Category: Politics

Privatizing Social Security, redux, redux

I saw Paul Ryan on CNN gleefully floating privitizing social security — and, just like when the idea was proposed five years ago and fifteen years ago, the rational is that the stock market in some random time delta has greatly outperformed the investments social security makes.

I remember attending a protest when the second President Bush proposed this at the onset of his first term. One of the local news stations had a reporter milling around the protest looking for individuals to interview for the evening news. She asked me leading questions — are you worried about your parent’s retirement if people start investing their social security money in the stock market — and she was surprised that my objection wasn’t anything so specific. The senseless thing about investing social security funds in stocks (or, more likely, in stock funds that also direct a decent chunk of money toward fund managers and investment firms that create those funds) — the whole social security system came into place because people dropped their savings into the stock market, it crashed, and they were broke. It is historically ignorant to avoid mentioning this fact. Social security forces people to make *some* safe investment choices. Yes, those have lower yields … but they also don’t LOSE money. If you earn enough money to have extra and want to invest it in DWAC or bitcoin or stuff it under your mattress … rock on! But don’t pretend that we’re not getting any benefit of the lower yield investments made with the social security trust money. Also, how in the world is our government funded after all this social security money starts flooding the stock market … the social security trust money is going into special Treasury bonds. Even if 20% of those funds got redirected into investment funds (and that’s a HUGE boon to fund managers, just like 401k’s were a huge boon to fund managers), that’s a lot of money *not* going into US Treasuries anymore.

I will note, too — directing a large pool of money into the stock market would, in the short term, re-inflate stock prices and allow current investors to make a lot of money.

Replacing the IRS

The “fair tax plan would replace federal income tax with a national sales tax. I can see the appeal if you don’t spend any time doing math. I mean, who *likes* filling out their taxes each year? A simple way that eliminates all of the IRS overhead sounds awesome. Make sure actual numbers get as much air time as the nice sounding “you wouldn’t have to fill out the tax form” and “no more wasting money on agents [to collect money people cheat the government out of]”. How much would you have to spend in a year to match your current tax load? Simple — take the amount of federal income taxes you paid and divide it by 0.3 (because the proposed rate I’ve seen is 30%). Do you spend more than that a year on taxable stuff? If so, you are seeing a tax increase!

Someone making minimum wage makes ~about~ $30,000 a year. And, with absolutely no deductions of any sort and as a single filer, they pay $3,394.50 in federal income taxes (they don’t; no one I’ve encountered who makes minimum wage actually pays the full “rack rate” for income tax because they qualify for some deductions). That would mean $11,315 a year in taxable purchases to reach their *WORST CASE* federal tax bill. Fifty bucks a week for groceries is $2,600 right there. Need to buy clothing/shoes? That’s taxed. Need to buy furniture? More taxes.

On the other hand, I pay about $15,000 in federal income tax. At 30%, that would require 50,000$ of taxable purchases *each year*. Maybe if there were some “get out of sales tax free” card that they handed out to anyone making under 40k a year, this would be an interesting way to discourage wasteful consumerism. But (1) that’s hardly the plan and (2) there’s a huge difference between taxing a new Birken bag and taxing *dinner*. The one good point I could see (well, other than there being absolutely no way any of this nonsense goes anywhere in the Senate nonetheless gets a presidential signature) is that, if the sales tax is only on new purchases, it would be a huge boon to resale and repair businesses.

Worse still, the more you make? The easier it is to reduce your overall tax burden. With land and solar, I could go this year without spending money on anything other than homeowners insurance, car insurance, property taxes, and probably new tires for the car. Even if all of these are subject to federal sales tax, that’s maybe $3,000 in tax for the year. More likely, though, only the tires are taxed.

Understanding Scale

There’s all sorts of bad advice about how people just aren’t trying hard enough to not be poor — if only you saved more money like there is a surfeit of money around to save. Work more like you can add a couple of extra hours to each day or just jam another day into the week. And this guy … who evidently thinks the whole problem is that people don’t understand … scale?

The funniest part to me? This dude wants to start with “you don’t understand scale, I’m gonna educate you …” and then proceeds to not understand scale. Small scale purchases will yield the highest price per pound — someone who is buying tomatoes by the tonne certainly isn’t paying a buck a tomato or even fifty cents a tomato. What’s the price for a tonne of tomatoes? The tomato price per tonne data I’ve found are a little outdated, but lets say $100 a tonne for easy mental math. Even if these tomatoes weigh a pound each (unlikely), then every 2k tomatoes gets you $100. He has about 4 million tomatoes … so 2,000 tonnes of tomatoes @ $100 a tonne grosses $200,000. In addition to not understanding scale, he is not understanding gross v/s net income. And, well, tomatoes.

Even if we ignore the required land (which wouldn’t be trivial — planting 150k tomato plants with adequate spacing is going to be 10+ acres), equipment, and labor required to produce and harvest all of those tomatoes. Say they ripen over a 90 day period (which is super generous in my part of the world, but again pretending it’s reasonable for the sake of argument), you need to move some 44,000 tomatoes A DAY for 90 days. Where are these things going as they get picked? How to I transport them to these hypothetical customers? And who are these customers? Even if every customer buys ten tomatoes a week, I need over 30,000 unique customers (every single one of whom repeats their ten tomato a week purchase for three months straight). Are there actually 30,000 people willing to buy a $10/week tomato subscription for the entire harvest season?

This guy’s hypothetical tomatoes aren’t an example of scale, they’re an example of generational wealth. If you inherited a few thousand acres of land (probably complete with an irrigation system and greenhouses), equipment, warehouses, and a fleet of trucks to move ’em … then maybe you could employ a lot of people for planting, harvesting, and selling at farm markets where you might hope to get something even approaching a buck a tomato. Even then, you aren’t netting hundreds of millions of dollars — you’ve got electrical, transportation, and labor expenses to pay. That’s not building a tomato empire from fifty bucks and a handful of tomato plants — that’s millions of dollars in inherited assets to net maybe a million bucks a year.

Reverse Electrification

Back when federal law phased out the sale of incandescent light bulbs, people stockpiled these bulbs instead of buying more energy efficient bulbs in the future. As I see California approve Advanced Clean Cars II — and Washington and New York looking to follow in California’s path — I wonder if de-electrification is going to become an industry.

Basically the reverse of buying a petrol vehicle with a blown motor and converting it to an EV … buying an EV (because that’s all that is available to be purchased as a new vehicle), buying a crate motor (also legal), and swapping the electric propulsion system for a petrol one. Eventually, reduced demand may well turn gasoline into an expensive, niche product produced in some small-batch refinery. Until then, I can absolutely see the incandescent bulb hording types going for re-petroliumed vehicles.

Police Resignations

Scott came across a video where some cop in Florida rips into this lady who drive for about a mile after he put his lights on — along a dark, uninhabited road — to stop at what looked like a petrol station. It was odd because I had an uncle who worked in law enforcement and I distinctly remember him saying to get somewhere well lit and around people before pulling over. Put on your hazard lights, drive slower … but get somewhere in public. And visibility helps the cop too — they can see that the blob in your hand is just your purse.

The video had some text at the bottom that said the deputy involved had resigned … but that could mean he resigned before the department was able to investigate the incident, got a job elsewhere, and is out there right now hassling some other person who simply made the prudent decision to stop their car in a safer spot.

Which made me think about some of the Township meeting — when someone from the fire department or police department resigns? They don’t just say “hey, I’m not gonna be working after Friday” and that’s it. They submit a resignation. The resignation is then submitted at the Trustee meeting — and the Trustees vote to accept the resignation. It seems like we could better unsure officers are held accountable for their actions by not accepting resignations if there is any outstanding complaint against the individual tendering their resignation. Wait for the complaint to be resolved — maybe it was nothing and they can resign. Maybe it bears an investigation. But there’s no leaving to avoid accountability.

Barr, Trump, and Defense Strategy

Watching the recordings of Barr’s testimony to the January 6th Select Committee I couldn’t help but think “Barr is an attorney” — I’d encountered him as the General Counsel of the company when I worked at GTE. I knew him as our attorney that led an effort to deregulate the telephone industry — but a bit of research let me to understand he was also an attorney who has been involved in a major political deal-e-o before (the Iran-Contras affair).

So when I hear Barr saying Trump was ‘detached from reality’ and that his election conspiracy theory was “silly” and “nonsense” … I hear someone setting up a defense strategy for Trump: the Tucker Carlson defense — no reasonable person would have believed these statements to be true. “I didn’t know  wasn’t true” is not considered a valid defense when you’ve been told by dozens of well-informed people — willful ignorance doesn’t remove culpability. Now, I don’t know that Trump will open the door Barr constructed. Detached from reality isn’t a good slogan for campaigning. And going the Carlson route would mean admitting not only that he lost in a completely fair election but also that he continued to bilk his supporters for millions of dollars by promoting his claim to the contrary.

Making Statistics Work for You

The local newspaper had a poll (in a heavily Republican area) asking if readers support gun control — now they didn’t define “gun control”, so it’s possible some individuals said “no” because they envisioned something unreasonably restrictive or some said “yes” because they think ‘gun control’ includes arming teachers in classrooms or something. Based on the way they elected to bucket the data, there’s no clear “winner”.

But looking at it as just ‘yes’ or ‘no’ — almost 80% of the readers said “yes”

They could break it out by party affiliation and show that only 10% of self-identified Democrats said they don’t support gun control where 28% of self-identified independents and 24% of self-identified Republicans don’t support gun control.

But any of these charts clearly show that a significant majority supports some type of gun control.