Infuriator in Chief

President Obama’s greatest talent seems to be his ability to infuriate his opponents. The latest example is the campaign speech he gave in Roanoke, Virginia last weekend. In that speech he declared, “If you’ve got a business — you didn’t build that. Somebody else made that happen.” The Wall Street Journal opines that, “This burst of ideological candor is already resonating like nothing else Mr. Obama’s said in years.”

Of course, Obama’s explanation of how success happens is absurd, but that’s only part of the story. Also interesting are the motivations and consequences of his remarks. His view is much more than wrong, it is insulting, infuriating, and demeaning to a large portion of the populace.

Obama’s supporters may agree with the views he is expressing. His words may make them more enthusiastic in their support for him, make it more likely they will donate to his campaign, and show up to vote in November.

On the other hand, do those words cost him any votes? Those who are incensed by what he says probably weren’t going to vote for him anyway. When the people who are already angry enough to vote against him get even angrier, are there any consequences? Is he increasing the population of voters who are livid, or is the impact simply redundant?

Coaches tell their professional sports teams to measure their words when talking to sports reporters. They tell them not to say disrespectful things about their upcoming opponents, and not to say something that will end up on their opponents’ locker room bulletin boards. Providing extra motivation for your opponents is never a good idea.

There is a vast difference between Barak Obama’s public persona and his true nature. In other words, his public persona is a fraud. An inherent problem with a fraud is that it is not easy to sustain in the long run. There is a constant tension between the reality and the fraudulent image. An old adage says, “The truth is easy to remember.” The corollary of that is lies are hard to remember. Like bubbles, the truth tends to rise to the surface. What we saw in Roanoke is the real deal Obama. Now and again Obama actually delivers on his promise of transparency.

There is a degree of internal logic to Obama’s world view. In his Roanoke speech he said, “There are a lot of smart people out there — there are a whole bunch of smart people out there.” In other words, there’s no real difference among individuals, therefore, incomes and wealth ought to be equal.

Getting our arms around Barak Obama’s worldview is extremely difficult for those of us who don’t share it. We ask ourselves, how can anyone believe such things? But believe it he does, and the rest of us need to recognize that fact.

Obama is well known for his frequent use of argumentum strawmanium. He makes up grotesque caricatures of his opponents’ policy positions. Included in his Roanoke speech was, “There are some things, like fighting fires, we don’t do on our own. I mean, imagine if everybody had their [sic] own fire service. That would be a hard way to organize fighting fires.” Does he not recognize how insulting and condescending that sounds? Who in the world advocates having his own free-standing fire department? No one is that stupid. It speaks volumes about his opinion of his audience’s intelligence. Being talked down to that way is not a way to win friends and influence people. Obama is incapable of dealing with his opponents’ real arguments, so he describes them in absurd, cartoonish ways. It’s pathetic.

Barak Obama is unquestionably the most divisive U.S. president in modern history. People I never would have suspected have expressed to me an intense resentment and anger about what he has done to the country they love. Two wonderful ladies I know, both age 85, have for the first times in their lives become politically energized. I’m pretty sure neither one of these fine ladies have had this much political anger in all of their lives. I don’t think they are isolated examples. In November we will learn just how many voters share their feelings.

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◼ Infuriator in Chief July 19, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

The Real Damage Done by High Tax Rates

President Obama has once again put the question of income tax rates on center stage. As a Wall Street Journal headline put it, “Obama Intensifies Tax Fight.” He is apparently hell-bent on making our income tax structure more progressive.

Raising tax rates on upper-income earners is an appealing idea to many people. The President certainly hopes that it is. The most common argument against the idea is that it would diminish the incentive for business owners to invest, hire, and grow their businesses. Although that is all too true, it’s only one kind of damage done by high marginal tax rates. Even if we were not in a recession, more tax progressivity would still be a bad idea.

It’s well known that taxes reduce economic effort. If you want less of something, tax it. That, by itself, reduces wealth creation and economic growth. Less well recognized, however, is that high tax rates misdirect and misallocate economic activity.

A flatter, less progressive income tax rate schedule is an idea that never seems to go away. Perhaps the earliest argument for a flat tax was in Milton Friedman’s 1962 classic, Capitalism and Freedom. Its latest sighting is in what’s called the “Ryan Budget” authored by Congressman Paul Ryan. The official name for his budget plan is “The Path to Prosperity: Restoring America’s Promise.” His proposal advocates only two federal personal income tax rates — 10 and 25 percent. A notable and similar recommendation was part of President Obama’s own deficit reduction team of Erskine Bowles and former senator Alan Simpson. Their “National Commission on Fiscal Responsibility and Reform” recommended federal rates of 8, 14, and 23 percent. Obama totally ignored the Bowles-Simpson recommendations.

High marginal tax rates reduce wealth creation in more ways than is immediately obvious. High tax rates not only reduce incentives overall, they also alter and rearrange incentives. Most of the damage done by excessively high tax rates is hidden from view and almost impossible to measure precisely. Although hidden, the damage is real and significant.

Our wealth is as much dependent on how efficiently we use resources as it is on the quantity of resources we have. The worst damage done by high tax rates is the way they distort decisions in the economy and result in a misallocation of resources.

Higher taxes increase the effort expended in avoiding taxes. When you increase the reward for avoidance, you will get more avoidance. It will follow as the night the day. More decisions will be determined by tax considerations. The result is a less productive economy.

Investing is a process of choosing among alternatives. A generalization that is true in most cases is that money and effort go to where they are most rewarded (or more precisely, where there is the best risk-reward ratio). Different rates of returns attract or repel investment capital.

An economy functions most efficiently and experiences the highest possible growth when resources move to their highest-valued uses. That is the natural tendency in a free market economy. High tax rates, however, significantly distort this tendency. Too often resources move not to where they create the highest economic value, but to where they result in the most tax avoidance. High tax rates reduce the reward for productive spending and increase the reward for wasteful spending. If the tax minimizing choice is the most economically productive it’s a happy accident, and a rare one.

High rates make avoiding the tax an option with a very high rate of return. The higher the tax rate the greater the effort expended to avoid them, the greater the misdirection of economic decisions, and the greater the loss to economy and all its participants. High tax rates result in “overinvestment” in tax avoidance. Overinvestment in one activity means reduced investment elsewhere.

High tax rates also reduce the price or “opportunity cost” of leisure. You could define leisure as wealth non-creation. There’s nothing inherently wrong with choosing more leisure, but it does cost something in terms of output. The higher the tax rate, the lower the price of leisure. More leisure means less wealth creation. High tax rates are equivalent to a subsidy for leisure. Is that really something we want to do? Have we made a policy choice that people work too hard?

ONE CLEAR EXAMPLE of taxes distorting economic choices is the tax on capital gains. The capital gains tax is due only when the gains are “realized.” In other words, only when the appreciated asset someone owns is sold. In most cases the choice to sell something is controlled by the owner. The capital gains tax is the closest thing we have to a voluntary tax, at least in regard to timing.

The voluntary characteristic of the tax on capital gains is why such taxes are especially sensitive to changes in rates. Even more than is the case with other taxes, revenue from changes often move contrary to the changes in rates. Capital gains taxes are the easiest tax to avoid or at least to postpone. In the past whenever capital gains taxes have been reduced there is invariably an increase in the turnover rate of investments and, therefore, many more “realized” gains and increased tax revenue.

There are millions of assets people would like to sell but don’t because they do not want to trigger the tax. Among other things, this prevents people from diversifying their investments as much as they would prefer. Many people have most of their wealth concentrated in one or two assets. Diversification is far and away the most effective way to reduce risk. Consequently, the tax on capital gains results in people bearing an undesired amount of risk.

When tax rates are raised there is almost never a proportional increase in government revenue. Why not? To understand why, it helps to remember that ours is mostly a voluntary exchange economy. Although taxes are not voluntary, the economic transactions you enter into are.

Taxpayers in the top brackets have the most flexibility in how they arrange their incomes, where they reside, and how they invest. This week we learned that the billionaire Denise Rich has renounced her U.S. citizenship in order to avoid U.S. income and estate taxes. In May, Facebook co-founder Eduardo Saverin renounced his citizenship for what many consider the same reasons. Now, rather than getting, for example, 35 percent of these peoples’ incomes and estates, our federal and state treasuries will get zero. California and New York, two states with top income tax rates over ten percent, have experienced out-migration of upper income residents in recent years.

A friend of mine is a chemical engineer for a large biotech firm. For several years he spent much of his time in Singapore overseeing the construction of a major new research and production facility there. When I asked him why the decision was made to build it there rather than the U.S., he answered even before I finished my question: “Taxes.”

Over-investment in tax avoidance is magnified in an environment of tax complexity. Every serious proposal for a flatter income tax schedule has also included tax simplification and the elimination of tax loopholes. Lower rates and a broader base — you can’t have one without the other. It was such a combination that was central to the tax reform President Reagan successfully passed in 1986. Reagan reduced the top income tax bracket from 70 percent to 28 percent. What followed was an extended period of robust economic growth.

A flatter tax rate schedule would increase productivity and economic efficiency. We would all be better off, not just “millionaires and billionaires.” President Obama, however, is far more focused on punishing the rich than he is in growing the economy.

Obama wants the top federal tax bracket to increase from 35 percent to 39.6 percent, the capital gains rate to increase from 15 percent to 20 percent, and the estate tax rate to increase from 35 percent to 45 percent. Buried in Obamacare’s 2,500 plus pages is a totally new 3.8 percent tax on all “unearned income,” which includes interest and dividends from investments, income from rental property, and the sale of single family homes. In other words, if Obama gets his way the top marginal rate will increase from 35 percent to 43.4 percent. That would have a poisonous impact on the economy.

Mitt Romney, on the other hand, wants a top income tax rate of 28 percent, the capital gains rate to be zero for incomes below $200,000, complete repeal of the estate tax, and a complete repeal of Obamacare .

The battle lines have been drawn. May lower rates and the economy be the victors!

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◼ The Real Damage Done by High Tax Rates July 13, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Mayor Bloomberg’s Lessons in Liberalism

New York mayor Michael Bloomberg has ignited a minor firestorm by proposing a ban on what he calls “sugary soft drinks” in larger than 16 ounce containers. Even though it’s an asinine idea that will have no tangible impact, it is notable because of what it says about divisions in our political philosophies. This is a learnable moment.

The proposed ban is not just a reflection of “Nanny Bloomberg,” it is a reflection of nanny liberalism. If you think Bloomberg’s proposal makes sense, you’re a liberal.

In Mayor Bloomberg’s view, “We’re not taking away anybody’s right to do things, we’re simply forcing you to understand that you have to make the conscious decision to go from one cup to another cup.” That’s interesting. How can anyone possibly believe that someone can be forced to understand? “You have to make a conscious decision?”

The Mayor admits that he’s applying force but claims that is will not diminish anyone’s freedom. He’s illustrating the mental contortions that are necessary to liberalism.

The Mayor went on to say, “It’s not perfect, it’s not the only answer, it’s not the only cause of people being overweight — but we’ve got to do something. We have an obligation to warn you when things are not good for your health.” Does the government actually have “an obligation to warn you?” Says who? Where did such an obligation come from?

If the government doesn’t warn us about something, does it mean it’s safe? “We’ve got to do something” are five of the most dangerous words in the English language. More often than not the “something” we’re told “we’ve got to do” does far more harm than good.

Bloomberg claims to have our best interests at heart: “I would just like to push that from the consumer point of view and to force the consumer to hopefully move over to the less fattening drinks and everybody will be better off.” To put it mildly, that is debatable.

When conservatives advocate for personal responsibility it isn’t only for philosophical reasons. When you start down the road of idiot-proofing society you should not be surprised when the result is a population explosion of idiots. Idiot-proofing society reduces the cost of idiocy. When you reduce the cost of something you invariably get more of it. The doctrine of caveat emptor (let the buyer beware) is not as callous as liberals think it is.

When the government sends us a message that it is assuming responsibility for our health and safety it’s telling us we don’t have to worry about it ourselves, so we don’t. Individuals have the best information and incentives for making the right decisions, even though they don’t always do so. The question is can the government do better?

Super-sized sugary soft drinks are only one of millions of potentially harmful choices available to us. There is no way the government can warn us and protect us from them all. Our objective should be maximize the amount of responsible behavior. Delegating responsibility to the government is the worst way to accomplish that.

Responsibility is one of those things that has a natural limit of 100 percent. When an entity like the government takes responsibility for a particular problem, peoples’ individual responsibility for that problem is necessarily diminished. Mayor Bloomberg’s assumption of responsibility for his citizens’ weight issues effectively takes them off the hook, at least in part. His presumably well-intentioned policy is training people to be irresponsible. That, in a nutshell, is the problem.

Another way to frame the issue is that it is about where in our society we are going to locate responsibility — at the center (government) or at the periphery (individuals). In other words, is responsibility going to be centralized or decentralized? An inseparable question related to that choice is do we want to depend on force or freedom?

Like liberals generally, the mayor is tone deaf when the issue is freedom. Freedom is well down their list of priorities and they assume that ought to be true for everyone. They always seem surprised when people bristle about being told what kinds of light bulbs or the maximum size of the toilet tanks they can buy. In their view society and the planet simply cannot afford to let individuals exercise their freedom. To paraphrase Jack Nicholson’s Colonel Nathan Jessup role in A Few Good Men: “You want the freedom? You can’t handle the freedom!”

To pilfer a phrase from Barack Obama, “Yes, we can.”

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◼ Mayor Bloomberg’s Lessons in Liberalism June 12, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Speculators and Manipulators

Other than killing Osama bin Laden, President Obama seems incapable of taking responsibility for anything. Blaming speculators is the latest iteration in his ongoing crusade to escape responsibility and to change the subject. He has added speculators to a long list that includes George Bush, insurance companies, greedy physicians, big oil companies, “fair share” fugitives, and Republicans in Congress. He should change his name to Barack Oblama.

Obama’s specific charge is that speculators are the reason for rising gasoline prices. Robert Reich, who for some unknown reason claims to be an economist, says that “speculation by U.S. index fund traders has been raising prices by up to $1 per gallon.”

Speculation can mean many things and take many forms. Basically, it is the attempt to profit from price changes.

Confusion about the role and impact of speculation has been common and recurring throughout history. Take, for example, the accusation that speculators artificially increase the price of the commodity in question.

It’s true, of course, that speculators can contribute to an increase in the market price of something by adding to the demand for it. What’s important to keep in mind, however, is that’s only half the picture. A speculator cannot make a profit by simply buying something. There’s no profit in hoarding. There has to be a round trip of both buying and selling. The main objective is to buy at one price, and then to sell at a higher price.

The impact of buying pushes prices up, the impact of selling pushes prices down. There is absolutely no reason to assume that speculators permanently increase the price of anything.

Speculation can benefit the economy in a number of ways, one of which is to allocate resources between time periods. An economy, like everything else, exists in time and space. The value and usefulness of something can be increased by changing the time and/or location it’s made available to users.

The supply of no commodity is constant over time. Prices tend to be low when supply is abundant and high when it’s not. The supply of corn is highest right after harvest time. If all of that corn were dumped on the market at the same time the price would be extremely low. The incentive to use it efficiently would be weak. Months later we could expect a shortage of corn and the price would spike. Speculators anticipate this dynamic. They buy when the supply is abundant and the price low, pushing up the price, and sell when the supply is low, pushing down the price. The net result is that both market prices and available supply are moderated.

Speculators, as such, are not philanthropists. They don’t wake up in the morning asking themselves, “How can I benefit humanity by stabilizing prices and supply over time?” Their actions are motivated by self-interest and profits. In the words of Adam Smith, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” The societal and economic value of speculators is not as obvious as for butchers, brewers, and bakers, but it can be every bit as real.

The information and incentives provided by the price system are crucial to the efficiency of how and when resources are employed. Speculation helps short-term prices conform to long-term realities. The economy functions best when we don’t allow temporary abundance to give false signals about what will be true in the long run.

Speculation is one of the factors that lead to what economists call “price efficiency,” meaning prices that reflect all available information. Such information includes expectations about future conditions. For example, if a stock’s price is expected to be higher tomorrow, it will be higher today.

Speculators assume the risk other economic players would rather avoid. A farmer can sell his crop even before he plants it. The farmer essentially transfers the risk (uncertainty) of price fluctuations to someone else. He can focus his efforts on farming and not worry about the vicissitudes of the market.

Speculators usually face intense competition with other speculators. The current price will be bid up until the anticipated profit is roughly equal to the average of other investment alternatives. At a minimum, the expected price change has to cover the costs of storage if they are to make a profit. Furthermore, speculators are not assured a profit. When their predictions are wrong, they lose.

Blaming speculation for high prices reflects the rawest kind of economic ignorance. I couldn’t begin to count the number of times I have been stunned by the utter lack of economic understanding demonstrated by Barack Obama.

Obama and his ilk are willingly and deliberately ignorant of economics and economic realities. Economics is an annoying impediment to their utopian belief system and their political objectives. Obama doesn’t understand how a market economy works, and doesn’t want to know. If he could he would criminalize the free market. He is as clueless as the worst economics student I ever taught, even at the beginning of the class. Obama never lets ignorance slow him down and we all suffer as a result.

Regulations against market “manipulation” already exist and are enforced by the Commodity Futures Trading Commission. President Obama has recommended increasing fines tenfold to a maximum of $10 million per violation, as well as more enforcement funding for the CFTC. According to the Wall Street Journal, “In the past 35 years, the CFTC has brought dozens of cases of manipulation in energy markets. It was successful in proving only one in court.” Besides prohibitions on manipulation, the regulations also prohibit “recklessness” and the creation of prices that are “artificial” (in contrast to being determined by supply and demand). The CFTC has the all but impossible task of proving that one firm has the ability to affect prices on the multi-billion-dollar commodities markets. No wonder the agency has such an atrocious track record.

More regulations and more bureaucracy will not stop imaginary problems that are impossible to define or enforce. They may help Barack Obama distract attention from his disastrous first term, but otherwise they are a counterproductive waste of time and resources.

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◼ Speculators and Manipulators May 3, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Lottery Lessons

As happens on a fairly regular basis, a lottery has been in the news. The latest example results from a record jackpot of $654 million.

Lotteries are instructional for a number of reasons. Believe it or not, Adam Smith discussed them in The Wealth of Nations (published in 1776):

In order to have a better chance for some of the great prizes, some people purchase several tickets, and others, small shares in a greater number. There is not, however, a more certain proposition in mathematics than the more tickets you adventure upon, the more likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer you approach this certainty.

The chances of winning the lottery are not significantly affected by whether or not you have a ticket. The chances of winning the latest lottery were said to be one in 170 million. There’s no practical difference between zero and .00000001.

Lotteries are an indication of the moral depravity of government. They are essentially a tax levied in proportion to a person’s ignorance of probabilities. They are a scam perpetrated by the government. Lotteries make probability ignorance a crime and the ticket price is the fine.

You could argue that buying a ticket is voluntary exchange, but it is exchange based on cynicism and deception. When it comes to lotteries, governments follow W.C. Fields’ sage advice, “Never smarten up a chump,” as well as, “Never give a sucker an even break.” Lotteries are nothing more than a state-sanctioned numbers racket. The state adds insult to injury by outlawing privately sponsored lotteries.

Most taxes and fees are in some proportion to some quantity. Income taxes are a function of your income, gasoline taxes are a function of how much gasoline you purchase, property taxes are a function of the value of the real estate you own.

Government revenues generated by lotteries are a function of what quantity? The answer, of course, is ignorance. If ever there were a bad bet, especially in terms of magnitude, it’s lotteries. The percentage taken by the “house” is many times higher than any casino game.

Getting rich by winning the lottery is profoundly different from just about any other way of doing so. Most people who are rich have become so by taking some action—hard work, using their talent, being creative, for example. By contrast, winning the lottery involves none of these factors. Winning has absolutely no connection with the rest of reality. The money received is not “earned” in any way. It involves nothing but dumb luck, emphasis on dumb.

It’s a truism that money cannot buy happiness, but numerous stories about past lottery winners lead to the conclusion that lottery money can buy unhappiness. There seems to be something unnatural about receiving such a large amount of money in such an unreal way.

It could be argued that lotteries give hope to millions of people. Hope, however, is not inherently good. Some kinds of hope do more harm than good. Winning millions of dollars in a lottery is a false hope. It is not one based in reality. There is an opportunity cost to that kind of hope. It deludes and distracts people from hopes and ambitions that do have a basis in reality. Hoping to win the lottery enables people to live in denial.

Large lottery jackpots are taxed at the highest federal tax rate, allowing various levels of government to get you both coming and going. For some bizarre reason, possibly guilt, in California lottery winnings are not subject to the state income tax.

Government sponsorship of lotteries should be proof that government does not have the citizenry’s best interests in mind. Government’s heart is clearly not in the right place.

Don’t be a loser or a chump. Don’t buy lottery tickets. It’s the kind of thing Shakespeare was referring to when he wrote, “It’s a tradition more honored in the breach than in the observance.”

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◼ Lottery Lessons April 12, 2012,

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Warren Buffett’s Empty Words

It’s the time of year when our tax preparers tell us how much we owe the government. Here’s what might be a revelation to any high-income liberal who thinks his or her tax rate is too low — the amount of taxes your CPA tells you that you owe is a minimum not a maximum.

Warren Buffett is President Obama’s favorite tax policy spokesman. It’s not, however, because of Mr. Buffet’s actions. It’s only because of his words. Like a broken record, the President has used Buffett’s words time and again as his primary argument for raising taxes on “millionaires and billionaires” and on “the most fortunate among us.” Obama claims, “That’s not class warfare, that’s just common sense.” In a recent fund raising letter the President asked, “Do you think it is fair that Warren Buffett’s secretary pays a higher tax rate than Warren Buffett? I don’t and neither does Mr. Buffett.”

In an interview with Christiane Amanpour Buffett said, “I think people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it.” In testimony before Congress Mr. Buffett said, “The rich are coddled by Congress as if they were spotted owls or some other endangered species.”

Buffett’s specific indictment of the tax system is that he, a billionaire with an annual income in the millions, pays a lower tax rate (about 17 percent) than the 20 people in his office who pay, according to Buffett, an average rate of 36 percent. (The 36 percent number makes me wonder about his credibility.)

Buffett apparently has not the slightest clue as to how much of a phony he’s proving himself to be and the chasm between his words and deeds. In regard to Buffett’s famous protestations, New Jersey governor Chris Christie recently made the following recommendation:

He should just write a check and just shut up. Really. And just contribute. I’m tired of hearing about it. If he wants to give the government more money, he’s got the ability to write a check. Go ahead and write it.

Governor Christie, of course, has it exactly right.

President Obama claims that he is not against wealth, per se. He says, however, “After some point, you’ve got enough.” Presumably he thinks Buffett is well beyond that point. Consequently, if Buffett paid two or three times the tax he’s now paying, it would be with money he doesn’t really “need.” If Obama’s right, Buffett wouldn’t feel a thing.

If you think you’re not paying sufficient taxes, there’s something you can easily do about it. This is a problem that readily lends itself to individual direct action. Beyond the legal minimum we’re free to determine our own tax brackets. If anyone actually believed that the government’s having more money would benefit society then he might happily pay more taxes.

Have you ever heard of anyone who protests that his tax rate is too low volunteering to pay more? Why not? Is there any clearer example of hypocrisy?

Actions speak louder than words. Judging from their actions, liberals have the same opinion as everyone else — government is the least effective way to get anything done. Even liberals recognize that they as individuals can spend or invest their own money or contribute it to private charities with vastly better results than sending it to Washington, D.C. Have you ever read an obituary that ended with, “In lieu of flowers, please send a contribution to the federal government?”

One easy way to raise your own taxes is by opting out of some of your deductions. How often does that happen?

It would be interesting to know what Warren Buffet would say to the question of why he doesn’t just voluntarily pay more taxes?

Mr. Buffett, why do you want other people to be forced to do something you are unwilling to do voluntarily? Talk is cheap. Put your money where your mouth is. Buffett is apparently unaware that he is making it crystal clear he is a complete phony. If he voluntarily paid more taxes he could quickly go from being a phony to being an inspiration. Show some leadership. Go from having no credibility to having tons of it. Why is it necessary to wait until your fellow millionaires and billionaires are forced to join you?

Buffet could argue that one taxpayer can’t make that much difference. Whether or not that’s true, however, isn’t contingent on what other taxpayers are doing. As Milton Friedman wrote in Free to Choose, “This contention that compulsion would change matters is wrong — even if everyone else did the same, his specific contribution… would still be a drop in the ocean. His individual contribution would still be just as large if he were the only contributor as if he were one of many.”

Of course, for liberals compulsion is a good thing. It’s been said that a liberal doesn’t care what you do so long as it’s compulsory.

In some instances liberals do believe in the effectiveness of individual, voluntary action. I’ve had conversations with Prius owners who admit that whether or not they drive a hybrid will make not the slightest difference in regard to climate change. They will say things such as, “Well, we can’t just do nothing,” or, “We have to start somewhere.” They say it’s important to set an example. Of course, the Prius’s distinctive shape assures that everyone will recognize that they’re setting an example and helps spread the guilt contagion.

Conservatives have no reason to feel conflicted about paying the absolute minimum tax required. Conservatives think almost everyone’s taxes are too high including millionaires’ and billionaires’. There’s no conflict between their policy views and their personal behavior. They have no reason to feel guilty. They think the government already gets too much of our money and does more harm than good with what it already has. On April 15, when I send my checks to the IRS and the California Franchise Tax Board, you can bet I will be sending the legal minimums. And my conscience will be clear.

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◼ Warren Buffett’s Empty Words

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Wag the Coed

The world is spinning out of control and the spin rate is accelerating.











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◼ Wag the Coed March 7, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.