Apple not paying enough in taxes? Who should you be mad at?

Congress is busy once again doing the two-step. Step one is to publicly vilify successful corporations for not paying enough taxes by exercising the very tax loopholes instituted by Congress. Step two is to laugh all the way to the bank with their crony-corporatism policies that make their fortunes while pretending to have the people’s back.

Apple is the latest target and Sen. Rand Paul is calling out these hypocrites – http://tech.fortune.cnn.com/2013/05/21/apple-rand-paul-twitter/.

“I’m offended by the tone of these hearings,” he said, with some heat. “Tell me what Apple has done that’s illegal. If anyone should be on trial here it’s Congress. The Senate should apologize to Apple.”

Spellchek posted this a couple years back when G.E. was in the crosshairs – https://spellchek.wordpress.com/2011/03/26/g-e-pays-no-corporate-income-taxes-in-2010-are-you-mad/.

You can be mad at G.E. for exploiting the system and retaining as much of their profits as they can. You would be better served to direct your anger at the taxation policies of our government.

Corporations have a fiduciary responsibility to MAXIMIZE profits for their shareholders. It is their obligation and duty. Any of this rhetoric we hear concerning a corporation having any type of moral obligation toward creating jobs or reducing profits as some sort of consumer benefit is just garbage. A company is in business for one reason and one reason only. To maximize profits and realize as great a return on their investor’s investment as possible. Period.

Getting mad at Apple or G.E. is simple ignorance to the facts. Congress makes their own bed and must lie in it.

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The high cost of going out of business

You can’t make this stuff up. Should you happen to reside in the liberal la-la land of Milwaukee, WI and your privately owned business decides to go out of business, you may need a license to do so. Really.

H/T – XRepublic.TV http://xrepublic.tv/node/3284

Going-out-of-Business Sales

A Closing Out Sale is any sale conducted or advertised using such terms as “closing”, “bankruptcy”, or “liquidation”. Closing Out Sales are regulated, licensed and monitored by the City of Milwaukee Health Department to protect consumers from misleading or fraudulent practices. Business may make arrangements to apply for a “Closing Out Sale” License by calling (414) 286-3674.

The requirements for Closing Out Sales can be found in Chapter 88 of The Milwaukee Code of Ordinances

Read more:http://city.milwaukee.gov/Milwaukee-Health/AZLinked/Closing-out-Sales

Don’t you feel better knowing this is done to protect you?

You can read the whole ugly regulation here-http://city.milwaukee.gov/ImageLibrary/Groups/ccClerk/Ordinances/Volume-1/CH88.pdf

In addition to your license fee, make sure you have the following:

-an affidavit from a CPA listing all the stock you plan to sell
-an affidavit listing names and addresses of the business owners, partners, officers, directors, principal stockholders and anyone else who aided in conducting the sale. Oh, by the way, if you haven’t been in business for at least 12 months your application will be denied. So say you wish to run a seasonal business and sell-off the remaining stock? Disapproved.
-applicants personal property tax returns for the previous 2 years
-Wisconsin dept. of taxation form 10 for the previous 2 years
-an affidavit proving you haven’t ordered stock for the previous 60 days. Order fresh product for your business? License rejected!
-an anything goes stipulation that allows the City Sealer to request any documentation they deem fit for the application

Regulatory burdens that don’t encourage entrepeneurs to go into business? Nah, not in Milwaukee.

So who’s really right on this whole unemployment/disability mess?

The monthly drama surrounding the nation’s unemployment rate will play out again next Friday when the Bureau of Labor Statistics (BLS) releases its April report. It’s become an industry upon itself with different organizations and media sources making predictions prior to the release and then subsequently debating its merits afterward. The methodology employed by the BLS makes any result unreliable as a true measure of the nations employment situation, yet the results drive policy and have a significant effect on the political climate in America.

The biggest problems are in what defines an employed person and how people are counted in the survey taken each month to derive the nations official measure of the unemployment rate.

The BLS considers one employed if you work as little as one paid hour per month. If you work at least 15 hours unpaid, such as in a family business, you are also counted as employed.

Interpreting the unemployment rate is really a crapshoot. The flimsy requirement to be counted as employed as well as other factors such as marginally attached workers and those considered not in the labor force at all make the rate a truly poor measure of the state of the economy.

However, this post isn’t intended to delve into the BLS methodology and all of its misgivings. Rather, it is to touch on the latest skewing of the nations unemployment rate via the meteoric rise in the number of Americans collecting disability payments. Disability has become the unofficial extension of federal unemployment benefits. After state and federal benefits and extensions are all exhausted, many are moving to disability as the next source of the social safety net.

The BLS recently released a new study concerning disabled Americans – http://www.bls.gov/news.release/dissup.nr0.htm.

In it we find that over 28 million Americans are considered disabled. Keep in mind these numbers are already nearly a year old as of May, 2012.

Just over 18% of the disabled were employed (recall the flimsy BLS definition of employed). That compares to around 64% of the overall working age population of Americans employed.

Here’s where it starts to get a little sticky. Nearly 60% of the disabled received some form of financial assistance in the last year from one or more of the following sources: Workers Compensation, Social Security Disability Income, Supplemental Security Income, Veterans Disability compensation, disability insurance payments, Medicaid, Medicare, and other payments or programs.

Yet over 92.5% of those surveyed stated that the financial assistance failed to impede their search for work. Really? Realistically, the only way for that to be true is that the rocketing numbers of those on the disability rolls are truly disabled and not simply collecting benefits as a source of income when all others have been exhausted. Can this possibly be true despite the tremendous advances in medical technology allowing the disabled to work and function nearly normal? We must be experiencing an unprecedented spike in Americans becoming disabled despite more reasons than ever before to not let it affect their lives.

National Public Radio (NPR) completed a study showing 14 million Americans are receiving disability benefits from the government – http://apps.npr.org/unfit-for-work/.

Reporter Chana Joffe-Walt made this statement during an interview with NPR’s This American Life on March 22, 2013.

since the economy began its slow, slow recovery in late 2009, we’ve been averaging about 150,000 jobs created per month. In that same period every month, almost 250,000 people have been applying for disability.

Can it be pure coincidence that the rise in disability mirrors the high unemployment numbers?

Chana Joffe-Walt calls it the disability-industrial complex. This has the left in a tizzy. They have trotted out a long line of debunkers and consider anyone even quoting the NPR study a right-wing extremist since the results don’t fit the official narrative of the left. You can draw your own conclusions as to the merits of the study. What is undeniable however is the rise in those considered disabled since Obama took office.

If you take any of these studies with a grain of salt perhaps because you consider them partisan or slanted in some manner, numbers from the Social Security Administration itself confirm that nearly one thousand new people each day are enrolling for disability benefits since Obama took office – http://cnsnews.com/news/article/8803335-another-new-record-disability-975-day-under-obama. The SSA is hardly a right-wing extremist source.

Also from the NPR study.

The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined.

Many people have heard that over 47 million Americans from 23 million households are now on food stamps or SNAP – http://cnsnews.com/blog/joe-schoffstall/record-number-households-food-stamps-1-out-every-5. They probably didn’t know that the cost of disability benefits was exceeding food stamps and welfare combined.

In fact, the fight against poverty is costing America a trillion dollars each year according to the CATO Institute – http://www.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf.

What can you takeaway from this barrage of numbers through various studies that show conflicting results? The economy stinks for the average American. The crony-capitalists and corporatists may be profiting per usual no matter who is in office, but there’s a reason this doesn’t feel like a recovery. Because it isn’t for most of us despite a booming Dow stock market average and the Wall Street financial markets that benefitted the most from the American taxpayer bailing them out.

So when the unemployment rate is released next week and the debate rages on, just remember to take it all in context with the big picture. Not all of us are suffering as the well-connected keep on living the American dream.

All three 2014 federal budget proposals compared

img-hassettnrochart041113large_180724163799

The American Enterprise Institute has put together this chart comparing the 3 budget proposals. See a larger version here – http://www.aei.org/files/2013/04/11/img-hassettnrochart041113large_180724163799.jpg.

Source – http://www.aei.org/article/economics/fiscal-policy/a-quick-guide-to-budget-proposals/

Forecasting budgets may be the only thing less accurate than weather forecasting. Freedomworks did a study a few years back on just how accurate CBO costs estimates are, at least concerning Obamacare – http://www.freedomworks.org/files/capitol_comment_CBO_scores_PDF_2.pdf.

Initially, it was projected by the CBO that the cost of Obamacare would be $848 billion. Now the revisions show a cost of $1.76 trillion – http://www.newsmax.com/Newsfront/Obamacare-costs-double-CBO/2012/03/14/id/432506.

This is not to highlight the incompetence of the CBO, only to illustrate that the CBO is a garbage in/garbage out organization that only be as accurate as the data it is given.

No doubt that the CBO estimates, particularly on outlays, will be woefully low. In the meantime, we can actually have some good old bickering between the left and right as to who has a more realistic proposal on the table. Sure is a nice distraction from reality in that none of these budget proposals will hit anywhere close to the mark.

The Fairness and Equality in Taxation Act of 2013 – how’s $308 cash each week sound?

Have you seen this new taxation bill in Congress yet? Of course you haven’t since I just made it up. But with fairness and equality the mantra of today’s liberal/progressive movements, why not integrate them into our tax code and tax collection system? The left likes to claim the title of the all-inclusive party in which everyone is welcome and treated the same. No discrimination, no disparity, just completely equal and just.

So why not put that theory to the test? Most have heard of the flat tax proposals being floated to replace the current tax code. Let’s take it a step further. Rather than the same tax rate for all, shouldn’t it be the same tax amount for all? You know, one person/one vote type thinking? Why would the left ever support a progressive tax rate that means the wealthier amongst us pay more? They are still just a person completely equal to the rest so why discriminate against them by penalizing their material possessions?

Of course I’m asking a rhetorical question because virtually no one supports this true measure of equality. Certainly not the poor as they generally pay no federal income taxes as it is. I would even contend that the rich don’t like it despite the seemingly obvious alternative to lessen their tax burden. They are investors and business owners and recognize the necessity for a modern infrastructure and the tax base required to provide it. Decreasing the tax base per person to an amount that even the poor can afford means an overall massive decrease in the total tax revenue collected.

So who would support it? Only a slice of the middle class who have grown tired of watching the poor benefit from the welfare state and watching the rich keep getting richer off of our crony-capitalism and crony-corporatism rewards system.

Can you imagine if a truly fair and equal tax rate were implemented at a level that raises enough revenue to match government spending? Obama finally released his budget for 2014 that spends $3.77 trillion in taxpayer revenue. We need to examine raising that much as fairness would seem to apply to a balanced-budget approach.

Let’s look at the logistics of applying this new tax rate. First, it isn’t an income tax. That leaves out too many people who either aren’t working or not earning income. Remember, fairness and equality. Everybody must contribute and participate. FETA would be an existence tax for Americans. If you’re capable of drawing breath and residing in America, you should have to pay your fair share.

That makes it simple. Every adult American citizen should have to pay this tax until death. Can’t be any more equal than that. Many millions would howl that this isn’t fair but let’s remember the premise. Every person is created truly equal so throughout their life they should have that same level of respect given to them.

The guideline then becomes any adult 18 and older which according to the U.S. Census Bureau is somewhere north of 235 million people. A simple calculation of $3.77 trillion divided by 235 million means everyone’s “fair” and “equal” share of the tax burden would be…. drumroll please…just over $16,000 bucks. Each. Per person. Totally fair and equal.

Can the total equality crowd complain about that? It shouldn’t matter if you have a job, are disabled, are a retired person, none of it. You live here, you benefit from the American system.

How about our tax collection system? Want to have an immediate and profound effect on people and their perception of the income tax system? Collect taxes in cash each and every week from them personally. No more income withholding. If people had to pay their share of the income tax in cash every week, they would be shocked at how much it is and we would have protests unlike anything America has ever witnessed. Direct deposit, electronic banking and credit cards have effectively neutered our pain threshold for spending our hard-earned dollars.

The $16,042 share of each American’s tax burden (which is federal only by the way) would amount to about $308 dollars due in cash each week at your door when the collection/enforcement agent shows up. No, it wouldn’t be an IRS agent, the IRS would be abolished since we no longer have an income tax. Fair and equal.

OK, I’ve had enough fun now. Not a chance in the world any of this ever happens but it does serve to highlight the hypocrisy of the fair and equal crowd who really want nothing of the sort. Nor would most not even involved in promoting all this fairness and equality. Paying a truly equal share of our federal government’s spending addiction, and paying weekly in cash to boot, is a frightening scenario. Add in your state and local tax burdens on top and the reality of just how out-of-control our centralized government has become would hit home.

Fed meeting minutes leaked! Horror of horrors, what could happen?

CNN has a story out about the minutes from the Federal Reserve meeting being released early to about 100 people and this caused a bit of a stink. Really? C’mon now, we all know that the insiders already had any pertinent info before the Fed meeting ever took place. Sure they’re not supposed to, insider trading and conflicts of interest and the like, but let’s be intellectually honest about how things work in the beltway.

At any rate, I had to take a look to see what might have been so important that might have “leaked” out. This would likely be the info most sought after as it determines the Fed direction on setting the interest rate and buying bonds (read printing money).

The expected path for the federal funds rate implied by
market quotes moved down over the intermeeting period,
likely reflecting policymakers’ communications
that reinforced market expectations of continued monetary
policy accommodation. Results from the Desk’s
survey of primary dealers conducted prior to the March
meeting showed that dealers continued to view the
third quarter of 2015 as the most likely time of the first
increase in the target federal funds rate. In addition,
the median dealer continued to see the first quarter of
2014 as the most probable time for the Federal Reserve’s
asset purchases to end, and most dealers anticipated
that the pace of purchases would be adjusted
down before ending.

Personally, I like the part about “continued monetary policy accomodation”. As in since when is it the job of the Federal Reserve to accomodate the markets? Theoretically, they have a dual-mandate to stave off inflation and pursue full-employment. Accomodating market investors isn’t supposed to be a goal but rather a result of good monetary policy.

Why not just come out and say it? The Fed exists to make the banksters and the elites mucho grande dollars!

At any rate, as you read the plan is to start jacking up interest rates in late 2015 and stop printing money at the end of this year (the first quarter of fiscal year 2014 is Sep.-Dec. of 2013). That has been the announced plan and should come as no surprise to anyone.

The rest is the standard blah-blah-blah about how to balance out the argument that our economy just keeps on improving while at the same time is disappointing. There is even some comic relief in these usually bland Fed meeting minutes.

One participant
cited research indicating that long-term unemployment,
which is currently especially high, could lead
to persistently lower income and wealth for those affected,
even after they found jobs.

Seriously? You’re sure? Unemployment could lead to lower income and wealth? Add that to my list of learning something new everyday. I wonder who paid for the “research” to uncover this little nugget?

There is also a sliver of hope. A voice of reason amongst the hordes. The Fed voted to continue plodding along with its artifical manipulation of the federal funds rate to keep it at 0-.25% and to keep printing money at $40-45 billion per month with one dissenter. Was it Bernanke? Ha!

Voting for this action: Ben Bernanke, William C.
Dudley, James Bullard, Elizabeth Duke, Charles L. Evans,
Jerome H. Powell, Sarah Bloom Raskin, Eric
Rosengren, Jeremy C. Stein, Daniel K. Tarullo, and
Janet L. Yellen.

Voting against this action: Esther L. George.

Ms. George dissented because she continued to view
monetary policy as too accommodative and therefore
as posing risks to the achievement of the Committee’s
economic objectives in the long run. In particular, the
current stance of policy could lead to financial imbalances,
a mispricing of risk, and, over time, higher longterm
inflation expectations. In her view, the Commit-
tee’s asset purchases were providing relatively small
benefits, and, given the risks that they posed as well as
the improvement in the outlook for the labor market,
she thought they should be wound down.

Way to go Esther! Too bad nobody is listening to you.

Have farmers replaced big oil as the most evil according to the left?

How many times have we heard about “big oil” profiting on the backs of the taxpayers? Endlessly from the democrat party. The rub is that the tax loopholes and credits are all legal and are NOT supported by the right. At least not by conservatives and libertarians who are against special treatment for any industry.

So if the left and right are both against tax breaks why do they still exist? Because lobbyists and special interests work both sides of the fence in the beltway so it’s a political issue for public consumption while at the same time members of Congress from both sides get the perks.

Just for fun, I thought I would venture over to a leftist website to get their take on the evil oil corporations. The Center for American Progress fit the bill quite nicely with this title.

Big Oil’s Lust for Tax Loopholes
Oil Prices and Profits Rise While Big Oil Defends Its Tax Loopholes

Of course, our President weighed in on this issue.

“To help pay for [clean energy investments], I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. … I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.”

Just how much money are we talking about here in the form of tax loopholes?

The administration estimates closing these Big Oil tax loopholes would save “approximately $4 billion per year in tax subsidies to oil, gas, and other fossil fuel producers.”

$4 billion dollars a year is a whole lotta change, my friend. Heck, it would even keep the White House open for tours if we closed those loopholes. We all remember the stink raised from the N.Y. Times article demonizing G.E. for taking advantage of legal tax loopholes to save $3.2 billion. Does Obama call out G.E. the way he calls out big oil?

Now let’s venture over to another leftist website to get the take on ethanol subsidies. The left likes subsidies for “green” energy projects. A thoughtful person may ask, “why does the left despise legal tax breaks and promote legal subsidies if they both harm the taxpayer?”. Of course, the answer is political agenda. From the Huffington Post.

“Don’t Blame It on the Rain: The Ethanol Mandate Is a Bad Idea in Any Year”

The annual ethanol mandate subsidizing farmers totals about $6 billion dollars. That’s a lot of money to pay farmers to burn our food supply. Wait a minute, in fact it’s MORE money than the evil oil companies received in tax breaks last year. Who woulda thunk it?

Now, the author at the HuffPo doesn’t seem to like these handouts to the farmers.

“Our government should not be picking big agriculture as winners over the environment and the poor. It’s time to stop requiring cars to burn food.”

Seems to make sense. Of course, government shouldn’t be picking winners and losers in industry. Like bailing out auto companies. But more to the point, if subsidizing farmers is bad, then why does the USDA do this? http://www.abc12.com/story/21770265/record-crop-insurance-payout-stirs-subsidy-debate

Farmers will be paid a record $16 billion in crop insurance claims for 2012 because of the widespread drought, a staggering amount that has critics calling for changes to what they say is an inefficient taxpayer subsidy the government cannot afford.

While farmers buy crop insurance from private companies, the federal government subsidizes their premiums and picks up the tab for losses over a certain amount. One analyst estimates the federal tab for 2012 will come to about $11 billion.

Whoa! Stop the presses! $11 billion dollars in insurance subsidies? On the backs of the taxpayers? So let’s see here, $4 billion in evil oil company tax breaks, $6 billion in ethanol subsidies and $11 billion in farmer’s insurance losses? How many people do you think even realize that taxpayers forked over that much to the farmers? Are farmers now the most evil group on the planet? After all, the left is calling for an end to everything Bush. Bush era tax breaks for big oil. Bush era subsidies for ethanol. Should it now be Bush era insurance payouts to farmers?

By my calculations, farmers received $17 billion last year between ethanol and insurance subsidies far outweighing the paltry $4 billion for big oil. Of course, we hate big oil because we all have to drive cars and they raid our wallets with their price fixing of gasoline prices, right?

Well, don’t we all have to eat? Why don’t we despise our farmers for raising food prices at the same time they are getting massive bailouts from taxpayers? Do we only hate things we can blame on Bush?

The answer is to end all subsidies and tax breaks for all industries. Bailouts as well. No special treatment. Now, that’s never going to happen since politicians from both sides love their power trip and getting their palms greased by lobbyists. But that won’t stop all of them from “fighting on your behalf” in the hallowed halls of Congress.

Obama finally sets foot in Israel – a scheduling error or just part of the agenda?

My, where has the time gone? President Obama has finally set foot in Israel, in what is purported to be our best ally in the Middle East. He couldn’t find the time during his entire first-term in office. Or perhaps it was a matter of priorities? So what has changed?

The Palestinian Authority’s pending new unity government including Fatah and Hamas. It’s no coincidence that Obama finally shows up at this critical time in the process. The trip is to accomplish a multitude of things but a couple that stand out relate to funding the Palestine Authority.

U.S. law prevents funding terrorist organizations, so a central theme of the Obama trip is to legitimize the unity government agreement between Fatah and Hamas. Defenders have denied for years that Palestine funding intended to support humanitarian actions and infrastructure support for the West Bank, controlled by Fatah, ever makes it to Hamas in the Gaza Strip. Clearly with the new unity government set to take over, that denial will no longer be possible.

To satisfy Congress, Obama had to make the trip to show his involvement and oversight if you will as to the “new” leaf turned over by Hamas. The trip has already paid dividends as nearly half a billion dollars in U.S. aid was released recently. A State Dept. briefing yesterday confirmed this.

To date, we have moved $295.7 million in Fiscal Year 2012 money, 200 million of that – see, this – numbers don’t – oh, and 200 million in Fiscal Year 2013 assistance. So breaking that down again, 200 million in FY2013 ESF money was direct budget support for the Palestinian Authority; 195.7 million in FY12 Economic Support money went for development and humanitarian assistance implemented by USAID; 100 million in FY2012 for International Narcotics Control and Law Enforcement; and then in February – at the end of February we notified Congress about another 200 million that we’d like to move.

Obama had to journey to Israel despite his obvious disdain for having to bite the bullet and do so. After all, what else would one expect from a muslim? But, he had to do it as Israel controls the taxes and tariffs collected by goods passing through Israel into Palestine. They regular withhold these as a form of economic sanctions.

The $107.31 million Israel released is only a one-time reprieve however. Arab nations have a supposed “safety net” in place to subsidize the Palestine Authority budget whenever Israel withholds the tax/tariffs, yet they haven’t come through as promised.

Obama was well-prepared in advance for the trip. He met with a multitude of anti-Israel, pro-Hamas groups prior to leaving and had his marching orders in hand – http://frontpagemag.com/2013/dgreenfield/obama-meets-with-anti-israel-pro-hamas-groups-before-trip-to-israel/.

Obama has quite a bit on his plate when you consider all that he needs to accomplish at the same time. He needs to maximize the public pain inflicted back home in America from the relatively miniscule sequester cuts. He also had to take the pain himself and visit Israel to pay lip service to support a two-state solution to the Israeli-Palestine conflict. And he had to play referee at the Palestine unity government negotiations (along with financier Qatar I might add) to insure that U.S. aid keeps flowing despite the law in place to prevent it.

Funding Hamas with the approval of Congress and Israel at the same time? Well done. Funding Hamas at the same time sequester is bringing government to a halt back home? Well done. Funding Hamas while sequester stops White House tours and starves the staff of Debbie Wasserman Schultz while Biden toughs it out in Paris with a half-million dollar price tag? Wow, really well done Mr. President.

Nobody ever said fundamentally changing America while promoting a global Islamic Caliphate would be easy, did they? So far, Obama has shown himself to be up to the challenge.

State tax rankings

The Tax Foundation has released their 2013 rankings for comparing states by their tax burdens. Read the entire report here – http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf

Here are some highlights.

Tax Freedom Day.

Tax Freedom Day represents how long Americans must work
into the year before they have earned enough money to pay all
federal, state, and local taxes for the year.

Ranked best was Tennessee followed by Louisiana and Mississippi. Worst was Conneticut followed by New Jersey.

The state business tax climate rankings.

Best was Wyoming followed by South Dakota. Worst was New York followed by New Jersey.

The report is chock full of information useful for making comparisons, particularly if one is considering relocating. Just breezing through it makes a flat tax look fantastic.

Friedman’s spoons stirring the fiat money soup

I came across two things today while surfing the internet that would seem to have no logical connection to one another, yet that are strangely linked. A quote from the famous economist Milton Friedman and a fiat money scheme called Bitcoin that is making news in Europe due to the Cyprus banking crisis. Friedman and fiat money aren’t generally associated with one another.

First, I read another article referencing the jobs works program with spoons story that always gets falsely attributed to Milton Friedman. Falsely in that it wasn’t his original idea, he was merely reinterpreting it. You can always find stories on the internet that generally reference either George Will or Stephen Moore talking about the Friedman quote. More on that in a minute.

Second, I was reading today’s blog post from a good friend of Spellchek, the Asylum Watch. You’ll need to go there and read his post to get the basis for this post as he covers the Bitcoin story.

Here is the George Will version of the Milton Friedman spoons story.

The one idea that we seem to have dropped, happily so — remember the phrase was “shovel-ready”? We were going to create government jobs.

It put me in mind of a great story Milton Friedman used to tell. He went to Asia in the 1960s and was proudly taken by the government to see a public works project. They were building a canal. He was struck everyone was digging the canal with shovels. Friedman says, why no heavy earth-moving equipment?

They said, oh, this is a jobs program. So Friedman says, why don’t you give them spoons instead of shovels? I think we understand, now, the sterility of government trying to create jobs.

Now, my intent here is not to posthumously knock Milton Friedman for not originating the spoons story. In fact, you can’t find a direct quote anywhere from him, only the retelling of his story by others, so maybe Friedman gave credit for it that wasn’t retold. Regardless, the originator of the quote was William Aberhart, a politician from the Social Credit party of Alberta, Canada. Here is his quote.

On September 13, 1935 William Aberhart gave a speech to the Canadian Club in Toronto. He recounted an anecdote in which he delivered a version of the saying: 4

One of the school graduates came to me to pay his respects to the school; he told me he was in charge of helping on one of the Dominion air ports. I said to him, “I suppose you use modern machinery in your air ports?”
“No, sir.”
“Why?”
“Well,” he said, “if we used modern machinery in the establishment of air ports there would be very little need of men to help us to do it, for they would do it so rapidly and easily that there would be no need of man labour. We give them picks and shovels and put them out to do it in the old-fashioned way.”
I smiled and said to him: “It would probably be just as well to give them spoons and forks; it would take them still longer to do it.” It seemed to me so ridiculous; we let modern machinery rust at the road side or air port and make those men bend their backs in order to give them the purchasing power to buy the necessities of life, and hardly that.

As you can see, the spoons story has been around for some time. It’s just strange that an iconic quote attributed to Friedman actually came from a fiat money redistributor like Aberhart. There are other versions circulating as well – http://quoteinvestigator.com/2011/10/10/spoons-shovels/#more-2826.

What was strange was the tie-in between the social credit origins of the spoons story to this new Bitcoin money scheme. If you haven’t ever heard of
social credit before, it is essentially a philosophy to equalize production with consumption. I’ll quote Gary North to explain it.

The Social Credit movement began in 1917. The fundamental
idea of Social Credit is that capitalism suffers from a major
flaw: it does not create sufficient bank credit to allow consumers
to buy the entire output of industry.

North wrote an entire book on social credit theory that will explain why it, along with the variations of it we still see today, won’t work.

Admittedly, this is some pretty “dry” stuff to read. However, the point is that we always see new variations of fiat money schemes. Anything that eliminates fractional reserve banking certainly sounds good on the surface and you’ll easily get followers to take notice if there is a way around it.

As North also pointed out in his book.

As the reader will see, I regard the real-bills doctrine as
erroneous and fractional reserve banking as immoral: legalized
counterfeiting. Thus, I am also opposed to Social Credit economics
and all of its inflationary first-cousins.

Any fiat money system that is inflationary can be traced back to social credit style theory. John Maynard Keynes bought into it. Certainly, Obama buys into it as do all supporters of economic activity through artificial manipulation. The stimulus spending for example. In fact, if you’re really bored, here is a link to the platform of the Alberta Social Credit League. It’s a bit scary to see how much of what our government is doing today to our economy is directly out of this platform. Good socialist ideas never die, they just resurface over time.

Now wait, you say, Bitcoin is actually a deflationary system. It begins as inflationary and then later deflates. There simply isn’t space here in a blog post to rationalize monetary systems. North’s book on social credit is over 300 pages alone. Just suffice it to say we need, as Ron Paul always says, honest money. No manipulation. Anything else leaves the door open for the common man to get fleeced.

At any rate, I found it a little wierd to see Friedman indirectly connected to a fiat money scheme.