The obvious reason is, of course, that it is a manipulation of what should be a free market. Even the calls from the anti-alcohol crowd are nonsensical at this point due to the history of attempts to control vices and, more notably, to the fact that liquor is still being sold. The fact that the state is doing it really does not change much other than that alcohol is only available at certain shops and at state-set pricing. It really comes down to being a set revenue stream for the state. Profits from alcohol go to the state treasury.

Our current governor (Bob McDonnell) is proposing privatizing the ABC (liquor) stores. His primary motivation is because the state needs a large chunk of money and the sale of the ABC businesses would certainly provide that. This is certainly not the right reason to make this change, but, well, if it makes the change happen, then I am all for it. Then I found out a particular detail of McDonnell’s plan, and it has me pretty angry.

Obviously, the sale of the liquor stores, while supplying a chunk of cash, will result in a reduced income stream in the future, an income stream of nearly $250 million per year. There are to be licensing fees and taxes and so forth, so the income will not dry up completely, and it is likely that more stores will open or have liquor added to their current list of items for sale, thus increasing the license income for the state. Still, the total income will drop.

I have no problem with this, as far as I am concerned, the state already gets too much money from its citizens, and it most certainly spends too much. McDonnell, however, in true politician form, wants to have his cake and eat it too. His plan, it turns out, includes a tax of 4% levied on businesses that sell alcohol, not just the liquor stores, but bars and restaraunts as well. This is not acceptable.

Not only does the governer think that we the people are ignorant enough to think that the tax on “businesses” will not affect the prices we pay, but he is trying to tax institutions not involved in the liquor store transaction at all. An increase in taxes will lead to an increase in prices. It does not really matter that the tax was not levied directly on the consumer, of the consumer pays it, then it is a tax on the consumer.

Now, it is entirely possible that consumers will not even notice the change. This is because, it is quite possible that liquor stores will drop their prices once competition is introduced to the market once again. Furthermore, current ABC policy dictates that bars and restaurants pay a premium for liquor, whereas any decent private store would be likely to offer discounts for bulk purchases and larger volume customers. As a result, the prices for the bars will likely go down. This means that, even with an added tax, prices may not go up for the consumer, indeed they could even still end up being lower.

The reason this has me so angry is that it is an attempt to pull the wool over people’s eyes and hide a tax. The state could, if they wished to maintain their income stream, levy the taxes directly on the sales of liquor bottles. While I am no fan of any sort of taxes, and consider the tax of a business to just be a disguised tax, it would still be more above board than the plan McDonnell has.

Why is he doing it? Because if he adds the tax directly to the sale of liquor in bottles, then he is affecting the profit margin of the liquor stores. Liquor stores will not be able to do as much with pricing as they otherwise would, thus making the business less profitable overall, and making competition more difficult. If he monkeys around with the profit margins of the stores, then the potential buyers will not pay as much for the stores and licenses. That means the state’s chunk of up-front money will be smaller. So, he is taxing a different business that is still part of ABC regulations but is not involved in this transaction so that he can keep his income up in the future and still make more up front.

I am sorry, that is not acceptable. I want a transparent government with a clear and simple system of taxation so that people can see what their government is really costing and what they are really up to. These games are tiresome, and they are insulting.

We are not putting up with this junk anymore Governor, we are awake, and we care what is happening. If you cannot do the hard stuff and cut spending rather than play games with our money and manipulate ways to get more money from the consumer, then we will find someone who can. Get the State out of the liquor business and leave us alone. If you find yourself with a budget shortfall, then start cutting state services. We don’t mind, we have been trying to get that to happen for years.

I was recently a bystander in a discussion at a local club where there was a conflict between the club and the owner of a nearby restaurant. Some of the issue was competition, some of it was the culture clash of different clientele. Certainly there were things both parties could do better, and there would be many ways in which they could work out their relationship and both be successful.

Unfortunately, the restaurant owner chose to make a scene and try to pull legal rank. The situation calmed down, and I overheard a few people talking to the club owner. They said, “you will have to change your business or do something to make nice with that owner, even tho he was wrong. He knows a lot of powerful people and he will get you shut down. There are so many regulations, there is no way to pass them all, they will get you for something.”

That, my friends, was a shot to the gut. I had that sinking feeling in my stomach that things are already so far gone, I am not sure how to bring them back peacefully. The fact that a legitimate business could not be run legally in this town is a sure sign of destruction for the whole economic structure. It will be all about who you know to avoid having your business shut down, and the smarmy types that play that game are rarely the types with decent business ethics or even decent business skills.

This was not just a reaction to some passing words in a conversation. I have seen half a dozen businesses shut down or restricted in this town in the last few months for stupid things like zoning violations, abc violations, noise violations, etc., all in areas where those things are not relevant. In some cases, the businesses were being innovative and helping to turn around a blighted area. No, not here, we have to enforce our zoning stuff and our taxes and maintain control if it kills us. Well, guess what mr. bureaucrat, it will kill us. Hope you are happy.

Government health care will be the death of this already struggling economy. Most people in the real world understand this, as evidenced by national polls concerning the health care bill and the direction of the country. There is still a lot of support, but most  of it comes from those who are uneducated on the realities of the bill itself or its costs and the overall impact on the economy. Increasingly, as information becomes more and more known, the polls have been showing steadily declining support for nationalized health care.

It seems elementary that government health care is a power grab. It is nearly as obvious as the Patriot Act. The health care industry represents around 16 percent of our nation’s economy, a massive chunk to be turned over to government control, either directly or indirectly. To have an economic power grab of that magnitude is mind blowing. To think that it would be a good idea to turn over that much of our economy considering our government’s track record with business is ludicrous. Considering how much even socialists point out that real freedom depends on having resources to do what you want, a government grab of an additional 16 percent of our production is worse than the phone taps and extra “security measures” in the Patriot Act ever were.

All of this is being gotten away with for the same reasons as the Patriot Act, however: fear. We need to wake up to the realities of the cost and control that is being pressed upon us, and we need to stop being a country of fearful wussies.

Grow a pair America.

A number of studies have been done on this, several by the Employment Policies Institute. With findings that all point to losses among the lower income wage earners. Many of the benefits of minimum wage increases, some studies showing as much as 87%, go to families who are not poor, by helping inflate earnings for secondary incomes, teenagers, etc., particularly since those who keep their jobs are the more educated. In many cases, businesses will hire younger, more educated persons for low-skill and entry level jobs rather than retain older low-skilled employees.

Entry level jobs for teens, whether they are necessary from a poverty standpoint or not, are an extremely necessary aspect of training the future labor force. These jobs are also being cut, with projections for teen employment falling well short  of demand even before the latest increase in the minimum wage. As history shows, this increase will only further retard that employment market. Certainly, those teens are not usually dependent on the actual income, but the work experience is invaluable to the future. Formal education is no substitute for some things.

The bottom line is that minimum wage is not the solution to the perceived problems. The market can adjust things far better than the government. It is true that employers have been known to take advantage of workers, paying as little as they could in order to maximize profits. This, however, is not as easy to do as it used to be. Employers are far more subject to scrutiny, not because of the government, but because of advances in communication. The ability of the average worker to interact with the media and with other people make underpaying far more difficult. Even in cases where employers are paying under the table, they can only get away with paying so little for people to be willing to work.

Artificial constraints on the free market rarely have the intended effect, and they always have some sort of side effect. Wage levels, taxes, price caps, etc. have always met with dreadful results, certainly nothing like the effects that were intended. Even minimum wage proponents recognize that too much is a bad thing. Many that normally support minimum wage are questioning whether now is the right time to be changing things around. I predict even more unemployment than we are already experiencing due to this ill-timed increase. The skilled workers that already make more than minimum wage will be fine, it is the poor and unskilled that will suffer the most job losses. You know, the ones for whom a minimum is supposed to benefit. And people wonder why our businesses are leaving our shores.

Obama always has been quick to change his mind. I think he may have seen the evidence int eh world summit that continued spending has not fixed Europe. If only he would see the same thing about Cap and Trade. The environmental aspects of the summit were still jsut as ridiculous as always, although they at least made it more talk than reality, agreeing to drop emmissions by 80% over the next 40 years but not lining out any forced methods for doing so.

With fuel prices dropping in light of the decreasing demand, it is possible that the economy may recover slightly. My concern is that, if it continues to tank as I expect it to, the second stimulus will be put back on the table, driving nails into a nearly shut coffin.

Either way, the pace with which Obama’s administration has been pushing things through has caused huge issues. Even if the actions were acceptable, the speed is not. That is what checks and balances were supposed to prevent. Too bad those are being ignored. Obama is pushing forward with powers that were granted the executive branch under Bush. I only hope that his supporters wake up in time to realize that he is not only doing the wrong thing, but weilding too much power and doing things too fast.

Hopefully, the change of heart on the second stimulus is a sign of Obama slowing his agenda to a more realistic level. Its still a crappy agenda and spells trouble for this country, but I could use a little breathing room. I don’t even have time to write about all the things I disagree with, because things are moving so fast that I can only hit the high points.

Lets hope this slowdown continues….

Cap and trade represents the largest overall tax increase in our history. It will hit everyone who uses fuel or buys products from companies that use fuel. That means everyone in the country. That means rich and poor. That mean Obama’s talk about not increasing taxes on anyone but the rich is an absolute lie. Suprised?

MAnufacturing is struggling in this country, we are spending massive monies to bail out the auto industry. Cap and Trade will hit manufacturing and energy production companies the hardest, followed closely by shipping companies. It will raise the overall price of transportation. Essentially, the one thing that accelerated the economic fall that was begun by the bursting real estate bubble (and various other bubbles) was the dramatic increase in fuel costs. A lot of anger was directed at “speculators” for that one. There has already been some return to an increase in fuel prices created solely by the decrease in our dollar’s global value, because of inflationary government spending and currency printing. Cap and Trade will put a nail in that coffin and, through legislation, recreate the effect on the economy, driving what little spark of life it is showing into cold ash.

This bill has a stated purpose of increasing the cost of using fossil fuels in order to decrease demand and usage. It is based on junk science and questionable conclusions of global climate change. It is being done in spite of evidence form other countries that the effect on carbon emmissions are minimal and the effect on the economy is horrible. For every job created by cap and trade in Spain, 2.2 jobs were lost. We cannot afford this in the face of still rising unemployment. These sort of actions are directly damaging to this country. There is no denying this. And the justification for it is based on comletely refutable evidence found predominately in end-of-the-world movies and Al Gore speeches.

Brace for impact boys and girls, this is going to be a bad one.

Obviously, the first thing must be, as was mentioned in part one, a freeze in the expansion of benefits. On the funding side, something must be done as well. One of the first things I would like to see would be a gradual shift of the burden of the social security from the current even split between employer and employee, to a greater burden on the employee. The reason for this, of course, is that the employee bears the burden in the end anyway. Employees currently pay 7.5% of their income to the social security system. Employers must match this figure. Thus, for a person making 40k per year, the employee pays 3k per year. The employer also pays 3k per year. This is essentially a payroll expense, and it is factored into the determination of employee salaries. The cost of the employee is 43k per year, not 40k (due to other taxes, required insurances, and other regulations the cost of an employee grossing 40k would actually be much higher, this is just an illustrative example). In the end, employees would make more, but they would actually see the real cost to them. Rather than complaining about the cheapness of their employer, they would be forced to see the real reason for their low net income. This is key to helping people to understand what programs like social security cost. When people see what it is costing them, they are far more likely to support a change in the system. It is only the illusion of getting something for nothing that keeps most people in support of governmetn safety nets.

Of course, as soon as the cost of benefits drops low enough, an immediate reduction in the tax rate would be in order. The benefit to the economy of reducing the effective tax rate by as little as 1% of the total national payroll could be massive. With our total national payroll, 1% is a massive figure, and it would help persons in business for themselves immensely. Currently, even a business that shows no profit is charged social security and medicare taxes. Thus, even a business that is taking a loss, if it is not incorporated, can constitute an even greater loss on the entrepreneur who is attempting to start a business. It is one of the most unfriendly aspects of our federal government towards small business. Only those who actually pursue incorporation can avoid this, leaving sole proprietors and partnerships unprotected.

 Another key step that will need to be taken in many arenas of government is the introduction of competition. Currently there are a number of government departments that have exclusive right to the provision of their product or service. Also, the requirement to pay them regardless of superior competition is an issue. The idea of private savings accounts or partial privatization of socials security is a good one. Many people have been in opposition of this because it still means government involvement, but that may be a necessary evil for some time. I would like to see the option to, at least partially, have some of the social security taxation be removed if an equivalent percentage is placed into a private savings. Such competition will always improve the quality of the services and products offered, and generally the efficiency and cost as well. Even with government having to approve the alternatives or even regulate them to some extent would be an improvement over the current plight of this system. Additionally, before a transition from government dependency can be undertaken, a private alternative must be built. Privatization or the introduction of private competitors to government services is the start of building that much needed infrastructure.

The final among the first steps towards fixing social security  is a step that should be taken in every area of government. Our government has earned a horrid reputation for waste and bureaucracy, a reputation well deserved. Auditing from private industry needs to be applied to government departments, it is time to remove the waste. Governments have enormous amounts of money in a country like ours, and waste is always a temptation. The concept of reward for frugal actions or risk for wasteful actions is not present in our government, not like it is in the free market. A system that would encourage efficiency is key.

I know this mistake is devastating because I have made the same mistake myself, sort of the same anyway. I have a history of entrepreneural activity. I have been trying to start businesses for most of my adult life. The biggest issue I have had is hanging on to an idea or a business after it has shown that it is not going to work. Dumping money and resources into a failed project only drains you, and it still doesn’t make the project work. In the end, you still have to take your failure lumps, only you have much fewer resources to start over with.

Our economy is floundering. It is doing so because we have too much debt and too little production. We cannot spend what we do on services and entertainment without a foundation of real products and production. We have a spending economy, and its prodigious size has gone beyond our ability to support it with spending. The bailouts are designed to support the ability of lenders to continue their game of debt, so that people can keep spending. The problem is, all this does is delay the inevitable, and make the crash worse. If we could just reset our economy in a reasonable time and without dumping all of our resources into “saving it”, then we could start over in pretty good shape. Life is dynamic, economies are dynamic. We have to stop trying to make a changeless world. We have to stop thinking so short term that we get desperate over the circumstances of the moment and make decisions that cause future problems. It is time to get rid of instant gratification, such things affect our overspending and our dependency on a “quick fix” solution from the government or whomever. The bailouts of the banks are only going to make the eventual crash worse, and drain us of our resources along the way. It is a bad move, and a dangerous one, we are making a mountain out of a molehill in two ways. We are exaggerating the problem and creating urgency that is dangerous, and our so-called solution that we have come up with is actually turning that imagined mountain into a real mountain that is looming ominously and fast approaching. Think what you want about the intentions of Obama and the rest of Washington, the fact remains that the decisions they are making are bad.

The thing is, with around half of the population of the country in the market, Wall St. IS Mains St. The effects of the market hit a lot more people than it did in the 1930s, and we saw how wonderful that was. The market is an indicator of the overall economy, and it is a judge of the validity of fiscal policy. It is a forward thinking entity, looking to the future health of the economy. It is not seeing much good. We need to rid ourselves of the Main St. vs. Wall St. mentality and understand that they are interconnected and relevant to each other. This is not a time for class warfare and divisive, predatory thinking. This is a time to unite and let our government know that they are the problem and that we want to be free again.

I don’t claim that the motives are entirely Orwellian. I don’t claim that the gradual manipulation of our society into a cashless system is even motivated in any way by a desire for global control and micromanagement of individual business and liberty. It may be a system born of convenience and of competition. It may be a system made possible by wondrous advances in technology and communication. It may be a place we have arrived with little ill intent in the drivers of the vehicle that brought us. It may also be that we are on the verge of a system so accustomed to a lack of cash, and so paranoid of theft and terrorism, and so dependent on the technology of the system, that the initiation of a controlled system like the one I heard about when I was young would not even be protested significantly. It may be that it has been orchestrated all along through venues that would not be suspected. On the other hand, it may be that none of it is nefarious in any way, and that our leadership, be they good, bad or ugly, are not at all willing to encroach on our freedom in such a complete and totalitarian fashion. It may be that I am simply finding myself in this position because of my own circumstances, and that if I were not in them that I would hardly notice. It may be that the culprit is nothing sinister, it is simply the result of the dependence we have on our electronic systems in the electronic information age.

I have been broke. I have been worse than broke. I have been, in fact, unable to fully pay my bills for an extended period of time during the last two years. This situation is nearing an end, largely because of a bankruptcy filing and a total re-evaluation of my priorities and my personal financial discipline. It is not ending due to a vast increase in personal income, unfortunately, and climbing from the hole is proving to be not only difficult, but terribly inconvenient. I find myself in more and more situations where-in our country’s legal tender is not accepted, and where some fee must be paid to make it acceptable. As if a bribe were required, or the services of an intermediary, to make cash a legitimate form of payment. The statement that a dollar is legal tender for all debts public and private is no longer entirely true. It is only legal tender if you are able to deal with your creditor in person.

The first place I noticed cash being an issue is in paying a non-local creditor. This, of course, is entirely expected. If you work with a bank or creditor that you find through an advertisement or an online search or some other means of price comparison that does not happen to have a local branch, it stands to reason that cash will not be a proper form of payment. One is not supposed to send cash by mail for obvious reasons, and if a creditor is offering a better deal than all its local competitors, then one must factor in the inconvenience of having to pay electronically or by mailed check. Demanding a cash payable option for such a situation is illogical, since no one required you to take the better priced offer in lieu of local convenience. The internet has made this an especially easy situation to get into, erasing geographical boundaries to competition by utilizing electronic commerce. Obviously a bank account is required, or a credit card, or some other means of electronic transfer of funds. This works great if you have a bank, and is, in fact, more convenient than cash in many cases, since payments can be automated, instantly made, routed, and credited to one’s account, etc. This convenience factor is easier on the creditors as well, hence the increasing prevelance of discounts for autodraft transactions and payment plans.

The second place that cash became difficult to use is in dealings with large-scale companies and utilities. Most utility bills, cell phones, and insurance plans require electronic payment. Utilities can be paid in person, but the lack of a bank account often increases demands for deposits and other additional costs. Cell phones, internet services, and other communications accounts, while not a necessity like utilities, are increasingly difficult to live without. Cash payments are accepted in most cases, or at least there is generally a company available that accepts cash payments, but more and more companies are charging an extra fee for the inconvenience of having to deal in cash. In other words, its no longer just a discount for using electronic payment means, its actually an extra charge to use our country’s legal tender. With required things like insurance, one finds themselves compelled to pay for the service, and pay an extra fee simply because they are not using a banking system. In other words, bank accounts, while not legally required, are very nearly required to function within our society, unless one is willing and able to pay extra for the privilege of not having one. Good for the banks and those who run them. Good for the banking system and its privately run stranglehold on society. Not so good for trying to climb out of a financial hole. Banks are supposed to be a service to the population, and they, like any other provider of goods and services, should have to compete to be the best on price, convenience, quality, or belief system. The more they become a requirement of life, the less they have to work for, or with, the customer.

The third place I find that cash is unusable is in the recovery system itself. My bankruptcy is administered by a local trustee. This local trustee uses a bank in Tennessee to handle all payments. This means that I must have a bank account or pay the premium for a money order just to make legally accepted payments. Cash can be used to get the payment to the bank by way of a money order, so technically they are not in violation of the statements on our currency that it is legal tender, but there is an additional cost involved. I am not the only one black listed from the banking system due to financial difficulty, nor am I the only one having to pay a premium to pay my bills, at the very time that I most need a break.

So, I find myself in a position where I am paid by check, and must convert that payment to cash. This conversion, with many banks now, comes with a fee of its own. Cashing a business check at Wachovia or Bank of America carries a $5.00 fee, even when the check is drawn on an account at that bank. Then, having lost that money, I find I must pay to convert that cash to a mail-safe format at the cost of another fee. Additionally, I find that many institution with which I would like to do business will not accept me as a customer since I cannot give them a bank account, card number, etc. Some will not even work with me unless I agree to set up an auto-draft account. Very large purchases, namely anything paid in cash over $2,000 is recorded and investigated. Thus, I cannot buy a car from a business, or even a high-end computer, without subjecting myself to criminal investigation.

I have no issue with the fact that I am inconvenienced. The fact that I have to go inside the gas station to pre-pay instead of having a card to swipe does not concern me. I am not upset that I cannot get the best deal online for purchases or for insurance providers, etc. Those are things that are part of the free market. If I do not have the means to operate within their requirements, it is not their responsibility to make it convenient for me. I do not find it “unfair” that I cannot get the same deal as someone else. What does concern me is that we have become so dependent on the banking system, that the banking system no longer needs us as much as we need them. It also concerns me that it costs so much extra to use cash for things that are required to live legally. It concerns me that the banking system can take advantage of someone in a difficult position so easily. It concerns me that our country’s legal tender is being shunned, and that, through the banking system it is even being devalued as we speak. It concerns me that those who deal in cash are immediately suspect by supposedly legitimate institutions. It concerns me that we are frighteningly close to a point in our society where cash could be abolished, and the powers that be would not have a difficult time selling that concept to the masses. There is a freedom in cash. It is not tied to you, it is simply property that you received in return for your efforts. It is a medium of exchange, of trade, of converting the efforts of one’s mind and body to something of value to another. Not a specific value, and not a specific person, but a universally accepted value, a least common denominator. I have cash in my pocket, I can spend it as I choose. There is no record of the transaction, there is no oversight by anyone other than the person with whom I am trading. I trade my production for the production of another, no one else is involved. The loss of such a freedom, the ability or requirement of someone outside of the transaction to be involved or to have record is quite dangerous. I have always liked dealing in cash. I too was seduced by the convenience of auto pay and online banking and electronic commerce. I do not claim that I will never use it again. I would like, however, to use it for my own convenience and my own profit and advantage, not out of legal necessity or because of an excessive fee attached to those who choose a more free and unsupervised method of living. I don’t want to be compelled to use the convenient system. Sometimes in a free market, the most convenient does not win. Sometimes the cheapest price does not either. Sometimes, even the quality of the product does not guarantee the patronage of a given customer. Sometimes, the decision is made based on an individual’s belief. I believe in liberty. I will always support the maintaining if a cash system, where cash is always accepted and is always legal tender. I fear, based on what I am now seeing, that such a freedom is already being threatened, and may soon get far worse.