Real Thought

Tied into the House legislation to raise the minimum wage (a stupid idea if there ever was one) are clauses to reduce or repeal the estate tax entirely. Well, it is about bloody time! The estate tax is a horrible idea. First, it penalizes those who work hard and save and invest by taxing that which has already been taxed. It is a barrier towards building wealth. Why should I work and invest to leave an estate for my children if I know it is going to be taxed upon my death? I think I’d rather go on a spending spree and leave my heirs with nothing. That way they won’t have to pay this odious tax to the government. Yep, encourage me to leave my progeny with nothing as opposed to surrendering 55% of their inheritance to the government. Now, THAT is good public policy.

In all fairness, the recently passed legislation exempts individual estates worth up to $5 million from taxation and joint estates get a $10 million exemption. Estates worth up to $25 million would be taxed at 15% due to rise to 20% and anything over that would be taxed at a rate of 30%. Of course the estate tax is to be phased out in 2010 under current law and reinstated at a rate of 55% in 2011. I guess that gives me a target date for my demise.

There is one bill H.R. 8 which would eliminate the estate tax entirely and that is the one which I support. There is no sane, rational reason to penalize my heirs upon my death simply because I invested well. Well, there is one reason, the fact that the government is a greedy, rapacious thug with an unlimited appetite for money and the lawmakers in Washington are willing to mug greiving families in order to feed the beast. I guess you could say that is a reason to keep the estate tax.

One more thing, don’t give me that line about “unearned wealth”. If you had paid attention in Economics instead of hitting on the cute girl or guy two rows in front of you or planning your next kegger, you would know that there is no such thing as “unearned wealth”. Every cent which has ever been inherited has been earned by someone either through labor or investment. Period. Go read Adam Smith and then come back and we will talk.

OK, the House voted yesterday to raise the minimum wage from $5.15 to $7.25 per hour over the next three years. Great! Now we will have higher consumer prices, loss of more jobs and a less competitive economy all at a time when basic living costs, like the price of natural gas, fuel and heating oil are at an all time high, provided the legislation passes the Senate. Brilliant! Yes, I know that there are those out there who say that minimum wage is “not enough to live on”. There are also those who claim that raising the minimum wage is “not inflationary” and will not lead to job loss. Let me address each of those issues in turn.

First, the idea that no one can live on the minimum wage. This is always used as an argument to raise the minimum wage and it is a red herring. The minimum wage will never be “enough to live on”. What? How can that be? Simple, as the minimum wage rises, so does the cost of living. As the price of labor goes up, so do the prices for the goods and services produced by that labor. This is simple macroeconomics. As a result, everyone will have to pay more for goods and services and people working for minimum wage will quickly discover that they cannot afford the more expensive goods and services. I started working in California when the minimum wage was $2.65 an hour. It was “not enough to live on”. Today, the minimum wage in the Golden State is $6.25 and it is still “not enough to live on”. No matter how high you raise the minimum wage it will never be “enough to live on”.

This, of course, is tied into the argument that raising the is somehow not inflationary. I really do believe that the people who believe this also believe in unicorns, the Tooth Fairy and perpetual motion. As stated above, the cost of labor is sometimes the largest portion of the cost of a given good or service. Raise the cost of labor and the cost of that which is produced has to rise to cover the increased labor cost, period. A rise in cost is known as inflation. There is no escaping this. Why some still insist that raising the minimum wage is not inflationary is beyond me. Of course, as the cost of goods and services rises, so does the “cost of living”, which is really a measure of the devaluation of the dollar. As the cost of living rises, so do the wages and salaries of most workers, thanks to “cost of living adjustment” clauses in their work agreements leaving minimum wage workers with “not enough to live on” yet again. If you don’t believe that raising the minimum wage is inflationary, try raising the minimum wage to $50.00 an hour and watch what happens to prices at your local fast food joint.

Finally, raising the minimum wage accelerates job loss. When the minimum wage was low, there were a huge number of unskilled, entry level jobs for young workers. As the minimum wage rose, companies found ways to eliminate many of those jobs. There were gas pump jockeys, car hops, soda jerks and a host of other jobs which have been largely eliminated. Companies found technological solutions which enabled them to keep costs down. When was the last time a gas station really offered “full service”? When was the last time anyone really was served by a “car hop”? Furthermore, an increase in labor costs leads companies to go elsewhere for their labor supply. Why do you think that so many of our consumer goods are produced in China or other overseas nations? Cheap labor. That’s why.

Raising the minimum wage will not help those who have to live on it. As the increased cost of labor is passed on to the consumer, those working for minimum wage will not have “enough to live on” no matter what their hourly wage is. The benefit will be short term and the long term dangers far outweigh the short term benefits.

Remember when Hollywood stars looked like stars and not like coked out sleazes? I submit the two following photos for your consideration. The first is of Jane Russell and the second is of Lindsay Lohan. The difference is amazing. What has happened to our standards of beauty and glamour?

But I spend a couple of days on Catalina Island with a buddy of mine on his boat. We left San Pedro early in the moring on Sunday and went over to Two Harbors. On Monday we went over to Emerald Bay. Tuesday, we headed back to San Pedro and saw the mock up of the “Black Pearl” from Pirates of the Caribbean tied up in the harbor. All in all it was a very relaxing couple of days. Here are a few pictures:

For the first time in five and one half years, George W. actually employs the veto on a bill that would allow the use of human embryos which would have been discarded anyway for stem cell research? WHAT????? Aren’t there more pressing issues which require the President’s attention? What about that little dust up in the Middle East? How about cutting government waste? What about the current national energy crisis? Nope, none of these are more important that using embryos which will be destroyed anyway for research.

I understand the moral implications of harvesting unborn humans for stem cell research and I find that morally indefensible. I am not convinced that stem cell research will provide the miracle cures that it’s proponents envision, yet I am truly confused by the President’s veto. What is wrong with using embryos which are going to be discarded for research? If human life is to be discarded, shouldn’t that which is going to be discarded be used for some potential good? Isn’t that the moral thing to do?

of Israel’s actions against Hezbollah in Lebanon, would someone explain why most the the world is so anti-semitic? That includes a large percentage of people here in the good old USA. I don’t understand it. Since I was a child some of my best friends have been Jewish and two of my nieces are. Growing up in the Old Testament driven Baptist church I was taught to believe that I was merely a Jew who believed the Messiah had come. I have never understood the emnity which many hold for Jews. Why is it that every ethnic, religious, linguistic, racial or national group in the world, no matter how small, has a right to self determination except for the Jews? I understand the religious and historical roots of anti-semitism but I just don’t get the entire concept. What would drive a person to hate a group so much that he or she would want them exterminated? What have the Jews done to deserve this? What have they done that denies them the right to self-determination and survival? Deny the divinity of Christ? So do Muslims, Hindus, Buddhists, Sikhs and most world religions. Practice racial and ethnic cohesion? Name a group which hasn’t done that. Long for a state of their own? Isn’t that what the Palestinians and Basques want ? Beget three of the world’s great religions? Haven’t the Indians given us Hinduism, Sikhism and Buddhism?

What is it about the Jews?

Israel and Hezbollah are engaged in open warfare in Lebanon.  Israel has the implicit backing of the United States and Hezbollah has the explicit backing of Syria and Iran.  I cannot say that I am surprised at Israel’s actions.  I believe that the State of Israel has a right to exist and that the Jewish people have a right to their homeland.  For years the Israeli government has tried to negotiate a peaceful settlement with the Arab states so that their state and people can exist and yet after major consessions to the PLO and other groups, the people of Irael live under a threat of extermination no less sincere than that of the Third Reich.  It seems that the Israelis have gotten tired of negotiating with those who wish to exterminate them.

Make no mistake, Hezbollah, Hamas and the PLO have never really disavowed the Endlosung der Judenfrage, the Final Solution.  They will not rest until every Jew in the world is exterminated.  After the Jews are exterminated, the Christians are next.  These thugs will not rest until the entire world lives under their twisted theocracy of oppression and ignorance.

France has condemned Israel.  Other European powers are sure to follow.  Why?  Because they have lost the ability to discern the terrorists from the terrorized.  These are the same powers who sacrificed Czechosolvakia to Hitler in order to try to gain some peace.  They are more than willing to sacrifice Israel to the terrorists.  This time however, the Israelis will not be sacrificed.  They have the will and the wherewithal to fight back and that is what they are doing.  They, unlike the French, have realized that appeasement does not work and that sometimes you do have to fight in order to obtain peace. I hope that the Israelis defeat Hezbollah and I hope that they do find peace.  After the Diaspora and the Final Solution, peace is what the Jewish people deserve.

Three weeks is a long time to be away from home.  Here are some impressions of my trip.  Boston before the 4th of July is a GREAT city in which to be.  The entire town is decorated for the festivities and the excitement is palpable.  Cape Cod is still wild and beautiful.  Somehow it has largely escaped the homogenization of America.  There isn’t a Starbucks on every corner and the lobster is still the best in the world.

Spending Independence Day in Colonial Williamsburg is something every American should do just once.  Having a very good friend who works for CW and watching the fireworks from his back yard makes it that much better.  Spending the evening laughing with friends at a restaurant in Virginia Beach is special too.
Real America still exists in the states south of the Ohio River and the Mason-Dixon Line.  Pulling pork with my father in law and brother in law is always great.  Seeing people who don’t worry about counting carbs or calories is great.  Going into a store and not seeing an “organic products” section is great.  Going into a store and seeing farm fresh local produce and foods and knowing that they really are is even better.  Maybe Jefferson had it right when he believed that the country would be better off without big urban areas and was populated by farmers.

I have to go unpack now.