Michael E. Newton's Blog, page 20
February 17, 2011
Teachers Unions only care about money
With the massive teachers strikes and protests in Wisconsin, I am very afraid for this country. The Bolshevik Revolution began with protests and union strikes. The Fascists in Italy and Nazis in Germany took over in part to stop the socialist/communist strikes. This country hasn't seen strikes like these since the 1920s.
The teachers in Wisconsin don't care about their customers: the students. We hear the cry over and over that "it's for the children," but when the teachers' benefits are called into questions, they abandon the children during the school year to protest about money.
Just so you know, US Airways is protesting today down at Phoenix Sky Harbor over some contract dispute. Airline employees complain they aren't making enough money. What about your customers? Airfares have gone up and quality of service has declined as we are packed into planes like cattle, and we now are poked, prodded, scanned, and molested to get through airport security. And through taxes and airfares, we pay for the right to do so.
Teachers unions. Airline unions. All other unions. All you care about is money, so stop pretending otherwise. "Fairness." "Quality education." "Safety." You don't care about any of that. You just want your share, more than your share, of the money.
Why should those struggling to make ends meet subsidize unions. Why can't union employees compete in the free market like the rest of us? Because they are not worth what they are being paid? When did the land "of the people, by the people, for the people" become the land of "from the people, against the people, at the expense of the people?"
February 13, 2011
Bill of Rights. Good, bad, or indifferent?
In Federalist No. 84, Alexander Hamilton writes:
I go further, and affirm that bills of rights, in the sense and to the extent in which they are contended for, are not only unnecessary in the proposed Constitution, but would even be dangerous. They would contain various exceptions to powers not granted; and, on this very account, would afford a colorable pretext to claim more than were granted. For why declare that things shall not be done which there is no power to do?
I can see both sides of this argument:
By listing certain rights, other are ignored and those in power will infringe on those unlisted rights, even if they are included in the ninth and tenth amendments.
On the other hand, it is possible the government would have more easily infringed on our rights if they were not written down for posterity.
Maybe the Bill of Rights has made no difference in either direction as the Constitution is increasingly ignored and reinterpreted. The government has simultaneously grown its power and reduced our rights so that the Federalist argument against bills of rights and the Anti-Federalist argument for them turn out to be the same thing: different methods of limiting the growth of government, both of which failed over time, but only after working well for many decades.
I must admit that I have an ulterior motive in bringing this up. I am writing about this in my next book. I'd love to hear your thoughts. (And if you have a great idea or quote, I may even quote you in my book.) So please, comment below.
February 11, 2011
New York ruling changes tax law. Get ready for a marginal tax rate of 288%.
New York has decided that owners of property living in another state may still have to pay income taxes in New York. The Wall Street Journal reports:
Connecticut and New Jersey residents with a Hamptons summer cottage or a Manhattan pied-a-terre are about to get a nasty surprise: New York state wants more taxes from them.
A New York court ruled last month that all income earned by a New Canaan, Conn., couple is subject to New York state taxes because they own a summer home on Long Island they used only a few times a year. They have been hit with an additional tax bill of $1.06 million.
Tax experts and real estate brokers say this ruling could boost the tax bill for thousands of business executives who own New York City apartments they use only occasionally. It could also hurt sales in the Hamptons and New York's other vacation-home communities.
I want to focus on this line:
Under the ruling, if an owner doesn't spend a single a day in a home it could still count toward a permanent residence.
If every state applied this ruling and federal court does not overturn it, a person could in theory own housing property in every single state and thus owe income tax in every single state and the District of Columbia. By my rough calculation using the top marginal federal income tax rate of 35% and the sum of all the top marginal state income tax rates, a person could theoretically be taxed at a rate of 288%. (Yes, I recognize it is absurd for somebody to have property in all 50 states and DC, but the whole notion of paying income taxes in every state you own property is equally absurd.)
I urge the federal courts to overturn this ruling. A permanent residence should be and must be the state in which the person lives the most. Income should only be taxed by states once, either by residency or by where it is earned. Not both and certainly not in a state where a person is neither a resident nor an income earner.
Isn't this why we have the interstate commerce clause in the first place? To stop states from conducting commercial and financial warfare against other states or residents of other states?
We don't want democracy in Egypt! We want republicanism.
Now that Hosni Mubarak has stepped down, the media, analysts, politicians, and just about everybody else is calling for democracy in Egypt. For example:
Marketwatch: Real democracy has a chance in Cairo
CTV: Will U.S. help Egypt transition to democracy?
Washington Post: U.S. must take the walk to democracy with Egypt
Joe Biden: "The transition that's taking place must be an irreversible change in a negotiated path toward democracy."
I believe these calls for democracy are made out of ignorance of the word's real meaning. While we want a democratic system over there, we don't want true democracy. Alexander Hamilton said at the Constitutional Convention:
"We are now forming a republican government. Real liberty is neither found in despotism, nor in the extremes of democracy, but in moderate governments."
Here are some more quotes about the evils of democracy:
"Now the first of these to come into being is monarchy, its growth being natural and unaided; and next arises kingship derived from monarchy by the aid of art and by the correction of defects. Monarchy first changes into its vicious allied form, tyranny; and next, the abolishment of both gives birth to aristocracy. Aristocracy by its very nature degenerates into oligarchy; and when the commons inflamed by anger take vengeance on this government for its unjust rule, democracy comes into being; and in due course the licence and lawlessness of this form of government produces mob-rule to complete the series." [Polybius, The Histories 6.4.7-13.]
"And hence when by their foolish thirst for reputation they have created among the masses an appetite for gifts and the habit of receiving them, democracy in its turn is abolished and changes into a rule of force and violence. For the people, having grown accustomed to feed at the expense of others and to depend for their livelihood on the property of others, as soon as they find a leader who is enterprising but is excluded from the houses of office by his penury, institute the rule of violence; and now uniting their forces massacre, banish, and plunder, until they degenerate again into perfect savages and find once more a master and monarch."[Polybius, The Histories 6.9.7-9.]
"And a democracy, I suppose, comes into being when the poor, winning the victory, put to death some of the other party, drive out others, and grant the rest of the citizens an equal share in both citizenship and offices."[Plato, Republic 557a.]
"Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths." [James Madison, Federalist No. 10.]
"I do not say that democracy has been more pernicious on the whole, and in the long run, than monarchy or aristocracy. Democracy has never been and never can be so durable as aristocracy or monarchy; but while it lasts, it is more bloody than either. … Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy. It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty. When clear prospects are opened before vanity, pride, avarice, or ambition, for their easy gratification, it is hard for the most considerate philosophers and the most conscientious moralists to resist the temptation. Individuals have conquered themselves. Nations and large bodies of men, never." [John Adams letter to John Taylor, 1814]
"The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections." [Lord Acton]
I for one shall hope that Egypt forms a republican and moderate government, just as Alexander Hamilton recommended for our own country more than 220 years ago.
Global Climate Volatility disproven
Previously, I wrote about how Global Warming has morphed into Global Climate Change, then Global Climate Chaos, and my preferred term of Global Climate Volatility.
According to a story in the Wall Street Journal, The Weather Isn't Getting Weirder:
Last week a severe storm froze Dallas under a sheet of ice, just in time to disrupt the plans of the tens of thousands of (American) football fans descending on the city for the Super Bowl. On the other side of the globe, Cyclone Yasi slammed northeastern Australia, destroying homes and crops and displacing hundreds of thousands of people.
Some climate alarmists would have us believe that these storms are yet another baleful consequence of man-made CO2 emissions. In addition to the latest weather events, they also point to recent cyclones in Burma, last winter's fatal chills in Nepal and Bangladesh, December's blizzards in Britain, and every other drought, typhoon and unseasonable heat wave around the world.
But is it true? To answer that question, you need to understand whether recent weather trends are extreme by historical standards. The Twentieth Century Reanalysis Project is the latest attempt to find out, using super-computers to generate a dataset of global atmospheric circulation from 1871 to the present.
As it happens, the project's initial findings, published last month, show no evidence of an intensifying weather trend. "In the climate models, the extremes get more extreme as we move into a doubled CO2 world in 100 years," atmospheric scientist Gilbert Compo, one of the researchers on the project, tells me from his office at the University of Colorado, Boulder. "So we were surprised that none of the three major indices of climate variability that we used show a trend of increased circulation going back to 1871."
In other words, researchers have yet to find evidence of more-extreme weather patterns over the period, contrary to what the models predict. "There's no data-driven answer yet to the question of how human activity has affected extreme weather," adds Roger Pielke Jr., another University of Colorado climate researcher.
That's it! The science is settled. I expect to never hear about Global Climate Chaos, Extremes, Variability, or Volatility ever again!
Yea, right…
February 10, 2011
Favorite quotes from the best book every written on investing: "Reminiscences of a Stock Operator"
Even though it was written way back in early 1920s, Reminiscences of a Stock Operator is still the best book ever written about investing/speculation/trading. Here are my favorite quotes:
"The professional concerns himself with doing the right thing rather than with making money, knowing that the profit takes care of itself if the other things are attended to."
"They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market."
"Stocks are never too high to buy or too low to sell."
"The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear…. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit."
"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."
"A loss never bothers me after I take it. I forget it overnight. But being wrong—not taking the loss—that is what does the damage to the pocketbook and to the soul."
"The only thing to do when a man is wrong is to be right by ceasing to be wrong."
"It was very curious how, after suffering tremendous losses from a break of fifteen or twenty points, people who were still hanging on, welcomed a three-point rally and were certain the bottom had been reached and complete recovery begun."
"Speculation is a hard and trying business, and a speculator must be on the job all the time or he'll soon have no job to be on."
"Nowhere does history indulge in repetitions so often or so uniformly as in Wall Street. When you read contemporary accounts of booms or panics the one thing that strikes you most forcibly is how little either stock speculation or stock speculators to-day differ from yesterday. The game does not change and neither does human nature."
"A man has to guard against many things, and most of all against himself – that is, against human nature." Reminiscences of a Stock Operator
"When I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating."
"Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities."
"Among the hazards of speculation the happening of the unexpected–I might even say of the unexpectable–ranks high."
"The big money was not in the individual fluctuations but in the main movements—that is, not in reading the tape but in sizing up the entire market and its trend."
"There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play."
"They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation."
Yes, that's quite a few quotes, but it's such a great book that is full of great lines. (I will have to reread it for the zillionth time once I finish the book I am currently writing.)
In case you thought the sovereign debt crisis was over: "Portugal yields soar, underline euro worries"
The sovereign debt crisis is back! Actually, it never went away…
Portugal yields soar, underline euro worries
ECB comes off THE sidelines to buy Portuguese bonds
Proving that the euro zone's sovereign-debt crisis is yet to be vanquished, yields on Portuguese government bonds continued to climb to levels viewed as unsustainable on Thursday, prompting the European Central Bank to intervene.
Yields on the 10-year bonds soared to a euro-era high of more than 7.6% at one point Thursday morning, according to strategists. The European Central Bank later intervened to buy Portuguese bonds, several analysts said, after staying out of the markets amid relative calm in recent weeks.
February 9, 2011
We've known about 'unknown unknowns' for years
With Donald Rumsfeld's book Known and Unknown making the rounds, I keep hearing the speech that gave the book its title:
[T]here are known knowns; there are things we know we know.
We also know there are known unknowns; that is to say we know there are some things we do not know.
But there are also unknown unknowns – the ones we don't know we don't know.
This idea is not new. I don't know who was the first ever to use this concept, but an old usage and favorite of mine comes from the best book every written on investing, Reminiscences of a Stock Operator:
Among the hazards of speculation the happening of the unexpected–I might even say of the unexpectable–ranks high.
FuturePundit asks: "Why Not Philanthropic Book Buying?"
FuturePundit writes:
Say you are reading a book you really like and want others to read it too. Maybe you just one certain friend to read it. Maybe you want to try to influence millions of people you do not even know. Or somewhere in between. It should be possible to easily buy restricted or unrestricted book distribution rights.
For example, imagine some wealthy guy with an interest in some policy area, someone who already might now be donating to think tanks like, say, the Manhattan Institute (and I happen to know such people in that specific case). They come across a book that delivers some message (could be about health care, banking reform, immigration, etc) they so enthusiastically agree with that they want to see it reach a much wider audience. It ought to be possible to go to a web interface of an online bookstore or publisher and bid for the right to make the next 10,000 copies of the book free to download. Or bid for the right to make the book freely downloadable for the next 3 days or the next month. Or make it free to download only in one geographic area (e.g. where a measure is on a ballot and you want people to read a relevant book).
If any philanthropists would like to "subsidize" the sale of The Path to Tyranny: A History of Free Society's Descent into Tyranny, let me know and we'll work something out.
Arabs waking up? We shall see.
One political analyst told AP:
Arab peoples used to fear their authoritarian regimes. Things have changed and now Arab leaders fear their peoples.
Reminds me of a famous, often misattributed, quote by John Basil Barnhill:
Where the people fear the government you have tyranny. Where the government fears the people you have liberty.
Let us hope and pray these authoritarian regimes are replaced by something better. As I write in The Path to Tyranny:
Furthermore, once tyranny is established, it is difficult to abandon. Most often, upon the death or overthrow of one tyrant, another tyrant takes his place. Aristotle points out that "a tyranny often changes into a tyranny, as that at Sicyon changed from the tyranny of Myron into that of Cleisthenes." Sian Lewis gives an even more impressive example: "When one looks before a tyrant such as Pittacus or Cypselus to see what kind of government they replaced, one tends to find not aristocracies or monarchies, but an infinite regress of tyrants, each apparently overthrown by a successor in the name of liberty: at Mytilene, for instance, Pittacus overthrew the tyrant Myrsilus, who had in turn overthrown Melanchrus, and before Melanchrus we hear of Megacles, who put down the rule of the club-wielding Penthelidai."
This succession of one tyrant followed by another makes it all the more important to avoid the first tyrant. Plutarch reports that Solon "uttered the famous saying, that earlier it had been easier for them to hinder the tyranny, while it was in preparation; but now it was a greater and more glorious task to uproot and destroy it when it had been already planted and was grown."
Overthrowing authoritarianism and replacing it with republicanism will not be an easy task. But for the first time in recent history, it appears that the Arabs desire and are willing to fight for true freedom.
