Hot Dogs at Filet Mignon Prices

When it comes to making decisions on how to spend money, people generally consider the value gained for the money spent.  Sometimes it makes sense to buy in bulk.  Other times it makes sense to put off buying something until it goes on sale.  A few extra dollars for a higher quality item may make good sense if you want it to last.  Sometimes people get tricked by a slick ad or a fancy logo into buying over-priced junk, but even then they do it because they thought they were buying quality.  When times get tough, people cut spending both on things they don’t really need and also through cheaper versions of the things they do need.  It’s just common sense.

One thing most people can agree upon is that you don’t buy generic flip-flops and pay a Nike price for them.  By the same token if you’re paying a Nike price, you expect to be getting the Nike product not something out of the Walmart bargain bin.  Yet when it comes to government, we the people are getting hosed.

“Almost Heaven” West Virginia doesn’t earn that nickname because the quality of life is almost heaven-like.  It earns that nickname because it’s being killed by the cost of its government and every day death is closer for the state.  Let’s take a look at the numbers.  These were compiled by U.S. News and World Report for 2017:

  • Overall Rank: #41
  • Overall Healthcare: #46
    • Public Health: #49
    • Health Care Quality: #49
  • Overall Education: #44
    • K-12 Math: #46
    • K-12 Reading: #42
  • Overall Infrastructure: #44
    • Transportation Infrastructure: #48
  • Overall Economy: #49
    • Economic Opportunity: #40
    • Employment: #50
    • Business Environment: #50

Wow.  For outcomes of that low quality, the people must be putting very little into government.  Surely, for bargain basement results the people are at least only paying bargain basement prices.  Oh, if only that were true.

According to the Tax Foundation’s Center for State Tax Policy’s latest rankings, the people pay a high price for what little they get:

  • State and Local Personal Income Tax: #18
  • Business Taxes: #18
  • Sales Tax: #16
  • Gasoline Tax: #18

Right now the Governor of West Virginia wants to raise taxes by nearly half a billion dollars and that’s only for the general budget.  He wants another quarter of a billion in tax and fee increases for a transportation infrastructure program.  It seems the only thing certain to come from that is that the state will rank even higher in the high tax rankings.

There would be some reasonable debate about whether to pay more to get more if the people were paying the cost of #18 and were getting the outcomes of #18.  Would it be reasonable to pay more and be at the cost of #12 if it resulted in outcomes of #12?  That’s not what choice the people of West Virginia are facing.  Right now they’re paying the government for filet mignon and getting served budget brand hot dogs.  All they can reasonably expect from paying more is maybe a brand name hot dog, but they sure as heck aren’t going to see the steak for which they paid their hard earned money.

The better question to be asking is why are the people paying the cost of being #18, but only getting the benefits of being at the bottom?  Where is all the money going?  If the people were only paying in at #41, they should rightly expect to get only #41.  That makes sense.  But when you’re paying for number #18 and getting only #41 or worse, something is seriously wrong.  In any other part of life if people paid a luxury price,they’d expect a quality item. If all they were able to get was a bottom of the barrel knockoff, they’d only be willing to pay a clearance level price.  Yet, since the people really don’t get much say in how much they pay verses how much they get, they’re basically paying for a Rolex and getting a knockoff.

In the last election, the candidates that said that taxes are too high already and people should be getting a better deal for their money won.  That resulted in a large majority for the Republicans in the legislature and a businessman in the Governor’s office.  When the election was over however, the new Governor changed his tune and began pushing for more taxes while the Republicans continued in their position that government should at least live within its means.  The legislature can’t do much about efficiency and quality in the delivery of government services as that is controlled by the executive branch.  All they can do is say no to tax increases, do their best to ease the burdens of laws and regulations and hope that the Governor will initiate efficiency reform in order to accomplish the same or more with no additional revenue.

That’s what the people thought they would be getting when they elected billionaire businessman Jim Justice as Governor.  He promised he could reform the government, eliminate waste, bring efficiency, and make a better business climate so the people would have more economic opportunity.  It sounded good.  It made sense.  After all, a business that is struggling in the marketplace because its operating costs and price point are higher than the quality of its product will allow doesn’t raise the price higher.  It makes reforms.  It cuts waste.  It cuts inefficiencies.  It may even seek to lower its cost in order to regain its value in the eyes of the consumer.  That’s the business sense the people thought they were getting when they trusted and elected Jim Justice.  Unfortunately, that isn’t what they got.

What they got was a Governor who says basically: I’ll tell you just this, I know you’re paying for filet mignon and only getting hot dogs and that’s terrible, so I need you to pay for lobster or else I can’t even give you hot dogs but if you do pay for lobster, you’ll get your hot dogs upgraded to foot longs and you should be as happy as a fly on a cow patty with just that.

Published in: on March 16, 2017 at 3:41 PM  Leave a Comment  
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On Taxation

The issue of taxation is one that divides everyone.  If we are to have government perform certain functions, we have to provide a mechanism to fund that activity.  For the sake of simplicity, let’s put all the various forms of raising revenue through taxes, duties, fees, tolls, etc. under the same umbrella and simply call that “taxes”.  The argument for duties or fees or other forms of revenue collection are really the same as the arguments for different methods of direct taxation.  Those arguments fall into two main categories: tax everyone for common services and tax those who use a service for that service.  Within those two arguments are additional arguments related to progressive and regressive methods.  On top of all of those are the exemptions (to stimulate growth in an area) or targeting (to reduce a given activity) arguments based primarily on the factual basis that taxation of an activity discourages that activity.  From these six basic principles has arisen the most complicated, convoluted and miserable creation of mankind: the various tax codes.

“The federal income tax system is
a disgrace to the human race.”
– Jimmy Carter

Everyone should be treated equally under the law.  Such a simple statement can be agreed to by all, but result in completely different interpretations.  A simple flat tax on income could be considered to treat everyone equally, but it can be argued to take a greater portion of wealth from the less well off who have to spend the majority of their income just on necessities making a flat tax a proportionally larger part of their wealth.  Attempts to make the rate of taxation proportional to discretionary wealth are championed in the form of progressive income taxes with multiple tax rates.  There was a time in the 1950s when the top marginal tax rate was 91% and it seems impossible to argue that anyone being taxed at that rate while others pay nothing is a case of equal treatment under the law.  By the same token, taxing people for services they do not use and may not be eligible to ever use in order to benefit others who pay the same or less also goes against the principle of equal treatment under the law.  This is an argument often heard by those with no children or who have children in private school against having to pay to support public schools for the children of others.  The converse argument is that everyone benefits for an educated populace and it is equal treatment for everyone to pay.  The list of examples could stretch on for volumes, but it is sufficient to conclude that equality is not a term upon which everyone can agree when it comes to a practical application.

“To compel a man to subsidize with his taxes
the propagation of ideas which he disbelieves
and abhors is sinful and tyrannical.”
– George Washington

An argument often lost is the one related to choice.  Government at the consent of the governed is a basic tenant of the American system.  Taxation to support activities to which the majority or even a single person objects is to enable government without consent.  Of course it is a practical impossibility to have each individual citizen express a preference on every expenditure nor is it a sound idea.  Yet the idea that a person should have some choice in how much they can afford to or wish to provide to fund the government is a valid one.

“It would be a hard government that should
tax its people one-tenth part of their income.”
– Benjamin Franklin

The issue of how much someone can afford to pay is not as simple as the amount of money coming in as income.  Someone can be making a decent income but have the expense of children in college that someone else of the same income does not have.  The cost of living in one area can be vastly different than the cost of living in another such that two equal incomes have a very different standard of living.  Someone can be running their own business as an individual and have a large income but only a small portion of that income is profit and therefore has a very low net income.  Income does not necessarily define ability to pay.  Some could argue that the choice to have children and the expense of college was made and thus the reduction in net wealth shouldn’t mean a lower amount of taxation; someone else shouldn’t have to pay more because another chose to have children in college.  The one with children in college could however argue that others with lower incomes get subsidized college for which he or she is not eligible placing that taxpayer at a disadvantage in that no benefit is received from taxes that are being paid at a rate higher than those who did receive the benefit – essentially a double expense.  These issues are often addressed with exemptions, tax credits, deductions and a whole host of ways to try to undo the unfairness in the principal method of taxation.  Of course, each of those adjustments made to undo the harm to one class of taxpayers comes at the expense of a different class which does not qualify for that adjustment and could claim the same unfairness and unequal treatment as a result.

“The power to tax is the power to destroy.”
– John Marshall

Increasingly governments are looking at consumption based taxation.  These taxation methods are based on how much is spent rather than how much is earned.  If you spend less, you pay less.  The main arguments against consumption based taxation come in two forms: its regressive nature and its impact on economic activity.  Consumption taxes on essential items for living do result in a regressive system for the reason previously mentioned.  This can be circumvented in one of two ways: exempt essential items or provide a rebate for the amount of taxes paid on necessities.  Of those two methods, the first is the most frequently utilized because it is the easiest.  Food, clothing, etc. may be exempted from taxation.  While this method may be simple, it is not logical.  It makes more logical sense to calculate the amount needed to be spent for a individual to subsist and then provide a rebate for the tax upon 150% of that amount.  That treats all people equally while removing the regressive nature of the tax.  The second solves itself.  Consumption taxes hurt economic activity in one area if there is a neighboring area with a lower tax rate, thereby encouraging a shift in economic activity to the lower tax area.  They also hurt when the rate of taxation makes discretionary spending prohibitive.  While that can be seen as a negative to consumption based taxation, it can also be a positive.  The ability to circumvent high rates of taxation by shifting economic activity or abstaining from economic activity is a check on unreasonable levels of taxation.  Consumption based taxes become balanced with economic activity at a certain level, thereby identifying a revenue limit for government to function within.

“It might be demonstrated that the most productive system
of finance will always be the least burdensome.”
– Alexander Hamilton

Even with consumption based taxation, one maxim remains a constant: only people pay taxes.  Taxes on businesses are passed along to the consumer.  This a consumption tax must be only on consumer retail purchases or else it just compounds and raises the effective tax rate on the people.  Such a process requires that all businesses be registered with the government and their tax exempt identifier be used for each purchase to properly record exempt purchases and avoid fraud.  Advances in technology have made such a registry easily developed, used and maintained.  As this would apply to all non-persons, the exemptions for traditionally tax exempt entities would still apply.  It is only a matter of appearance that businesses would no longer pay taxes as the reality is that they already do not.  Treating the tax system in this matter would essentially eliminate the complications in the tax code, eliminate the need to file anything more than an individual rebate claim and treat all people equally without being regressive.

“Collecting more taxes than is absolutely
necessary is legalized robbery.”
– Calvin Coolidge

A side issue to this matter are so-called “sin taxes”.  These targeted taxes on certain products and services are put in place to not only raise revenue but also to reduce the targeted activity.  They are a type of self-destructive tax in that they seek to raise revenue through the destruction of that which the revenue is raised.  Whether they are placed on cigarettes, junk food, alcohol, gambling or whatever, the rationale is the same: to reduce the consumption of these items and to raise revenue to combat the negative effects on society as a whole by the use of these items.  If the rationale were put into practice, this would be a sensible method to deal with the societal costs of destructive activities.  Government should not strip people of the right to engage in an activity that is not infringing on the life, liberty or property of others.  Some activities however are more likely to result in unintentional infringement on the rights of others.  Thus the taxation of these things to provide revenue specifically to provide revenue to address the unintended damage of these activities makes sense.  Governments however do not restrict the revenue raised to this purpose.  They utilize it to fund other things, thereby creating a situation where the need for the revenue exceeds the intent to end or at least balance the consequences of a certain activity.  If gambling taxes are used to fund schools, then the government becomes interested in maintaining and even increasing the amount of gambling in order to fund the schools.  If gambling taxes are restricted to fund gambling addiction recovery programs and a proportional amount of law enforcement costs associated with gambling related crime, then the government has no interest in maintaining nor expanding the amount of gambling.

“The government’s view of the economy could be summed up
in a few short phrases: if it moves, tax it. If it keep moving,
regulate it. And if it stops moving, subsidize it.”
– Ronald Reagan

Given the arguments presented, the model taxation strategy is a consumption based system placed solely on individuals with a calculated rebate and potentially additional targeted taxes on specific items that have significant unintentional societal costs, such taxes to be restricted in amount to covering the actual costs associated with the items and treatment for those addicted to them.  Under such a proposed method of taxation, individuals would be encouraged to repair rather than replace, garden, save and otherwise reduce consumption in order to reduce taxation.  This would be most likely with those on fixed incomes and others with tight budgets.  One could even receive more in rebate than one actually spent and thus have a net negative tax rate.  Government would have a restricted source of funding that would remain linked with economic health.  Attempting to raise the rate would only reduce the economic activity and result in no change in revenue.  While lowering the rate would increase economic activity and thus result in no change in revenue.  Government would be forced to keep its expenditures in direct relation to the economic health of the society.  As the economy grew, so would government revenue, but if the government implemented policies that hurt the economy, it would see its revenue decrease in equal proportion.  Tying the government to the health of the economy is a valuable check on the power and actions of government.

“Whether taxation should extend only to property,
or only to income, are points on which opinions
have not been uniform. I am inclined to think
that both should not be taxed.”
– John Jay

What should not be done is to tax in multiple methods at one and the same time.  Taxes on income and then on consumption is just double taxation on the same money.  Taxes on businesses are passed on to consumers and then the consumer transaction is also taxed resulting again in cumulative taxation.  These types of hidden and duplicative taxes are little more than a way for government to increase revenue without the citizen knowing the true rate of taxation.  Government should either tax income, or consumption, or property, but not more than one so that the rate of taxation is obvious to the citizen and the citizen can thereby vote for and lobby representatives from an informed position.  No targeted taxes should be levied on one thing in order to fund unrelated government activities or subsidize another.  Government should not “pick winners and losers” through tax exemptions, but rather implement a tax structure that treats all people equally without being unduly regressive.

Published in: on March 7, 2017 at 4:31 PM  Leave a Comment  
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Ready to get ready

We’ve all heard the TV preachers run through their pep rally type calls for a commitment to Jesus Christ.  Are you ready to open your heart to Jesus?  Are you ready for the Lord to work miracles in your life?  Are you ready to embrace the love of Jesus?  Are you ready for the healing spirit of Christ in your life?  To each question, the congregation shouts out affirmations.  Why then doesn’t the Holy Spirit descend into each of them?  Why doesn’t the Holy Spirit descend into you while you eagerly watch on TV?

It can be a bit of a letdown for us when we reach out to the Lord and are met with silence.  Our hearts are not automatically filled with love and joy.  Our bodies are not cured of all their ills.  Our concerns and worries are not lifted from upon us.  We came.  We said we were ready.  God didn’t answer.  We turn away.

Anyone who has children knows that you can call out to them, “are you ready?” and you’ll get told they are but when you take a look, they’re not.  Why did you say you were ready when you don’t even have your shoes on?  Why did you say you’re ready when you can’t find your jacket?  The answers to those questions contain a variety of convoluted logic and excuses and explanations.  The point is that they weren’t really ready even though they basically thought they were when they answered.  Better stated, they were ready to start to get ready.

That’s how it often is for us.  Are you ready to surrender yourself to Jesus?  Are you ready to embrace God’s love?  Are you ready for Jesus to work miracles in your life?  You may say yes, but God knows the truth.  Sometimes we are really ready, but oftentimes we’re not.  We want to be ready.  We’re ready to get ready.  But, we’ve not really prepared our hearts for the Holy Spirit to dwell within them.

I truly wish accepting the Lord and receiving His grace in my life were as easy as just saying I’m ready.  If only a sprinkling of Holy Water on my body or an anointment of oil on my head would open some divine doorway in my heart to allow the Holy Spirit to flow into me and fill me with joy and comfort.  Wouldn’t that be great?

I attended a funeral once and the preacher said that the deceased lady had a personal relationship with Jesus.  He went on that anyone who had one too knew what that meant.  Then he said, “If you’re not sure if you have one, you don’t.”  That was the moment that I first learned that my knowledge of God and the Gospels didn’t really amount to anything.  I wasn’t sure if I had a personal relationship with Jesus and that meant I didn’t.  He was right.

It wasn’t until a few years later while I was sitting in church that the first awakening came to me.  The sermon wasn’t anything spectacular.  God just knew that I was ready.  I’d been going to church and thought I was ready for quite awhile and never really felt a relationship.  Now, here I was sitting on a pew listening to a fairly generic sermon on the parable of the two sons from Matthew 21 which concludes in Matthew 21:31, “Which of the two did what his father wanted?” “The first,” they answered. Jesus said to them, “Truly I tell you, the tax collectors and the prostitutes are entering the kingdom of God ahead of you.”  All at once, I was struck by the immensity of God’s love through Jesus Christ.  Here Jesus said that these other sinners would get into the kingdom of God ahead of, not instead of, those questioning him.  Even those who crucified His only Son could enter into His kingdom.  That’s a level of grace, love and forgiveness beyond me.  God is so far beyond me.  Through that opening, that crack in my love of myself, the Holy Spirit filled me.  I finally understood what it meant to have a personal relationship with Jesus.

Don’t think that I’ve been walking around ever since with a feeling of love and grace upon me.  Don’t imagine that I’ve seen all the burdens of life lifted from my shoulders.  Don’t suppose that I’ve been cured of all my ills.  It doesn’t work like that. At least not for me as I am right now.  Maybe God is waiting for me to truly be ready for more.  I think I am, but God knows me better than I know myself.  I may never be truly ready to surrender myself until the day He calls me home.  Or, I could suddenly find myself once again filled with the grace of God and the love of Jesus Christ just a moment from now.  As they say, “The Lord only knows.”

Do not be disheartened if you are searching for God but haven’t found Him.  Do not be let down that your prayers seem to go unanswered.  Do not give up when you open your heart to Jesus and it continues to feel empty.  Do not despair.  As Jesus said, “And surely I am with you always, to the very end of the age.” (Matthew 28:20).  Just as you would not take your child outside without shoes or jacket even when that child says “I’m ready” but you stand nearby with love until your child is ready, neither will the Lord take you when you’re not fully ready even when you say you are, but will be there with you waiting until you are.  God is not ignoring you.  God knows that, just like dragging out your child into the cold without shoes or jacket, more harm can be done than good by moving your spirit before it is ready.

This doesn’t mean that you should just sit and wait.  Your children’s shoes would remain off and the jackets remain lost if there wasn’t a push to get ready.  Being ready to begin getting ready is the first step.  That you are ready to seek God and are ready to begin to open your heart to God’s love and are ready to have the blessing of a personal relationship with Jesus are all wonderful things.  There are things you need to do in your own soul before you’re truly ready for the Holy Spirit to dwell within you.  Just as the child hadn’t yet realized the shoes were not on or the jacket was not found, we don’t yet realize what about ourselves needs to be readied before we can go walk with the Lord.

Reading God’s Word, doing all in your ability to live by His law, seeking Him through study and more importantly through fellowship with those who have received His grace, are all ways you can ready yourself to receive it yourself.  I can’t tell you when or how it will happen.  I still am working on it more for myself.  All I know for certain is that it will happen.  I have felt it and know that there is more to come.  I have reached the point at which I truly have faith.  Only God knows when I will be ready for more and when you’ll be ready.

 

Published in: on March 2, 2017 at 12:14 PM  Leave a Comment  
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Highway to Nowhere

The new governor of West Virginia has proposed a massive tax increase to fund a huge bond issue for use in a push to complete a number of road projects in the near future.  The stated upside is more jobs, more money into the economy and a separate “bucket of money” to use for other things.  Before we even get into the downside of this proposal, let’s examine each of the positives.

This major infrastructure plan is touted as a jobs plan.  It certainly will result in a lot of work, but will it result in a lot of jobs?  First we need to consider what would happen if we did not engage in this stimulus program.  These road projects would still get done, but they would be done over a longer time period.  So from a sustainable jobs perspective, spacing the work out over  a longer term provides more employment stability.  Of course, the goal of the governor is not long-term sustainability but an immediate increase in employment.  One could argue the issue of short term employment growth verses long term employment stability, but let’s just table that for now and focus on the short term issue.

To really consider the number of jobs created in the short term, we have to review our capacity and expansion capability.  In other words, how much highway construction work can the current WV construction companies complete in a year and how much more work could they reasonably expand themselves to complete?  As it is, the construction firms within the state are of a size compatible with the average market needs of the construction sector.  They’re as big as they can be given the amount of work available.  If we double the amount of work available, can these companies double their workload?  Unfortunately, it’s not that simple.  It isn’t just a matter of hiring more people (even if the people exist).  These road projects would be all over the state and happening during the same construction season.  So, you need not only more workers, but also all the equipment, engineers, logistical support, etc. to run additional projects in other areas.  That’s a lot of investment to make on a short term prospect.  If it were just people, as bad as that may sound, it would be less of an issue because those can just be laid off.  But, equipment isn’t cheap and there are taxes on inventories and equipment that make the idea of investing into those things without a clear long term revenue return very precarious.  Clearly, there would be some companies that expand but expecting them to expand to double their current size, taking into account the skilled labor needed, would be a stretch.  There are jobs for general laborers, but the real driver is skilled labor of which this state has a finite supply after decades of industrial decline.

The limited expansion capability of the WV construction contractors means that there will necessarily be an influx of out of state contractors.  Not only will they likely be needed in order to perform so much work in the compressed timetable, but they may even be able to underbid the internal contractors (who, if they intend to expand, would have the expense of acquiring more equipment).  The existing WV contractors have a slight price advantage now due to reduced mobilization costs, their base of operations being already in the state.  Once a large amount of work is dumped on the market in a short time frame that exceeds the capacity of the internal contractors, out of state contractors will by necessity move in and then, because they are already here, they will be able to bid on subsequent projects as part of this multi-year stimulus at the same lower mobilization rate as existing contractors.  If those out of state contractors are using cheap imported labor and also have the same mobilization costs because they’ve temporarily located resources within the state, we could even see the event of existing WV contractors’ workloads decline in the subsequent years of this program.  Any WV citizens who might be hired by the out of state contractors would know that their jobs are short term unless they follow the company out of state when the work ends.  In short, the impact on employment for WV workers is at best minimal and short term and at worst may even cost jobs due to increased competition from larger out of state firms.

That brings us to the second “benefit” of the plan: more money into the WV economy.  There is no doubt the government will be spending more money.  In order to do that, it will be taking money out of the economy in taxes and fees to cover bond payments.  Considering that the bond repayment includes interest, once can clearly see without the aid of an abacus that the amount of money taken out of the economy will be greater than the amount of money put into the economy by WV.  There is however, the federal money that will come for road projects.  Assuming WV can get a full match for its dollars (a dangerous assumption given the leanings of the majority in Congress), then there would be more money being spent on contracts than had been taken out in taxes, fees and interest payments.  Score one for the governor?  Not so fast.  We need to consider how much of the proposed work will be won by out of state contractors, how much will be spent on imported construction supplies and how much will economic activity will be lost in areas that see increased taxes and fees but do not benefit from a road contract.  It would take an army of eggheads with calculators and theories to estimate all those things, but let’s take a general look at it.

The governor proposed to do ten years’ worth of road projects in the next five years.  Assuming that is possible (engineering, design, permits, etc. aside) and assuming a best case that existing WV contractors can expand in size by 50% using all in-state workers, that still leaves 25% of the work going to out of state contractors.  So far, assuming half the money is federal and interest on the bond is low, WV is still ahead of the curve with only 25% of work going to out of state contractors as 75% of the money spent would be to WV contractors.  The next determination is how much of the supplies needed will be made in WV.  We need structure steel shapes, preform concrete shapes, wiring, light fixtures, signs, concrete, rebar, asphalt, gravel, etc.  Unless there is a major industrial center hiding somewhere in the state just waiting to jump out, yell “surprise” and disgorge a plethora of material, much of that construction material will be coming from out of state.  Since materials are a large cost of construction projects, the numbers now turn grim.  If we can’t keep all the professional services, skilled labor, day labor and associated profits in the state, there is no way to balance the amount of money exported to suppliers.  Since the capacity isn’t there to do this much work in the proposed time-frame, there isn’t any chance of keeping all the non-material expenses in state.  The money will flow out and not into the WV economy.

In order to balance out the money removed from the economy in taxes and fees to fund the bonds, there has to be at least as much put back in.  Assuming a full federal match (again a big assumption), we’d need a little over half the money spent (to account for bond interest) to remain in the state.  Given the need to import so much of the material for construction and our limited capacity and natural limits to sudden expansion, the numbers just don’t work out – unless you only care about the next couple years.  That is the secret.

The WV economy in the next few years may see a net increase in money even if a quarter of the work goes to out of state contractors and much of the supplies are imported.  If you dump $2 billion into projects during a five year period in which you suck out only $1 billion of the cost in taxes and fees during that period, there might be a net gain in the WV economy.  However, as the taxes and fees that continue to be drained away to pay back the debt is coupled to the revenue lost to out of state contractors and suppliers, the net effect is a huge loss.  That only matters if you’re going to still be in office when the pain comes or if you’re an average taxpayer.

The theory that if you borrow some money and match that with federal money, you get back more than you put in only works if you actually get back more than you put in.  The work would have to go only to WV contractors, only to WV workers and primarily to WV suppliers.  Otherwise, the amount that bleeds out exceeds the amount of federal money that comes in and there is a net loss to the economy.  That’s why capacity matters.

The numbers get a bit more complicated due to the proposal by the governor of putting a 5% tax on the winning bidder.  Let’s just all get on the same page first.  If you announce a 5% tax on the winning bid, all bidders will pad their bids to absorb that cost, so the state isn’t getting any money back from contractors – it is just having the contractors take more in order to give a little of the excess back.  So after it drives up the cost of the work by at least 5% so that at least 5% less work can be done, there will be a “bucket of money” that is “generated” by this kickback scheme.  That money is proposed to be used to build drug treatment centers and who knows what else (no one knows as it hasn’t been said).  Since the amount of road work that can be done will be reduced by at least 5% due to this skimming of the funds, it is ludicrous to consider that skimmed money as “additional revenue” to be counted towards economic activity.  There is a popular economic theory that contents that if you pass the same dollar to Person A who gives it to Person B who gives it to Person C who gives it to Person A that the one dollar became three.  By that theory, the 5% extra charged by the contractor that is then taken as a 5% tax means 10% of increased economic activity but in reality nobody got anything except the lawyers, accountants and bureaucrats who each took a cut as the money passed from the government to the contractor and then back again.

Worse than there being no real benefit from the “bucket of money” generated by taxing inflated bids which results in a net loss of spending money (due to the processing costs), the whole scheme is a violation of the law – in spirit, if not in letter.  The people have to vote to issue bonds for a specific purpose, i.e. road construction.  By playing this little game of announcing a 5% tax on the winning bidder so that the bids are inflated to absorb it, all that is really being accomplished is the siphoning off of funds from a constitutionally limited bond issue to use to do things not permitted by the bond issue.  It’s like a guy that sells a copy of a $1 newspaper for $500 and gives the buyer two complimentary tickets and then claims not to be scalping tickets.  Putting a targeted tax on a bid funded by a constitutionally limited bond issue is just semantics for the misappropriation of funds.  It may be technically legal but it’s crooked.

All the benefits touted by the governor for his over-tax and way over-spend infrastructure plan have been reviewed and none of them hold up to even cursory inspection.  There are potentially some very short term benefits for the state as a whole, but many long term detriments.  Only politicians with no long term prospects of staying in office and owners of contracting firms really benefit from the plan.  Sure, existing WV workers and some additional WV people who will be hired will get paychecks but, for the most part, they’d be getting those anyway if the construction work were done at the regular pace.  The acceleration of the pace of work and additional projects crammed into a construction season doesn’t increase the number of hours in the day nor the number of hours a WV worker can work in a season.  It just invites external competition.  That’s just how the market works.

The short term benefits may be worth it given the current economic difficulties of the state if: 1. the work could legitimately be considered a definite driver of future economic growth such that it would negate the long term costs and 2. there will be enough construction contracts in the immediate post-stimulus years to sustain the contracting industry.  Fixing roads is important, but does doing it all at once impact economic growth?  There doesn’t appear to be any evidence that suggests doing 10 years worth of projects in 5 years has any positive effect on economic growth; only that not doing projects at all (deferred maintenance) has a negative effect on economic growth.  If all a state or nation had to do in order to spur long term economic growth was borrow some money and build roads ahead of schedule, we’d all be living in an economic boom time already.  The feds tried it and it did nothing.  Well, that’s not true.  It did worse than nothing.  That’s because of condition number two listed above.  If the state does a decade’s worth of necessary projects in five years, what work is there to do in the next five years?  There will be some work that is always needed like repaving, but if all the bridges are fixed and will last decades, then what bridge work will there be?  Some projects from more distant years may be able to be moved up, but why replace or repair something that hasn’t reached its lifespan?  The fact is that if the work of ten years is done in five, there isn’t much work to do in the next five.  The WV workers will find that their steady construction jobs disappear when the stimulus is over because the work is done.  The WV worker only made five years of wages, the same he or she would have made without the stimulus.  Now, the workers will face layoffs or the need to go out of state to find work whereas, without the stimulus, the work for years six through ten would still be there for them to do.

Maybe the long term welfare of the state’s skilled construction workers doesn’t matter.  Maybe the long term loss to the state’s economy doesn’t matter.  Maybe doing an end around the constitutional limits of a bond issue doesn’t matter.  Maybe all the economic growth that was lost in other sectors due to the increase in taxes in fees doesn’t matter.  Maybe the economic hardship for every citizen of WV who isn’t in the construction industry or related support businesses who has to pay extra taxes and fees from an already limited income doesn’t matter.  Maybe all that matters is that one man can dream big, tax bigger, spend even bigger and then invite all the owners of contracting firms that profit from the venture to come stay at his hotel when they’re all done draining the economy.

Published in: on February 28, 2017 at 5:02 PM  Leave a Comment  
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Time

They say that you make time for the things that matter. Really? In some ways that is true, but I have to say that a good portion of my life is spent on things that don’t matter to me in any major sense, but that I have to do. If my life were about the things that really matter to me, I’d certainly spend less time at work.

It’s not that my job is unimportant or that I dislike it. It’s just that in the larger view of life it isn’t very meaningful. It is something that is necessary to provide the source of funds for food, clothing and shelter. Beyond that, it does provide some challenges which are good for the intellect and growth – but generally it is just repetition of skills already learned and honed. Most of the mental stimulation I get in life comes from other sources.

Even those things I choose to pursue often end up dictating more of my life than I intended. When you join organizations and are active in them, you find that you need to attend meetings even when you’d rather do something else at that particular time. Sometimes an escape turns into an obligation. Sometimes what you get out is not longer worth what you put in.

So, it isn’t really true that you make time for the things that matter. A lot of times you know that what you are doing or about to do doesn’t really matter, but you have to do it. Some could argue that those things you have to do are things that matter simply because they are necessary. I don’t see it that way. Necessary and meaningful are not one in the same and I view the ‘things that matter’ as meaning the ‘things that are meaningful’. It’s all semantics, I suppose.

When you stop to think of all the time you spend working to support the goliath that is government (estimates put it at roughly 40% of the fruits of your labor go to taxes at one level or another of government), you realize that even the time you spend working isn’t even all necessary. Roughly 21 weeks or 830 hours of the time you spend working produces nothing directly for you – it all goes to government at some level or another and most of that is wasted or spent on things from which you get no real benefit. Go ahead and try to argue that all that money taken by the government is efficiently and reasonably spent on necessary things that have a direct positive value to every taxpayer at least equal to the amount they paid in. Go ahead. I’m not worried you’ll prove me wrong.

Now think of all the time you spend conforming to society. For example, how much time do you spend shopping for clothes you don’t really need and that cost more than they are really worth? How much time did it take you to earn the money you are spending on them? In other words, how much time did you expend in order to ‘look right’? Think of all the products you buy that really are all for that purpose. Sure, maybe you like those things, but because you were conditioned to like them. But you know as well as I that they are not meaningful things and the time you spend obtaining, caring for, apply or earning money for them is all time that is essentially wasted.

How about the time you spend exercising? It is all a waste of time. Now, now, don’t get all upset and start rattling off health benefits. Of course it is good for you, but it is only necessary because the rest of your daily routine is so unhealthy. The food you eat, the job you work, the entertainment you enjoy all contributes to a lifestyle that is so unhealthy that you need to set aside a block of time for physical movement. Think about that for a moment. You spend money and time specifically for the purpose of moving your limbs around for a set period of time. How insane is that? Workout clothes, gym memberships or home equipment all cost money which you have to earn working. Again, time spent working to support time spent exercising because you didn’t have time to do any normal physical activity in a day. Anyone starting to see a pattern here?

If you could cut all the nonsense out of your life: taxes, social conformity, regimented exercise, etc. and just live your life you could live on roughly half as much as you make now, i.e. work half as much as you do now. If you worked only half as much, you’d have time for so many things that really matter.

Unfortunately, taxes aren’t going anywhere and that’s the biggest drain on your earnings and therefore biggest factor compelling you to work 40 or more hours in a week. That means that you need clothes for work which cost you more money meaning more time working. That means you need to have set exercise times, which means more clothes, equipment or a membership which means more money which means more work.

All of that means that you have less time for your interests, your family and your personal growth. The only way to make more time for those things is to rob it from the hours available for rest. How many of us regularly do that? We trade a few hours of sleep fairly often in order to spend time with friends or family, read a book, pursue a hobby or whatever. That’s how we ‘make time’ and the cost of that time is quite high. It affects our health and can wear us down and burn us out so that we don’t even enjoy the things that matter anymore.

This post may seem like a bit of a downer. It isn’t meant to be. It is meant to encourage you to stop and look at the life you are living and ask yourself if you are living for yourself or not.

It’s not too late to refocus your life. It’s not too late to really make time for what’s important by cutting out what isn’t instead of robbing time from necessary rest. The only thing stopping you is money.  How much of it do you spend on things that don’t really matter but that you use because they bring quick pleasure in your otherwise unmeaningful life? If you were doing the things that matter to you, you wouldn’t need most of those things anymore. You wouldn’t need the money to spend on them. You wouldn’t need to spend so much time making that money.

Of course, it’s just easier to just keep going as usual. Then when the end is near, you can lament all the things you didn’t do.

Published in: on February 25, 2010 at 3:19 PM  Leave a Comment  

Welcome

I first began my internet presence in 1996.  Over the years I’ve shared my views on websites, blogs, videos, blog radio, blog tv, tweets and forums.  Most of those formats trend towards picking a single theme.  Common wisdom says that you need to do that to get a message across.  Well, I’m not going to follow that view any longer.

Life is not a single topic or even a single theme.  Those who look at life’s issues with the blinders of a single focus will never find truth.  Politics without history, philosophy, faith, economics and a host of other themes is a worthless waste of time.  Wisdom comes from examination of all things and not just those few things that fit within a predefined view.  So now I will start anew with this blog and share with you the thoughts I have any a wide variety of topics.  Some you may enjoy and others you may find uninteresting.  Some of you may agree with me on a given thought and others will believe me to be wrong.  That’s O.K.

I’ll happily accept your criticisms and  alternate views.  Just don’t waste your time telling me that I’m wrong without presenting facts to back up your position.  I won’t respond to mindless flaming.  There are far more important things to do in life than to argue with idiots and if you can’t post anything more than an unsupported attack, then you are indeed an idiot.

Finally I want to make it clear that I will write what I believe.  I will state it as I feel it.  I abhor political correctness in all its forms and will not lower myself or the subject matter of my posts by attempting to conform to the straightjacket of political correctness.  Freedom of Speech means freedom to speak from the heart and not just from the leftist handbook.  If you find this blog offensive at any time, you have the unrestricted right to stop reading it.

All that being said, I welcome you to this blog.  Hopefully it will indeed grow into what I envision for it.  It is an opportunity for you to see the world through my eyes and for me to share with you my thoughts on those things I find most interesting or important.

Published in: on February 22, 2010 at 3:26 PM  Leave a Comment