To one thing constant never...

How to prevent licking an abdominal incision

2011-12-19T22:56:00.001-05:00

Scarlett recently had surgery to remove a cancerous skin tumor from her abdomen. She was absolutely pitiful with the e-collar, so Kathy first used a long-sleeve shirt with a dog cape to keep Scarlett's tongue from the stitches. We upgraded stylistically to flannel this evening, and should trip Scarlett less than the prototype did. It's cute, and it means we get a full night's rest (unlike the first night, when I slept on the floor with her sans e-collar).

Prototype

Final Version

Occupy "Here" Disappointment

2011-11-10T23:22:00.000-05:00

I have been very disappointed in the immaturity and criminality associated with the "Occupy" movement. Having been to at least one Tea Party rally, I can attest to the sharp difference between the two crowds.

Although both are rightfully (to an extent) railing against financial excesses, the "Occupy" movement seems to have misunderstood their civic right to peaceably assemble and petition for redress of grievances. Whereas the Tea Party rallies emboldened people to go home and seek electoral change, the "Occupy" movement seems to be stuck in urban locations making a nuisance.

The level of crime that has sprung up around these camps is more than sufficient to demonstrate a stark difference from the Tea Party rallies. We should be as shocked about the crimes happening in the camps as we are about the child abuse that occurred at Penn State.

We should celebrate our right to assemble, but show disdain for those who abuse it. We cannot--and should not--send them to jail for assembling. But we can turn our backs on them, and we can support Mayors who work to arrest the lawbreakers.

Scottish Stormtropper

2011-11-05T17:45:00.000-04:00

Photographed last weekend at the Highland Games and Celtic Festival at the Meadow Event Park in Caroline County, Virginia.

Even the earthquakes are leaving California

2011-08-23T14:59:00.000-04:00

Yesterday and today, Colorado had significant earthquakes. Today, Virginia had a 5.9 quake about an hour's drive from my home.

Perhaps taxpayers are not the only ones leaving California!

Journalistic Misuse of Photography: Example

2011-08-21T11:26:00.001-04:00

(JOHN GILES/ASSOCIATED PRESS)

The above picture appears at the head of Ezra Klein's article "Getting ready for a wave of coal-plant shutdowns".

I want to take issue with what I think is a misleading use of photography in a journalistic setting. First, my qualifications: I am a competent amateur photographer, I live near two clean-coal plants, and have toured one of them as a volunteer firefighter.

This picture is tied to comments about coal-fired power plants being idled and remaining coal-fired power becoming more expensive as a result of new EPA regulations. The picture appears at first to be of a dirty smoke pouring out of the stack. This simply is not true. The stack in question is a water-spray column through which smoke is directed *after* it has gone through a first-stage ash filter. (The ash is often consumed by landfills and concrete manufacturers.) The cloud emerging from the stack is in fact nothing more than steam. (There are invisible gases emerging as well, such as Carbon Dioxide.)

The photographer has imaged the cloud with the sun behind it. Then using exposure bracketing, he has formed a High Dynamic Range photo, which enhances the shadowed areas without blowing out the bright areas. This leads to simple white steam appearing dark and fringed by white.

In the winter, this steam lingers along the wind for thousands of feet before finally behind cooled and absorbed into the air. In summer, the steam is rarely visible more than a few hundred feet, except when high humidity in the air--such as during a heavy rain storm--prevents rapid absorption of the humidity.

In short, the photograph displayed is completely misused for the article to which it is applied. It is a lapse of editorial integrity to combine the two.

A Question of Procedure

2011-07-14T23:00:00.000-04:00

In congress, ordinary procedure calls for a bill to be submitted to committees having jurisdiction over the subject area. Once the committees have amended the bill, if they approve, then the bill will go to the floor to be amended again, then voted up or down (or sometimes pulled from consideration).

Watching the Congress and the President wrestle over the debt ceiling and the deficit is like watching bad theater. None of this is business as usual. There are 435 members in the House of Representatives, and 100 senators in the Senate. Each is assigned to various committees and subcommittees. The budget committees have proper jurisdiction over the level of appropriations, and should be the ones doing the heavy lifting in this time of "crisis." They are not, and so we have stepped away, yet again, from normal procedure.

I say "yet again" because Speaker Pelosi bypassed the committees several times to get what she wanted. This represents yet another critical breakdown in the legislative process.

What should be happening? How about this:

1) The Democrats in the House draft a revenue bill plus debt ceiling increase and work to bring it to the floor for a vote. The Republicans let them, knowing that they have the overwhelming "Nay" votes.

2) The Senate cannot constitutionally bring forward a revenue bill, so the Democrat-controlled Senate is limited to formulating and voting on a spending reduction plus debt ceiling increase bill. The Republicans work to shape the bill, but do not filibuster.

3) The House proceeds to consider Republican and/or Democrat spending reduction plus debt ceiling increase bills. One of these will pass, probably the Republican bill.

4) The two chambers appoint a joint committee to reconcile the two bills. Many concessions are discussed, and either the committee comes to agreement or it does not. If it comes to agreement, then both chambers attempt to pass the jointly-revised bill. Otherwise, the bill is dead.

5) If both chambers pass the revised bill, then it goes to the President for signature. If he doesn't like it, he vetoes it. Otherwise, he lets it pass into law.

6) If the President vetoes the bill, then the Congress must vote to override it. To muster veto-proof support, the bill must be palatable to 2/3 of each chamber, a good definition of bipartisanship.

7) If Congress cannot override the veto, then the bill is dead.

So, at which point in the process is it who's fault if the bill does not pass? In truth, everyone's prints are all over the corpse, and all are responsible. Republicans are responsible if they produce a bill that the Senate cannot reconcile to. Democrats are responsible if they produce a bill that the House cannot reconcile to. The President is responsible if a reasonable majority approve a critical bill and he vetoes it.

The American people aren't supposed to know the ins and outs of legislative procedure. What's in the Constitution is a good enough, high-level description. But we should know that the procedure is fair and representative, and that it is deviated from only in times of great national danger.

What is happening now is a government-made national danger. It is shameful that reckless spending and borrowing have occurred and have now brought us to this point. It is imperative to re-infuse the process with representativeness and fairness.

Following an expedited form of the process above would give Democrats in the House something that Speaker Pelosi refused to give Republicans in the House: a fair chance to have their legislation voted up or down. If they want tax increases, then let them try to muster enough support for a vote. If it fails, proceed with the only option that remains: spending reductions.

Above all, let the voice of the people, through their Representatives in the House, be heard by the Senate and the President. Let the opposition stand aside when they lose the vote. Let the victor move forward confidently and with humility when they win the vote.

Maybe then, we'll get a functioning legislative branch.

Taking Lightning Photos

2011-07-11T23:00:00.002-04:00

To take these photos of lightning in action, I use a Nikon DSLR in manual mode. The trick is to open up the shutter for 20 to 30 seconds, using the f-stop to control the amount of light hitting the sensor. I also adjust the ISO (sensor sensitivity) depending on whether I want to see the foreground (400) or not (100).

The difficulty with taking lightning photos is not knowing where or when they will strike. One can generally get a feel for the direction, so one points that way with a wide angle (18mm lens setting in my case) and hope for the best. The focus needs to be manually adjusted to infinity and then a notch back, since my camera overdoes it just slightly. (The same is true for astronomy pictures.) I have difficulty focusing correctly at higher zoom levels (55mm) in the dark, although in hindsight I could have used the hospital building behind me to set the focus for the horizon shots, as the focal distances are close enough.

The second difficulty is with rain. At the front of the storm, the rain blows at you and is more intense, and the lightning can be obscured by the thick rain bands. At the back of the storm, the rain hits your back and is usually just a drizzle, and the lightning is less obscured by thinner rain bands. I need to consider getting a waterproof casing, just like I would use for underwater camera use.

The back of the storm seems safer from a lightning strike perspective, but that is not necessarily true. Lightning can travel miles in any direction nearer the speed of light than not. It can fork in multiple directions, run cloud to cloud, and strike ground to cloud. The basic idea is not to be caught in the middle of any part of a lightning strike.

Have fun!

Lightning Storm

2011-07-03T20:59:00.000-04:00

Took these pictures this evening from the end of my driveway.

Geithner Needs more Humility

2011-06-24T05:29:00.000-04:00

CNS News is reporting testimony by Treasury Secretary Geithner regarding the Obama Administration's plan to raise taxes on small business owners. Two comments jumped out at me:

... I have to go out and borrow a trillion dollars over the next 10 years to finance those tax benefits for the top 2 percent, and I don't think I can justify doing that,” said Geithner.

And shortly after:

...then you have to do exceptionally deep cuts in benefits for middle-class Americans and you have to shrink the overall size of government programs, things like education, to levels that we could not accept as a country,” said Geithner.

What struck me wrong in the first quote is the use of the pronoun "I", and the conclusion "I don't think I can justify doing that." What arrogance to think that an appointed official of the United States of America believes that he and not the Congress is the gatekeeper on how tax revenues and borrowings are balanced.

In the second quote is the assertion that we as a country could not accept a smaller government. Again, this is for the Congress to decide what is priority and what is not. It is up to Congress to raise revenues or decrease spending (or both), because they are our representatives. It is the duty of the Secretary of the Treasury to advise and challenge the Congress, and afterward to do the will of Congress as enshrined in law. It is not his duty to tell Congress what the people do and do not want.

Secretary Geithner needs to be reined in. His ego has outgrown the confines of his office.

Wikipedia Jokes

2011-06-21T22:28:00.002-04:00

I have no idea if these are original, but I thought of them on my drive home today.

What's a dog's favorite encyclopedia? Lickipedia.
What's a dog's least favorite encyclopedia? Tickipedia.

What's a doctor's favorite encyclopdia? Sickipedia.

What's Disney's favorite encyclopedia? Mickeypedia.

What's a mason's favorite encyclopedia? Brickipedia.

What's Jokey Smurf's favorite encyclopedia? Trickipedia.

What's Santa's favorite encyclopedia? Nickipedia.

What's a witch's favorite encyclopedia? Wiccanpedia.

Groaners all, yet they must enter the humor of the modern web. Long live Wikipedia!

Mushroom Ruins Asphalt

2011-06-02T19:25:00.000-04:00

We've had a lot of rain recently. Evidently a mushroom quietly drank a lot of it, then suddenly burst through the edge of our one year old asphalt driveway.

Two things are tremendous about this. First, that the mushroom grew so quickly--we did not notice this damage at 8am, but noticed it at 6pm. Second, that the mushroom was capable of delivering enough hydraulic pressure *and* surviving in order to push out this asphalt.

I wonder if this would have happened if we had managed to seal the driveway first.

Netanyahu Addresses Congress

2011-05-24T22:33:00.000-04:00

This is the speech that Obama should have given: unequivocal, clear-headed, direct, and brave. Simply awesome.

Hail!

2011-05-18T22:15:00.000-04:00

I came home this evening to find that we had received a fair amount of hail. What I found at 10PM had dropped before 7PM, and was layered more than one inch thick, consisting of round, marble-sized crystals. Wow!

The dogs were dry when Kathy came home after 7. She didn't notice the hail where she was, a few miles north, so this was highly localized.

The Firebird (Stravinsky)

2011-05-09T22:19:00.000-04:00

My first introduction to Stravinsky's Firebird was through Fantasia 2000. Quite literally, a firebird came out of a volcano in a thunder of brass and percussion and chased down the Spring nymph to her doom. Fortunately, a single tear revived her from the ashes of the burned forest--the result of the firebird's brief reign of terror--and, helped by her friend the stag, triumphs over the ruined waste with seed and rain. Instantly, as the music crescendos in triumph, great trees spring up out of the ground, rising to the heights of ancient trees in mere breaths. The waste fades to memory as the story of renewal is told once more.

Well, that's the way Disney's artists saw it. And good for them! The music they selected is just a brief excerpt from the whole piece, so I was in for an experience listing to it again tonight.

Netflix was having an internal error, so I switched my Roku box to the Classical TV channel. The first item on the list was Valery Gergiev conducting the Vienna Philhamonic in Vienna in 2000. Three pieces were on the program: Prokofiev's Symphony No. 1 ("Classical"), an unwatchable modern viola concerto, and Stravinsky's Firebird. I have a hard time watching Gergiev conduct, because he has a tendency to shake his right hand about as if he has palsy. (He doesn't, as I was able to observe as he conducted the later pieces in the program.)

The great complexity of the viola concerto and of the Firebird demanded someone who could feel the music as much as memorize it. Gergiev excelled at this, especially during the Firebird, which is incredibly dynamic and expressive. By the time the orchestra plays at the concert, the conductor is generally reminding players where to come in. The task of shaping how they will play is (mostly) complete. It takes a lot of work, most of which concertgoers never see. I had the privilege of working with my college orchestra as an assistant for five years, under two directors. I learned more about composition and performance from those rehearsals than I ever did from listening to albums.

Some orchestras allow you to attend rehearsals. You may not get to hear the music non-stop, but you get the experience of learning how it is all put together. I strongly encourage experiencing music up close and personal. If you're not playing it, go wahow it is played.

Royal Wedding Fever

2011-05-02T23:08:00.000-04:00

I am a true Natural Born United States Citizen, but I was born in Australia to American parents, and my father's heritage runs blue-blood from England and Scotland. I have a soft spot for the marches of Elgar and the magnificent cathedrals and abbeys of London, so it is no surprise that I like royal weddings.

I first watched the wedding of Prince Charles and Princess Diana in 1991, when it was rebroadcast on A&E. Being a softie for this sort of thing, I taped it. My wife hasn't watch it, but she did seem to like watching the most recent royal wedding when it was rebroadcast (same-day) on BBC America. Little does she know that I modeled our own wedding ceremony (but far more spartanly) on Charles' and Diana's. I so loved the old language of the service, that we based our vows on the old Book of Common Prayer.

I have visited Westminster Abbey, and I wondered so much how they could pull off a wedding there. With unparalleled photographic access, the BBC showed us how. I was especially happy to see the trees inside, with their young light green leaves glowing under the bright lights. St. Paul's Cathedral (the site of Charles' and Diana's wedding) is much larger and better lit by the sun, but Westminster is no less beautiful for a wedding.

We waited until the bridal couple returned from signing the register before we thought about turning off the television. I wanted to hear the household trumpeters deliver the fanfare--and what a job they did! That was the best moment for me of the 1981 royal wedding (and I finally found a recording), so I especially wanted to see what they did in 2011.

For me, most weddings are musical. I helped my mother and her best friend play piano and organ duets at several weddings (I was a page turner), and this has stuck with me. The 1981 royal wedding was far more musical, with three orchestras, a few choirs, soprano Kiri te Kanawa, and spirited classical music from Clarke, Handel, and Elgar. I like the Walton march used as the 2011 recessional less than I like Elgar's Pomp & Circumstance March #4, but it was well-played--better in fact than many recordings I have heard.

Next time you go to a wedding, pay attention to the music. Usually there is a lot of thought that goes into choosing each piece, and certainly there is a lot of effort in performing it. You might be able to read the bride and groom a little better as a result.

Osama Bin Laden is Dead!

2011-05-02T22:45:00.000-04:00

Go Navy! SEAL Team 6 did the deed, taking out the bad guy in a remarkably resilient operation. Kudos to former President Bush and current President Obama for supporting the military and intelligence apparatus that finally put this mission success in the history books.

The war is not over--this snake has many heads--but a shiver should now be running through the world of Islamic fanaticism. We can put the pieces together. We can kill or capture terrorists and their leaders, before they have a chance to do their worst. We may be slow to learn, but we are fast and strong once we strike.

This is a proud day for the U.S. and its allies. It's definitely a morale booster for all of us.

P.S. I wonder if this is why William and Kate did not go abroad for their honeymoon. It is reasonable to assume that U.K. Prime Minister David Cameron was informed, since the U.S. knew in mid-March where Osama was living, and that he would have informed the Palace and MI5 of the risks.

Absences from Writing

2011-05-02T22:37:00.000-04:00

I've been away since mid-February?! This has been a tough spring on the business front. Just when we think we have something finally under control, it busts loose again.

It's also been tough on the family front. My grandmother passed away two weeks ago, aged 87. I was able to see her before she went. I flew standby to Arizona and back, and made all of my flights.

Now it is May. "Get up, get up for shame! The blooming morn / Upon her wings presents the god unshorn." [Robert Herrick] The time has come to get back into writing. There is a lot going on in the world, and I should not be so passive.

My Favorite Superbowl Commercial

2011-02-14T23:23:00.000-05:00

This commercial is simply awesome!

Employees' Share of Profits? What about Share of Revenues?

2011-02-10T00:06:00.001-05:00

On Monday, President Obama spoke to the U.S. Chamber of Commerce. Part of his speech struck me wrong, and I want to comment on that.

From the text of his speech (available on the White House's web site):

Of course, your responsibility goes beyond recognizing the need for certain standards and safeguards. If we’re fighting to reform the tax code and increase exports to help you compete, the benefits can’t just translate into greater profits and bonuses for those at the top. They have to be shared by American workers, who need to know that expanding trade and opening markets will lift their standards of living as well as your bottom line.

The interpretation on the Right seems to be that Obama is calling for profits to be shared with workers. The interpretation on the Left seems to be the same. In fact, he called for sharing the benefits of a reformed corporate tax code and trade rules. The paragraphs that followed look toward better wages and benefits, believing that a worker who can afford to buy the product his company makes is the kind of worker we want to create in America.

Kathy and I recently confronted this situation in our Animal Hospital. Because of the high cost of constructing the facility and purchasing equipment, and the steadily increasing costs of supplies, pharmaceuticals and labor, we had to charge prices higher than older established businesses that built up during cheaper times. The other four hospitals that opened (or changed ownership) within two years (plus or minus) of ours had prices at or above our own. Our staff finally told us that they were having a hard time affording veterinary care, and asked what we could do to help. They asked this despite a major reduction in prices in December and the institution of a Bonus Bucks forward discount program, and despite the deep discounts we can offer up to the tax-free limit.

As a general rule, the average worker should be able to afford the average price of an average product. When there is an imbalance, standard of living will decrease (average price above average wage), or it will increase (average wage above average price). The first outcome risks economic recession if prolonged; the second risks inflation and eventual economic recession if the imbalance is too great.

The President is talking about making changes that will reduce expenses for businesses paying corporate taxes and trade tariffs. What he wants is for some of the savings to be shifted to labor in the form of higher wages rather than flow straight through to management bonuses and increased equity or dividends for owners. As a request, this is fine. If legislated, I will have a huge problem with this.

One of the standard complaints of liberals is income inequality and how the share of national income is skewed toward the super-rich. The facts always seem to be in dispute. The IRS data provides the best source for longitudinal studies. It is important to strip out those taxpayers who report sizable one-time boosts in income (such as retirees who sell a large family home with a cost basis much lower due to decades of inflation), and to look at taxpayers over time (to account for dynamic effects due to customary increases in wages over time, e.g. as one becomes a more valuable worker through the years until retirement) in order to arrive at how many are truly super-rich and how much income they actually have. (See this 2004 study for an excellent discussion on the pitfalls of using aggregated data incorrectly.)

What is commonly demonized is profits, as if these are solely the dominion of the super-rich. In fact, profits are nothing more than the leftovers after expenses, including labor, are paid. This table (Excel spreadsheet) from the IRS breaks down tax-paying business financials from the year 2003 (the latest year for which this data is available). In it we find that 27.5 million businesses earned $24.5 trillion in revenues. Of this, $13.2 trillion (54%) was paid in Cost of Goods Sold; $2.4 trillion (10%) was paid to labor in the form of salaries, wages and benefits; $470 billion (2%) went to government in the form of taxes; $900 billion (4%) was paid to creditors in the form of interest; and $800 billion (3%) was deducted for cost of assets purchased prior to 2003, reimbursing the business for the initial outlay, but often actually covering principal payments to creditors. The leftovers, in the form of profits and losses, were $1.4 trillion (6%) together, or separately $2 trillion (8%) in profits and $600 billion (2%) in losses.

Did you catch the part where labor's share is 10%, and the part where the owners' share is 6%? Furthermore, some businesses lost $600 billion collectively. They might be starting out, or failing, or having a bad year. That loss is significant. Labor may lose a job temporarily, but owners may lose investment permanently. Labor has more chance of getting a new job (or social assistance) than an owner has of regaining investment.

The unemployed get 0%, which will dilute the share to labor, but I don't think that 10% unemployment is going equalize the labor share with owner share (from 10% to 6%). (The unemployment figure in 2003 was in the neighborhood of 5%, when the 10% share to labor occurred.)

If you want the laboring classes more like the super-rich, help them invest in profitable companies. The way for labor to get a share of profits is to buy equity in the companies that earn profits. For the right price, current owners will part with their equity. The government regulates a vast market for buying and selling equity, so there is little excuse for labor not to partake. Two things will occur as a result: the super-rich will exchange income-generating assets for neutral cash, which they will either re-invest in new businesses, or else consume (via other businesses) products and services. If they do the former, they create new jobs. If they do the latter, they recycle the cash into the economy on things that do not generate future income for themselves, thus reducing their long-term wealth, and sustain and perhaps grow new jobs already in the economy. Meanwhile, the laboring class will increase their long-term wealth by deriving income from more than just their labor. They may not become rich, but they will have less excuse to be poor.

Paul Ryan: Budgetary Wunderkind

2011-01-25T22:48:00.000-05:00

In honor of Paul Ryan's rebuttal to the State of the Union address, I wanted to go back to last year's Health Care Summit and show his amazing mind at work.

I'm looking forward to seeing more of him.

Gabrielle Giffords: Congresswoman Assaulted by Gunman

2011-01-09T10:18:00.000-05:00

There had been only eight congressmen killed or wounded before yesterday. Yesterday, Gabrielle Giffords was shot by a murderer. She lives barely, but not so the six others who are dead, including a long-sitting Federal judge, and more than a dozen wounded.

There is simply no place for this type of violence, whether it is politically motivated or due to mental disorder. So far as political motivation goes, none of us should be so immature as to stoop so low to commit an act so vile. It has been done before, regarding slavery, abortion, civil rights, war, and others.

Let us encourage one another to be mindful of our speech, lest we incite others to violence. We can and must speak what we believe to be true, having persuasion as the goal, and explanation as the foundation.

This is the model of civil discourse to which we should strive. Save violence for the defense of our nation against an aggressor who will not respond to diplomacy. Save violence for the defense of our familes and homes against an aggressor who will not respond to warnings. Save violence for the defense of the people against an aggressor state that deploys armed agents to take away our rights.

Gabrielle Giffords was unarmed. She possessed only her vote in Congress and her ability to persuade and explain. I pray for her speedy recovery, and those wounded with her, and mourn the deaths of the others, including Judge John Roll.

Guest Post: Why the reading of the Constition by Congress Matters

2011-01-07T22:16:00.000-05:00

[Note: This is a guest post from my old philosopher friend. No names! Just the voice of reason.]

Almost every country has a constitution, even if "unwritten". It is usuallly the basis (if only rhetorically) for all other laws and rules required to operate its government. So having "a constitution" is really no big deal.

But for the US, its constitution plays one other, supremely important role: It is what makes this "a country". In France, Germany etc. etc. it really matters little if its constitution is broken or disregarded. Frenchmen will still live in a France, Germans will still live in a Germany and so forth, In other words, their language, culture, ethnicity, long shared history and sometimes even religion provide a tie that is far more important and compelling than their constitutions.

Not so in the US. This country has a short history, its historical memory is too short to allow even that little to be "shared", it is ethnically greatly divided, much of its culture is a plaything of the moment, and it has great geographical and commercial differences between its various major regions. As has been observed, the US is really 4-5 different countries held together mainly by its constitution --- and this even before it has started worshipping "diversity". More correctly, it is held together by general acceptance of the constitution as a sort of a contract binding on all its citizens and their government. Remove that contract and/or its acceptance, and the only thing that is left to hold the country together is its sheer inertia.

That is why the call of the Tea Party (and of some Republicans) is so important. That is why the current reading of the constitution in congress (and other similar gestures) may be the single most important thing that this new Congress will have done. It is also why the contemptous reaction of the Left, including much of the Democratic Party, is so profoundly subversive.

Tron: Legacy, Soundtrack Review

2011-01-05T23:54:00.000-05:00

I mentioned before that I liked the soundtrack to Tron: Legacy. Now that I have listened to it for several days at home and in the car, I can offer a review.

First, the soundtrack is a mix of traditional orchestral music and electronic synthesized music. It seems that Daft Punk works chiefly in the electronic space, but their vision of the soundtrack sold the producer and director early in the production process. They collaborated significantly to produce the soundtrack, and in my opinion it was a fruitful effort.

Second, the first half of the soundtrack mirrors the development of the storyline in the movie. The tension in the music is hinted at in the early tracks, and becomes incredibly noisy and fractious in the second half. The bass is amplified so much on some tracks that it literally hurts my ears with every beat, forcing me to adjust my bass setting downward. On other tracks, the instruments are overdriven so much that they create a cacophany that literally stressed me out. I think that my stress is due to listening to these tracks separately from the visual cues in the movie. Despite these minor problems, my enjoyment of the soundtrack was only slightly diminished. The tracks I like the most make the album completely worth the purchase.

Third, the CD comes with an insert filled with pictures from the movie. The art and paper quality is excellent, making the actual purchase of the disc a benefit over simple download. Even the lettering on the disc cover has a holographic quality, leading one to remember the strip lighting on everything within "the Grid."

Here's a track-by-track (Warning: Spoilers):

1) Overture
The overture begins with a drone in the low strings and a soft choir of horns. This opening reminded me of the Prelude to Wagner's Das Rheingold with its similar instrumentation and rhythm. The introduction of synthesized instruments later is a little jarring, but then so is entering the Grid. It works! The heroic theme is simple, descending through a single octave. It reminded me a little of the 1-3-2 tones played on an older phone (I can't hear these being any different on my modern phone), followed by the 4-6-5 and the 7-9-8. The phone was the original hacker tool in the 70's, and that may be what brought this to mind.

2) The Grid
The initial voiceover by Jeff Bridges threw me at first. I'm a geek though, so I got to like it the more I heard it. The Grid theme occurs here. This voiceover then segues into an electronic repeat of the heroic theme introduced in the Overture. There's a mix of triumph and lament in the melody, which will play out in the film.

3) The Son of Flynn
I really liked this melody. It's synthesized arpeggiated chord progressions patterned off the Grid theme. I immediately thought of arcade games when I heard this, but it is set to Sam Flynn's motorcycle ride (on his dad's bike). The camera work was great, including from the bike itself as it sped down the freeway. Can you say "foreshadowing?"

4) Recognizer
A spiccato playing of a melody similar to Sam's theme, this is tense, dark, and probing ever lower.

5) Armory
Contemplative, soft music. Fits the scene well. ("What is going on," Sam thinks.)

6) Arena
Sam finds out soon enough what is going on. It wouldn't be Tron without disc wars. The music builds as the world of the Grid is revealed and the games begin.

7) Rinzler
Rinzler is the superbad, undefeated program in the games. There is a hint of James Bond mixed with Sam's theme in the melody. The overdriven instruments start in this track, but only briefly near the end.

8) The Game has Changed
The underlying melody is pure 80's synthetic, but the spiccato Grid theme is back in the strings, intertwining and repeating with the underlying melody. The brass interrupt for emphasis from time to time, but the main energy is in the endless rhythm of the strings.

9) Outlands
Alternating notes in the upper strings, then broadening to the lower strings, with a quick and light touch that accompanies the escape from the electronic world of the Grid into the dark and rough world beyond it--the Outlands. The theme is like the Grid, yet not fluid--it is apprehensive and discontinuous. Brass instruments give slow, crescendoing notes, building toward the arrival at the destination. Suddenly brass and woodwinds alternate in a frenzied descending staccato chord progression and finish the piece.

10) Adagio for Tron
Kevin Flynn tells his son where he has been, and of the death of Tron. Strings provide the atmosphere and divide to also provide the melody. Cellos and violas take the theme and share it with us in even richer tones. Synthesized arpeggios quietly come in, and then an organ takes over the same theme. The lower strings finish the moment of remembrance. Then a pause, and a new direction. Lower strings play staccato, followed by legato upper strings repeating the adagio. Brass provide crescendo until a sudden retreat leaves a solo cello with soft upper strings slowly playing the adagio. A very sad, pensive moment.

11) Nocturne
Slowly starting in the strings, playing softly, with a synthetic bass strumming slowly underneath. This gives way to a slow synthetic melody. The mood is dark and uncertain, and it ends slowly.

12) End of Line
Run by the DJ's at the club (Daft Punk in disguise?), this electronic piece is for dancing, but not frenetically fast. In the background, one can hear the sounds of the arcade game "Pong," one of the original inspirations for the first Tron movie. The original Tron movie (and arcade game) had a Pong-like game through which the player had to escape.
13) Derezzed
Much faster than "End of Line", this very synthetic track is frenetic in its pacing. The bass pulses so strongly that it squeezes in on my head with every beat. The repetition is part of the story, so it is hard to imagine doing anything other than being drunk and dancing (or other similar things) to this.

14) Fall
The elevator plummets. The overdrive of the instruments sounds like the overdrive of the elevator as it is stressed by too much speed. The beats are merciless. The lower strings play the Grid theme over and over, rising as the tension mounts. Brass instruments join in, then a drum roll, and then it is suddenly complete.

15) Solar Sailer
As with real sailing, the world around is quiet. This track is a sea of tranquillity, with a steady pulsing of a synthetic bass driving the Solar Sailer forward.. An Enya-like arpeggio fades in, like Orinoco Flow in a calmer setting. Strings add atmosphere, rising and falling in volume and scale as the journey continues. Then it fades out.

16) Rectifier
A rectifier is something that allows electric current to flow in only one direction. This martial piece is the beginning of the march to the final confrontation. There is no turning back. The mood rises as the lower strings chant, the upper strings strain to warn us of danger, and the brass announces the purpose of C.L.U.'s army.

17) Disc Wars
The drums are beating out the Grid theme in a toneless rhythm. Synthetic brass add continuo. The strings join, quietly, adding tone to the Grid theme. Suddenly, a synthetic melody appears, arpeggiated downward always, building tension as the chords are struck. More drums, accelerated this time, drive the track forward seemingly faster, yet without tempo increase. Then the drums go quiet, and only the strings and synthetic bass are left to fade away quietly.

18) C.L.U.
A bass drone sets the stage. After a few moments, strings beat out the Grid theme in rising tension. Without warning a synthetic, jaunty instrument completely takes the music, repeating an alternating pattern of notes. The strings return to raise the tension. Trills sharpen the high edges of the score. Brass suddenly dominate--C.L.U. is relentless in his pursuit of perfection. High strings take us up, then turn the note again and again as the drama reaches climax. The lower strings take over and beat out the Grid theme, now stronger and with synthetic help. Drums beat only for emphasis. Brass raise the scale and the tension over and over. Drums then beat 1-2, 1-2-3-4, repeating again and again and again. Then full stop, and only echoes are left.

19) Arrival
Synthetic and haunting, a new melody, related to the heroic theme, like a slow lament, plays. Voices like an angelic choir seem to hover high above the slow melody line. High strings mimic the angels, and then it is quiet.
20) Flynn Lives
A rhythmic line related to the Grid theme, played spiccato, forms the foundation. Low brass sing solemnly. The horn choir return, playing to us the heroic theme from the Overture. Winds arpeggiate this time, increasing the feeling of triumph, causing the feeling of lament to diminish. Sam, with Quorra behind him on his father's motorcycle, ride off into the sunset--her first ever on her first night outside of the Grid.
21) Tron Legacy (End Titles)
Echoing "End of Line", a synthetic music line takes us through the electronic credits. Strings join with the heroic theme and bring it to a satisfying climax.

22) Finale
This track was not in the movie. It is orchestral, building slowly from a pensive start--like the Overture. But this is a heroic synopsis of the music of the movie. It quickly builds to a climax, then retreats to a soft, upper strings and woodwind conclusion. When the last high note ends, one releases a sigh for what has happened. The journey is complete, and cannot be repeated.

The Milgram Experiment, the TSA, and We the People

2011-01-02T22:58:00.003-05:00

Last week, Kathy's dad returned from a trip to the west coast. On his way back, he noticed TSA agents completely dismantling and inspecting a wheelchair. What he then noticed appalled him to the core: the owner of that wheelchair, an elderly woman of 90 years or so, standing on the footprint mat, her legs slightly spread, swaying as a TSA agent gave her the new pat-down. On the woman's face was a far-away look, like she had dementia, but obvious in the moment was the terror and fear that she felt.

He told us sadly and with some self-loathing that he did not say anything then. He wanted so much to go over and tell the agents to stop, and that they should be ashamed of what they were doing, not merely to an American citizen, but to a woman who could have been their own aged parent or grandparent. We agreed with him that he and the travelers in the security area should have threatened a riot over so obvious a display of cruelty at the hands of the state.

Daily Kos does a fair defense of the TSA agents, but this only raises the issue studied by psychologist Stanley Milgram in the aftermath of World War 2: Why do the agents obey an authority figure who instructed them to perform acts that conflicted with their personal conscience? Similarly, why do we obey an authority figure who performs acts on us or on fellow travellers that conflict with our personal choices?

(See the Milgram Experiment on YouTube: Part 1, Part 2, Part 3. I first saw these in Psych 201 back in 1992. These videos send chills down my spine even now, seeing the anguish in so many test subjects as they deliver the shock despite their personal belief that they are causing harm.)

[Note: Kathy's dad lived in occupied Budapest during World War 2, and German soldiers were garrisoned in his home frequently. He saw both sides of these soldiers: the normal, conscientous type at home; and the cruel finger of the state in the streets. For him to describe what he saw is to look through the eyes of one who saw the real cruelty of the past and the shadow of such cruelty that is darkening our airports.]

I do not want to suggest that America is becoming Nazi Germany. That is a leap too far. But when specific state actions mimic historically condemned actions, the question needs to be raised, "Why?!" The Milgram Experiment shows the danger inherent in a state bureaucracy carrying out actions that are brutal--these actions happen with alarming alacrity and minimal actual restraint.

Frogs don't boil when the heat is turned on all at once. They die when they are boiled gradually. Likewise, totalitarian states did not happen overnight. They occurred gradually. We know this, so why can't we seem to agree to stop it from happening here in the Land of the Free, and the Home of the Brave? Why do we have so many people who think it is a sign of progress?

I just don't understand how what is happening got this far. We should know better! We do know better. It is past time for us to unite and take action. We can exercise our First Amendment rights: to decry what is happening, and to petition our government for a redress of our grievance. What comes after depends on the government's response.

How a Guy Wraps Presents

2011-01-01T13:52:00.003-05:00

My friend Scott shared his experience with us:

Movie Reviews (no spoilers)

2010-12-31T13:55:00.005-05:00

I don't spend a lot of time in movie theaters. It's just too expensive a pastime. So Kathy and I watch a lot of movies from Netflix. I did, however, make it to see three movies in the theater in the past two weeks.

First, The Voyage of the Dawn Treader. I've read the books, now I have watched the movies. This installment was not very deep, but it was entertaining. I wan't sure the actor playing Eustace could pull it off, but by the end I was a fan. He played both brat and friend with such vigor that I am looking forward to his appearance in the next installment. Recommended for entertainment value, and though my 8 year old nephew ended up with brief nightmares about the green mist, I think it is suitable for older children.

Second, The Deathly Hallows, Part 1. Again, I've read the books, now I have watched the movies. I wasn't sure how they would pull off the slow sections of the book, or whether they would be as true to the book with regard to injuries and deaths of significant characters. I was not let down in any way. The movie is well-paced, and there is time allotted for both action and introspection. I'm looking forward to the next installment. This movie is suitable only for teenagers and older, hence the PG-13 rating.

Third, Tron: Legacy. I watched the first movie and enjoyed it immensely. I knew then that computers did not work that way, but I liked the fictional approach. The sequel does not break from the fictional approach, and its visuals are far better than the original. The story for both movies is harder to appreciate if you are not somewhat nerdish, though the focus on games in both movies expands the movies' appeal considerably. (There is a reason that the Tron arcade games were so popular in the 80's. This new generation of gamers will have such a different experience, far closer to that offered by the latest movie. I hope that the Xbox Kinetic shines as a result of the new Tron games. Of all the current game technologies, it has the best chance to mimic the disc game most naturally.) Maybe they will make another installment, but this was a good end to the story. I especially like the soundtrack from Daft Punk, and picked it up from Target for $13.99 today. I recommend this movie for nerds like me and for older children and up. Oh, and if you can see it in chair-shaking Imax 3D like I did, you might enjoy this movie even more.

That's it for the in-theater movies. Here's a short list of movies I recommend from Netflix (either through DVD or Instant):

The Dish
What happened at the radio telescope in Parkes, Australia during the Apollo 11 mission. A fun movie, and doesn't require a degree in astrophysics to appreciate.

V: The Original Miniseries
The effects and acting are hokey, but the story is relevant. It's theme is largely based on European experience under Hitler and Mussolini, but there are some parallels to what the TSA is doing today in airports. (At least the TSA is not enslaving us.) Fears of totalitarianism will be stoked by this movie, and I think the Founding Fathers would approve of our healthy fear.

Happy New Year!

Settlers of Catan

2010-12-31T13:34:00.003-05:00

After reading such positive reviews, especially by Harrison Brookie, I decided to look into Settlers of Catan. I started with the Wikipedia entry, then proceeded to the SoC website. There is an excellent interactive tutorial that shows the mechanics of play along with some of the consequences of different moves.

I moved on to an extensive online strategy guide, which confirmed my sense of resource scarcity and the inability to "do it all" as a viable strategy. It extended my understanding of game dynamics beyond what the tutorial provided.

Then I tried a couple of single-player online versions of the game. The one that I started with from SoC was a bit simplistic, and I didn't have time to play online against multiple real players. I finally settled on the download from MSN Games. (If you are a subscriber, then you will pay the least amount to register the game. I didn't, so I got stuck overpaying for the privilege.)

I played this version for several games, losing badly each time. Two nights ago, I played again. I went second, and was able to place settlements at the intersections of all of the required resources with 5, 6, 8, or 9 for the roll. I also had a clear shot at Longest Road, but I couldn't get the necessary resources until the end, when it proved critical to my first victory.

I trailed badly through the game, rolling a 7 on my turn *every* time I had more than 7 resource cards. (I think this is programmed into the game, as I have yet to see a deviation.) I managed to acquire three hidden victory point development cards along the way, being careful to not be robbed by the undefeatable 7. I got a lucky roll and ended up with the resources for three road segments. (Those cities make a difference!) When I pressed "End Turn", I was awarded Longest Road and the victory.

Now that I have won a game, I think I might like it. (It's awfully difficult to like something you always lose at. I won't play Rummy with only Kathy because in 9 years with her I have won only once.) Now, can I get my extended family to like it? To set aside time to play it?

We can't even find time to learn Mah Jong, despite my sister-in-law's plaintive invitations. I may just have to stick with the electronic version for a while.

The Conversation Game

2010-12-31T13:16:00.003-05:00

We have a family that likes to discuss politics. There is one of us who is liberal/progressive. The rest of us are firmly conservative/libertarian. Recently at a dinner hosted by the liberal/progressive, I noted that she could not get many words in edgewise due to the passion of her guests. Being an old parliamentarian for church and other social groups, I naturally concluded that "rules of order" might be employed. But to use Robert's Rules for such an intimate family affair would be stifling! So I whittled down what Robert gave us, leaving just two broad rules:

1) Participants select a topic, the total amount of time to discuss the topic, the maximum length of time allocated to each participant to speak at any one time, and who will preside (if necessary) and keep time.

2) When it is a participant's turn to speak, they control the conversation for that slice of time. They may make statements and ask questions of (i.e., debate) other participants. During their turn, this person has the sole privilege to interrupt any other participant. When the participant is finished, regardless of how much time remains, control moves to the next participant.

Robert's Rules provide that no other person may speak again until all have had the opportunity; only then does the next round of speech begin. This is preserved implicitly in Rule 2, while still allowing for natural back-and-forth conversation.

The need to exercise Rule 1 is based on the tolerance of participants for a topic and for each other. The last sentence in Rule 2 might be called the "Forrest Gump Clause", as he often said "That's all I have to say about that," and then promptly moved on.

We have not all gathered yet again to try this game, but momentum has built towards wanting to try it. I'll post you on our results. If you should try these rules, let me know how your experience went. I suspect some groups may need the formality closer to Robert's Rules, while others will need less.

In all your political discussions, be courteous, and have fun learning!

The Virginia Museum of Fine Arts

2010-12-30T22:59:00.002-05:00

Kathy and I had a date to the Virginia Historical Society and to the Virginia Museum of Fine Arts. They are side-by-side in downtown Richmond, Virginia.

While poking around the modern art exhibit, it occurred to us that a lot of the photos we were looking at could have been taken by us, but we could not have written the outlandish verbiage that accompanied each work. Is that verbiage what makes it art?

Then another thought occurred to me later over dinner. If I look at a piece, and I don't understand it without (or maybe even with) an explanation, is it still art? Like a joke that has to be explained, is it still funny?

I was far more impressed by the ancient art, up to 5000 years old. It is very difficult to fathom what 5000 years is. Human history has only been recorded for one or a couple additional millenia. It's 50 centuries.... 500 decades. I was born only about 4 decades ago, or about 8/10% of the time in question. I was surprised at how well the paintings on the Grecian urns had survived. The urns had clearly been carefully re-assembled from shards, and the paint work touched up on the seams, but this was only visible on close inspection.

I don't feel as old now that I have been among 5 millenia of art. That wasn't the artists' intention, I'm certain, but it is a nice by-product.

More Views from a Hot Air Balloon

2010-11-16T19:20:00.000-05:00

Our sister balloon descending over a pond. Dropping down near ponds revealed a colder layer of air. We used these to our advantage to get closer views. We spooked a lot of livestock doing this. (Sorry, farmers!)

We followed US Highway 29 for many miles, as it paralleled our course northward on the eastern side of the Blue Ridge Mountains of Virginia. A very eager driver pulled over to wave and to take pictures of us as we transited. (I hope his pictures come out, as he is shooting into the sun!) Our chase vehicle can be seen in the lower right corner.

Looking northward on US 29, the road loops through a rural community. I wonder if there was a church near this cemetary, or if this is a community cemetary. It is a very simple site, compared to many that I have seen, but it is no less dear to God than any of the others.

My nephew Nicholas needed to sit down near the end of the trip. It is hard for a child to stand in one place for an hour, and he was a real trooper. I am very happy that Nicholas was in our basket, because it makes it easier to see the ride through the proverbial eyes of a child. He made it more fun, because he thought differently than us adults about many of the things he saw. The pilot loaned him a small pair of binoculars so that he could explore better. I might have gotten nauseous doing that, but he didn't. And so he was able to point out many things that we did not see at first.

Views from a Hot Air Balloon

2010-11-16T19:06:00.000-05:00

Floating low over farm ponds made it possible to capture our reflection. The water is a little filthy on the surface, but the reflection is unmistakable.

The expression of natural beauty in the farms and forests of Virginia provides a real contrast. In summer, this is all green. In winter, it is void of leaves and gray. This day, however, the leaves were at their autumn peak. They are alight with reds and oranges.

The bright morning sun on the eastern slope of the Blue Ridge Mountains illuminates the many farms that dominate this part of the countryside.

What happened to these cows? They look different! Not really--that is only their shadows, lengthened by the early morning sun. The many dark specks surrounding them would smell good to Kathy if we were low enough to sniff. I'm very glad that we did not land in a cattle field. (We landed in a hayfield instead!) I did not have the correct shoes for being in a manure-strewn field.

Hot Air Balloon Landing & Packing Up

2010-11-16T18:13:00.004-05:00

I have this in two parts. First the landing. This is actually the second landing of this ballon, in which I was a passenger. We were denied our intended landing site by a rather perturbed homeowner, so we disembarked at our next landing site. The pilot proceeded onto the next landing site, which was accessible to the chase vehicles. We were in time to record the landing.

This was followed by the deflation and packing of the balloon. If you remember how it came out so easily when it was filled for launch, then this video will make clear why the packing is so important. It reminded me of packing a spinnaker for a yacht, which I did many many times in a many years ago. The trick is to make sure your connectors are on the outside, and everything else can generally be stuffed without much additional concern.

You can clearly see that the parachute vent has been removed completely to allow the balloon to empty quickly. The process goes quickly when the ground crew squeezes the balloon like a tube of toothpaste in order to dump the air out the top hole.

The neighbors and residents all came out to celebrate the landing. It's not every day that perfect strangers drop onto your acreage asking permission for a peremptory landing. We're very thankful to these good people who turned a bright, brisk morning into a beautiful, warm morning with their hospitality.

Hot Air Balloon Liftoff

2010-11-16T18:06:00.002-05:00

Here is a photo sequence of takeoff. We have a video of this as well, but until it is edited this will serve as a rough cut:

This lovely community of Rochelle is located in Madison County, Virginia, near the Orange County border. The bed and breakfast from which we launched is Ridge View Bed & Breakfast, and we are very thankful to the innkeepers for allowing us to have such a wonderful time at their home.

One of the interesting features of the launch is that the balloon has defrosted the ground under the basket. You should be able to make out a greener circular patch at the basket's launch site. We were heavily bundled against the cold weather, but I was not prepared for the warmth coming from the burner and from the gradual escape of the warmed air from the balloon. It made for a very pleasant trip--no shivering!

Hot Air Balloon Inflation

2010-11-16T17:55:00.003-05:00

Seems so simple in hindsight, putting up a hot air balloon. Here is a sequence of photographs, each about 5 to 10 seconds apart, showing the inflation process.

Here is a similar, though shorter, sequence for the second balloon.

The balloon is packed with the basket-end connectors at the top of the bag. Once the connectors are attached to the basket, two people hold the bottom open while a gas-powered fan blows quickly into the balloon and while a third person pulls the bag away. The balloon naturally unpacks and fills at the same time.

Once the balloon is fully unpacked, the person at the far end puts in the parachute vent, which will enable the pilot to release hot air in order to control when and how much to descend. This completes the top seal on the balloon, which then completes the air fill.

The final step is to heat the air to around 200 degrees Fahrenheit, at which point it rises to the familiar vertical position. Once all the passengers and the pilot are added, about the temperature must be raised about 50 more degrees to lift off.

Way cool.

Becoming an Aeronaut

2010-11-15T00:06:00.000-05:00

We went ballooning this weekend, courtesy of Kathy's brother and his wife. They made it a family affair, beginning with an overnight stay at the wonderful Ridge View Bed & Breakfast, taking off the next day from the B&B's back yard. There were 8 of us, so we required two balloons. Kathy and I, our sister-in-law and our nephew were in the foreground balloon (with the yellow lightning bolts).

We took off around 7am and landed around 9am 20-minutes drive to the north of Madison, Virginia. The weather was cold at first, so we bundled up heavily. But by the time we landed, our coats, scarves, hats, and gloves were off and laid in the backseat of the chase vehicle.

We were denied landing permission once, could not get the trucks through a gate at the second landing place (where us passengers in our balloon disembarked), but found a welcoming crowd (including one experienced ballooning enthusiast who followed us from his farm) at the final landing location.

Perhaps the funniest landing story comes from when the first balloon set down (we were in the second). A very nice lady stepped onto her back porch wearing her nightgown, was hailed from above by the balloonist asking permission to land in her yard. She gasped in awe and surprise, spilled her coffee, then fully embraced the moment and enthusiastically said yes! Then she went in calling to her family to come out and see, emerging just a minute later fully clothed in jeans and a shirt.

Ridge View is located in the center left, with the balloon support trucks in the center at our takeoff site.

This picturesque location is also great for astronomy. Jupiter and his moons were wonderfully visible through my telescope (sorry, no pictures), which delighted my 8 year old nephew considerably.

The balloonists returned us afterward to Ridge View for champagne and a splendid breakfast.

The autumn foliage was in its peak as we skimmed the eastern edge of the Blue Ridge mountains. Drifting north and looking northeast, we passed this remarkable ridge.

If you are interested in a delightful adventure, contact Mandy Rossano at Monticello Country Ballooning. They will work with any B&B in the area to take off locally, but do consider the delicious coffee and frittata at Ridge View (not to mention the excellent hosts and rooms) plus the excellent backyard launch site.

More pictures in later posts. Good night!

Tax Reform Idea

2010-09-29T17:47:00.007-04:00

Why is income tax reform so difficult? The modern tax code is an attempt to incentivize certain (many) behaviors without disincentivizing certain (many) others.

The classic division between taxpayers is those who work for income and those who live off financial income. The current income tax code allows lower rates for qualified dividends as a nod to seniors who need this kind of income to survive.

It's simple to make this work similarly to our current tax code:

REFORM IN FOUR EASY BULLETS
1) Establish one progressive rate structure for earned income. Use a standard exemption, perhaps based on the minimum wage. Compute the "earned income tax" solely from income in this category. Save the number for later.

2) Establish a second progressive rate structure for financial income (i.e., dividends, capital gains, interest, etc.). Use a standard exemption, perhaps based on the social security benefit. Compute the "financial income tax" solely from income in this category. Save the number for later.

3) Establish a third, inverted progressive rate structure for deductions. (The idea is to weight the first quantiles of the deductions more than the last. Use the sum of the earned income and financial income when designing the rate structure, but apply it uniformly regardless of the breakdown in the two incomes.) Use a standard deduction if deductions are not itemized. Compute the "deduction tax credit" and save the number for later.

4) Add the "earned income tax" and "financial income tax" and subtract the "deduction tax credit". Pay the resulting tax.

This structure is easy to implement: Use the existing withholding mechanisms for earned income, and add withholding mechanisms to financial institutions. Taxpayers would use withholding allowances based on the expected "deduction tax credit" and total income in each category.

Why is this better than what we have now? It comes down to marginal incentives.

HYPOTHETICAL CASE STUDIES
Case 1: A retiree who is living on financial income might like to take a job for supplemental income. Under today's income tax code, that extra income will be taxed at the (higher-than-average) marginal rate, even if the work is at minimum wage. Under the proposed tax reform, that extra income would be subject to a low tax rate (if it is larger than the exemption).

Case 2: A worker early in their career is living off earned income and is saving for large future expenses (e.g., home down payment, car replacement, college, etc.). The amount of savings (and resulting income) is small at first but grows. Under today's income tax code, that extra income will be taxed at the (higher-than-average) marginal rate if it is interest, or at one of two lower rates if it is dividends or capital gains. Under the proposed tax reform, that extra income would be subject to a low tax rate (if it is larger than the exemption).

Case 3: Mr. Rich lives richly on financial income. Under today's income tax code, that income is taxed under the cumulative progressive rate structure if it is interest, or (up to a point) at one of two lower rates if it is dividends or capital gains. Above that point, higher taxes might kick in. Under the proposed tax reform, that income would be subject to a progressive rate structure of its own, which would be less advantageous as a percentage of total income to Mr. Rich than to lower- and middle-class workers.

IMPACT ON NOMINAL FINANCIAL GAINS
The earning rate on financial income is usually at or above the rate of inflation, so up to a certain point there is no tax for nominal-only growth. (This reform idea does not directly address taxation of nominal-only growth, despite doing so indirectly here.) This can help save-and-spend types if the exemption is set high enough to allow tax-free growth up to an amount useful enough to make a down-payment on a house or vehicle.

IMPACT ON QUALIFIED RETIREMENT ACCOUNTS
There is still a place for qualified retirement accounts (e.g., 401(k), IRA, 403(b), etc.). Rather than supplant them, the proposed reform seeks to increase non-retirement, short- and medium-term savings by protecting part or all of that savings from the bite of taxes.

IMPACT ON DEMAND FOR CREDIT
By encouraging non-retirement savings, more taxpayers could have savings that could be tapped for emergencies, unexpected larger expenses, and planned expenses, and these savings could be replenished with little to no tax impact. Fewer taxpayers could be laden with consumer debt (the most expensive type) if they could save more in advance.

IMPACT ON WEALTH CREATION
Savings whose income is reasonably exempted from income is heritable wealth for lower- and middle-class workers, which can improve the prospects of their offspring (e.g., education, home ownership, liberation from poverty) without reliance on government or third parties.

IMPACT ON "THE RICH"
The common complaint about "the rich" paying lower tax rates would similarly be addressed. "Excess savings" would generate "excess financial income" which would be taxed progressively. Similarly, by inverting a progressive rate for deductions, "excess deductions" would be given little or no tax credit, essentially tapering down as the total deduction increases. If the financial tax rates are similar to those for earned income, then the complaint is resolved.

CONCLUSION
By changing the broad incentives in the individual income tax, it is possible to incentivise labor and savings simultaneously without disincentivizing one over the other. This can lead to positive effects in the economy at the individual level, including greater resilience during downturns, fewer bankruptcies, greater long-term thinking about major expenses (including retirement), fewer complaints about the divide between "rich" and "poor", and lower reliance on government for assistance in current and successive generations of lower- and middle-class workers.

Disclosures:
I am not a fan of progressive rates. I instead advocate a tax on property (assets or wealth--I am undecided), since part of what the government defends is the integrity of property and the right of citizens to use that property in the way they see fit (subject to reasonable constraints). In place of income taxes, I would use a flat-rate consumption tax (exempting basic necessities) combined with a property tax. This reform idea is solely a way of improving our tax code in a small, simple-to-understand, incremental way, yet with significant positive consequences. I fully expect (and would demand) further reform.

I also make the assumption that rates would be set in such a way as to be revenue neutral overall from the old system to the new system. I don't have IRS data, so I am not making specific numeric recommendations.

Finally, any time I hear about the "poor", it is usually in a relative sense. I believe that we should have an absolute definition of poverty that is independent of the distribution of wealth or income, a definition that can be applied globally. For example, to what extent does one have food, water, shelter, clothing, medical care, education, etc.? Once we agree on what "poverty" is, then we can argue about who bears responsibility for assisting. But now that is a spending discussion, not a tax discussion.

In Memoriam: Angus, 27 August 2010

2010-09-07T23:06:00.004-04:00

He was a feisty kitty, born in rural Kansas amid tornadoes and thunderstorms. He travelled more than his peers, by road and air to California and finally to Virginia. He owned our local neighborhood, asserting dominance over all who walked in front of our house (including one of our clients and her two medium-sized dogs).

He was Kathy’s “deck buddy”, spending evenings and cooler days with her on the back deck, or on the lawn when she worked outside. Like other cats, he would lay upon us and assert his dining schedule over our sleep. He was (and we in return were) a source of warmth in the winter. He was Kathy’s companion of the past thirteen years and a founding member of our family. (I would not have been welcome had he not tolerated me from the beginning.)

He lived longer than most cats, thanks to the diligence and loving care Kathy gave. She once said that he had gotten her through veterinary school, and so it was proper that she get him through the struggles (and three near-death experiences) in his life. She did, and he did. God sent them to each other at a perfect time, and in His perfect time He took Angus back.

We are thankful for the time that we spent with him, and we are thankful for the luxury of sending him on from his comfortable home, surrounded by his loving family. We will miss him, and God willing we will see him again.

Rest in peace, little Angus. We send our love.

Restoring Honor Rally

2010-08-29T10:30:00.003-04:00

Went to the Restoring Honor rally in D.C. yesterday with family. Much has been said in the news about it, much of which leaves out the details and focuses only on the reaction of Al Sharpton and others who claim the traditional mantle of "civil rights activist." Additionally, there were many protestors holding derogatory, even vulgar signs about Glenn Beck or others who attended, and included one Boy Scout dishonoring his uniform in an unkind political protest.

The argument Beck made superbly is this: Good government starts in the home, with ourselves as individuals, with our families and local communities; and from this personal form of self-government arises leaders who exemplify the qualities needed for self-government at all levels, namely faith, hope and charity. If we would have good self-government at the state and federal levels, then we must begin with ourselves. John Adams would have approved: "Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." Also, "Because power corrupts, society's demands for moral authority and character increase as the importance of the position increases."

The weather was perfect for the occasion. The metro was so heavily used that I could not get into the train with Kathy's dad; I ended up walking the 600 yards or so to the station exit where he later emerged. The aerial photos of the event show the area immediately around the reflecting pond full of people, and the parks to the left and right where jumbotrons were also set up. The World War 2 memorial had a speaker set in place which enabled more people at that far end and across the street leading up the hill to the Washington Monument to participate. I have not seen any pictures showing how large the crowd below the Washington Monument was, so I cannot say how many were there. The crowd everywhere we went was calm and polite, helpful whenever anyone had to cross through to get to family, and exceptionally generous--one family behind us furnished a chair for Kathy's dad to sit on, to avoid the pains of getting up and down from the ground. (Thanks again for your kindness!)

We believe that we participated in something that will be remembered in the history books as a positive force for basic moral and political strength. I hope that people put down their protests until they have read or listened to what was said and done, and judge the event by what happened and not by who produced it. I think Martin Luther King would have urged the same.

Milton Friedman on Donohue: Socialism vs. Capitalism

2010-07-16T23:11:00.005-04:00

Found this after looking at a recommended interview with Ayn Rand. I used to watch Donohue, and as much as he is pushing in this interview to get Friedman to admit a flaw in capitalism, he shows respect for the answers. I also noticed that Friedman was comfortable enough to smile--that is good hosting by Donohue.

EDIT: See also the other parts of the interview. Here is part 1. Part 2. Part 3. Part 4. Part 5.

See also a year later. Donohue is more aggressive and openly liberal (see his personal frustration in places). Friedman is unflappable and polite (see use of "Excuse me" many times in both interviews.) Part 1. Part 2. Part 3. Part 4. Part 5.

I would like to have seen Friedman debate Paul Krugman, a more recent (and unabashedly liberal) Nobel Prize winner in Economics.

Thinking Dispositions

2010-07-09T23:09:00.001-04:00

While recently reading a review of Keith E. Stanovich's book What Intelligence Tests Miss: The psychology of rational thought called “A Taxonomy of Bias: The Cognitive Miser”, I was struck by this section:

[T]he reflective mind embodies various higher-level goals as well as thinking dispositions. Various psychological tests of thinking dispositions measure things such as the tendency to collect information before making up one's mind, the tendency to seek various points of view before coming to a conclusion, the disposition to think extensively about a problem before responding, the tendency to calibrate the degree of strength of one's opinion to the degree of evidence available, the tendency to think about future consequences before taking action, the tendency to explicitly weigh pluses and minuses of situations before making a decision, and the tendency to seek nuance and avoid absolutism.

There are seven tendencies discussed. I’ll call them out to make them explicit, rephrasing them as “best practices”:

Collect information before making up one's mind
Seek various points of view before coming to a conclusion
Think extensively about a problem before responding
Calibrate the degree of strength of one's opinion to the degree of evidence available
Think about future consequences before taking action
Explicitly weigh pluses and minuses of situations before making a decision
Seek nuance and avoid absolutism

Ben Casnocha wrote about the type of people who make breakthroughs when they are young. Jonah Lehrer covered the subject from another angle. Tyler Cowen covered the subject here.

All of these made me question what type of person I am. I believe that I am a conceptual innovator. I generally do not like the tedium of being an experimental innovator, although I will do so for certain specific subjects (like games that require one to build and defend over time and then deploy to achieve game-winning goals).

Here is my evidence.

On the seven tendencies mentioned above, I am very weak. I frequently “rush in where angels fear to tread”, trusting to my courage and God’s grace to carry me through. (I learned at a young age that “God takes care of fools and little children.” At age 36, I now distinctly fall into the former category) I have been a “know-it-all” for decades, rarely questioning what I say for truth. I believe that I have a better way of doing things, and I can never seem to explain exactly how I know it—it is intuitive. In reality, I am making a lot of simplifying assumptions, and holding as axioms a lot of ideas that aren’t really axioms.

My recent and most vivid memory of my fearless/stupid tendency came during a trip to Jamaica a few years ago. Kathy and I decided to take a zipline canopy tour with Chukka Caribbean Adventures. Somehow, we ended up nearest the first zipline while listening to the safety instructions, and I was chosen to cross the river first.

Now, a person strong in the above tendencies might think the following in that moment: I paid for this and am going to do it; I don’t want to look silly in front of my wife or all of these strangers; I don’t want to look like a wuss in front of the two guys leading us through this adventure; there are two ziplines I am connected to for safety; the other guy is on the other end and will make sure I land safely; and so on.

I didn’t do any of that. I stepped forward, said to myself, “What the hell”, and jumped forward. As I zipped across, I managed to look around for a couple of seconds at the people on inner tubes floating by below me before I diverted my attention back to the problem of stopping (which ended up being trivial).

How did I end up like this? Am I a genius to whom things come easily, or am I intellectually lazy? My opinion is that that I am some of both.

When I was in the sixth and seventh grades, my IQ was tested twice. The results were imbalanced: I scored around 140 for left-brain activities, and around 120 for right-brain activities. The doctor conducting the test described it approximately thus: “His left-brain is a Cadillac, and his right-brain is a Volkswagen.” (I drive a Volkswagen Jetta at the moment, so I’m not sure whether this is complimentary or not.) The imbalance, however, was not the problem. My reaction to this information was the problem, and it would impair my long-term development.

You see, I believed that I was a genius, like Mozart. I believed that it was enough that I would simply absorb and use knowledge. If something didn’t appeal to me, then I didn’t care about it, as I was probably smart enough already to handle it. Result: I didn’t do a lot of homework until I got to college and realized I wasn’t going to go anywhere unless I really learned the material. So much of education and learning is about repetition, the kinds of things that experimental innovators do well at.

The truth is that I cultivated my intellectual laziness for more than a decade. It cost me my grades, nearly cost me a chance to go to a good college and to qualify for an engineering major. I learned a lot in my first years in college and on the job, but most importantly I learned that I do usually have to work hard to learn. As a result, I have learned to blend conceptual innovation with experimental innovation: I grind through daily work, but I still let my mind wander whenever I get a chance hoping to spark my creativity and leap ahead; I teach myself statistics and modeling, higher-order economics, business and accounting, and law, and put all of these into practice.

Now I look at the seven tendencies, and I realize how much farther I still have to go. Kathy is a very good example, though, so I have a role model to observe.

I think the lesson for others is to not let innovative tendencies overwhelm experimental tendencies. The super-geniuses at extreme poles of these tendencies might disagree, and perhaps be hindered by not treating these mutually exclusively. But for the rest of us, I’m willing to bet that we need both tendencies to survive and thrive.

The Role of the Supreme Court

2010-06-30T22:51:00.003-04:00

Words of wisdom from a man who knows his history and the inner workings of the halls of government:

The entire supreme court idea has turned into a joke. The notion of a body dedicated to a more or less objective determination of certain things has been manifestly out the window for many decades. (If it ever really existed in fact rather than just the jurists' sense of self-importance). If it were really that kind of body, the ideological orientation of [a] new member of the court would not be as crucial as it is. But in fact the court has become the supreme legislative body of this country, from the decision of which there is no appeal. Thus, along with this role of the court, the notion of three coequal branches of gvt and a "separation of powers" has become a myth. The court is somewhat like the board of directors of a large company that makes all the major policy decisions, and then there is the executive (in this case congress and/or the presidency) which sort of more or less takes care of the implementing measures.

It is in fact almost the quintessential tyranny: Nine unelected people, serving for life, unremovable and unaccountable, have the unappealable power to decree whatever they wish to decree. The only requirement on them is that they must muster a majority among themselves and must cloth[e] their edicts in legal language and mumbo jumbo, pretending to a nonexistent degree of objectivity and "science".

So we have the spectacle of a 5-4 vote on gun control. Here is one person (One!) whose vote defines what is to be the "eternal verity of the constitution". If that one person would have been another person or if he/she had felt different that morning, "eternal verity" would have been the opposite of what was decided. So why bother with elections and other ways of counting what the people want?

There are so many problems confronting this country. But perhaps one of the most fundamental ones is a lack of realism. Its people pretend that they are governed by one system, when in fact they are governed by one in many ways closer to its opposite. How can things be set right if we are lying to ourselves?

My conclusion: The only saving grace, then, is that the courts are limited in practice to deciding cases put before them. (Although they can and sometimes do make a bigger issue--and make a bigger ruling--than the case calls for.) And perhaps they want the fiction of impartiality to survive, which deters open dictatorship.

I will dig up more from this excellent philosopher with whom I correspond and post more.

Carbon Taxation

2010-06-28T21:38:00.004-04:00

Last year, I explained to a co-worker that the way to incentivize solar and other forms of clean energy was to disincentivize carbon-based, dirty energy. Sounds simple. In fact, it's as simple as raising taxes on all forms of energy until the cost per unit is equalized.

For those who are not economists (like me early on), these are called Pigovian Taxes. The idea is to internalize (into the price of energy) the externalities of pollution and other negative factors of energy production and use.

The Economist ran a great article that reminded me of the downsides to a Carbon Tax: The politicians will use them as just another source of revenue. It's not enough to say that the tax revenue will be used to remediate the externalities. It just never seems to happen that way. Politicians are addicited to spending tax money the same way as a spendaholic with a millionaire's credit card. It's just too much for them to have self-control.

Too bad. A Carbon Tax gradually put into place over twenty or so years would give investments in clean energy a positive return on investment without necessitating massive government subsidies.

Immigration into the United States

2010-06-28T20:55:00.005-04:00

One of the blogs I like to read is by Harrison Brookie (Bottlenecked: slowing down to move forward). Earlier this month he wrote a candid post about why he supports immigration, and also shares his concerns. He posted again on the topic almost two weeks later.

I commented on each:

On your point (1) Wages may be driven down only so far, due to minimum wage laws. Greater demand for jobs will lead to greater unemployment. Combined with your point (5) would mean government ruin.

On your point (2) There is a good lecture video from NumbersUSA (part 1, part 2) that applies queueing theory non-mathematically to the immigration problem (uses gumballs and jars). There is significant investment required to provide infrastructure (roads, schools, utilities, etc.) for new population (indigenous and migrant), and so total growth rates must be affordable (using savings--which there is little of municipally--and debt issuance--of which there is already a lot and which must be repaid through tax revenue). Hence the need to control the rate of migration (unless you are China and can also control indigenous population growth).

On your point (3) If migrants find enclaves (like Hispanics in the Southwest) large enough to avoid assimilation altogether, your point (4) kicks in. Are we really a nation at that point? Can we prevent this forseeable possibility through robust immigration policy?

On your conclusion: Would you want to be one of the ones bearing the cost of the transition? Would you want government policy to ease your pain by spreading it around?

My father-in-law legally migrated to the U.S. after WW2. Immigration policy that rewards law-abiders and punishes law-breakers creates the incentives and disincentives migrants need to succeed in our country. Letting illegal immigrants off scot free is an insult to the law-abiding migrants who worked with the system we put up to control the process. Immigration policy should also consider national security concerns. Both of these aspects are not embodied in the basic theory of immigration espoused by economics. It's an incomplete model, though, not a flaw.

And again:

I'll repeat one of my concerns from the earlier post: The government (at all levels) today has provided a regulatory and social welfare environment that did not exist in 1905. It is inconceivable that the immigrant today would assimilate the same way as a century ago. The level of investment required to provide infrastructure, and the level of taxation required to provide transitional welfare benefits, and the barriers to entry into small business, are all stacked against unlimited migration, for moral reasons or otherwise.

This morning, Steve Chapman posted in his column Citizenship Should Remain a Birthright on Reason.com. He writes in favor of "soil citizenship", but the comments ultimately proved more interesting.

There were four models posited in the comments for citizenship: 1) Soil citizenship, 2) Citizenship by choice at the age of majority, 3) Citizenship by parentage, and 4) Immediate Citizenship. (A fifth was alluded to, via a Gattaca reference: 5) Citizenship following service to the State.)

Some of the commenters raised my points concerning our social safety net. (Being a libertarian site, the commenters welcomed the cost as hastening the end of the welfare system.) This is I think the chief impediment to unlimited legal immigration (and by extension, unchecked illegal immigration). It all comes down to queueing theory, the mathematics of which are well established: The net intake rate cannot exceed the nation's ability to afford the transition period from net-tax drain to net-tax provider.

All very good reads. I lean to (3) Citizenship by parentage.

Subsidizing Rights

2010-06-28T20:03:00.002-04:00

I noted today the decision by the Supreme Court to extend the Heller v D.C. Second Amendment protections to the states and municipalities. We have the right to bear arms!

I note that the decision was 5-4, and that Justice Thomas preferred a different route to the same end (i.e., the Privileges and Immunities Clause instead of the Due Process Clause). As I mentioned to friends following the Heller decision, given so much 18th and 19th century evidence in favor of the Heller interpretation (read the Scalia opinion (PDF) in the case), how did four justices get it so differently?

The Founding Fathers were very clear that they wanted an armed populace that could defend itself, not only from invasion or crime, but also from the tyranny of government.

So let me now be satirical: Since health care is a right that the government must subsidize for moral reasons, let's fund subsidies so that everyone can exercise their basic right to bear arms! Those that cannot afford arms should be provided a subsidy to purchase and train to use arms. Those who can afford in plenty should be taxed to provide the subsidy. After all, it is not fair if only the rich have arms. Not only that, but everyone should be able to afford the same minimum standard of arms, so that their right is not impaired by poor quality.

Arms for America Now! Nothing less than your right to life, liberty and the pursuit of happiness is at stake!

Joint Forces Air Show: Blue Angels (Closeups)

2010-06-25T22:28:00.002-04:00

This is my best shot! Color, composition, focus--everything came together in this shot. I picked this out of a sequence of a dozen photos of them passing in front of us. I have another like this where they are in a tight diagonal, but this one illustrates the precision of their flying best.

The detail photos below show the sharpness I was able to achieve digitally zooming into the photo. The second photo demonstrates my evolving skill as a photographer.

The third photo demonstrates best just how close they are flying. I am willing to guess that the top of the canopy is about a foot from the bottom of the wingtip. These are the best pilots in the Navy/Marine Corps. The showed their stuff at this air show and wowed the crowd (Kathy and me included).

Joint Forces Air Show: Blue Angels (Crossing Shots)

2010-06-25T22:22:00.000-04:00

It is very hard to get crossing shots. Last year, I was able to get some of the Thunderbirds perfectly crossing, but I had not yet learned how to focus correctly, nor set the shutter correctly, so they were unacceptably blurry!

Kathy helped me by keeping a lookout and counting down to when the crossing was going to occur. I eventually figured out that the planes were crossing in front of us more or less over a precise point (show center, which is astonishing for the consistency with which they repeated this feat), and that helped me prepare nearly well enough.

This year, as many as I tried, only three came out close. I'm either a moment too early, or a moment too late, or I have pointed the camera too far off-center and cutoff the subject somehow. See these three examples: The first two are taken just a moment apart. The third is taken a little later.

Joint Forces Air Show: Blue Angels Pictures

2010-06-25T22:15:00.000-04:00

Kathy and I went to the Joint Forces Air Show at Andrews Air Force Base on May 16. I took a lot of photographs! In this and the succeeding two posts, I'll show some pictures I took of the Blue Angels in flight.

These are hard shots to get right, and I screwed up by setting the ISO (sensitivity) to 1600. The result is slightly noisy (grainy) photos. I did get the shutter speed in the correct zone (~1/2000 to 1/3200 sec), and I learned how to first manually focus on a distant object on ground, so the photos are sharp and in focus.

Getting the composition correct involves some luck, especially when the aircraft are approaching from different directions and maneuvering simultaneously. (More photos of this nature later.)

The Bully Pulpit

2010-06-23T15:38:00.004-04:00

"Everyone who favors repeal is welcome to come talk to these people and tell them why we should go back to . . . the way things were. But you're going to need to explain why they and tens of millions of Americans should have their rights taken away." --President Obama

The Washington Post reports today that President Obama met with Health Insurance CEOs on the 90th day since passage of the health care reform law. He warned them not to increase rates simply because of the new law. Is this an appropriate use of the bully pulpit?

Fact: The law removes co-pays for preventive care.

Fact: The law removes annual and lifetime caps for care.

Fact: The law removes exclusions for pre-existing conditions.

Fact: The law mandates coverage for adult children through the age of 26.

There are more facts, but these are sufficient to support the claim that regulatory requirements will increase health insurance premiums.

The quotation is also telling: Health insurance is a right. If you want to repeal the law, you want to take away the right to health insurance that the government just granted.

This is nothing more than emotionalism substituting for rationalism. Just what does an emotional government do when it can't afford to do it all? Tax people it thinks are bad for society? Borrow indefinitely from anyone who will loan the money? An emotional government cannot say "no"; it knows no constraint. A rational government says "no" in response to priorities and constraints; it's not personal.

It's not personal, President Obama. We want to repeal the health care reform law because it's bad regulation (as written) and poor fiscal policy.

One more thing: A right never imposes a duty on another citizen. You've made health insurance a privilege, not a right. Get your vocabulary straight, please.

Day 2: Luray

2010-05-23T13:33:00.002-04:00

This is the view from the back deck of our cabin in Rileyville. This particular porch is entirely enclosed (no access to ground), so it is safe to let Merlin (left) and Scarlett (right) off leash.

We spent this morning in Luray, again catching the weather just right. The National Weather Service forecast rain after 12 PM. It hit Luray around 12:15 PM as we were finishing our lunch at the Luray Hawksbill Greenway.

We hiked the Greenway earlier from end to end with the dogs. We met many friendly and pleasant people along the way who were also enjoying the beautiful weather in this magnificent park. At one point near the rail trestle, Merlin sniffed closely at something on the grass by the walkway. I walked over and realized that it was a snake's tail. I quickly backed him away, and we warned several passersby. One confirmed that it was a copperhead, a common poisonous snake in Virginia. Another later confirmed that just last week two copperheads had been curled up together near the same spot. We came very close to ending our vacation if Merlin had been bitten.

We stopped in the visitor's center located in the old train station. They have not completed filling the building with historical displays, but the older gentleman who was at the visitor desk was very kind and helpful. I did receive directions to Lake Arrowhead in the country format (a string of "go right at the intersection past the" ...), which mostly confused me, but such is what you will find in a historic and still small town like Luray. Folks like me need a map. I can do it without the GPS, thank my Boy Scout training.

We'll have more rain this evening, but we have another, harder puzzle to put together and other games to play. That should keep us vacated and yet not bored.

Rain in the Shenandoah Valley

2010-05-22T15:33:00.003-04:00

The rain is lightly falling this afternoon in the Shenandoah Valley near Rileyville, Virginia. We interpreted the weather forecast hopefully this morning and got out early to Shenandoah State Park. We were prepared to pay the $4 entrance fee at the gate when we were handed a bundle of papers and told "Welcome to Parkfest!" and "No charge today."

We spent nearly three hours hiking trails west of the park. We ended up out of our reckoning two hours in, before "correctly" orienting ourselves to return to the parking lot. I quote "correctly" because the trail map was not in synch with the trails. One could argue that we were not in synch with the maps and the trails, but this would run counter to the best efforts of two intelligent and experienced hikers. We normally go to the YMCA for exercise, but this hike covered us nicely.

Did I mention ticks? After we exited the grasslands, with twenty minutes to go in the hike, we pulled aside and examined our dogs and selves for ticks. Nearly a dozen each were on the dogs--the strangest location was on Merlin's lower lip--and nearly a dozen more were clinging to Kathy and myself. Upon our return to the car, we went through this again, pulling off a dozen more from the dogs. Running through the tall grass is a great pleasure for the dogs, but just walking through it is sufficient to become infested. Ticks are very good at hiding, so it is difficult to detect them. Kathy has the most experience, being a veterinarian, so she did the second, more thorough examination, while I did the first, more cursory examination.

Afterwards, we drove across the park to where the South Warren County Fire & Rescue Company was selling food to raise money for a new pumper truck. We were pleasantly surprised by the prices, which were a quarter of what typical event vendors would charge back home. The people representing WCFR were extremely cordial, and it was a pleasure to be a part of their event. While we ate, a local group called "Loose Strings" played acoustic melodies that sounded as if from long, long ago.

As we drove back from Front Royal following a quick trip to the grocery store, the rain began falling in this picturesque valley. It is easy to see how the Blue Ridge Mountains got their name.

Lawn Care for America Now

2010-04-26T18:53:00.014-04:00

This weekend, I witnessed a modern American Tragedy. My neighbor, a single mom with two kids, was forced to send her son across the street to our Hispanic neighbors to borrow their lawn mower. She then spent nearly two hours drudging up and down her front lawn, suffering more each time she had to go into the front ditch to mow.

When all was finally done, dark had fallen. She shutdown the lawnmower, called to her son, and instructed him to return the mower to our Hispanic neighbors.

How, I ask you, do we allow someone of these tragic circumstances be forced to mow her own lawn and to beg the use of a mower from immigrants to our great country?

Clearly the free market is not functioning properly. This woman could not afford to pay for what is fundamentally a basic human right: she was unable to hire a professional lawn service, with their superior lawn care knowledge and equipment, to ease this strain on her existence.

That's why I am founding Lawn Care for America Now. Don't let this overburdened single mother suffer, nor the infirmed, nor the elderly, all for want of a few dollars to hire someone to mow their lawns!

The mission of Lawn Care for America Now is to lobby Congress to recognize the fundamental human right of every person to live with dignity by getting access to quality lawn care. Like the recently passed Patient Protection and Affordable Care Act (PPACA), Congress should pass the Homeowner Protection and Affordable Lawn Care Act (HPALCA).

The HPALCA, like the model PPACA, would provide means-tested subsidies to low-income, disabled, and other disadvantaged citizens so that they can exercise their basic right to quality lawn care.

This bill is very important to the continued vitality of America. Many advantages immediately become obvious:

More Jobs: Lawn care jobs cannot be outsourced. This bill would directly reduce unemployment by increasing the number of lawn care specialists, and increase investment in lawn care capital equipment and durable goods and create related manufacturing jobs (in the U.S.A., naturally).

Improved Health: So many people suffer from lawn-related allergies that the cost of treatment and prevention is measured in the tens of billions. Expensive drugs from profit-seeking drug companies are regularly dispensed to suppress allergic reactions and to thwart asthmatic illness. By reducing the number of people regularly exposed to lawn allergens, this bill would reduce health-related expenditures related to unfortunately allergic people being forced to provide their own lawn care. Further, by shifting the labor to those who are more physically fit for the job, this bill will reduce the incidence rate of heat- and stress-related injuries and illness, which needlessly shorten the lives of those most at risk.

Increased Efficiency: Each year, Americans spend hundreds of millions of hours performing lawn care with inefficiently utilized equipment such as mowers, trimmers, edgers, and more. With low utilization rates, much of the maintenance of this equipment is forgotten, shortening the useful life of these assets. Additionally, ordinary Americans must individually bear the expense of purchasing this equipment, paying a relatively high cost for equipment of minimal effectiveness. Professional lawn care equipment does not suffer from this last penalty, as a little more outlay often brings significant benefits. Sadly these benefits are beyond the means of ordinary Americans. This bill will lower the cost of lawn care by efficiently allocating professional-level equipment to lawn care professionals who will achieve high utilization rates, thereby reducing the risk associated with investment, and will allow lawn care professionals to offer access to more services at more affordable prices.

This bill would necessarily require all homeowners to subscribe to lawn care services provided by licensed lawn care professionals. This requirement would benefit consumers in two ways. First, it would spread the cost of lawn care across a larger subscriber base, making it more affordable to lower income homeowners. Second, it would ensure that the lawn care received by homeowners meets minimal quality standards, providing a form of necessary consumer protection.

The bill would also create new and minor taxes on lawn care equipment and services in order to fund the subsidies for lower income homeowners. These taxes will be borne by the equipment manufacturers and lawn care professionals and their profit-seeking shareholders.

There are some who will say that they enjoy performing their own lawn care. There are others who will say that the subscription requirement will cost them more than their lawn care presently costs. Still more will say that they do not need the level of service anticipated by the bill, being willing to accept a lower standard of lawn care. These are half-truths spread by the opposition, who would leave single mothers like my neighbor to fend for themselves in a harsh and unforgiving world.

Remember my neighbor, your parents and grandparents, the wounded veteran, and those with special needs. Join our cause! Donate generously to our group, so that we can work to influence more with our common cause! Contact your elected officials, and make sure they understand how important the passage of this bill is to the welfare of millions of disadvantaged American homeowners.

Together, we can win!

[EDIT: Added heat- and stress-related injury and illness.]

Government Tilting the Playing Field

2010-04-20T18:37:00.006-04:00

Got a postcard from the IRS to my small business today touting "the recently enacted Patient Protection and Affordable Care Act", saying that it "could earn you a new tax credit this year for providing health insurance for your employees."

On the reverse, it explains that "eligible small employers could qualify for a credit worth up to 35% of premiums paid in 2010 (for businesses) or 25% of premiums paid (for tax-exempt groups)."

In order to qualify, I must have fewer than 25 employees (more if I have part-time employees), and less than $50,000 in average wages.

Here's my complaint:

My small business (a veterinary hospital) will be open four years in September. We have around ten employees, split around 50-50 between full and part time. This is the minimum staffing for our business to provide the required standard of care, whether we see patients or not (i.e., whether we have revenue or not). Thanks to an unforseen and powerful recession, our profit is less than one week's revenue and incredibly unstable.

My wife is the chief doctor and receives no compensation yet. (No stable, significant profit means no compensation for the doctor-owner). Our second doctor is compensated according to industry standards (approximately 25% of gross production). Our staff is provided a steady number of hours each week at competitive wages to honor their need to keep on budget at home. We provide time off for full-time employees, and hospital discounts for all employees.

The thing is, not one of our employees wants a group health plan. Some are covered under spousal health insurance plans. At least one detests being in a group plan for the extra expense brought by other employees, and so has an individual plan of her own choosing. Our solution is to pay a cash benefit to full-time employees to help cover the costs of health care. There is a provision in the federal tax code that allows this to be tax-free to employees under specific circumstances, otherwise it is treated as additional wages.

Here's the problem: The tax credit offered by the Act does not apply to my business!

How does this tilt the playing field? My competitors who are larger and have group health insurance plans will have a major labor expense subsidized.

I cannot and will not force my employees into a group health plan in order to get this tax credit. They don't want it. It would be an affront to their individual liberty to do so, would be unethical on my part, and would likely be illegal under state and federal law.

Through no action or inaction of my own, my competitors will receive thousands of dollars in subsidies to provide a benefit they already provide out of revenues. In times of rising medical supply costs (even for veterinary hospitals), this subsidy will allow my competitors to consider passing on fewer of these cost increases in their prices. At best, it will provide additional income to the owners at taxpayer expense.

This hardly seems the object of the Patient Protection and Affordable Care Act. Yet it is a foreseen (and foreseeable) consequence. The federal government wields blunt instruments.

Our situation is but one of many unintended consequences of governments of all levels intervening in the marketplace. Even local government is not immune to tilting the playing field.

Dan Telvock, writing in his blog on Fredericksburg.com on March 24th and in later posts, details how yet another company is being offered multi-year tax rebates simply for locating in the county. What a slap in the face to the rest of us who have already located businesses in the county! Are the jobs we create less valuable than the jobs another company brings in?

Economists will call this creating incentives at the margin, but there are costs to these incentives. In this case, local government is taking a lot of "little bits" from me and many others to give "a lot of" preferential benefit to one private entity. Furthermore, it arouses ill-will in the existing business community. What assurance do we have that the deal is being considered solely on merit? There can be none!

In truth, the playing field has been crumpled and tilted in so many ways, that it is impossible to know whether the net benefit to my business is more or less than it would be if the field were level. The fact that the situation is so obscure makes possible rent-seeking by lobbyists and "good ole boys". In plain language, it is easier to hide gains from having the field tilted in your direction.

After all, what the public does not know cannot hurt them, right?

Brimstone Hill Fortress National Park

2010-04-19T23:19:00.002-04:00

Known as the "Gibraltar of the West Indies", Brimstone Hill was built by the British to defend their "middle third" of St. Kitts. Eventually, they took the whole island, but until not after the French (who had the other two thirds) had taken Brimstone Hill at least once. This is a UNESCO World Heritage Site and is worth the thirty minute drive.

Go early in the morning to avoid the rush from the tourists. (Ahem, we are "explorers" and "travelers" on our journeys; never call us tourists, no matter how much we stick out.)

As usual, get a taxi and ask lots of questions on the drive to and from. We had a taxi driver (Leo's Taxi Service, christopherom at yahoo.com, 869-764-3387) who knew more about his island than we could have dreamed of asking. He also knew a fair amount about American History. As it happened, when we told him we were from Virginia, he grew very excited and exclaimed that it was James Madison's birthday. He asked if we had been to Madison's home (Montpelier)--we have, as it is in neighboring Orange County. This is the kind of experience we treasure, and it is not often found on tour buses.

Departing Basseterre, St. Kitts

2010-04-19T22:59:00.002-04:00

Kathy has a very good sense of how to get night shots that bring out an artistic reaction. These two photos were taken as we awaited departure from St. Kitts. We were unexpectedly delayed by three hours as we took on fuel from a barge. This gave us time for astrophotography (didn't turn out too well) and these two samples.

English Harbor, Antigua

2010-04-19T22:53:00.001-04:00

This is a view of English Harbor and Falmouth Harbor (beyond the causeway) in Antigua. This photo is taken from one of the three outposts on Shirley's Heights.

In English Harbor proper is Nelson's Dockyard, so named because Admiral Nelson was commander here for some time. The dockyard is a well-preserved historical site that offers insight into the workings of a Caribbean British naval base in the Age of Sail. It is best to first go to Shirley's Heights to watch the worthwhile presentation prepared by the Antiguans.

Whether with a tour group or going independently with a taxi driver, ask lots of questions on the way to this side of the island. It takes about half an hour to get here from St. Johns (the capitol), and cuts through the heart of the island.

A view of Signal Hill on Pigeon Island, St. Lucia

2010-04-19T22:45:00.002-04:00

This photo was taken from just below Fort Rodney, on the lower of the two peaks on the island. The resort on the causeway to the island is a Sandals resort.

Part of what is interesting about this picture is the difference in vegetation on the saddle point between the two peaks. On the ocean side (left in photo), the vegetation is rough and scraggly. On the harbor side (right in photo), it is composed of more grasses and trees. I wonder if this is a salt spray effect?

High Dynamic Range Photography: Inside the Cathedral in Old San Juan

2010-04-19T22:40:00.003-04:00

This picture was taken inside the cathedral in Old San Juan. This is my first attempt at creating a high(er) dynamic range picture. This is a combination of three photos using "exposure blending." I shot three images, bracketed by 2EV each. In a normal exposure, the madonna in the alcove is washed out. Using this method, as semi-automated by a GIMP script, it was possible to have the full range of detail.

One lesson I learned from several attempts is to use a tripod. In many cases, I shifted or rotated the camera slightly, resulting in an imperfect alignment that is difficult to correct. I gave up on several of my hoped for HDR photos, but I will do better in the future!

2010-04-19T22:34:00.002-04:00

A view of the harbor in San Juan, Puerto Rico as it leads past Old San Juan to the sea. This is part of the walking tour of Old San Juan. We are standing right next to the Governor's Mansion (not pictured), one of the oldest dwellings in the New World.

We found that we could drop our luggage at a restaurant named Barrachina, home of the first Pina Colada, located just two blocks from where this picture was taken. Not only are they very nice to hold our luggage (for a nominal "tip", payable in advance), but the food is authentic and excellent. It was a nice way to end our cruise last month, as we waited to depart by plane later in the afternoon.

The View from Signal Hill, Pigeon Island, Saint Lucia

2010-03-26T22:53:00.001-04:00

This image is a panoramic that I put together using Panorama Factory and shots from the top of Signal Hill on Pigeon Island in Saint Lucia. It's quite a hike to get to the top of this hill, but the view is spectacular.

Many years ago, when the Rodney Bay marina was constructed, they removed the sand and used it to build a causeway linking the island to the mainland. Since then, Sandals resorts has built a lovely hotel on the causeway, which some of the locals resent encroaching on this even lovelier historic national park.

This island has a lot of history. It was fortified by the British as a defense (and implied threat) against the French on the nearby island of Martinique. Fort Rodney, on the lower peak of the island, was the primary walled defense, supported by gun emplacements in the saddle between the two peaks. Signal Hill was used to display large signal flags on a tall flagpole so that distant friendly ships could receive messages. Near the present causeway are the ruins of the extensive headquarters and support buildings built to support the island as a major naval base.

Regrettably, Saint Lucia is undergoing an extreme drought, so all the foliage and underbrush is dry and brown. This is most unusual for this island, which normally boasts extensive rainfall and lush vegetation. The situation is so dire that the government is rationing water, cutting off service to various areas for several days at a time, unannounced and for uncertain duration each time. The locals still use water barrels, and so are generally able to coast through each rationing period. Nevertheless, it puts an incredible strain on their ability to host tourists, which is by far their greatest export.

Kathy and I hope to return to Saint Lucia a third time, when there is more rain and more green. Until then, we pray for them to receive good rains.

Quote of the Day: The Slaughter Rule

2010-03-10T22:26:00.002-05:00

"Why not just get rid of the Constitution altogether, adopt the sham legislative procedures of a banana republic, and drop the pretense that we are a nation governed by the rule of law and certain specifically prescribed political procedures? That would be preferable to enduring this current charade and insult to the electorate being undertaken by the Democrats." --Guy Jones, commenting on the article referenced below.

Read more at the Washington Examiner

Quote of the Day

2010-03-03T09:57:00.004-05:00

"The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with most unnecessary attention but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."

-- Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Volume 1

Justin Wehr asks philosophical questions

2010-02-22T12:43:00.003-05:00

Wehr in the World is asking questions about wisdom.

Here are the questions and the answers that I submitted:

Question 1: What is a good parent?
A good parent realizes that their life was fundamentally altered when their child was conceived. They re-prioritize their life to make the education (in knowledge and wisdom) of their child(ren) their most valuable long-term goal. They are, in fact, influencing the life of their child(ren), their own life (in the event of age or disability), the lives of everyone their child(ren) will come into profound contact with, and very probably a line of succeeding generations. A good parent balances the individual needs of the child(ren) with familial and societal needs, which vary by person, family, and culture. This involves constant discipline and action. In the end, a good parent teaches their child(ren) to be independent thinkers and doers, capable of achievment.

Question 2: How can one tell if one is in love or infatuated?
Infatuation is a gut reaction of desire; not wrong or right, it just is. Love is something altogether more difficult to comprehend. There are many types of love--for self, for parents and siblings, for spouse, for children, for friends, for ideas, for country, etc. The distinguishing characteristic about love is the presence of the spirit of "giving" in addition to "desire."

Question 3: How much love should one have for oneself?
Enough to appreciate one's qualities, but not so much that one becomes prideful. Enough to accept one's faults, but not so much that one never strives to improve.

Question 4: Should one worry what other people think?
Worry? No. Be concerned? Maybe. Any action one takes that affects the well-being of others should involve concern. Otherwise, it is probably not any of their business, and concern on their behalf is a waste of effort.

Question 5: What should one do when anxious?
Pray. Seek counsel from references, either books or people, from memory or otherwise. These things and people are called "references" for a reason, as they provide a reference point for our own feelings, knowledge and experience. Anxiety is tied to impending uncertainty or unpleasantness, neither of which one wants to experience. Mastering the anxiety is the key to continuing on. Mitigating the causes of the anxiety and their effects provides action, which is soothing in and of itself. Just don't give up.

Question 6: How should one deal with death?
Above all, with honesty. If another has died, one must accept what has occurred, regardless of why. One must move on with life or else follow the deceased. If one's own death is pending, one must accept what will occur, regardless of why. One must complete preparations for death if possible, but once that is concluded (or while it is in others' hands), one should embrace the life that remains.

Question 7: What should one do if one is shy?
Find and hold fast a small group of close friends and family. There is no need to be outgoing with everyone, so long as one has at least one other person in life as a good and true friend. Do what must be done in public life, be polite with all, but be not ashamed for being shy.

Question 8: How should one end a relationship?
I have never done this properly, and consider myself unwise in this respect.

Question 9: How can one live happily with other people?
I am still learning how to do this, and consider myself unwise in this respect.

Roger Ebert

2010-02-19T23:32:00.004-05:00

This wonderful look at the life of Roger Ebert caught my attention. What I find most amazing is that a man who has endured so much pain can still find so much joy in life.

Because he can no longer speak, he writes notes on scraps of paper or has his computer speak his words. What is interesting is the effect on his anger. He will still become angry, but the moment passes him more quickly because of the effort required to communicate it. Perhaps there is wisdom in counting to ten before releasing our anger, as it may really evaporate more often than not.

Also quite moving is the story of his relationship with Gene Siskel, his first television partner. He has spent considerable time in his online journal remembering Gene. They were opposites in many ways, argued much, but were connected somehow by a shared destiny. They were the best of friends until the day Gene Siskel died. While showing to an interviewer the journal entry containing a video of his first show after Gene's death, the video was unexpectedly reported deleted. This sent Ebert into a towering rage, typing on his computer the equivalent of "standing on the street corner ... arching his back and ... shouting at the top of his lungs." I have no doubt that whoever deleted the content received hell for it soon after.

Roger Ebert does not believe in any afterlife. He knows that he is "dying in increments." But he goes on living and working and enjoying what is left of his life.

I do believe in the afterlife. This will not stop me from drawing a lesson from Roger Ebert's life:

My belief in a paradise after death should not stop me from "sucking the marrow" from the life I have on earth, no matter how good or bad my life becomes. This does not mean, "eat, drink, and be merry, for tomorrow we shall die." Rather, I should treat life as a precious gift and not let a moment go to waste in despair and despondency. "To despair is to turn one's back on God." It also wastes the gift of life.

Bonus: Here is a review of the Esquire article linked above. It records some of Ebert's reaction to the article. It seems to have been cathartic.

The Law and the Profits: Part 4

2010-02-17T21:30:00.006-05:00

Finishing up Chapter 1. This is such a rich chapter that I don't mind having spent four posts getting through it and the preface.

To summarize all that went before, "the public revenue is regarded as limitless[,] and expenditure rises eternally to meet it, and the various devices which are supposed to check expenditure fail to do so, being wrongly conceived and imperfectly motivated."

What to do? "[R]e-motivate the people actually concerned, penalizing the extravagance we now reward and rewarding the economy we now penalize."

The crux of it is this: "Ministers should not begin by ascertaining what the departments need. They should begin by asking what the country can afford to spend." Much like household budgeting.

Without specifying a value for the ideal tax revenue to GDP ratio (more in chapter 6), he identifies this as a critical metric. "What proportion of the national income should the government demand? What proportion of the individual's income can the government safely take? And what happens when that proportion is exceeded?" He asserts that economists have been actively shying away from this problem, which has the unfortunate side effect of letting government believe that "where government expenditure is concerned, the sky is the limit." I have read many news articles recently where the ratio problem is accepted as true and bearing real adverse consequences. Perhaps this is a sign that economists are not shy about this problem any longer.

The natural advantage of this method of tax revenue budgeting is that it necessarily limits expenditure. This makes it easier for the legislature to allocate funds, under ideal circumstances. This is a consistent grain of salt that must be applied while reading this book: Prof. Parkinson sounds a lot like an idealist, and may very well have been. This can undermine his suggestions on grounds of impracticality, although he often anticipates this response (especially from the civil service) and offers advice on how to get round the opposition.

The second advantage is that expenditure can (should?) become flexible within each department and sub-unit. The reason for this is as follows: Ministers are responsible for achieving goals; more goals can be accomplished on a fixed budget if ministers economize; if promotions are based jointly on economy and goal achievement, then ministers (and subordinates) are competitively prodded in the direction of less inefficiency and waste.

To oversee the ministers, the Treasury department, instead of "divided control", can employ the "strong leash of account and audit." (This creates an efficiency in and of itself by eliminating a lot of overhead.) The minister is then "compelled to accept responsibility, free to display initiative[,] and forced to recognize that cost and value are but two aspects of the same idea."

As mentioned in an earlier post, enlisting the public (as the ultimate overseer of government) is vital in the prevention of waste. He suggests an official tribunal, composed of private citizens and at least one government representative, to receive all proposals for saving money. Upon detailed review of each proposal, including hearings with the public and with the affected departments, they can conclude the feasibility. Each favorable decision would lead to a "ministerial order to the department concerned to reduce its future allocation by the amount to be saved." The tribunal would also reward each successful applicant, such as through tax credits proportionally related to the amount of the saving. He also suggests that all savings be used to repay the national debt. It seems clear that the savings that would go through the tribunal are sizeable compared to the savings that each minister might find within their own department as part of the goal achievement competition.

To combat the "formidable opposition"-- "a closed phalanx of civil servants representing one of the strongest vested interests in the world"--there is not yet in the book a suggestion for victory. There is a history of rebuffed reform attempts from 1570 onward, a brief chronicle of the rise of "esoterrorism" (a blend of "esoterics" and "terrorism"). "Let no one imagine that this citadel will yield to the first assault. Let no one doubt, however, that it will yield to the last."

Next time, the types of taxes through history.

"Why are liberals so condescending?"

2010-02-10T15:45:00.005-05:00

I was startled to come across this article in the Washington Post asking the question, "Why are liberals so condescending?" Within, Gerard Alexander examines statements from the 1950's forward that cast conservatism as "more of a psychiatric disorder than a rival."

Comments were closed, so it is difficult to know how other readers are responding to the article. I don't believe that every liberal is condescending, just as I believe that not every conservative is without guilt in destroying civility in public discourse. It is definitely a problem, however, when liberals appear to be running two out of three branches of the federal government.

I may not be the most intellectual conservative-libertarian, but I do not need liberal pity and condescension for my beliefs. I'd like to see leading liberals (and conservatives and libertarians) roll up their sleeves and talk about more facts and fewer opinions.

Here is a response article from Dan Kennedy in the U.K.

The State of the Union: Campaign Finance

2010-01-28T09:21:00.002-05:00

Last night, the President stated:

With all due deference to separation of powers, last week, the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.

I don't think American elections should be bankrolled by America's most powerful interests or, worse, by foreign entities. They should be decided by the American people.

He received much applause from the floor, but earned a quiet "Not true" from Justice Alito.

Laying aside the issue of trying to intimidate the Justices and whether corporations are politically "people", there is a simple flaw in the President's argument. He fails to acknowledge the behavior of national and state parties and associations in crossing state and district lines respectively to imbalance elections. Imagine a scenario where House candidates only receive funds and volunteer assistance from within their district, and where Senate candidates only receive funds and volunteer assistance from within their state. This is a fantasy, far removed from the truth of how campaigns are financed.

Let's face facts. The national parties are special interests in local and state races. Out-of-state corporations and associations are "foreign entities" under state laws. We have the fundamental rights to associate and to petition our government for redress of grievances. (Together, these rights allow us to try to get our candidates elected--the ultimate opportunity for redress of grievances.)

It is hypocrisy to point out the mote in someone else's eye and ignore the log in your own. If you want to clean up campaign finance, examine out-of-state and out-of-district contributions. By definition, that means that you are examining foreign contributions.

Tax Time Stinks

2010-01-17T21:20:00.003-05:00

Forget the winter blues. I've got the taxation blues.

I'm busy closing my year-end accounts for tax filings for my businesses. Every January (and at the beginning of each quarter--January is just the worst) I really hate having to be Uncle Sam's and the Commonwealth of Virginia's uncompensated tax collector. Last year I got smart and paid my accountant to do the annual payroll tax filings (W-2's, 1099's, etc.).

Has anyone ever sent government an invoice for tax collection services rendered? Had it paid? Does this make me a slave to my government?

And it will only get worse for me if Congress passes the health insurance reform bill. I hope that Brown wins in Massachusetts, and that the Democrats don't use reconciliation to pass the bill without cloture.

Please, God. Put an end to it! I don't want to suffer more!

The Tolkien Professor

2010-01-12T20:48:00.005-05:00

A friend of mine sent me this wonderful site containing an ongoing series of podcasts about J.R.R. Tolkien and his writings. The author writes concerning himself and the site:

My name is Corey Olsen. I am a professor of medieval literature and an English PhD, and I have been a student of Tolkien’s works for as long as I can remember. On this website, I am posting a series of FREE audio lectures on Tolkien’s major works for you to download and listen to on your computer, your iPod, or wherever. I hope you have as much fun listening to my lectures as I have making them!

He is not too far along, so it won't take long for you to catch up.

Quote of the Day

2010-01-09T22:43:00.001-05:00

"Apathy and inertia are the handmaidens of indifference."

--Over the Hedge comic strip, 9 January 2010

The Law and the Profits, Part 3

2010-01-08T09:33:00.003-05:00

Still in chapter 1.

Professor Parkinson relates the general process of government budgeting: The civil servants create the budgets in such a way that the previous year's dollars are adjusted for inflation, and then a percentage is added for good measure. These values trickle up to the Treasury, at which point revenues are allocated to meet budgetary demand. The legislature plays a role in the authorization and allocation, but if the system of accounts is not robust (as it was in Britain despite major reform efforts in 1666, 1689, 1826-29, and 1904), then the legislatures role is practically limited.

The United States federal government has spent many years attempting to improve its system of accounts, yet after so long still regularly fails to modernize and make reliable the financial systems at key departments. (See the Financial Report of the United States, past and current, specifically the auditor's reports.) Having read the U.S. financial reports for nearly a decade, it is clear that progress is being made. Nevertheless, politics interferes with budgeting reform. A fascinating paper by Theresa Kohler of Virginia Tech examines some of the major problems of legislative involvement in budgeting, and reviews some concepts for improvement. A list of recommendations from the Heritage Foundation identifies seven steps for current budget reform. Parkinson has his own suggestion for reform, which is stated simply: "Ministers should not begin by ascertaining what the departments need. They should begin by asking what the country can afford to spend." This is after all the basis for household and business budgeting; why not the government as well? More in part 4.

The U.S. is a long way from the Britain of Parkinson's time (1957), and yet we are still very close in many ways. He states, "The accepted principle is that new expenditure is watched by the Treasury, old expenditure by the departments themselves." In the U.S., most budgeting is done by incremental changes to the baseline, which is determined by the departments. New allocations are an amalgam of legislative and departmental desire. There is so much happening in the federal budget that the 535 people who are our representatives cannot know what is going on in any significant detail. Therefore, they must deal in "deltas" from baseline, allowing what presently is spent to continue to be spent. This is the reason that few government programs are ever ended despite the clear end (successful or not) of their mission. It is simply too difficult to identify these living-dead programs and to end them. Now, in modern times, using the internet as a tool, some efforts to bring transparency to the federal budget are having the effect of allowing more citizens to review the budget and to make their voices heard concerning the waste. What remains to be seen is whether politicians will have the political fortitude to end the waste.

Parkinson writes concerning the watchdog,

"The ordinary taxpayer is often in a better position to know about waste in administration than either the politician or the journalist. For one thing, he may himself be employed in the [government program]. It is theoretically in his interest as well as his duty to come forward and denounce extravagance when he sees it. He does nothing of the kind, and that for two distinct reasons. In the first place, he stands to gain nothing but unpopularity and abuse, being likely to be regarded as at best a crank, at worst a spy. In the second place, he knows perfectly well that the money saved in one direction will certainly be wasted in another. Nothing he can do will reduce the tax he has to pay. So he wisely decides to say nothing and keep the good opinion of his neighbors. In matters of public expenditure no help is to be expected from the public at large unless the informant is personally rewarded and at the same time assured that all savings will go to the reduction of the taxes to which he is subject."

He did not foresee the internet, nor the rise of watchdog groups. He saw the heroic individual standing up for what is right in the face of "unpopularity and abuse." The watchdog groups still receive "unpopularity and abuse," but the effect is diluted and easier to individually bear. There is strength in numbers, and I must caution that not all interest groups are evil or self-interested.

Next time, how much taxation can a country afford, and what types of taxation are appropriate?

The Snow Cometh; the Snow Goeth

2009-12-25T22:25:00.001-05:00

2009 Christmas Blizzard

The Law and the Profits: Part 2

2009-12-19T22:15:00.006-05:00

The Law and the Profits, by C. Northcote Parkinson (of Parkinson's Law fame). Chapter 1, continued.

Chapter 1 delves into the reasons for increasing taxation before attempting to persuade concerning the evils of excessive taxation. In short, he attributes the trend increase to "temporary" wartime increases that are never fully decreased once the war is over. This long paragraph, excerpted from the beginning of Chapter 1 is too well-written to attempt a paraphrase:

Governmental as opposed to individual income is historically linked with the incidence of war. In all systems of revenue there has always been the provision for the temporary expenses of conflict. During a time of emergency, with our interests, our beliefs, our pride, or even our existence at stake, we agree to pay almost anything as the price of victory. In theory the revenue should fall to something like its previous level. In practice it seldom does. While the governmental income remains almost at its wartime level, peacetime expenditure rises to meet it. In times past the action of this law was slightly restrained, to be sure, by two considerations which no longer apply. In the first place, it was usually felt that taxes had to be reduced somewhat in time of peace in order to allow for their being raised again in time of war. During a century, however, when each successive war is judged to be the last, this theory finds no further support. In the second place, there are types of extravagance which yield only a diminishing return. To the provision of banquets and the enjoyment of dancing girls there is (eventually) a physical limit. The same is not true, unfortunately, of departmental and technical luxuriance. Economic and cultural advisers can multiply beyond the point at which concubines might be thought a bore; beyond the point even at which they might be thought unbearable. Financially, as well as aesthetically, the situation has become infinitely worse.

One can look into the history of the United States to understand when taxation has been introduced. Article 1 of the U.S. Constitution provides for "Taxes, Duties, Imposts and Excises," of which primarily duties, imposts and excises were chiefly in force in the colonial period. The first instance of the income tax is in 1861 during the Civil War (at a mere 3% single top rate). Though struck down as unconstitutional, it was introduced again in 1894 during peacetime (at a mere 2% single top rate), but was struck down again as unconstitutional. It was revived permanently (thus far) in 1913 following ratification of the Sixteenth Amendment. The highest rates were increased from 7% to 77% between 1916 and 1918 during World War 1. Following the war, the rates were reduced (generously, we might think) to (only) 24%, though it took until 1929 to reach this nadir. Rates went up again (to 81% by 1941) to combat the Great Depression, increased further to 94% (by 1942) during World War 2. Rates came down (only) to 82% (by 1949), then increased again to 92% in 1952-1953 (the onset of stalemate in the Korean War). Since then, rates have trended downward to the present highest rate of 35%. (See this Wikipedia article for the details.)

Payroll taxes were introduced to combat the Great Depression (Social Security) and the War on Poverty (Medicare), and have been expanded several times over several decades to increase revenue and expand public services.

It is clear simply from U.S. history that Parkinson observed correctly. Taxation does not seem to return to pre-war levels, giving rise to the statement of the second law, that expenditure must inevitably rise to meet the increased level of taxation.

In the next article, we shall take up the details of taxation somewhat from the civil service and political viewpoint.

The Law and the Profits (Part 1)

2009-12-17T22:58:00.007-05:00

Earlier this year, I read The Law and the Profits, by C. Northcote Parkinson (of Parkinson's Law fame). This book was first published in 1960, and though the subject of the analysis is Great Britain and the supporting figures are many decades old, the theme is still true and relevant today in the United States.

(My 1960 first edition American printing was recently shredded and eaten by my two dogs, so I have since acquired--for around fifteen dollars--a replacement 1960 first edition London printing from Alibris. The drawings within are different, but the text appears to be the same. This survey of the book is based on the first edition.)

I have not found (by Google search) any material about this book, save a brief mention in this Wikipedia article concerning Parkinson's Law, and then only to call it a corollary to the first law. It is in fact Parkinson's Second Law--claimed so by the author himself in Chapter 1.

Chapter 1 is titled "Parkinson's Second Law" and opens thus:

Expenditure rises to meet income. Parkinson's Second Law, like the first, is a matter of everyday experience, manifest as soon as it is stated, as obvious as it is simple.

The first example is of a family implicitly obeying this law. However, the subject of the book is government, and to that he moves in the second paragraph and rarely leaves this subject again for the remainder of the book.

It is less widely recognized that what is true of individuals is also true of governments. Whatever the revenue may be, there will always be the pressing need to spend it. But between governments and individuals there is this vital difference, that the government rarely pauses even to consider what its income is.

("What its income is" does not refer merely to accounting, although the early 20th-century British government appears to have had a problem even with this. Rather, this phrase, as we will see in later installments, refers particularly to the nature of the income and not merely its quantity.)

It is arguable that governments that annually rely on deficit spending are described perfectly by this statement. I will need to return to this topic later.

With this simple understanding of Parkinson's Second Law, let me quote now from the "Preface:"

The first purpose of this book is to show that there are limits to the collection of revenue and that evils multiply when these limits are ignored. However, the tendency to cross these limits appears to be universal, eternal and all but irresistable: the growth of taxation is clearly subject to a law.

The second purpose of this book is to show that a greatly reduced revenue would bring about an improvement, not decline, in the public services. It is the paradox of administration that fewer people have less to do and more time, therefore, in which to think about what they are doing. When funds are limitless, the only economy made is in thinking. The worst inefficiencies do not stem from a lack of funds, but from an initial failure to decide exactly what the object is. It is this muddled thinking that leads to waste, and often to waste on a colossal scale. Towards eliminating public waste an essential step is to reduce the total revenue. Officials are less inclined to squander what is not there. A knowledge of the law which governs expenditure should ensure that the profits from taxation are rarely thrown away.

I believe that Professor Parkinson succeeded completely in this book achieving his first purpose. I will determine through this survey whether I think he succeeded in the second.

I have observed in recent decades in the United States that the reduction in revenue was tried in the 1980's, but because a reduction in spending was politically impossible and that seemingly limitless borrowings were available to fund the annual deficit, that the government-reducing scheme was a failure. I do not think that this disproves Parkinson's second purpose, because I do not think he imagined a government with a fiat currency. The second purpose would hold if government were somehow constrained to spend within its means.

This quote leaps out at me: "When funds are limitless, the only economy made is in thinking. The worst inefficiencies do not stem from a lack of funds, but from an initial failure to decide exactly what the object is. It is this muddled thinking that leads to waste, and often to waste on a colossal scale." If you substitute the concept of "family" or "small business" or "association" or "church" in place of "government" in the preface, the raw and personal truth of these statements becomes clear. If it were my own money and my own decision, I would be inclined to be thrifty and clear on what I spend it.

Next in the series, I will continue with Chapter 1 concerning the rise in taxation over time.

The Santa Instantiation Hypothesis

2009-11-22T21:19:00.002-05:00

Today, Kathy and I spent the afternoon at the mall marketing our veterinary business next to the Pictures with Santa fantasyland. At one point, I explained to Kathy that in the moment that the picture is taken, the real Santa momentarily exchanges places with the fake Santa. In this way, the picture with Santa is always with the real article, and the real Santa can spend his time preparing for Christmas.

She didn't believe me.

Seen on a T-Shirt

2009-11-22T21:18:00.001-05:00

"I've just kidnapped myself. Give me $100 or you'll never see me again."

Politically Powerful Dinner Guests

2009-11-09T22:59:00.008-05:00

Let's say that you are into the health care reform debate in a big way. Let's also say that a Democrat leader from the Senate is your Thanksgiving dinner guest this year. (Let's also pretend momentarily that your fellow hosts have not forbidden political discourse--which they actually have for the sake of peace and harmony.) What questions would you have to ask your guest? Here are mine:

The U.S. spends considerably more per capita on health care. Leaving aside the assertion of disparate outcomes, how much is the spending influenced by demand factors such as demographics (particularly age and other factors), lifestyle choices, wealth and income effects, geography and population density (see also the demographics link); by supply factors such as pharmaceutical (PDF) and capital equipment expenses (and associated research and development expense), labor expense (and associated regulatory costs, such as licensing, the Fair Labor Standards Act, etc.), and facilities expense (and associated regulatory code compliance expense); and by price factors such as state insurance mandates (PDF), Federal regulations, insurance market structure, foreign price controls on pharmaceuticals, and financial market performance (both for access to credit and for investment income purposes)? Is the comparison influenced by currency exchange rates, or is a more stable method of exchange utilized?
Where does the Constitution grant Congress the authority to compel a private citizen to purchase health insurance? Does this conceptually abrogate the freedom of the private citizen to contract with providers of goods and services? What is the limit to what Congress may compel the private citizen to purchase? Can Congress compel a private citizen to associate with any group, regardless of whether the mission and values of the group are antithetical to the beliefs of the private citizen? If we pierce the veil, isn't the "tax" upon the private citizen for failing to purchase health insurance really a penalty or fine? What does the concept of "liberty" mean, and does it include the freedom to not act just as much as it includes the freedom to act.
What is the contribution to the rate of growth of private sector health care costs that is attributable to price caps enforced for public sector health costs? (Mathematically, if the growth rate of the public sector half of the health care spending is artificially lowered, then the growth rate of the remaining private sector half must be artifically higher in order to balance to the average growth rate of the entire amount spent--which I assume is presently based on demand, not on government decree. In equation form, P1 * Q1 + P2 * Q2 = Pavg * Qavg. where P is price, Q is quantity, 1 is the public sector, and 2 is the private sector.)
What is the contribution to the expense of health care costs in general and on insurance premiums in particular due to government regulation, such as state mandates (PDF), prohibition on interstate commerce in insurance policies, and Medicare and other Federal rules for providers and insurers?
What are the desired effects of health insurance reform on Medicare, and what is the intended and estimated impact on the $36.4 trillion unfunded liability (pg. 69, infinite time horizon)?
With Medicare fraud in the billions of dollars, can the Federal government contain fraud in a Federally sponsored/managed insurer?
Why refuse to extend the Hyde Amendment to insurance subsidies contemplated in congressional health reform bills?
Why refuse to use the Systematic Alien Verification for Entitlement (SAVE) Program to prevent illegal aliens from utilizing Federal spending contemplated in congressional health reform bills?
How do ten years of revenues and six (House bill) or seven (Senate bill) years of expenditure produce a stable, long-term program?

I doubt that I could get many Federal politicians (of any party) to answer these questions without prevarication. If you watch enough of the BBC series "Yes, Minister", the reasons become evident rather quickly.

I think I'll stick to eating and drinking this Thanksgiving.

I'm a Tenther.... How about you?

2009-11-09T22:51:00.002-05:00

Sticking "-er" to the end of the topic du jour seems to be in vogue: "birthers", "tea baggers", "truthers", etc. Tonight I decided that I am a "Tenther". That is, I am a believer in the Tenth Amendment to the Constitution. (That's the one that reserves to the states and the people all powers not granted to the Federal Government and all those powers not prohibited to the states.)

Wikipedia has an article about the Tenther Movement. I didn't know this name was already in use, so I feel smart for having coined it myself. (If Leibniz can get credit for developing calculus along with Isaac Newton, I can also get credit for coining the term.)

Note: Being a "tenther" doesn't make me a secessionist. There are good reasons to have a federal government. Too bad so many of those reasons are obscured by present practices.

Quote of the Day

2009-11-05T23:07:00.002-05:00

"Congress is becoming increasingly corrupt. Pretty soon, they could put a fence around the Capitol and turn it into a minimum-security federal prison."

--Tommy Butler, WSJ Commenter

Article: Senate Alters Taxes for Big Companies

The GM Takeover by the Government

2009-10-29T23:17:00.003-04:00

I don't agree with the takeover of GM (or Chrysler), but it is instructive to learn why and how it was done from the person who was at the pointy end of the spear.

Quote of the Day

2009-10-22T23:26:00.003-04:00

To be GOVERNED is to be watched, inspected, spied upon, directed, law-driven, numbered, regulated, enrolled, indoctrinated, preached at, controlled, checked, estimated, valued, censured, commanded, by creatures who have neither the right nor the wisdom nor the virtue to do so. To be GOVERNED is to be at every operation, at every transaction noted, registered, counted, taxed, stamped, measured, numbered, assessed, licensed, authorized, admonished, prevented, forbidden, reformed, corrected, punished. It is, under pretext of public utility, and in the name of the general interest, to be place[d] under contribution, drilled, fleeced, exploited, monopolized, extorted from, squeezed, hoaxed, robbed; then, at the slightest resistance, the first word of complaint, to be repressed, fined, vilified, harassed, hunted down, abused, clubbed, disarmed, bound, choked, imprisoned, judged, condemned, shot, deported, sacrificed, sold, betrayed; and to crown all, mocked, ridiculed, derided, outraged, dishonored. That is government; that is its justice; that is its morality.

(P.-J. Proudhon, General Idea of the Revolution in the Nineteenth Century, translated by John Beverly Robinson (London: Freedom Press, 1923), pp. 293-294.)

Health Insurance Facts, Part 2: Why is Medical Insurance Different?

2009-08-20T22:08:00.004-04:00

Link: Health Insurance Facts, Part 1

I have been brooding over the question of "Why Medical Insurance is Different" for many days now, trying to get succinct evidence to share. I have found it, and will present it shortly.

Medical insurance seems to have been first considered in 1694 [1], and first introduced into the United States in 1850 [2]. It was intended to cover injuries due to accidents, and seems to have been related to modern disability insurance. Sickness insurance followed in 1890, and employer-sponsored group disability insurance was first issued in 1911. [1]

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations. The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II. [1]

The wage controls imposed during World War II are often cited as the leading cause of the importance of employer-sponsored medical insurance. With companies unable to offer greater wages to their workers by law, they turned to fattened benefits in order to compete for talented workers. Medical insurance policies covered more things as a result. This was fine for those individuals and families whose employers provided such benefits, but did no good for those employed elsewhere, such as by small businesses unable to afford such benefits, or unemployed (whether voluntarily or not).

Enter the states. Before I describe insurance mandates, let me take a moment to address the question of federal regulation of interstate commerce of health insurance.

The Health Care Choice Act, a bill introduced unsuccessfully into the House of Representatives in 2005 and 2007 has attempted to allow medical insurance to be sold across state lines, amending the Public Health Service Act (42 U.S.C. 300gg et seq.). I need more time to determine whether sections 300gg et seq. prevents interstate commerce with respect to medical insurance policies, but I think it is safe to say that if a bill in Congress is attempting to achieve the opposite, then it is safe to assume (for this article) that Congress has in fact prevented it.

Therefore, states have a monopoly on the chartering and regulation of medical insurance companies. Large insurers compete in states by creating (or acquiring) a subsidiary in the state in which they wish to do business, but all policies therein are unique to that state, even though the subsidiary is financially backed up by a multi-state parent insurance company. This type of organization raises the costs of entering the market in another state, and is therefore a barrier of entry to competition, and is one factor in the oft-cited fact that a few large insurers dominate the market in many states.

Add to this barrier of entry the manifold regulations by the states of what must be in policies. The Center for Affordable Health Insurance has catalogued 2,133 policy benefits mandated by the states in a 2009 report (pdf). (These 2133 mandates overlap considerably.) The report shows the mandates by state, and estimates the contribution of each mandate to the cost of the state's required policy. This means that medical insurance has evolved, under employers' hands and the state governments' hands, into something more comprehensive. What was once known simply as Accident Insurance, then (over time and as coverage increased) Hospital Insurance, Major Medical Insurance, and just plain Medical Insurance, now is known as Health Insurance, covering arcane things such as contraception and AIDS testing.

The method of payment for claims has also changed considerably over time. Insurance policies were once "indemnity" policies, meaning that we submitted our own claims and were reimbursed afterwards for whatever was covered. Later, insurance companies formed Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). In HMOs, the insurance companies own and operate the means of providing care, and employ the doctors and nurses. In PPOs, the insurance companies negotiate fees with the providers, and do not necessarily own the means of providing care. In HMOs, we pay whatever is not covered by our policy, and there is no extra paperwork between the provider and the insurer. In PPOs, the provider generally bills our insurer on our behalf, and collects the difference between what is covered and what is not directly from us. Preferred providers go a step further by waiving any part of their usual fee not allowed by the insurer (due to fee negotations). In short, we have become separated from the costs of care, because we no longer bear the full cost, no matter how temporarily, because the providers and insurers float the costs through their accounts payable/receivable. We once did the paperwork with the insurer for free; now we (or rather, our insurer) pay the provider to do it on our behalf.

I am forced to conclude that medical insurance is different from auto insurance and home insurance because we the people, ostensibly through our employers and elected representatives, have chosen it to be this way, for better or worse.

Ronald Reagan discusses Socialized Medicine

2009-08-14T16:19:00.001-04:00

This is an audio link from YouTube. The recording dates from 1961.

Listen Here.

Quote of the Day: Health Care

2009-08-12T20:59:00.002-04:00

"Health insurance companies refuse to cover pre-existing conditions for the same reason that you can't insure your automobile after you crash it." --Robert Tracinski, Real Debate Is Individualism vs Collectivism

The article is excellent throughout and pre-figures my Part 2 for understanding Health Insurance.

Quote of the Day

2009-08-08T10:09:00.003-04:00

"The founding of this country was the result of a tax revolt."

--Breck Collingsworth, a Wall Street Journal subscriber, commenting on an article about Town Hall revolts in Maryland.

Perhaps those in the White House and in Congress who wish to tax us more (and more "progressively") should better remember our nation's history.

Health Insurance Facts, Part 1: What is Insurance?

2009-08-03T17:16:00.010-04:00

On July 24, protesters picketed the Richmond headquaters of Anthem, a subsidiary of WellPoint, a national health insurance group. One of my relatives was among the picketers.

Before dinner the next evening, I had the opportunity to speak with my relative concerning the protest, and I discovered that certain facts had been asserted, and certain negative opinions had been formed. I recommended that she examine Anthem's financial statements, freely available online from the Securities and Exchange Commission, and to especially read the Management's Discussion and Analysis section. Not only does this check the asserted facts, but it puts the protester into the shareholder's and manager's perspective, inviting them to see the real constraints encountered in the health insurance industry, but also challeging them to think of what they would do better, and if that is the real substance of their protest.

I want to provide first a general discussion about insurance and learn what I can without deifying or demonizing any particular company. Second, I want to understand better why medical insurance (AKA health insurance) is different from other types of insurance. Third, I want to examine the real financial statements of a large health insurer and understand what events are occurring and what choices management is making.

Let us begin by answering the questions, Why do we have insurance, and what is it? In the simplest approach to insurance, one person who is going to perform a risky activity (the insured) contracts with another person (the insurer) who is willing to accept the cost if an adverse outcome occurs. The liklihood of the adverse outcome is usually low, and the cost is usually very high. The insurer charges an amount (proportional to the risk) for the insurance (the premium) and sets it aside until the insurance contract expires. If the adverse outcome occurs, then the insurer covers the cost, usually more than the value of the premium. If the adverse outcome does not occur, then the insurer profits from the premium, and the insured endures an additional, unneccessary in hindsight, cost of doing business.

One early use of insurance was to protect the owners of shipping vessels. Then, as now, shipping goods over the sea was a risky enterprise. The loss of a vessel was a real and substantial threat to the solvency of a shipping company. Those with money to invest would insure the shipping companies. If an insured ship was lost at sea, the insurer would compensate the owner for the goods and the vessel. Since the amounts at stake were so large, syndicates of investors would be formed for the duration of the insurance contract, and these syndicates would provide the necessary financial backing. By syndicating the risk, the value insured could be much larger than any single investor might be willing to lose.

It might seem that the insurer's profit can be quite large when the adverse outcome does not occur, but if you repeat the insurance contract over and over again, the insurer will pay according to the likelihood of the adverse outcome, and profit the rest of the time. A smart insurer will therefore set the premium large enough to break even over the long run, plus a bit more for the remaining uncertainty. The lesson here is that large insurance profits in one time period are no guide to the morality of these profits over the long run.

An extension of the single-event insurer is the cooperative insurer. The non-profit version of these insurers, often called mutuals, exist for the benefit of their members, and are often owned by their members. For-profit versions are also common, and transfer the risk of loss away from the policyholders and onto the owners of the insurer. The latter type is most familiar to us, having names like Allstate, Geico, Wellpoint, and Aetna.

The idea behind the cooperative insurer is that adverse outcomes do in fact occur over the long run, and that it is prudent to save over the long run in order to offset the eventual cost of these adverse outcomes. Ideally, all of our adverse outcomes would occur after we have had a chance to save for their costs. The reality is that it usually happens before we have saved enough. By joining together into a cooperative, we increase the likelihood that we will have enough resources to cover every individual adverse outcome, because the likelihood of them happening in large enough clusters in short periods of time in a way that exceeds our collective savings is very low. We benefit most when we are all long run members of these cooperatives.

The modern financial markets provide the insurer with an opportunity to turn these collective savings into investments that earn income. This income can then be combined with premiums to cover the costs of adverse outcomes (or claims). The greater the savings cushion, the greater the investment income, the lower that premiums need to be. The basic equation for an insurer is quite simple:

Investment Income + Premiums = Claims + Fraud, Waste, & Abuse + Overhead + Profit (or Loss).

(Reality adds more variables to each side, but the concept is unaffected.)

Profit is used in two ways: to reward the owner of the insurer for bearing the risk of loss, and to increase the amount of savings earning investment income. Loss reduces the amount of savings, and hence the investment income. (In a mutual, there is only the increase in savings when the insurer profits.)

Now there are some general points to draw from this model of an insurance company.

1) If claims exceed premiums and savings, then the company is insolvent.

2) If investment income falls, then premiums must rise.

3) Fraud, waste, and abuse, and overhead must be controlled if the insurer is to profit, and therefore leave its savings intact.

4) In a for-profit insurer, the owners provide the initial capital that funds overhead and claims until premiums and investment income are sufficient over the long run, and own the increases in the insurers savings.

Next: Health Insurance Facts, Part 2: Why is Medical Insurance Different?

EDIT: Added link to Wellpoint's financial statements at Edgar.

EDIT: Clarified for-profit cooperatives by providing named examples.

NOTE: About my use of the word "cooperative" in this article, I use it in a conceptual way, rather than in the manner of a legal organization. The article's concept of a cooperative is as a long-run, multi-participant insurance construct, as opposed to a single insurance contract between an insurer and an insured. I'll cover the legal organization in a later article. I suggest this article and this organization as starters.

TARP Inspector General Reports

2009-07-20T21:54:00.003-04:00

This article summarizes the outlays and insurance-like guarantees made by the Federal Government to prop up the economy. The total? $23.7 TRILLION.

TARP has come to include 12 separate programs that include a total of as much as $3 trillion

The special inspector general counted approximately 50 initiatives or programs launched since 2007 to fight the economic collapse.

The Federal Reserve, he found, has increased its balance sheet from $900 billion to more than $2 trillion, and Barofsky estimated that the total amount of support to the economy by the fed is at least $6.8 trillion, because it is exposed to significant losses if many of the assets guaranteed by the Fed deteriorate in value.

The FDIC, Barofsky writes, has contributed $2 trillion in “new gross potential support.”

The Federal Housing Finance Agency – “under whose auspices fall the Government Sponsored Enterprises such as Fannie Mae [and] Freddie Mac,” – has effectively provided more than $6 trillion in gross potential support.

Treasury itself, Barofsky concludes, has contributed nearly $4 trillion of potential support to the economy beyond the TARP program itself.

There are a lot of people who saw the misuse of these funds before they were approved. Elections have consequences, all right, and the Tyranny of the Majority (and the endless mistrust in government) is alive and well.

The Congressional Budget Office Speaks Out

2009-07-16T23:18:00.003-04:00

The Director of the Congressional Budget Office felt it necessary to cut through the lies and misinformation in order to educate us citizens. Here is the post.

He discusses the long-term debt problem (as a percent of GDP) and the deficit problem (AKA excess costs).

People like me who read the Annual Report of the United States have known this for a long time, have written to elected officials for a long time, have supported candidates who have the right ideas for dealing with this problem correctly, and have been disappointed (for a long time) in the inability of the elected leaders to a) understand the problem or b) do something about it.

Just like state and local governments in today's economic crisis, the federal government needs to do some soul-searching on what the Constitution requires it to do and what additional that we can actually afford. It also needs to come to grips with what the Constitution says it should not do, which would unburden the budget a lot in short order. But that's a rant for another day.

Fixing Health Care

2009-07-02T22:01:00.002-04:00

First, wrap your head around actual facts here, here, and here.

Senator Jim DeMint (R-SC) provides a laundry list of ways in which the Federal Government interferes with the market for healthcare and insurance.

Here is an example of how the Commonwealth of Virginia is getting out of the way of small businesses, by reducing health insurance policy requirements so that basic plans can be affordable and at least effective in a catastrophe.

The bottom line is that when we hear that the Federal Government needs to take over health care financing (and who pays calls the shots!) that it is a crock of you-know-what and it stinketh mightily. Fedzilla and state governments need to remove impediments, not insert themselves as a monumentally larger impediment.

And it wouldn't hurt if the Federal Government would take border security and the economic problems of illegal immigration seriously. Please, it's been nearly eight years since 9/11, and we are only now getting this report from the Department of Justice?

It seems that conservatives know these things intuitively. Kathy says we must all be too busy working to make a show of force. She may be right.

The Second Amendment

2009-07-02T21:39:00.002-04:00

I find it ridiculous that the Second Amendment is under attack still following the remarkable majority decision (penned by Justice Scalia) in Heller v. D.C. upholding our individual rights to own and use ordinary weapons. (If you have the time and wit to do so, I recommend reading at least the first half of Scalia's opinion. I have not had so much fun reading the gradual but inexorable takedown of stupidity in all my life. It's like watching Julia Sugarbaker take someone down with superior intelligence, but longer and better.)

This article in Reason Magazine is an interview with the attorney who won the Heller v. D.C. case and highlights the ongoing stupdity in D.C. and other jurisdictions. That we have to fight these cases in all their absurdity is a result of poor choices by the electorate and successful power-hungry politicians who install similarly power-hungry judges.

This is the long range effect of elections--the shifting of the judiciary between originalist interpretation and "living document" interpretation of the Constitution. Something we take for granted, like the Bill of Rights, is in jeopardy every time a constitutional case comes before a divided court.

Remember that next time you vote (or think not to).

Apologetics for Dummies

2009-06-09T21:06:00.004-04:00

I am studying apologetics in Bible Study. This very interesting subject covers one-third of Aristotle's three different types of rhetorical proof--logos.

Logos is the use of logic and reason to persuade one of the truth of a premise. With the lost, it is difficult to start with "The Bible says....", and apologetics demonstrates that there are preliminary steps we can take to help persuade that the Bible is a source of truth. To me, that seems to be the biggest hurdle, and one in which the Holy Spirit plays the fundamental part.

The study is a book written by Norman Geisler entitled When Critics Ask: A Handbook on Christian Evidences. In the first chapter, he reminds us that God commanded us to be ready to give answer to all men for what we believe. The study of apologetics is part of the foundation for winning the lost to Christ.

Apologetics by itself is insufficient. Citing Aristotle again, we learn that pathos and ethos are the other two types of rhetorical proof, both of which are important to our witness.

Pathos is the use of emotion to persuade. The best example of this to me is sharing one's testimony. I have never failed to be moved by the Spirit when hearing the testimony of one who has been saved from a life of sin, whether that life was similar to or different from my own. Having been saved since age 4, I can only guess what the lost experience on hearing a testimony.

Ethos is the use of authority to persuade. As Christians, we should be perceived as authorities on Christianity. The world will readily point to the divorce rate among Christians (equal to that of non-Christians) or the corruption of clergy (Catholic and Protestant alike) or the hypocrisy of churchgoers (not necessarily Christians) as a way of judging all Christians. However, this is the fallacy of the false generalization. Just because a few Christians are hypocrites or corrupt does not mean that all Christians are the same, or that Christianity is empty or antithetical to its stated values. Only by demonstrating in our own lives the struggle for holiness and the miracle of salvation do we make clear our authority as Christians to share the Gospel.

Combining these three modes of persuasion in the service of the Gospel was recognized by St. Augustine in the 4th Century. It lives on in the sermons of pastors around the world. Learn to recognize the use of these persuasive elements and to integrate them appropriately into your own witness. You may find yourself a better prepared tool for Christ in ministry.

Star Trek Movie Review (Caution: Spoilers)

2009-05-11T19:44:00.003-04:00

It is fitting that I watched the latest Star Trek movie on Mother's Day. With only slight exception, I have watched every Star Trek movie with my mother. (For some reason I cannot remember, we missed Star Trek II: The Wrath of Khan in the theater, and she passed away before Nemesis was made.) She was an original trekkie and fueled my innate desire to become one as well. We did not have cable when I grew up, but somehow I managed to watch most of the episodes of the original series.

When I turned in straight A's in First Grade, she took me (just the two of us) to Fort Walton Beach (a thirty minute drive) to see Star Trek: The Motion Picture. I remember very little of that evening, except an image of the part of town at night and my emotional excitement at seeing this movie. When the movie was released much later on VHS, I it became one of my favorites. (In fact, I can highly recommend the Director's Cut, which improves many of the visual effects without giving the movie an adversely different feel.)

To sum up the new Star Trek simply: I think my mother would have liked it as much as I did, though for perhaps different reasons. After watching Generations, she decided that it was the end of the old and the beginning of the new. She did not watch much of the new, though it did not stop her from seeing the Next Generation movies with me. The new Star Trek would have put her back in familiar territory.

As I write this review, I watch Star Trek II: The Wrath of Khan. (My wife is away in D.C. through the evening, so it is my night to watch what I want.) I can tell you that the writers for the new Star Trek integrated many little details that were developed in the shows and in the movies. For instance, in the new Star Trek, Kirk has an allergic reaction after McCoy inoculates him with a particular vaccine in order to sneak Kirk to the Enterprise. Do you remember that the elder Kirk received spectacles as a gift because he was allergic to the available vision-correcting drug? The elder McCoy nodded knowingly and said, "Exactly!"

There are a few things I dislike about the new Star Trek, and some things at which I shook my head at their Hollywood triteness. But that which I liked far outweighed these few things.

That which I shook my head at:
1. They really don't observe black hole physics. To the scientifically informed, this is unconscionable in a good science fiction story. As this movie is more about characters and action, I can understand the choice to jettison known reality.

2. Why do we have to have monsters on the ice planet? Isn't a successful 16km trek across the ice pretty much guaranteed? Kirk could have met the future Spock at the outpost. That's where they ended up anyway. And not to dwell too long, the big bug monster looked a lot like a similar bug monster in Attack of the Clones in the arena scene.

3. Kirk being made captain of the Enterprise before graduating from Starfleet Academy. He may have scored off the charts on the aptitude tests, and may have saved Earth (I suppose this is the first of now three times), but is that really sufficient experience to manage a crew of hundreds and spend the next five years dealing with entirely new and novel situations? This will pose a credibility problem for the writers of future movies, as they must allow Kirk's lack of experience and wealth of bravado to cause problems, or else be accused of creating an unrealistic superhuman character.

4. The main ensemble characters came together very quickly--too quickly for credibility. It takes time to build good teams and to get them to perform at a high level. This is even more important given the raw brilliance of each main character. They did a good job of rapidly working out the usual team-building dynamics, so my criticism is limited to the low likelihood of the short timing.

5. Why does Scotty need a midget alien sidekick? Haven't we milked the short sidekick thing too long already? And why does he get treated like a dog or child? Didn't Warwick Davis demonstrate long ago that little people can act well?

Now the few things I did not like:
1. Why did the engineering spaces on the Enterprise look like a 20th century factory? In every episode and every movie of every series (including Enterprise), the engineering spaces were spartan and high tech. I hope that this was a funding problem and not a failure of imagination.

2. Why is ejecting the core the magical solution to so many Star Trek plots?

3. I could add "Yet another Time Travel plot" to this list, but it worked in this movie, being narrowly focused. The creation of an alternate timeline is exactly what was needed to make this reincarnation of Star Trek believable. The destruction of Vulcan and the death of Spock's mother will definitely shake things up, as will his meeting with (and continued existence of) his future self.

4. What is Star Fleet doing sending all but nine ships completely out of range of Vulcan (and completely away from the story)? Yes, the galaxy is large, and Vulcan is relatively close to Earth. But what about commercial vessels? They did not expect an attack; they were trying to prepare an emergency evacuation of 6 billion Vulcans and solve the seismic problems. Hundreds of cadets lost their lives in seconds, and nothing was said of this in the end.

To the best of my limited memory, that is all that I had a problem with in this movie. The rest... I liked it! I'm looking forward to the next installment in the new movie series. (Just please don't screw them up! And don't fall prey to the Odd-Even Curse!)

The Things I Really Liked:
1. Admiral Pike: Excellent character, and well-played by Bruce Greenwood. In the alternate universe, he is the reason Kirk joins Star Fleet. In the original universe, it was Kirk's father. I got the impression that Pike had watched out for young Kirk for at least part of his post-adolescent life, providing some fatherly stability. Did you pick up on the fact that he ended up in a wheelchair? He did as well in the original series, though under different circumstances. A small detail, but a familiar one to us original trekkies.

2. The opening scene was well-done. It balanced the anguish of the no-win moment with enough exposition of Kirk's mother and father to make us empathize with Kirk later and to give a foundation to Kirk's intelligence and future loyalty to his friends and crew.

3. Leonard Nimoy's role as the elder Spock: Serving as the bridge between the former future and the new past, he provides perspective to young Kirk and Spock on their need for one another. This was not a cameo, nor was it played tongue-in-cheek. The contrast between the elder Spock and the younger Spock was well drawn, and demonstrated that even Spock was young and wild (in his own way) like Kirk.

4. Uhura never got a big role in the series and movies. I was happy to see that she had special abilities that made her essential to the high-performance of the team we know and love. She is no longer a radio operator and secretary, and I hope that she will continue to play an important part in future installments.

5. Uhura and Spock are lovers? This did not work for some people I know, but I appreciated it for many reasons. First, Spock is a complex blend of Vulcan and Human emotions controlled by a continuing act of will. To see him love another on a regular basis is a refreshing break from Pon Farr every seven years, which is animalistic and hormonal, not loving. It also makes Spock more like his father, who admitted to marrying Amanda for love.

6. Sarek and Spock are loving to one another throughout the movie. The movie does not show whether Sarek was angry with Spock for going to Star Fleet (which is made clear in episodes and movies before this one), but their rapid reconciliation and understanding of one another following the destruction of Vulcan makes likely that we will be able to see this relationship develop in ways that it could not (until Star Trek IV) in the original timeline. Beginning with Star Trek IV, we got to see the fruits of reconciliation between father and son (a situation not unfamiliar to me), and I wished then that we could have seen more. (The Next Generation was able to do some of this before Mark Lenard's death in 1996.) I do hope that the writers will take advantage of this change and develop the father-son dynamic. (And Ben Cross is a good choice for Sarek. I first saw him as Harold Abraham in Chariots of Fire, then as King Arthur's nemesis in First Knight. He has aged well and brings gravitas to a highly-respected character.)

7. Dr. McCoy: When I heard that Karl Urban was playing McCoy, I was skeptical. I did not like how he played Eomer in the Lord of the Rings (nor how the character was altered by the writers), but I liked the way he played McCoy. The humor was classically McCoy, re-using the best jokes and one-liners from vintage DeForest Kelley days. He was at once new and familiar. I thoroughly enjoyed watching him run after Kirk (during Kirk's allergic reaction) yelling "I can fix that!" And I enjoyed watching him quote rules and regulations in order to get his way--again, classic McCoy!

8. In the original series (and movies), Kirk, McCoy and Spock make up the triumvirate about which most plots revolve and among which the best interplay occurs. The future of plots highlighting other characters is likely to be much like the past--they will likely be excellent supporting characters again--but the actors chosen for the "main three" will do credit to the roles and give us cause to continue spending our hard-earned money at the theaters to see what they do next.

Summary
Star Trek is going where no Star Trek show or movie has gone before. They have erased what was and must now live in a significantly altered universe thrust suddenly upon them. There are certainties only regarding the inborn nature of each character. The experiences that shaped them to become what we are familiar with are no longer certain. We get to experience this new past with our characters, and that is going to be half the fun!

I hope you enjoy(ed) Star Trek as much as I did. See it again if you can manage. In the meantime, Live long and prosper!

What kind of buyer are you?

2009-05-08T22:30:00.002-04:00

I came across this excerpt from Geoffrey Miller's book Spent via Marginal Revolution and couldn't resist passing it on.

Some common themes emerge from these slightly whimsical suggestions. One is that buying new, real, branded premium products at full price from chain-store retailers is the last refuge of the unimaginable consumer, and it should be your last option. It offers low narrative value -- no stories to tell about interesting people, places, and events associated with the product's design, provenance, acquisition, or use. It reveals nothing about you except your spending capacity and your gullibility, conformism, and unconsciousness as a consumer.

Are you "unimaginable", or do you take delight in the "people, places, and events associated with the product's design, provenance, acquisition, or use"?

I'm not generally a big consumer, and I do not think I possess a knack for choosing fine things. Yet as I have traveled around this country and overseas, I think more about the hands that made the objects I buy.

When in Germany I read "Made in China" on many supposedly local items, I realized I was about to be duped and had the sense to leave well enough alone.

In Hungary, I had a different experience: All of the items I bought were handmade by local artisans. They were indeed crafted goods, and I held them in greater value.

I have brought these thoughts back to the United States, and now look for where something is made. I eschew "Made in China" unless I have no ready substitute. I see names of countries that I did not realize made such a product as an export, and I think of what I know of these countries and the people that inhabit them.

Sometimes, it makes me more likely to buy, to bias the circular flow of money in their direction. Economic growth, it has been asserted, is the greatest means of lifting vast numbers of people from poverty.

I can take comfort in a smart buy.

Jeff Sessions to replace Arlen Specter on Senate Judiciary Committee

2009-05-07T22:05:00.002-04:00

This is good news (from Reason Magazine). The Republican senators are putting the RINOs on the back burner and putting forward solid conservatives.

In my opinion, the RINOs have split the ability of the Republicans to have a coherent message. Rather than have a nuanced approach in order to have a larger tent, I prefer that each party be somewhat pure. This gives rise to multiple parties (or even better, no parties and just legislative caucuses). The Federalist Papers (No. 10) covers this topic rather cleanly, and is a recommended read. (Wikipedia has an excellent write-up, and here is a link to the text for No. 10.)

It is regrettable that we strayed from this wisdom so near the beginning of our Republic.

Government Intrusion: Yard Sales

2009-05-07T21:57:00.002-04:00

This item from Reason Magazine (a libertarian source of news and analysis) touches on new guidance from the Consumer Product Safety Commission claiming that their reach includes your yard sale.

Is there no end to the nanny state?

Taxes greater than 50 percent --> Loss of National Competitiveness

2009-04-27T09:25:00.002-04:00

So argues Andrew Lloyd Webber in an op-ed to the Daily Mail.

In business, prices are loosely based on cost. In order to remain in business, prices must be above cost. But how much above?

The answer is "what the market will bear." That is, people will pay what they are willing to pay. And generally, the higher the price, the less they will buy.

Thus what separates competitors is their individual unit cost of production. The business with lower cost will reap more profit, which attracts greater investment, which leads to greater growth of revenue-producing assets, which leads to more market share than the competition, which can eventually lead to the demise of the weakest competition (those with the lowest profit/highest unit cost).

Consider whether the same is true of government.

Government has more control over competition (tariffs, quotas, work visas), but these work on imports of goods and services. In a free country such as the United States, there is no restriction on the individual worker exporting themselves to a foreign country to work. (There is, however, a punitive tax on moving financial assets out of the country--for ten years, an ex-patriate must continue to pay taxes.)

Certainly patriotism must be considered as a reason workers dissatisfied with Government regulation and taxation do not leave despite their desire to do so. However, I consider it yet another abuse by Government when this patriotism is abused in order to trap the workers' assets and income for tax purposes.

Government can take a last bite out of those who flee, but ultimately cannot prevent the loss of workers or their talents (or the taxes that they pay).

State governments understand the competitive nature of taxation very well. If you are a big business, state and local governments will mortgage their future revenue streams in order to lure you. (Small businesses like mine are not so fortunate. We end up making up for the subsidies to bigger businesses.)

The national government usually does not need to consider competition. Yet in times of high taxation, worker flight is inevitable. They will take their talents, capital and their income with them.

National Governments, take heed!

Keynes v Hayek

2009-04-24T23:08:00.002-04:00

Roger Garrison of Auburn University has put together three fantastic PowerPoint presentations demonstrating Keynes' Circular Flow Theory and Hayek's Means-Ends Analysis and how they work together in a more sophisticated way than Keynes envisioned to explain Boom-Bust cycles and the dangers of monetary intervention.

In my opinion, Keynes was right to identify the Paradox of Thrift, but he was wrong to rule out possible mechanisms for undoing the paradox. Hayek showed clearly how to resolve the problem, but Keynes was dismissive. It seems that Hayek's explanation did not fit Keynes' world view.

Most of what economists do well is qualitative analysis. They generally disagree when numbers enter the picture, and you should be skeptical of any claim to forecast the economic future. But do learn economic principles and the qualitative effects that are described by these principles. Use your own experience and be your own judge as to the magnitude of each effect and whether they reinforce or cancel one another.

Doing so is another step on the road to living intelligently in a world of humans that does not always act or react rationally.

Physics Joke Winner

2009-04-24T12:51:00.004-04:00

The winner of the first round of the Reverse Joke contest was number 4.

4. It's a Schroedinger's Cow problem. The milk is in the pail if you don't look in it. (JM)

Round two has begun, and the following entries are in contention:

1. Why do dairymen sell so many empty buckets to blind people? (JM)

2. What did the bad magician say after his famous "milking the invisible cow" trick failed? (ST)

3. What did Charlotte say to Wilbur when she did not cry over spilled milk? (JM)

4. What the milkmaid told her father after the "Counting Chickens" incident. (CT)

Finally, true images of Saturn

2009-04-21T23:00:00.002-04:00

These images of Saturn are phenomenal!

Rings, moons, moonlets, gravity distortions of the rings, unusual above-plane formations in one of the rings....

Produced by the Cassini Spacecraft in orbit round Saturn.

The Business, Professional, & Occupational License (BPOL) Tax: Facts and Economic Considerations

2009-04-10T20:50:00.023-04:00

I wrote this analysis back when Stafford County was debating swapping their Merchants Capital Tax for the Business, Professional, & Occupational License Tax. I've tried to be as qualitative as possible regarding effects, and I must caution in considering effects that any one effect rarely occurs in isolation. Other effects can reinforce or mask any effect I mention below. That does not mean that the effect did not happen. It just means that our ability to measure it independently may be limited or non-existent.

I am accustomed to paying the BPOL as a business owner. I am well aware of the effects of this tax and other taxes on my ability to adjust prices. It is important to remember that prices are related to costs, but that prices are pushed down by external factors like competition, substitution effects, and individual assessment of benefits. That is to say, the market determines the price. My analysis touches on this problem by separating goods and services according to their "price elasticity of demand". The bottom line is that some businesses are hurt by the BPOL, and some are not. My own business is not hurt by the BPOL, but I am also a consumer of goods and services and understand the costs of providing them.

Jerry Logan (Spotsylvania Supervisor) is not a fan of the BPOL and has been trying to build support for changing or eliminating it (ht Dan Telvock, here). Supervisors and citizens should be well-informed of the characteristics of this tax before they speak for or against it and before they suggest modifications. In politics, it seems that Unintended Consequences are rarely considered, even though they are easily forseeable (e.g., making food into fuel causing food prices to spike around the world). At least do the homework and try to limit the Unintended Consequences!

The BPOL Tax is similar to the Retail Sales Tax, except

It taxes services as well as goods;
The rate differs according to the type of business; in Spotsylvania County,

0.0025% for wholesale merchants
0.08% for contractors
0.10% for direct sellers, itinerant merchants and peddlers, and retail merchants
0.18% for amusements, business services, developers, miscellaneous, photographers, personal services, rentals, and repair services
0.29% for financial, real estate, and professionals

The tax is not shown on invoices or sales receipts;
There is a threshold below which taxes are not collected nor returns filed;

Spotsylvania: $200,000

There is a standard deduction that reduces the tax liability;

Spotsylvania: $50,000 [1]

It does not matter whether the business is profitable or not;
Annual limits on the amount a business is liable to pay reduces the effective tax rate for that business;

Spotsylvania: $150,000 [2]

Consumers ultimately pay the BPOL Tax.

Cash flow in a business ultimately comes from only three sources:

Investment by owners
Borrowing from creditors
Revenue from consumers

Owners do not add new money to pay the BPOL;
The business does not borrow from its creditors to pay the BPOL;
Therefore, the BPOL is paid from revenue, just like all other business expenses.
Not all consumers are county residents. This is an important part of the decision whether to tax capital or revenue.

Businesses and Government in the County incur additional cost to collect the BPOL tax if it does not replace an existing collection effort.

Businesses must file annual returns stating their revenue derived in the County;
These returns must be handled, processed, and stored by the government;
The government must send out reminders to report revenues;
The government must send out invoices to collect the tax;
Businesses must pay the tax invoices;
The government must pursue late or missing payments;
The government must pursue and prosecute non-filers;

The BPOL tax system collects data on business activity for every business over the filing threshold.

The government can derive measures of economic activity from the collected data;
The measures of economic activity can be combined with other sources such as Retail Sales Tax reporting to obtain estimates of economic activity in below-threshold retail goods businesses;
Service-businesses below the filing threshold must be measured in one or more other ways;

To the extent that the BPOL tax is greater than the tax(es) it replaces, micro-economic activity might fall, in some cases temporarily, in others, permanently.

To pay for the net tax increase, businesses will raise prices and accept lower profits in varying proportions;
Prices have variable measures of elasticity:

Sales revenue of relatively inelastic goods and services will rise when prices rise;

“Goods and services that are more essential to everyday living, and that have fewer substitutes” are inelastic; [3]
Lower profits are less likely to result, since prices may be increased to cover a greater share of the BPOL tax without causing an equal or greater magnitude adverse effect on demand for goods and services;

Sales revenue of relatively elastic goods and services will fall when prices rise;

“Goods and services with many substitutes, or that are not essential [to everyday living], have higher elasticity”; [4]
Lower profits are more likely to result, since prices may not be increased due to the adverse impact on demand for goods and services;

To the extent that sales revenue of inelastic goods and services is greater than sales revenue of elastic goods and services, net tax revenues will increase;
To the extent that sales revenue of inelastic goods and services is less than sales revenue of elastic goods and services, net tax revenues will decrease;
Producers of elastic goods and services will suffer the greatest adverse effects, since the market will not readily bear higher prices, with lowered demand reducing sales revenue more than higher prices would have increased it; (P_i x Q_i >P_f x Q_f, where “P” is price, “Q” is quantity, “i” is initial value, and “f” is final value).

Reductions in aggregate demand reduces the growth rate of producers;
If the growth rate becomes negative, then producers must shrink;
Producers that must shrink will choose from a variety of methods to reduce costs:

Substitute lower-cost supplies or labor;

This can result in reduced consumer choice or product quality;

Reduce labor hours or staffing;
Sell non-productive assets

Sometimes at a gain;
Sometimes at a loss;

Delay purchase or lease of new or replacement assets;

Those producers that must shrink below their ability to remain viable will close;

This will result in

Reduction in consumer choice;
Less price instability as a new equilibrium point is reached;
Lower employment within a given industry;

To the extent that laid-off workers are immediately unable to find re-employment,

The government will incur the cost of unemployment benefits;
Retail sales tax revenue (and similarly BPOL tax revenue) growth will fall while laid-off workers curtail discretionary spending;
Property tax revenue growth will fall while laid-off workers curtail durable goods spending;
The risk of foreclosure and eviction will increase for laid-off workers;

Foreclosures adversely affect property values, thereby reducing real estate tax revenue growth;

If, as in the past, aggregate wages increase at a greater rate than prices, then macroeconomic activity will recover; however, the change in the makeup of producers and consumers and the level of innovation that occurs in the interim makes the specifics of this recovery less predictable. It might or might not result in increased employment or increased business and tax revenue.

The BPOL Tax is willfully ignorant of the business's profitability

This is likely due to the difficulty of taxing businesses that do not derive 100% of their revenue (and therefore profits) within the county.
For instance, big boxes like Walmart and Target are multi-national companies. How do you tax their profits derived solely from doing business in Spotsylvania County?
Revenue is the only measure other than assets that can be allocated accurately to the county level.

Maximum Revenue Taxed Under the BPOL

The maximum revenue taxed differs according to the type of business; in Spotsylvania County,

$60 billion (in gross purchases) for wholesale merchants
$187.5 million for contractors
$150 million for direct sellers, itinerant merchants and peddlers, and retail merchants
$83.3 million for amusements, business services, developers, miscellaneous, photographers, personal services, rentals, and repair services
$51.7 million for financial, real estate, and professionals

The rationale behind the differing amounts and the differing rates is not clear, and are subject to manipulation by special interests.

In New Mexico, which has a had a statewide BPOL for more than 40 years, there are concerns over special interest carve-outs and “tax pyramiding”, wherein taxes are levied again on goods or services on which taxes were already levied at an earlier stage of production. [5]

[1] For businesses with less than $1 million in gross receipts.

[2] Certain types of businesses have lower annual limits. Palm Readers, for instance, pay no more than $1,000 annually.

[3] http://www.mackinac.org/article.aspx?ID=1247

[4] http://www.mackinac.org/article.aspx?ID=1247

[5] http://www.heartland.org/policybot/results/20927/New_Mexicos_Gross_Receipts_Tax_Offers_a_Cautionary_Tale.html

What is the joke to these possible answers?

2009-04-08T14:42:00.004-04:00

1) Consider a spherical cow [in a vacuum]. (JM)

2) Consider a frictionless cow that lactates uniformly in all directions. (ST)

3) Perform a small-scale test using a Gaussian goat and a Poisson pail. (CT)

4) It's a Schroedinger's cow problem. The milk is in the pail if you do not look at it. (JM)

5) Consider a cow traveling at the speed of light. A stationary observer is standing by. It follows intuitively that accidental cow tipping will undo creation. (CT & AT)

6) (Inexplicably missing)

7) Consider a cow suspended by a linear spring. (JM)

8) Imagine a cow sliding down an inclined plane with coefficient of sliding friction 0.2. (ST)

9) Okay, assume three unit cows are orthogonal to each other. (JM)

10) Okay, haven't you guys ever heard of evaporated milk? (JM)

11) A cow enters the event horizon of a singularity. One result certainly is condensed milk. (CT)

12) First use Schwartzchild's radius and look for black holes. (TC)