Soaking "The Rich" - A One-Time Well

It is no secret that many in the country feel "the rich" (defined currently by our savior – I mean President - Barak Hussein Obama as someone making $250,000 or more) should be taxed to the hilt. Never mind that the top 25% of earners pay over 80% of the tax bill in the U.S. already. They should pay more.

To that end there are a number of proposals for sticking it to "the rich". I'm not going to outline them all. That info is easy to find on the web.

But there is one very significant point that all liberals and soak "the rich" types quickly forget:

People's lives are dynamic.

People adjust to the changing environment. "The rich" will adjust to new taxes too.

Despite what you think and hope "the rich" aren't going to just lean forward, grab the ankles and take it with a smile. They will change their behaviors to minimize (if not totally negate) the effects of new and/or higher taxes.

This means they will sell taxable income producing investments like corporate bonds and dividend paying stocks and buy tax-free municipal bonds and non-income growth stocks. They will buy more tax-deferred products like annuities, IRAs and cash value life insurance. And they will likely buy more gold, silver, platinum and other metals and jewelry that are non-taxed (and untraceable for all intents and purposes). Maybe even some collectables too.

So the first year this new soak "the rich" taxes probably will increase tax collection. It takes time for "the rich' to reposition themselves. And in so reposition will incur some taxable transactions (like selling one stock to buy another).

But the second year the tax collection will be far less than predicted. Same for the third year. And by the forth year the actual tax collection will be much lower than what the experts predicted would be by soaking "the rich".

At that point there will only be two choices open to the Messiah:

1 – Try to pass new laws that make investments and vehicles that are currently tax-free or tax-differed no longer such;

Or

2 – Raise taxes even more for another short burst of tax revenue increase.
(or some combination of the two.)

Either way, raising taxes to soak "the rich" is a well that ha a very limited supply. You can only go to that well so many times before it runs dry.

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Brothers, Why Have You For Saken Us? – An Open Letter to The Arab World

Dear Brothers,

Why have you turned your back on your fellow Arabs?

In 1948 you asked us to leave our homes and land in the newly formed Israel. You warned us that when you our brothers in Syria, Jordan and Egypt, and supported by arms and financing from Iran, Iraq, Libya, Saudi Arabia etc. attacked Israel to push the Jews into the sea we might get hurt. So to look out for our well being you said we should temporarily leave our homes until the push was done. Then we would return.

We were touched by your concern for us, your fellow Arabs. And we trusted you. So we left our homes.

True to your word in 1948 you attacked the fledgling Israel.

And lost!

So now for 60 years we are considered refugees from our homes that you told us to leave!


We don't hold it against you that you lost to Israel (how embarrassing!). But why haven't you taken care of us, your fellow Arab brothers and sisters?

Your Arab countries are among the richest countries in the world, having grown fat on oil money. So why do you let your Arab brothers live in squallier?

Why haven't you taken us into your countries and given us citizenship?
Why haven't you built for us decent housing?
Why haven't you paid for our children to go to school?
Why haven't you given us access to your hospitals and doctors?
Why haven't you retrained us for our own jobs? Perhaps in your rich oil industry?

Other peoples do it. Jews have many programs to help resettle other Jews from Russia, Africa and other places. Christians have programs and support networks to help displaced fellow Christians. So why haven't you our Arab brothers helped us?

Could it be you are selfish with your money and lives of luxury?

Could it be you're using our lives and our children's lives for your own selfish political games with the West?

That would be dishonorable considering the long tradition of hospitality in the Arab world. Not to mention the deep brotherhood of support in the Muslim community.

So I am perplexed – Why haven't you helped us for 60 years?

Awaiting your response.

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Minding Your Own Business (or, No One Wants Your Advise)

What would you do if you saw a friend doing what you truly believe is throwing their life away in the biggest mistake ever?

Not just a bad decision or something you wouldn't do or you would do differently, but you thought your friend was truly throwing his/her life away on a truly stupid move. Something they may not be able to recover from even if later they realize how bad a move it was.

Would you say something?
Would you say it strongly?
Would point out all the dumb things you think they are doing and why?
Would you risk the friendship to speak your mind?

Or would you take the easy way out? – Wish them well and stay quiet while watching them potentially self-destruct.

It's not an easy answer.

No one will ever thank you for point out how foolish they are or how moronic they are acting or how they have been manipulated by someone. No one will ever say "Oh wow. I never realize how utterly stupid I have been. Thank you for point it out to me!"

Doesn't happen like that. It may make you feel better having gotten it off your mind, but you won't be thanked for it.

So what would you do?

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The Product Liability of: Water!

With today's crazy law suits about products, even when the product is so grossly miss used or otherwise operator's error, you have to wonder what every day items would not be invented or at least put on a shelf and not brought to market if such liability existed decades or even centuries ago. Even common natural products if were "invented" may be considered too risky to sell for fear of being sued up the wha-zooh!

For example: Let's consider old fashioned WATER.

Let's presume we lived on a planet where water (good 'ol H2O) didn't exist and someone invented it.

It is very useful for many things like cleaning, eating, swimming, making things go (as in steam power), etc.

But also think of the problems and issues with water:
- Just a slight coating of water can make main surfaces as slick as glass.
- Water dissolves and erodes just about everything given enough time.
- Water is an excellent breeding medium for many kinds of diseases and parasites.
- A human can drown in as little as 6 inches of water.
- When water freezes it expands and cracks things.
- When water heats to steam it can scald.
- Poisons and toxins can be solve in water and undetectable without chemical analysis.
- A vehicle can become out of control driving on just a few inches of water.

With all this going against it who in their right mind would have brought water to market?!

And that's the point.

You can easily measure people who have been hurt by a product (their own fault or not). But you can not measure all the people who could have been helped had a product been brought to market but wasn't for fear of liability suit.

Think about that before the next time you think to yourself "I should sue them."

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The "Rich" Are Consumers Too!! (or So What Do You Think They Spend It On?!)

Taxing the "rich" is all the vogue now. As of writing this my esteemed Sen. Chuck Schumer is promising to tax at 91% the bonuses that AIG executives are to be paid (based on an employment contract – more about those in another article). I suppose that's rather charitable given that I have heard others want the bonuses 100% taxed!!

(My advice to the AIG execs: Take the bonus money and put it into a muni bond money market. If you have to pay it back in taxes at least you'll get some return on it you can keep!)

But this begs the question:

What do you think the "rich" – defined anyway you want – do with the money they earn??

This is a very serious and important question.

I know a lot of liberals and young people read my blog, both of which rarely make a lot of money, and they think the "rich" are all about caviar holidays, Champaign dreams, lifestyles of the famous, etc etc.

Put the images of people like Donald Trump and Paris Hilton out of your thoughts. While they are "rich" they are celebrities. The lives of truly "rich" people are nothing like that.

Tell me: What do you think the "rich" do with their money?

I think they buy things with it.

They buy food, transportation, housing, medical care, clothing, entertainment, vacations, repairs and maintenance, and so on. Maybe not the kinds of things you would buy – and more to the point the kinds of things you want them to buy – but they do buy. And someone has to provide those goods and services they buy. In other words, they stimulate the economy!

And yes the do pay taxes. Maybe not as much as you think they should be paying but they do. There are just so many deductions, write-offs, credits etc one can take.

So tell me: What do you think the "rich" do with their money?

I really want to know.

Post your replies and let's find out!

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TAO: The Art of War (Part 2 - Knowing Terrorists)

In part 1 of these series I summarized the four points of AOW and discussed the concept of you choosing the time and place of battle as it relates to fighting terrorists and terrorism.
In this article I will discuss another of those points: Know your enemy.

I'm not going to delve into a psychological dissection of who and what a terrorist and terrorism is other than to give this broad definition:

A terrorist is someone who uses the credible threat of violence to [try to] effect political change.

By this definition a terrorist doesn't necessarily have to actually do violence but merely threaten violence. And, based, on their track record of carrying out threats of violence, they now have credibility that such threats will result in violence if the terrorist's demands aren't met.

To know your enemy you have to first have the courage to accept truth wherever it leads. This is essential because defining the enemy will certainly hurt in today's feel-good political correct world. But that doesn't change reality. In knowing who your enemy in the War in Terror logic and maturity demands that we are realistic and not given in to feel-good-ism of political correctness.

On September 11th, 2001 the United States was attacked by Islamic Arab terrorists. That is a fact which no matter how you twist and turn it simply can't be changed. I don't care what country they were born in, what passports they held (fake probably too). There were Islamic and they were Arab.

On that day America was not attacked by terrorists from France or Germany or Italy or China, or Sweden or Brazil or New Zealand etc.

On that day Americans were not killed by Canadians or Swiss or Indians or Panamanians or Mexicans or Eskimos etc.

On that day it killing and destruction was not done in the name of the G-d of the Jews or the Christians or the Hindus or the Buddhists or the Lutherans or the Baptists or the Pagans or even the Satanists.

Islamic Arabs – This is the face of where the terrorists came from.

To deny it is to deny reality itself.

Does it mean that all Islamic Arabs are terrorists in waiting? Most likely not (at least I hope not!).
But that is the direction which we need to be looking. At least for now.

Profiling? I call it knowing my enemy.

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TAO: The Art of War (Part 1 - Fighting Terrorists)

If you have read "Tao: The Art of War" by Sun Tzu you will recognize this topic.

I read the book (a defacto requirement these days in business though I don't see the deep philosophic lessons for business others claim it has, but that's for another article) and I'd say the whole philosophy can be summarized in 4 points:

1. Know your enemy.
2. Know yourself.
3. Know your limitations.
4. You choose the time and place of combat.

It is point #4 this article addresses.

Like it or not (and I suspect the latter) the Bush Doctrine for the War on Terror follows #4 very well. By engaging the enemy (yes, they are the enemy!) on their home turf of the Middle East we are keeping them away from our shores.

Sitting back and waiting to defend against an attack brought to our door step is not a winning strategy. Nor is it a life saving strategy. Reacting after an attack has taken place does nothing to stop people from getting killed and/or property damaged (let's not forget that – nothing wrong in protecting the things you own!).

This is of particular importance since American interests are global these days. Attacks on Americans anywhere in the world should be considered the same as an Attack right here on Main Street, USA.

Taking the battle to the enemy is a proven winning strategy throughout history. Nazi Germany would never have been defeated if allied war plans where just to keep the Nazi's out of England and Russia. Imperial Japan would never have been defeated if American strategy was just to keep them away from Hawaii and the West Coast.

Sitting back and waiting for the enemy to make the move is never a good philosophy. Make the enemy react to you and not the other way around! Of course still mount a good local defense.

But as another well known philosophy goes: The best defense is a strong offense.

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Social Investing Is For Idiots!

Yes, I said it. Have an organic carrot juice and calm down.

Any one who buys stock in a company solely because that company claims to have "progressive" values and policies about pay, benefits, time off, equality etc. is a fool. Similarly, someone who buys stock in a "green" company just because it is supposedly a very environmentally sensitive enterprise is also a fool.

Why such a strong stance?

That activity equates to charity, not what real investing is about! You may as well just send a check to the company. If you're not buying the stock because you think the company's' product/services are good and in demand, and you don't know the longer term prospects and strategy for the company than you're just throwing money down a hole hoping somehow someday it will come back.

Such a person is not an investor. They are a fool – or a hypocrite.

A hypocrite because they want to make money off of what they believe is social justice and "green". They are, as the mantra goes, putting profits first! And 'profit' is a dirty word to the social progressive and greenie.

Investors invest to make money. Period. The good an investor does comes from their goal of making money. No one, and I mean no one, invests for the #1 reason other than to make money. There maybe additional reasons but as sure as the sun rises in the East the top #1 main priority is to make a profit. And the sooner and bigger the better. Anyone who doesn't understand that doesn't belong in stocks. Stay with CDs.

Changing the world without making a significant profit is backwards, not forwards. And anyone who tries to get you to invest in something "progressive" or "green" without a solid plan for profitability is just trying to sucker you. Don't fall for it.

Enjoy the carrot juice.

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The Purpose Of A Business

Normally I don't like repeating myself. But this is a subject I now feel it needs to be restated once again:

The purpose of any business is to make a profit for its owner(s). Period!

A business is not a social services program! -

A business is not a jobs/works program.
A business is not a job training/retraining program.
A business is not a health care program.
A business is not a retirement program.
A business is not a rehab or counseling program.
A business is not a day care program.
A business is not a community funding program.
etc.
etc.
etc.

The business exists to provide goods and/or services and to collect as much payment as possible for those products and/or services. Obviously, in the majority of situations a business can't just charge what it wants for something. At some point market forces end up limiting how high the price can go before consumers of the product/service start reducing their purchases in favor of another business's products/services which are cheaper. Or just stop buying altogether.

If the owner(s) of the business choose to willfully operate the business in such a manner as to reduce the profit making of the business in order to advance some social concept that's their choice. But the basic purpose of having a business isn't to provide social services to the employees.

Whether you choose to believe it of not business do provide these things to their employees and the community they are in as it is. Perhaps not as much as you want them to or to the extent you think they should but they do. It's the nature of being a business with employees today.

To be in business with employees means you need people to do task that either you are unable to do yourself because you lack the skill or simply don't have the time to do it all. And in order to attract good people to your employ and to keep them working for you the business has to offer at least some aspect of benefits. Maybe not all the bennies you think they should or to the amount you think they should be but they do have to offer it. Very few good people will work at a company that offers little or no benefits like insurance and some kind of retirement plan.

Nobody starts a business solely for the express purpose of hiring people and giving them a paycheck, insurance, retirement funding, paid time off, etc. No business would ever get past day-1 with that as a mission statement! And more importantly, when you come to understand the loooooong hours, high costs and great personal risks that a business owner takes on in starting and operating a business it becomes even more obvious that no one in their right mind would put themselves through all that just to give handouts to someone else!

If an individual business's owners want to operate the business in a manner that does these things that's their decision. If the business owners believe they can deliver the goals of the business, generate the cash flow needed for all this social loving, and remain viable for the long run that's up to them. But it is not in anyway, shape or form an intrinsic aspect of a business per se.

So grow up and take command of your own life!

You are the CEO of yourself – act like one!

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Creatures Of Habit: Is This Insanity?

It is often said that one definition of insanity is repeating the same action over and over again, each time hoping for a different outcome.

Humans are creatures of habit. Whether it's in out nature or our psyches I don't know. But it is a fact that most people repeat the same actions over and over in their lives in spite of the failures previously encountered.

Our culture teaches us this with phrases like "If at first you don't succeed, try try again" and being told that truly successful people don't see failure but just a momentary set back. There is some truth to that. Perseverance is a good quality to have. And sometimes it isn't the action that failed but the environment it was tried in wasn't conducive to a positive out come.

Still, there is the Scott Adams Dilbert point of view: "If at first you don't succeed, try try again. If you still don't succeed move on. No sense being a damn fool about it!"

Knowing the difference between the two is the trick. It isn't always clear (if it's ever clear).

There's someone I know who so desperately wants to get recognition in his hobby field. For years he has tried all sorts of venues to push his agenda and ideas. The only results he's gotten is insulting many people, being seen as a joke at best (quack at worst), and alienated many people who would otherwise be a good support mechanism for him. His reply: Threats to sue! If you agree with him he's your buddy. If you disagree you're attacking him and he threatens to sue you for slander and liable. Not a graduate of Dale Carnegie training obviously. Yet he keeps this same routine over and over again for at least the last 3 years. Hasn't learned it doesn't work.

Creature of habit? Or insanity?

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