How idiotic is Elizabeth Warren’s tax plan? This idiotic.

Remember how I suggested progressive candidates’ spending plans would contribute to a major sell-off in financial markets and lots of people losing their jobs?

From the Wall Street Journal, Elizabeth Warren’s Tax Plan Would Bring Rates Over 100% For Some:

Democratic presidential candidate Elizabeth Warren has unveiled sweeping tax proposals that would push federal tax rates on some billionaires and multimillionaires above 100%.

That prospect raises questions for taxpayers and the broader economy that experts are starting to ponder: Under which circumstances would taxpayers have to pay those rates? How might that change their behavior? And would investment and economic growth suffer?

Potential tax rates over 100% could result from the combination of tax increases the Massachusetts senator proposes for the very top tier of investors. She wants to return the top income-tax rate to 39.6% from 37%, impose a new 14.8% tax for Social Security, add an annual tax of up to 6% on accumulated wealth and require rich investors to pay capital-gains taxes at the same rates as other income even if they don’t sell their assets.

Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.

Source: The Wall Street Journal

Of course, this image does not quite capture the impact of the legislation on investment choices because it is only taking into account proposed changes to federal tax law. If you live in a high-tax municipality and/or high-tax state, you are even deeper in the hole. (In places like Chicago, you’d be deeper in the hole to several independent but overlapping taxing districts on top of this.) So you could see these proposals as adding to the factors that would drive the exodus out of high-tax jurisdictions, but that’s already inevitable under current tax laws.

Why does this matter? If you are a Millennial, you probably could care less about how much a multi-millionaire or billionaire has after tax as long as your progressive political pied piper is promising the federal government is going to forgive your student loans and provide you with “free” health care, supposedly on someone else’s dime, someone you are being told you should resent with all your heart.

Tax rates over 100% mean that no matter what a wealthy individual does with their money they will be seeing their wealth confiscated from the government. This removes literally every incentive that person has to put their money to work in the United States. They have zero incentive to invest in companies. They have zero incentive to invest in infrastructure. (The WSJ doesn’t seem to grasp the latter, but a wealth tax would remove the incentive to invest in municipal bonds, unless municipal bonds are specifically removed from the tax. I am not sure they will be, either. Ironically, progressives have historically been some of the biggest proponents of removing tax advantages for public projects because of their economic resentment of the people who can afford to buy them. Yes, they care more about sticking it to the “rich” than they do about whether your kid is spending the day in a school building that was built after we put a man on the Moon.)

These involve putting their money at financial risk, now with no possibility of reward. No rational economic actor ever chooses to do that.

This means they have zero incentive to invest in any activity that ends in workers receiving wages. Even worse, they would have to liquidate current investments to pay for these taxes.

This right here is why socialism always fails. You have people making decisions about how tax policy makes them feel, not what tax policy actually does.

I’m sure if you ask Warren or Sanders about these consequences, they will tell you that having rates over 100% is a feature of their plans, not a bug. As the WSJ article notes, they are running on the idea that concentrated wealth should be broken up and redistributed. They just don’t quite understand that the opportunity cost extends to all the things happening in our economy that come from that wealth being productively invested. These folks are, after all, the products of education institutions that call Karl Marx an economist and not a bad philosopher. They can’t think clearly about economics and it shows in every word they utter.

The ultra-wealthy are not the only people who will be hit by this system, either. Anyone who has done what they were told and built up a serious nest egg to carry them through their golden years will get hit. Progressive politicians love to refer to them as “the 1%,” but really they are capturing anyone who habitually saves and small business owners, where their livelihood is their major asset, most of whom have worked their asses off for their entire goddamn life and are not debutantes trying to figure out what whether she wants diamonds or rubies on her chihuahua’s collar. Progressives live in a world of caricatures, not the real world.

Beyond the estimated 75,000 households that would be hit by the wealth tax, Ms. Warren’s capital-gains plan would transform investing rules for the top 1%—about 1.5 million households.

Under Ms. Warren’s plan, their unrealized capital gains outside retirement accounts would be taxed at 39.6%, just like ordinary income, plus an existing 3.8% investment-income tax. Add to that her new 14.8% investment-income tax to bolster Social Security, and state taxes, and combined tax rates could reach 70% in California and New York City.

The effective tax on business investment could actually be higher because these personal taxes would come after a company has already paid a corporate tax rate, under Ms. Warren’s plan, of 42%, up from 21% now.

I think one serious unconsidered consequence of this is also that investment in US companies may not grind to a stop, but instead is replaced with inflows of foreign money. That is to say, places like China will see progressives’ tax code as an opportunity to purchase the United States’ economic engine at a steep discount.

It never gets less hilarious that these are the people the Democratic Party is offering up for president. It’s like it is a competition to see who can horrify the electorate the most.

Of course a plan like this would likely not be enacted if Warren were implausibly to win the election. She’d spend the entire election trying to convince Americans that she can finance a sliver of the spending she has proposed by only impacting high net worth households and businesses. Then a consensus would emerge that it would be disastrous, so they would end up implementing the kinds of policies their pseudo-socialist darlings in Europe have – steep retail taxes and others that impact the middle class directly. Hahaha, jokes on you, you elected this batshit bullshit artist.

And the middle class can get used to the fact that they are poorer than they used to be and that they live in a society with no serious possibility of upward mobility, because their money is going to pay for a massive bureaucracy instead of savings.

Interesting (and tedious) tidbits from Nikki Haley’s new book

So I read Nikki Haley’s new book, With All Due Respect: Defending America with Grit and Grace last night. I am mostly ambivalent about it.

I like Haley personally and always imagined she’d end up being the first female president. And I love everything associated with South Carolina. To be honest, however, I wasn’t very impressed by her book.

I suppose part of my reaction is that I do not usually read vanity books by politicians, and that is certainly what this turned out to be. If I am going to read a book about public policy, it’s going to be about public policy and not someone’s feelings about public policy.

Her book reads like it was written by a chick, sorry not sorry. The whole thing is about how she feels about this or that. It’s like she was aiming for the Republican version of Michelle Obama’s Becoming. Her audience is more book club than professional analyst. And that’s fine. She clearly wants to position herself as President Trump’s heir apparent, and that means speaking to the least common denominator. Except I think the least common denominator is a heck of a lot smarter than she thinks it is.

At any rate, here were my main takeaways from the book:

The slacktivists who try to capitalize on mass murders are beyond awful.

Haley was Governor of South Carolina during the shooting at Emanuel African Methodist Episcopal Church (“Mother Emanuel”) in Charleston, the oldest African-American church in the United States. She refuses to use the shooter’s name, which I think is a good idea, and provides short biographies of everyone who was murdered that day, which I think is great. That chapter will absolutely break your heart. I learned a lot details about the folks who perished that I did not know before. I learned that the shooter had visited the church before carrying out the massacre and was treated with such kindness that he briefly reconsidered his evil intentions. Even during the massacre, members of the church were trying to reason with him, saying “you don’t have to do this.” One mother shielded her daughter and told her to play dead, even though her son (who had tried unsuccessfully to shield his aunt) lay dying next to her.

Haley explains that this shooting occurred in the aftermath of Ferguson (an event, incidentally, that was exploited by Russian propagandists trying to wreck havoc on our election process) and she did her best to prevent her state from exploding with racial animosity and potentially more people being hurt or killed. She goes into long digressions on the “New South,” which has mostly put its racist past behind it. She sees her own political career as evidence of that.

She blames others – whom she notes are not from the South, and thus rely on caricatures of the South instead of understanding the tremendous progress that has been made – for trying to inflame instead of extinguishing destructive passions.

Her primary target is former President Obama. She said that when Obama called her after the event, he was cold and inauthentic in offering her sympathies. He used the event as an opportunity to speechify about identity politics. She thought his behavior was a distraction from honoring the victims and that he was inflaming the people she was trying to calm. He was an instigator among instigators in her mind.

She says the same thing about Al Sharpton. Haley attended the funerals of every victim of the massacre, including a Democratic state senator whom she knew very well personally and considered a good friend. She called him immediately upon learning about the event, without knowing that he was one of the people who had been killed. She says she is haunted by the thought that his phone was ringing in his pocket as he was laying there, dead, in the church.

Sharpton showed up for the first funeral and inserted himself into the program. Instead of speaking about the deceased, whom he did not know, he immediately got political… at a stranger’s funeral. He attacked Haley from his “stage,” and was called out for his terrible behavior. He went back home after that and left the families of the other victims alone.

These folks were among mobs of people who had nothing to do with Charleston or the deceased who swarmed the city after the event trying to sow chaos. Here were families dealing with the most impossible grief, with opportunists trying to disrupt their world further for the Twitter glory.

She says she took the programs home from the funerals and spent time each night trying to introduce her children to the people who had died. She would sit her family down and repeat to them everything she had learned about them. This reminded me of something we like to say in my family when someone passes away: “I will remember you to everyone.” I was also touched by the motto of one of the deceased – someone who just sounds like a good church lady you would love and come to depend upon – always “be kinder than necessary.”

She has a whole chapter devoted to this history of taking down the Confederate flag at the capitol, which frankly I thought was idiotic and I wish she had not included. That whole chapter is an opposition researcher’s dream.

She does not share Michelle Obama’s perspective on “white flight.”

Haley shares a litany of experiences that all boil down to her being rejected because of her race or gender. She spends a lot of time talking about identity politics only to dismiss it.

Haley was an Indian-American, the child of immigrants, who spent most of her early life in rural South Carolina (a town with less than 3,000 people). Her mother put Haley and her sister in a local beauty pageant when she was very young. The town selected both a black and a white beauty queen each year. The judges were confused by the girls, who fit neither category. They disqualified them and gave them a beach ball as a consolation prize.

She also talks about a black Democratic colleague who told her that she was not a “real” minority because she was from India. He called her “a conservative with a tan.”

Haley’s argument is that the fact that she experienced these things but still managed to become governor of a Southern state is evidence of how much progress the South has made to overcome racial bias. She does not like people like the Obamas, for whom race looms large in every aspect of their lives, even after becoming leader of the free world.

I just don’t even know what to say about things like that. I grew up in Los Angeles during the 1990s, which was full of racial animosity, and working in education policy for a spell convinced me that there is still a lot of quiet racial animosity even in polite places. Contrary to the way the mainstream media paints rural America, rural America is more of a functional, tolerant melting pot than urban America. That comes from necessity. People have to get along to survive. People in rural areas tend to get along easily across ethnic groups, religions, and economic classes.

I share her exasperation with the media who like to paint flyover country as a bunch of racist, sexist, homophobic hicks. There have been more openly gay mayors in the South and Midwest than there are in New England or California. Many of the same Appalachian counties who voted for Trump also voted for Obama. Places that pride themselves on being polite and hospitable are usually polite and hospitable.

But it is possible for Obama and Haley to both have factually true narratives, neither of which lend themselves to generalizations about what “America” as a whole is like. Obama can experience white flight in Chicago’s suburbs without suggesting that all of America is racist. Haley can experience thousands of acts of colorblindness without dismissing that racism continues to be a significant experience for some people. But I would submit to you that none of this is good politics. The majority of Americans are over identity politics, and are tired of arguments both for and against it. They just want you to shut up about it already.

James Comey backed Haley up on her decision for South Carolina not to accept refugees from war-torn countries.

Not going to lie, I physically rolled my eyes when she invoked him as an authority. Does she not have an editor?

Haley says she refused to accept refugees because she did not want even a single potential terrorist relocating to her state. She says she did not come to this opinion straightaway, but spoke with then-Director of the FBI James Comey about background checks on refugees. Comey told her the United States has no meaningful information about any of the refugees that were being brought in. He said he could offer no serious analysis of the threats they may or may not pose. After the Paris concert shooting, which left 130 dead and over 400 people injured, she decided to balk on the refugee issue.

She tells a story about how complicated thinking about refugees is. Her husband, Michael, who served in Afghanistan, worked to bring his team’s interpreters to the United States. The military’s Afghan interpreters served an intelligence function and translated threats to their units, making them prime targets. The Haleys used their connections to Senator Lindsey Graham to make sure the interpreters could seek asylum in the US and become citizens. She says the Lutheran Church was helpful in getting them temporary housing and teaching them English. (I used to volunteer for a refugee ESL program – for refugees from the Congo – through the Roman Catholic Church, so I know exactly the programs she is talking about. But I don’t understand why their interpreters needed to learn English. How were they interpreters? But whatever.)

Tillerson was insufferable and he hated Haley because Trump offered her his gig first, which she turned down.

It’s a good thing that Haley does not spend much time in “tell-all” mode, because everything she has to say about internal politics is not as flattering to her as she thinks it is.

It really does not require much imagination to believe Rex Tillerson is a colossal prick who thinks he’s the smartest person in every room and gets along with approximately no one. But in Haley’s own account of events, you almost can’t blame him for thinking she’s an unqualified brat. No one is going to read this book and hold her in the same esteem as, say, Condoleezza Rice.

She says Trump summoned her initially to serve as his Secretary of State, a position she turned down…. Well, she does not say why, exactly, but you are left with the impression that she thought it was too much effort.

So Reince Priebus then suggests that she consider being ambassador to the United Nations. Her reply – in front of Trump – was “I don’t even know what the United Nations does! All I know is that everybody hates it!”

I seriously almost closed the book at this point. Does she think this is adorable? It’s not adorable. How stupid do you have to be to put something like that into the book that you are presumably using to introduce yourself to the electorate? *head explodes*

She then laments that Tillerson insisted on interviewing all her hires himself to make sure she was not screwing up US diplomatic efforts by importing a bunch of her staff from South Carolina to the United Nations. You are left thinking, you know, maybe the folks who worked on your campaign back in Columbia, South Carolina, aren’t experts on Syria? Maybe his concern was… reasonable?

The part most discussed in the media revolves around a few pages where she alleges that Tillerson and John Kelly were plotting to sabotage Trump. This no doubt will get a lot of nods from anyone who cares about the Deep State, but it is so painfully stupid and unprofessional within actual context that I had to re-read it to make sure she really said it.

In her telling, Tillerson and Kelly corner her in an office where they proceed to tell her that she’s not qualified to do her job and how Trump made an epic mistake turning the UN ambassador into a cabinet-level position (which she said was a criterion for her accepting the position; in previous administrations, she would be answering to Tillerson). In a split second, they go from being sexist dicks telling her how worthless she is to trying to “recruit” her into their nefarious Deep State plot, which seems to consist merely of doing whatever they want. I mean, come on. Either they think you are useful or you are not.

The only thing you are left with here is the observation that none of these people currently work for Trump and that’s probably not a bad thing for the American people.

UN Security Council Resolution 2334, which condemned Israeli settlements on the West Bank, was timed not to interfere with Hillary Clinton’s presidential bid.

The Obama administration abstained on the vote, allowing the controversial resolution to pass, the first time the Security Council had adopted a measure like this. But they waited until December 2016 to do it, so Hillary’s many Jewish supporters would not sit out the election. Let the cynicism that involves wash over you for a moment.

China forcibly sends North Koreans who escape the country back.

We brought in two North Korean women who had successfully escaped after having been caught by the Chinese and forcibly sent back to North Korea. The stories they told were blood-curdling. One woman was sent back to North Korea by the Chinese three times before she finally escaped. The punishment reserved for these escapees, who were mostly women, is severe. The woman told of being forced to abort without anesthesia the child she conceived in China. At one prison camp, the bodies of the inmates who had starved to death were fed to the guard dogs. Both women told of being raped, starved and forced into hard labor.

United Nations refugee statistics are bogus.

I’ve always had this impression, but it was somewhat interesting to learn the mechanics of how the United Nations manipulates data to inflate the financial obligations of member countries.

If you go to the United Nations website, they say there are currently over 70 million forcibly displaced people in the world. For the sake of comparison, there are 327 million people living in the United States. They say 26 million of those are refugees and 3.5 million are asylum seekers. (We have more asylum seekers than that currently living illegally in the United States, but I digress. Their numbers suck in many ways.)

How do they get such high numbers for displaced people? The answer – which is absolutely insane – is that they see being displaced as genetic, not a physical situation. If you are a descendant, for example, of the original Palestinian refugees – even if you have successfully relocated to another country and been granted citizenship there – you are considered a refugee. You may have never known anything besides a comfortable suburban existence in your entire life, but according to the United Nations, you are a refugee and entitled to international financial aid. Thus you have the United Nations turning into an inter-generational income stream. This is your tax dollars at work, because the United States is footing most of the bill for this.

The United Nations Relief and Works Agency has other bizarre problems too, according to Haley. They use member funds to pay for schools and health care for Palestinians, and this includes schools where the textbooks preach about violence to Jews and where the schools themselves are way stations for tunnels beneath the border (meaning the schools are effectively UN-funded terrorist installations). It’s really kind of ironic that American taxpayers are paying for stuff like this when the school districts of major US cities are in acute financial distress and US politicians are complaining about medical bankruptcies.

It is beyond dispute that Iran continued to work on its nuclear weapons program under the Obama administration and early Trump administration (i.e. when Tillerson was persuading Trump to roll over the Iran deal while they debated strategy internally).

A lot of people go around talking about how they hate the Iran deal because blah blah blah pallets of cash. Not to suggest that freeing up as much as $100 billion for the largest state sponsor of terrorism is a good idea.

But the most bonkers thing about the Iran deal is that it was deliberately drafted to allow Iran to proceed with building nukes. Which they of course did.

Obama said the deal provided for “anytime, anywhere” inspections of Iran’s facilities, which is almost true. The inspections apply only to *declared* nuclear sites: “for any other locations that were suspected of harboring nuclear activity, the Iranians could deny access to inspectors for up to 24 days.” And there were many such sites. So the bureaucrats at the UN would dutifully inspect the sites Iran told them to inspect. If intelligence picked up another site and the administration decided to make a big deal of it, they would ask to inspect that site. And Iran had nearly a month to relocate equipment to another undeclared site or tell inspectors to pound sand. Yeah, there was no way that the people negotiating the agreement did not understand they were creating a loophole.

Try to process for a second how insane someone would have to be to think a nuclear Iran was a meh idea. And then you’d have John Kerry.

But you would also have a lot of people in Trump’s cabinet too. The man who set out campaigning to end the Deep State ended up hiring a lot of Deep State folks, according to Haley:

Supporters of the [Iran] deal argue that the Trump administration set out to destroy the Iran deal out of a desire to undo President Obama’s singular foreign policy initiative. The truth is, there was so much support for the deal in President Trump’s cabinet – not to mention virtually unanimous support among the foreign-policy establishment – that the easy thing to do would have been to stay in the deal.

Trump’s biggest problems have always been personnel problems. He has hired some terrible people (he can’t blame anyone but himself for that) and he and his proxies have failed to fire many, many more terrible people. It’s a difficult thing for outsiders to sort out all the rubbish within government ranks, but that should not be an argument for only electing people who have been in DC forever. Your choices are essentially deal with a lot of unnecessary drama or continue to send ever more of your paycheck to pay economic rent to corrupt losers. Change is not easy.

Haley thinks Assad is bossing Putin around, not the reverse

She says this many times throughout the book with absolutely no logic behind it. I’m kind of curious what she thinks this means. Russia is not exactly the superpower that it once was, but I can’t imagine that its leader is the lapdog of a small country savaged by a civil war. Perhaps I am wrong about that, but I’d like to better understand the dynamics there if I am.

Haley hates being called “ambitious,” a pet peeve she brings up about thirty times in the book. (Kidding, I didn’t count, but it’s enough that you get tired of it.) She clearly saw utility in being UN ambassador because it could give her the foreign policy bona fides to run for president later. And that’s hardly a stupid strategy – you see daily through candidates like Elizabeth Warren how much of a shortcoming having zero foreign policy experience can be in a campaign.

But Haley’s folksy way of talking about foreign policy is not much of an asset, at least not the way she talks now. She does well when she acts like a ball-buster, not someone who whines about ex-CEOs who really act like Mean Girls. Despite the title, this book was not written by the ball-buster version of Haley.

Why pulling out of Syria is the only sane decision

I fully support President Trump’s decision to pull US troops out of Syria. I don’t agree with everything Trump does, but in this instance he is displaying exactly the kind of courage in public policy that our country needs right now. I think there are a lot of Americans who quietly agree with me. I do not think these views have been articulated, even by conservative media. So I am going to articulate them here.

First, I am going to cite my personal bias: I am from a military family.

My father was a combat veteran in Vietnam. He was drafted into the Army in 1968-69, the peak of the war over there. He fought as a door gunner on a helicopter gunship with the 101st Airborne. Men fighting in his position had a life expectancy of 30 seconds in battle. Our family considers it a bona fide miracle that he survived. Most of his peers did not.

Like most combat veterans, my father refused to tell many stories about his time in combat. My parents saved the letters they wrote each other during his time there. Well, they saved his letters to her; he was forced to burn her letters after he read them. It was common for the opposing side to steal family correspondence and write vicious things back to soldiers’ loved ones back home. And they could contain sensitive information about the war.

Occasionally, he would see a movie about Vietnam and then he’d go sit in his truck and sob for hours. He had violent nightmares through my entire childhood, and continues to have violent nightmares now that his is in his 70s.

Imagine your dysfunctional government forcing you to experience such horrific and traumatic events that you are having nightmares about them 50 years after the fact. I can tell you from personal experience that combat quite literally re-wires your brain. It permanently changes your neural chemistry and the pathways your mind is willing and able to entertain. The psychological impact of combat on veterans is on par with a profound physical handicap.

My father came home from war in the height of the cultural revolution in the US. He experienced many of the typical things veterans experienced then. He was chewed out by strangers when they saw him in uniform. He attempted to finish college, but his mind was not able to focus on the ordinary concerns of young adults post-combat. He came home one day and threw his medals in the garbage – including his Bronze Star for Valor in Combat, which he earned for fighting in battles like Hamburger Hill.

I come from a family of immigrants, but I am proud to say that every generation of my family has produced a soldier for this country. My grandfather stormed Normandy in World War II. My cousin was stationed in the DMZ in Korea, and knows what it is like to stand guard at a place where a firefight could break out any second. We are a family of warriors, and I love that.

My father has no judgment for Trump for dodging the draft in a war that he himself would have preferred never to have been sent to. He considers that a rational decision. My father had to kill a man on his 21st birthday – an event that most Americans celebrate by going out bar-hopping with friends and getting black-out drunk – who was sneaking into his camp in the middle of the night to slaughter his fellow soldiers. He understood the necessity of that action, but he still struggles with the image of that man’s eyes in the dark night. He had to end that life. The life of someone who probably felt equally justified in what he was about to do. Many people talk about such decisions, from the luxurious position of not having to make them in the world that exists beyond social media, as if they are black-and-white political issues. They absolutely are not.

My father’s situation was not all that different from the experiences of soldiers in the Middle East right now. They are off fighting in wars that most Americans have forgotten or never knew existed. If it weren’t a perceived opportunity to snub Trump, the media would not be covering any aspect of these conflicts right now. In the Common Core era of American education, I doubt most young Americans can point to Syria on a map. Or Yemen, for that matter. Or Somalia. Many were only born when the events that sent us into Afghanistan occurred. There were no actual events that sent us into Iraq. That was a scam. We send soldiers to risk their lives in wars that are, frankly, mostly irrelevant to most Americans. At the very least, they are not understood by most Americans. I am certain our Founding Fathers never anticipated such a situation. Heck, some of these wars have no formal authorization from Congress. That would break the Founding Fathers’ brains.

We have spent essentially $8 trillion on wars in the Middle East in my lifetime. And the same people who can’t find Syria on a map likewise are not experiencing the economic fact of having to pay for those wars. This is not like World War II when food is getting rationed and women can’t buy pantyhose. Where every family knows someone who died in combat and the sacrifices seem necessary and inevitable. The swamp creatures that keep us in these eternal wars are borrowing that money from China and Japan, with interest, and they just re-finance that debt over and over and over again. The cost of servicing the country’s debt alone is starting to become a budget component that should not be ignored. But we just start financing more of the country’s day-to-day operations instead of changing. That’s a problem for future generations. It’s immoral.

Think of the opportunity cost of that spending for a second. Imagine some parallel universe where Americans spent $8 trillion on public schools, infrastructure, or the space program. We would be a very different country right now. The most popular people on the debate stage would not be apologists for Stalin’s ideology. A lot of things have shattered this country and its political discourse, but it’s not hard to see the wars in Iraq and Afghanistan as the proximate cause for our own cold civil war.

The thing that pisses me off the most about the wars in the Middle East, however, is this: If we were going to intervene militarily in any region right now, it should be Central America and providing military assistance to Mexico to break apart its drug cartels. The unrest in these countries – which are not on the other side of the world from us, but merely to the south – is creating real humanitarian and economic crises for the US. Right here, on our soil. Yet we keep sending our grandchildren’s treasure to the Middle East. A trillion here, a trillion there. If you challenge that status quo, you must be an irrational, uneducated deplorable.

In the last federal fiscal year, nearly one million people – mostly humanitarian and economic refugees, but accompanied by a not insignificant number of bad actors as well – attempted to cross the southern border. Most of them have nothing and pose nothing but a social cost on the US population. They are experiencing incomprehensible suffering, and the US – wealthy as this nation is – is not in a financial position to support all of them.

Most of the heroin and other drugs on the streets in the US have come across the southern border, and cartels know how to use the humanitarian crisis they have helped create to conceal their evil shadow economy. Every major city in the US now has a homelessness crisis that is really simply a drug crisis. Even the tiny beach town that we live in now has several heroin camps hidden out in the middle of the jungle.

If you bring up these concerns about immigration policy, you are usually deemed a racist or xenophobe, no matter how many good intentions you have. Here in Florida, we live among the refugees from socialism and drug cartels. I can tell you from talking to these people directly that they are not Bernie bros. The naivete of our politics stuns them.

How did we get to the point where we will spend trillions of dollars fighting in wars the US was never logically a counterparty to, while addicts rot in plain view and our southern border is plagued with the destruction of brutal, evil tyrants that are only an hour plane ride away from the US?

There are no heroes in the civil war in Syria, no matter how many crocodile tears the establishment sheds for the Kurds. Our participation in that conflict is not as simple as the media and policymakers who are on defense contractors’ payrolls make it seem. During the Obama administration, the Pentagon and the CIA were arming folks on both sides of the conflict. Americans were seriously paying for US interests to fight each other. As long as more guns get sold, Washington doesn’t complain. For the same reason they don’t care that cancer drugs cost $50,000.

If you want to argue that the US should stay in several conflicts in the Middle East indefinitely, that’s fine. But I want to hear you acknowledge that in saying that, you are also saying that you want kids in the US to get a garbage education. That you want people in the US to sit on bridges with poor safety ratings during their morning commute. That endless wars are more important than health care reform or stabilizing Social Security and Medicare. That sending our youth to make sure the Kurds and Turkish forces play nice is the single biggest political priority to you. Because when you quantify the cost of these wars, that is where it ranks in reality.

Medical catastrophes are not stories about health insurance

When it comes to opinions about health care, there are two kinds of Americans. No, I do not mean Republicans and Democrats. There are (1) people who have actually experienced a medical catastrophe, and (2) people who have not yet experienced a medical catastrophe. (But don’t worry – you and your loved ones are not immortal. You will learn what it means to be vulnerable eventually.) I used to be a government economist, and I can tell you… the policy wonks have no idea when it comes to the myriad problems with health care. This reality is why so many people of all political persuasions hate the “establishment.”

By my reckoning, I have now experienced four medical catastrophes. A family member miraculously survived an aortic aneurysm, something that is damn near universally fatal. A family member survived a horrific car accident that involved being cut from a car with the Jaws of Life and required a month-long stay in the ICU. I gave birth to a critically ill child. And, as followers of this blog know, my husband recently accidentally swallowed a metal needle from a grill brush that worked its way through his entire digestive tract, requiring a week-long hospitalization.

Needless to say, I have learned a heck of a lot more than I ever wanted to learn about how health care and long-term care works in this country over the last ten years. I’ve navigated the nuances of government programs in several states. Our household has been covered by the best private insurance that money can buy and by Obamacare plans. I can tell you that private insurance is a hell of a lot better than what was offered under Obamacare. Honestly, I think Obamacare is deeply immoral and far-from-progressive policy.

A little digression on Obamacare

For the couple of years that we had an Obamacare plan in Kentucky (because there were no good private options available to self-employed individuals), it was an absolute nightmare. I had to get our daughter’s kindergarten vaccinations at a public university hospital because literally no pediatrician in our city would accept Obamacare. None. I called every single one. It was the first question their secretaries asked when they picked up the phone, even before asking your name or the age of your child. “Do you have Obamacare? We do not accept it. You will have to pay for your appointment in cash, up-front.” The hospital knew that it had a captive group of customers too, which is why a 15-minute appointment with a nurse practitioner at the children’s hospital there cost twice as much as the permissible amount for a doctor’s visit under Obamacare. They essentially got to bill twice for services, knowing that customers would end up having to pay the gap. They could go nowhere else for care because their insurance cards were radioactive.

Staying under Obamacare, we would have been forced to pay over $1,000 a month to a nonprofit that had only been in the insurance business for a couple years because every big insurer had been driven out of the state. We might as well have been uninsured from a financial perspective. That’s not quality health care, but we counted as “insured” for government statistical purposes, which is all that mattered to the program’s proponents. They continue to congratulate themselves for doing this to people. They radically transformed your life!

And that was without a catastrophic event, which would have cost us tens of thousands of dollars even under Obamacare. We could have handled that expense, but I know most American households would have been sent over the edge. The notion that Obamacare is saving normal households from health care-driven bankruptcy is an outright lie, and people like Bernie Sanders are correct to point that out. And really all you need to do to understand that is to get a simple quote.

You know why the level of uninsured is increasing now that the Trump administration has removed the tax penalty for not carrying insurance? Because Obamacare was always bullshit as far as coverage goes and young people now have the freedom to choose to be uninsured rather than being fleeced for coverage that they do not perceive a real need for. I’m not saying being uninsured is a good idea, but it is undeniable that they are doing what they think a rational economic actor should do under the circumstances.

The Affordable Care Act was nothing but a giant Medicaid expansion. If you are on Medicaid and were marginally qualified before in terms of means testing, you love the ACA. If you actually purchased coverage on an exchange, which is quite different from Medicaid, it is pure unadulterated hell to deal with. And chances are you are choosing not to see a doctor when you actually need care because it costs so much to do.

The whole logic of Obamacare was to end the practice of people going to the emergency room for standard health care. Guess what? If you go to the ER a decade into the Obamacare era, you still have a three-hour wait to get into a room. Be sure to tell them you have difficulty breathing and are in excruciating pain. It’s about the only thing that will help you see a doctor within five hours. If you don’t do that, you will be waiting behind sixty families who really only need antibiotics that have already learned how to game the system. I watched my husband sit for several hours with a needle lodged in his throat while doctors saw a parade of people who were there before us with colds and the like. The ER is still where a lot of people are getting care, even with a litany of subsidized programs.

Hospitals charge immense amounts for phantom care

But anyway, the point is to talk about why looking at health care from an insurer’s perspective is useless. Changing who the bills go to will not cure the system. In fact, having taxpayers absorb everything will probably make it much worse. Much like allowing college students to borrow virtually unlimited amounts of money from the federal government at subsidized interest rates jacked up the cost of college astronomically.

I am thoroughly convinced that Democrats have absolutely no idea what insurance of any kind is. I mean, they can’t explain how it functions as a financial instrument. They talk about it as if it’s a newspaper subscription instead of a risk pool that redistributes costs. There is an episode of the comedy show Superstore that offers an excellent parody of this mentality. The episode where the annoyingly idealistic and naive Jonah creates an employee health care fund for the store, only to discover that half the employees routinely milk the system and the risk associated with their health costs could not be reasonably divided among the employees even if they were all rich. I highly recommend hunting it down so you can appreciate exactly how stupid Obamacare is. And how Medicare for All is even worse. It is hilarious either one has made it past the thought experiment stage.

If you have ever had a loved one in the hospital, you understand that most hospitals are financial predators masquerading as charities. When my husband was in the hospital recently – to be monitored, which means he saw a doctor for five minutes a day, and even then we had to explain to the latest doctor on call what was going on – the hospital charged us … no kidding, here…. $1,000 per hour for the hospital stay. It was the most expensive daytime television our family had ever watched. To be monitored overnight for the first hospital he was at resulted in a bill for $24,000. The hospital did absolutely nothing to improve his situation during that time (in fact, they arguably made it worse). Over twenty thousand dollars to lay in a bed.

When our daughter was in the NICU after being born, the hospital charged us around $30 for every package of baby wipes she required. Each day, we watched the nurses open a package of baby wipes every time she needed to be changed, and then toss the package and remaining wipes in the trash afterwards. They were the same way with packages of gauze, and many other things. If we had known that we would be paying $30 a pop for something you could get for $1 at Walmart, we would have seen the whole episode differently. The charges from specialists were nothing compared to the overall cost of being hospitalized, which in the end was well over $1.5 million.

I have a friend who is in perfect health – perhaps too perfect health, because she injured her knee as a marathoner and had to have some ligaments fixed. For OUTPATIENT surgery, she was charged $75,000. She was in and out of the hospital in three hours, with a $75,000 bill. Did she get the world’s best knee surgery because she lives in the United States instead of Mexico? I doubt it. This is why medical tourism exists.

Now you can say, hey, at least you guys had insurance, so you aren’t eating the actual cost of those procedures. That is missing the point. The point is that the procedures are not actually worth that much money. The hospitals and pharmaceutical companies are gouging prices the same way colleges and universities are now gouging prices on tuition. Baby Boomers paid next to nothing for college and now an undergraduate degree alone costs a quarter of a million dollars – and arguably the product has decreased in practical value in the meantime. The only thing that changed was the perception of how much families should be willing to sacrifice financially for something that is pretty basic.

The federal government rewards hospitals and health care providers for antisocial behavior. They reward them with a tax exemption under the federal tax code. They reward them with grants and line-item appropriations. They reward them with bundled fees for entitlement programs. You go bankrupt, but these “nonprofits” get subsidized. They get subsidized so much that hospital administrators can buy all the hookers and blow they want for three lifetimes.

The problem is not private health insurance. The fact that private health insurers can turn any profits for their shareholders in this policy environment is insane. We live in an era where insurers are opting not to do business in regions altogether, and presidential candidates think they are Rockefellers.

If you want to fix health care, you need to start with the actual institutions that are providing care. Not the people who are pooling risk using financial technology that dates back to Ancient Greece and hasn’t changed one iota.

And for what it is worth, this same financially predatory behavior is being imitated by dentists nationwide too. You go see a dentist now and you are going to come away with a treatment plan that costs as much as a yacht even if your teeth are fine. If you are poor, you can go to some medieval joint in a strip mall where the patients can’t take out a home equity line of credit for Instagram-worthy smiles. Hospitals have gotten away with it for so long, they are joining in the great health care bubble.

George Will on the value of a classical education

To those who say we are threatened by a suffocating “hegemony” of Western civilization’s classic works, the correct response is: If only that were the problem. The danger is not cultural hegemony but cultural amnesia, and the concomitant balkanization of the life of the mind.

George Will, The Conservative Sensibility

As I mentioned in an earlier post, I have been working my way through George Will’s new tome on political philosophy and history, The Conservative Sensibility. It is an excellent read, even if (especially if) you do not share Will’s political biases. (I do, however.)

The general purpose of the book is to provide a timeline for where the dueling conservative and progressive strains in American political thought emerged and developed. I don’t think there is much controversial content in what Will writes on that account. Conservatives are people who see themselves in the Enlightenment and neo-classicism of the nation’s Founding Fathers; progressives are creatures of Nietzsche’s postmodernism. For folks who did not receive a solid liberal arts education, however, the easy manner in which Will distills historical events and philosophical shifts could be very helpful in understanding how they are situated among moral and other conflicts.

My favorite chapter of the book so far is Will’s defense of a classical education. I think it is safe to suggest that – at least in American public schools and universities – there is a crisis regarding what exactly an education should do for a child or young adult. Education in the US from kindergarten through graduate school has been colonized by Nietzschean progressives who see “virtue” in turning their backs on what have been historically regarded as “the classics.” And they’ve replaced the classics with… Well, a whole lot of nothing, actually.

For most of K-12 education, there is no serious attention paid to history or literature or languages (certainly not the dead languages of the world’s greatest civilizations), which are now often portrayed as tools of oppression. Most attention is paid to subjects that can be easily measured by standardized tests, and by all accounts schools are failing at teaching them as well. If you look at the gaps in academic performance between kids who attend public schools and kids who attend private schools or are homechooled, one thing is clear: kids who are raised on the classics are more literate and analytical individuals. They are challenged intellectually earlier in life and their sense of learning is more systematic and less chaotic. This has been a formula for success for millennia, but educators in the 21st century are rejecting it with predictable results. (This is quite ironic too, as the founder of postmodernism was himself an impressive classicist. I used to be able to read Nietzsche in his original German, and the wordplay with Greek and Latin was fantastic. I don’t think he anticipated his disciples abandoning his intelligence altogether, but here we are.)

Folks on the left love to portray everything as an “existential crisis.” It’s Armageddon 24-7 in their world. Electing a Republican president means a nuclear holocaust is coming. We are at full employment, wages are rising, asset prices are increasing broadly, consumers are happier than they have ever been, demand for benefits is down, but a recession is just around the corner – as if a recession is just going to sneak up on you out of nowhere, because that’s totally how economics works. I read a news article recently that was predicting doom based on the obviously standard economic indicator of recreational vehicle sales. Is it possible to get less serious than that? Americans have endured several decades now of environmentalists predicting the end of life on Earth without trillions of dollars of new investment. When I was a kid growing up in the 80s and 90s, aerosol cans were the era’s plastic straws, because a younger, but substantially similar Al Gore thought the hole in the ozone layer would kill off life on Earth. (In reality, it closed up on its own and he moved on to selling other forms of doom because he has no other shtick.) Now we have politicians saying that we need to support black and brown people in developing nations killing their babies because otherwise they will steal all our natural resources. We need genocide for the environment – that’s a real claim made by liberal political elites in 2019, and they wonder why kids these days feel okay hurting their peers.

The older I get, the more absurd claims that it’s all going to collapse any day now seem. The world never ends; the Chicken Littles in politics just retire to a beach house bought from a lifetime of brokering government contracts. A beach house they spent their life arguing would be underwater thanks to global warming, like the Obamas new mansion on Martha’s Vineyard. That’s how seriously they take their own panics. It’s like Paul Krugman predicting global economic collapse with Trump’s election. If he had actually put his money where his mouth was and went massively short the financial markets, he’d be bankrupt. Because the world didn’t end, because people in the real economy rightfully don’t care about the dystopian fantasies of the chattering class.

The one sector that these folks do not see Armageddon in is the one they probably should: education. The US has long been losing its intellectual hegemony to other countries. Even the Chinese are increasingly choosing to keep their children at domestic universities rather than send them to the American Ivy League. And who can blame them? All US schools are doing now is cranking out kids that will be easily replaced with algorithms (likely written by their peers in India and China). That is a bona fide existential crisis.

America desperately needs to turn its educational institutions around. Right now, the classroom is seen as space for indoctrination rather than a place to teach kids how to succeed and flourish in the real world. We won’t continue to be a superpower or have the world’s largest economy unless we can produce future generations who are willing and able to compete for that status.

Unfortunately, this is at its core a political problem. What postmodernists believe necessarily makes them destructive educators. We did not place astronauts on the Moon by believing that there are no facts, only interpretations. Cancer won’t be cured by opinions. There’s a reason why the Enlightenment was a period of great discovery and the space program died when the hippies of the 1960s went into government and got jobs as teachers.

US taxpayers across the local, state, and federal levels of government spend roughly $1 trillion every year on education. Think about that for a second. One trillion dollars annually. That’s the scale of bad investment in postmodernism right now. We don’t need to throw more money at education consultants and academics to invent ever-new philosophies of education.

The answer to improving education is pretty simple. You want smarter kids? Read better stuff to them. George Will gets that.

Why a “wealth tax” is terrible public policy (and this is not even a controversial observation among economists)

The trouble with Socialism is that eventually you run out of other people’s money.

Margaret Thatcher

For months now, Democratic presidential candidates have proposed a litany of new spending proposals to woo the electorate into voting for them.

These include:

  • Medicare for All, which has a $32 trillion price tag – assuming it is extended only to US citizens, though most Democratic candidates have suggested also extending it to tens of millions of undocumented immigrants. I am not sure this additional cost has ever been scored, and any number would also be dependent on changes to immigration policy. For example, if crossing the border were made into a civil offense *and* immigrants qualified for entitlement programs, there would likely be an unprecedented number of border crossings. This would, in turn, significantly increase the cost of Medicare for All.
  • Forgiving trillions of dollars in outstanding student loan debt.
  • “Free” postsecondary education at public institutions.
  • A “Green New Deal,” which has not exactly been well-framed. The legislation introduced by Representative Ocasio-Cortez has been estimated to cost over $90 trillion. Presumably, the candidates want something a little more… modest… than replacing or retrofitting every building in the country. But after Medicare for All for anyone on the planet who wants to enter the country, who knows.
  • Universal pre-kindergarten.
  • Universal child care.
  • Universal raises for child care professionals and teachers.
  • Hundreds of billions of dollars to combat the heroin crisis.

I’m sure there are many more that I did not list here. Basically, so long as you are not a member of the dreaded “1%,” the federal government is going to assume all of your household’s ordinary expenses.

Nevermind that our existing entitlement programs are going broke, and no one is even trying to solve that…. Let’s add more!

This also does not take into account the fact that America’s existing entitlement programs are all headed for insolvency with no current plan to shore them up.

I’m impressed that Millennials think they are going to get Social Security, let alone free health care. Lol.

And let’s not even talk about how many public pensions are underfunded, which will be the next big generational pissing match to get lobbed toward the federal government. If you think student loans are a problem, wait until you see what California, Illinois, New Jersey, Connecticut, Kentucky, and Puerto Rico owe their workers that they’ve only saved pennies to pay out.

There is not enough money in the United States to fund Democrats’ spending proposals. Literally.

The obvious problem is how to pay for any single one of these proposals, let alone several of them. I think they are well over $100 trillion in spending proposals at this point. No kidding. According to the Federal Reserve, the aggregate net worth of U.S. households and non-profit organizations is barely $100 trillion, a record level both in nominal terms and purchasing power parity. This means that even if the federal government confiscated every single last dime from American households and every charity in the country, Democrats could still not pay for their spending proposals. That’s how batshit these people have become.

Of all the socialist-chic candidates, Bernie Sanders is at least approximating honesty when he tells people that he’s going to raise their taxes dramatically to fund his vision of universal health care. You won’t be paying health care premiums; you’ll be paying taxes. A lot of taxes. (In exchange for health care from the same geniuses that have veterans blowing out their brains in the parking lot of VA hospitals. But I digress.) Perhaps you won’t notice that he’s only changing “pay to the order of” on the check you write.

But let’s ignore the headline numbers and talk about a wealth tax anyway

The Hot New Thing among Democratic candidates is now a “wealth tax.” It’s not a hot new thing elsewhere in the world. In fact, a dozen other countries have already tried the wealth tax concept and promptly dumped it:

While as many as a dozen countries in Europe had a wealth tax in the early 1990s, that number has dropped to three as of 2018, according to an Organisation for Economic Co-operation and Development report. (In 2018, France replaced its net wealth tax with a new real estate wealth tax.)

So why are Democratic candidates proposing an idea that everyone else in the world has considered but rejected?

I imagine there are two reasons. One, the idea of a wealth tax is included in Thomas Piketty’s tome on income inequality, Capital in the Twenty-First Century. This made a bad idea trendy again. Two, they have nothing else. They are proposing an obscene amount of new spending and are hoping the electorate’s economic resentments will cancel out numeracy. Polls suggest they might be right, particularly among highly innumerate younger generations.

Since some Americans seemingly have to re-discover why socialist concepts of governance necessarily and inevitably fail in the real world, here’s why a wealth tax is a terrible idea.

(1) A wealth tax will not generate as much money as Democratic candidates suggest.

Let’s bracket off the fact that Democratic candidates’ wealth tax projections are insufficient to pay for their proposals in the first place. Even liberal economists acknowledge that the projections they have made are grossly inflated.

This is why the idea of a wealth tax was never seriously considered by the Obama administration. Obama’s policy advisors thought it was laughable when he was in office, and they are trying to communicate that is laughable now.

There is a reason why Elizabeth Warren et. al. have chosen policy advisors that do not have experience in government scoring budget measures. Anyone with experience observing how wealthy people skirt the estate tax understand that people wealthy enough to have tax advisors will understand how to shelter their wealth from taxation. It would do Warren well to take a vacation in the Cayman Islands sometime. Extreme wealth is extremely portable.

(2) “Wealth” is not “cash.” The assets of America’s wealthiest families can fluctuate dramatically day-to-day and can be extremely difficult to value.

What’s the daily mark-to-market value of Zuckerberg’s modern art collection? How much does a $200 million yacht depreciate when you sail it away from the yacht broker? How often are you going to value a privately held company?

Every country that has ever implemented a wealth tax has discovered that it is an administrative nightmare to enforce. It’s not as simple as asking “ultra-millionaires” to check their bank account.

You’d think Warren, an expert in bankruptcy law, would understand this. There’s a reason bankruptcy proceedings can drag on for years. You can dispute the valuation of illiquid assets until the end of the republic.

(3) Contrary to what Warren claims, her proposed wealth tax is not at all like paying property taxes on real estate.

I almost can’t believe Warren is dense enough to make a claim like this. But here we are explaining how taxing unrealized gains in Facebook stock is not like taxing a home on a cul-de-sac in Phoenix. And why she’d essentially be taxing the same assets several times. And why she’d kill the market that state and local governments use to fund infrastructure projects, like roads and schools.

First, traditional property taxes have a comparatively efficient tax base. Traditional property taxes fall on both the building and the land underneath. Land is thought of as a very good tax base because its supply is fixed—individuals and businesses cannot avoid a tax on land by producing less of it. Because of this, economists generally think that land taxes are very efficient taxes. In many jurisdictions, the land is a significant portion of the total value of real estate. As a result, a meaningful portion of real property taxes share this positive characteristic with a land tax.

Warren’s wealth tax would apply to land, but it would also fall on many other types of assets, some of which are much more responsive to taxation. For example, Warren’s wealth tax would fall on the ownership of financial assets such as corporate stock or bonds. A wealth tax would reduce, sometimes significantly, the return to these assets. For example, municipal government bonds, which have interest rates around 2 to 3 percent, would face effective tax rates higher than 100 percent. This would make it much less likely that individuals would hold on to these assets. This could have several negative effects on the broader economy, including a reduction in national saving.

Another virtue of the traditional property tax is that the taxable asset isn’t particularly hard to value. While there can be controversy over the value of property in a given year, localities are pretty good at determining it. One reason is that there is a lot of property to compare to and homes are sold frequently in many places. There are companies that can tell homeowners what their house is worth at any given time.

The wealth tax would fall on many assets that are very hard to price. For example, a closely held business—one that is not traded on the market—does not have a known value, and the value can change significantly from one year to another. As a result, it would be very challenging to apply the wealth tax. Tax authorities would either need to guess or use some sort of formula to impute the value—a process taxpayers would be unlikely to trust.

For homeowners, there is another important distinction to consider. Under current law, the returns to homeownership are mostly exempt from the income tax. Under current law, the first $250,000 ($500,000 for married couples) of capital gains on the sale of your primary residence are exempt from the income tax. In addition, the imputed rental income (the rent you, as a homeowner, pay yourself) is exempt from the income tax. The CBO shows an effective rate close to zero. As a result, the state and local property tax is usually the only tax that falls on real estate for homeowners.

In contrast, a lot of the wealth under Warren’s wealth tax is already taxed under the income tax before it’s hit by the wealth tax. For example, dividends from corporate stock are subject to the individual income tax. Then the value of the stock would be taxed under the wealth tax. The assets subject to both taxes would face significant effective tax rates—a combined tax burden that homeowners don’t face.

(4) A wealth tax will be an economic drag. Not just because it’s going to move wealth away from the country, but because it will influence major investment decisions.

I often say that I would rather get a root canal than talk to a Democrat about economics. Democrats tend to assume that their fellow citizens are not rational economic actors. You create a new tax, they think, and people just roll over and pay it. In reality, people change their behavior in response to ordinary activity suddenly becoming a tax penalty. In policy circles, these behavioral shifts are called unintended consequences.

This means a tax that Warren bills as forcing the wealthy to pay for everyone else to carry less household expenses will actually impact what the latter earns. Or even if they have a job at all. (But, hey, at least that would cut down on child care expenses.) Wealth taxes reduce investment, wages, employment, incomes, and output. They depress financial holdings, which most Americans store their own wealth in.

This also means that this tax, which takes so many government resources even to enforce, reduces tax revenues to the federal government, state governments, and local governments through lost economic activity.

Before you pull a lever for a charlatan selling you on ideas that other countries have already tried and rejected as abysmal failures, ask yourself this question: Will I ever see any of this free shit they promise? Or will I actually be worse off economically than I am now, just like every socialist experiment that has taken place in the history of human civilization? If there is a consensus among educated people that these policies fail, why are they centerpiece of these candidates’ campaigns?