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Recently I helped out with some delivery chores. As I
drove about, I discovered that one of the roads I would normally use was closed
by roadblocks. It was, I imagine, due to road repair work. I had to reverse
course and take a substantial detour.
I wondered why the road crew hadn't put up a sign
indicating the road was closed back at the main intersection, but I shrugged
and muttered something like "Typical government operation."
Driving back home, this idea of roadblocks took root in
my mind. The thing is, only governmental entities can set up roadblocks
– at least, legally.
Obviously, there are times
when such roadblocks are entirely appropriate... for example, when a bridge
is found to be dangerous.
In that case, putting up a roadblock to let drivers
know that the road is a no-go makes perfect sense.
For example, a temporary warning sign to let people
know that there is a road crew fixing potholes ahead makes sense and that
sort of thing.
Otherwise, unless a road is damaged to the point where
driving is either impossible or ill advised, there should be no roadblocks
set up. Makes sense, right?
The decision
to set up a roadblock should be taken only by people who are close to the
problem, who understand the issues, and can deal with the problem on the
road, fix it, and open it up again as quickly as possible.
Imagine then a world where government officials, as
often as not operating hundreds or even thousands of miles away, are in
control of the roadblock rules.
Despite having no real knowledge of the problem at a
local level, they dictate that those roadblocks be set up and made permanent
based not upon the specific condition that a road is out, but rather based on
political expediency, cronyism, imaginary threats, and donations by
influential lobbyists.
In a world like that, where roadblocks are set up all
over the place and without any real thought to the consequences to road users,
imagine how difficult it could be to get from Point A to Point B.
In fact, it would not be out of the question that the
single road leading to your house could be blocked, leaving you no way out.
While that seems rather extreme, I would contend that it
is a valid metaphor for the world we now live in.
To make the point, a couple of weeks ago, I discussed
my recent
travels to Ireland and Portugal and the devastating consequences the actions
of the European central planners have had on those economies.
Before the European Commission bulldozed their way of
life, the Portuguese fishermen made a nice living. They made money and
supported their families the same way they had for generations. Life was
good.
But not long after Portugal's admission into the
Eurozone, however, they woke up one morning to discover their own regulatory
roadblock.
It was cooked up by bureaucrats thousands of miles away
who have no idea of the local challenges or hazards it would bring to the
local economy and the families that rely on it.
This
roadblock required them under law to destroy their fishing boats,
thereby preventing them from earning their livelihoods.
Another example of roadblock insanity can be seen in
energy policy here in the US.
Hollow Sound Bytes and
Pointless Platitudes
Politicians bray about the need for energy
independence.
Behind the scenes, however, they kowtow to the environoids and special interests by littering the
landscape with roadblocks that prevent energy companies from achieving and
innovating our way to exactly the independence they tell us we must have at
all costs!
Here's where it affects you:
Government has set up another sizable roadblock. This
time it is in the path of savers.
By meddling in the market in order to allow the
debt-bloated government to continue its out-of-control spending, the Fed has
suppressed interest rates to the lowest levels in US history.
Almost overnight, retirees and others who counted on
the yields earned on savings to cover living costs have come to a dead stop
in front of a roadblock placed in the way of their most pressing needs.
Their
finances now in tatters, even people in their 70s who have worked hard and
saved all their lives are being reduced to serving up French fries at
fast-food joints.
For another roadblock, look no further than Obamacare.
In a recent Reason magazine article, it also
expressed the same sort of convoluted logic that has gone into creating a
series of related roadblocks. As one wit put it:
"If you think health care is expensive today, wait
until it's free."
One of those roadblocks has to do with the considerably
higher taxes tucked away in reams of unreadable
legalese that will shift yet more funding from the private sector to the
public. Here's the text from an email sent to Doug Casey by a financial
professional friend of his this week:
You may have
had only a casual interest in the debate over the Obama Health Care bill, and
even if you followed it closely, the headline discussion seemed to be more on
the inclusion of millions of uninsured citizens, the penalties for not being
insured, etc., vs. the fact that this is a noticeable income tax increase on
investment income.
For those who
have an adjusted gross income of $200k ($250k for joint returns) or more, the
number on the bottom of the first page of your 1040, which comes before
itemized deductions, charitable gifts, or personal exemptions, there is a
+3.8% uncapped tax applied on all investment income (capital gains, interest,
dividends, etc.), plus an obscure provision of the code known as the Pease,
which reduces the value of itemized deductions, adding another +1.2% to the
tax rate.
Be aware that
if the current "Bush tax cuts" are not extended, the current
long-term capital gains tax rate of 15% will go up by two-thirds to 25%
beginning 1/1/2013. The top rate on dividends will nearly triple from 15% to
44.6%!! Ouch.
Unlike Social
Security taxes, which are capped, the Health Care tax is uncapped. The mouthy
Warren Buffett is finally getting his wish – paying more than a 15% tax
rate. Instead of just writing a check for more, which he is certainly welcome
to do, as an advisor to the administration, he
probably had some influence on getting it applied to all higher-income Americans.
As you know,
I am not a tax attorney nor an accountant, so am
sending this as a heads-up, and if it is relevant to you, you should confirm
the details with your tax advisors.
On the topic of throwing up more tax roadblocks, here's
one from overseas… sent along in an email from our own Vedran Vuk. In Vedran's own words…
"Most of
the time when we think about raising taxes, it's the threat of millionaires
leaving. We don't usually think about them not coming to a country. Here's an
interesting case of Zlatan Ibrahimovic
signing a soccer contract for 14 million euros per year. If the new tax goes
through in France, he will be taxed for 75% over the first million euros. If
the tax does go through, good luck attracting multimillion-earning players to
France. A lot of people in the 99% will be pretty unhappy when all of their
sports teams become horrible as a result of the tax."
My favorite quote from the article is:
"Ibrahimovic will earn 14 million euros annually, sports
daily L'Equipe reported. Sports Minister Valerie Fourneyron said that indicates that European football
needs more regulation."
Yes, just what the world needs – more roadblocks.
Of course, this time it's to block decisions that the
football team's management believes it needs to make in order to win (and
therefore attract fans, sell tickets, and raise rates to sponsors).
Insane.
I recently ran into a public-high-school English
teacher and asked how the education business was going.
His response was, "Do you have four days for me to
tell you all that's wrong?"
"It
seems like every month some team or another shows up from the government in
order to introduce a new teaching program. And the really frustrating thing, is that none of these people has ever taught
school."
He went on to say that it becomes clear very quickly
that they have no idea what they're talking about and that each new protocol
was conceived by some bureaucrat with no teaching experience either.
It was eye-opening to hear such emotive language from a
public-high-school teacher – in my experience,
most of the people who choose that profession are largely on board with the
whole big-government thing.
Yet, it seems that more and more people are beginning
to catch on to the idea that central planning is not such a great idea.
It's how you end up with roadblocks where roadblocks
don't belong.
It's how you end up on a road you never intended to travel
along, forced there by roadblocks that don't make sense and clearly don't
help.
Ultimately you risk getting hopelessly lost, or you
turn around go back the way you came and start again.
So yet another school program gets introduced, another
law, another rule. And it all starts again.
Happily, it
is almost a certainty that, in time, the bureaucrats and their many roadblocks
will be shoved aside.
I say that because there really is a limit to how long
people will put up with being denied access to their fundamental rights of
life, liberty, and the pursuit of happiness.
There is only so long that entrepreneurs will put up
with having to navigate around more and more roadblocks in order to provide a
product or service to consumers, when such roadblocks serve absolutely no
useful purpose.
Unfortunately, while there are a number of things you can do to get started and plenty of sound
advice along the way, it will take time.
That's because there is still a considerable swath of
the voting public who actually buys into the idea that government is a force
for good and that without it, equality and justice would go by the wayside.
And so it is that the US and virtually all of the large
economies around the world are still firmly in the grip of the notion that
central planning is the only way to get to the green pastures that surely
must be just over the next hill.
Or, more specifically, the next round of legislation
and policy machinations (read "roadblocks").
There has never been a starker example of the mindset
of the current administration and its many followers than a comment made by
President Obama this week. Here it is:
"If
you've got a business, you didn't build that.
Somebody else made that happen."
His point is that essentially, all human progress is
due to the good work of governments.
- That without governments, there would be no roads
to set up roadblocks on.
- There would be no Internet.
- There would be no body of case law nor a judicial system to enforce that law.
- There would be no telephones.
I disagree, and so do many others – including many from past
governments who see the direction Washington, DC is taking and don't like
it.
I contend that this view of the world is essentially
the opposite of the tenets of the capitalist/free-market model.
In the view
of Mr. Obama and his ilk, We the Sheeple are all
but helpless without the government to lead us forward.
That the US government's activities as a share of GDP
have gone from well under 10% at the beginning of the last century to over
40% today – and will go over 50% by the time Obamacare
is fully implemented – makes it clear that this country is now
operating on principles that run completely contrary to those that promote
success and economic well-being.
The consequence of continuing to operate on this model
will be a steady decline in the quality of life for most Americans, while
favoring a ruling elite that produces nothing…
except more roadblocks.
Ayn Rand will someday be celebrated as a futurist.
But how does one fight back? Grab a gun? Don't even
think about it: the Second Amendment may have been intended to protect
against a tyrannical government, but the actual truth is that the weaponry of
the US government is so incredibly advanced at this point that even the most well-armed militia wouldn't last a minute.
No, the best way to "fight back" is to get
wise to the whole thing.
Understanding what's happening and knowing where the
roadblocks are likely to be just makes sense.
And having clearly set out strategies that both
sidestep the roadblocks and preserve your wealth is not just a good idea
– it's critical.
The upcoming Casey Research conference, Navigating the Politicized Economy, will give its
attendees a real sense of both knowledge and preparation.
The speaker lineup is a "who's who" of
investment success, and each brings a world of experience to the event.
Among the confirmed faculty are former US Comptroller
General David Walker; The Creature from Jekyll Island author G. Edward
Griffin; Karl Denninger, author of The Market
Ticker; and Mauldin Economics Chairman John Mauldin. The early-bird
registration discount ends on July 31, so grab your seat now.
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