Friday, July 31, 2015

Corporate Taxes

A few days ago I was commenting on the Chattanooga shootings of recruiters and supported arming them.   Another commenter raised the issue of Posse Comitatus and...

Frank Clarke: I hadn't considered Posse Comitatus (which, oddly, is also "PC").   I guess the government will just have to allow EVERYONE to go armed to act as a deterrent to a military takeover
· July 18 at 1:06pm

Wendy Anderson: I don't have a problem with that, Frank.   I would like to see tax rates on corporations go back to pre-Reagan so we can pay for more State Police...   we can assign them to guard those military offices without getting into the who (sic) "marital (sic) law" issue.
· 23 hours ago

Frank Clarke: Why?   Does it cost more to have law-abiding citizens armed?


I got to thinking about this (increasing corporate taxes) and had a revelation.   Allow me to share.

We say that corporations don't actually pay any taxes; they just collect them.   The basis for this is that by the workings of "generally accepted accounting principles", taxes are a cost of doing business.   As such, these costs work their way down through the cost-of-goods-sold into the wholesale price and the ultimate buyer pays it.   Either that or they reduce the firm's retained earnings and the shareholders pay it.

"Nothing wrong with that," I hear you say,   "Those capitalists can afford to make less."

So, the firm eats the tax increase and Retained Earnings falls off.   So does the Dividends per Share.

Preston and Diana Gotbux have 40,000 shares of ACME Tool in their investment portfolio, and they notice the drop in their dividend income.   Investigating, they realize that the corporate tax rate went from 38% to 44%.   The portion of dividend income they didn't get was taxed at 44% instead of the 53% they would have paid at their upper tax bracket.   They actually got a small discount on their taxes although it would be tough to calculate exactly how much.

Pete and Dede Sixpack have 40 shares of ACME Tool in their portfolio and they barely noticed a blip in their annual dividend check, so they didn't even bother to ask why.   Too bad.   It turns out that the few cents they didn't get from ACME because of the corporate tax bump was taxed at 44% instead of the 23% Pete and Dede would have paid if the dividends had been paid to them.   Pete and Dede didn't actually pay any more taxes -- less in fact, because their gross was less -- but ACME paid more on their behalf and at nearly double the rate they would have paid.

Preston and Diana are one of 30,000 couples in similar circumstances.   Pete and Dede are one of 36 million couples in similar circumstances.   Pete and Dede paid a penalty; Preston and Diana got the benefit.   Way to go, babe.   Stick it to the poor and pay it to the rich.   Ain't Unintended Consequences a bitch?

It gets worse.

ACME is big enough and has been in business long enough that they can absorb the higher taxes.   JONES Tool is a startup from last year and operates on a shoestring.   They don't have a spare 6% to cover the higher taxes.   They are now forced to make a cruel choice: either off-shore some of its employees as a cost-cutting measure or close their doors.   Either way, the twelve JONES Tool employees are goners.   If JONES shuts down, ACME has less competition and has more freedom to manipulate the market.   A bright ACME lobbyist would have asked his Senator to jack up the corporate tax rate.   Maybe he did.   And the Unintended Consequences keep on rollin' in.

Thursday, October 30, 2014

African Genesis

Some of you may already know that the book that has most influenced the formation of my thinking and philosophy is my raggedy and tattered paperback copy of Robert Ardrey's "African Genesis".

Ardrey was a playwright by profession ("Khartoum" among others), not an anthropologist, but he rubbed shoulders with several of the brighter lights in that field, among whom were people like Louis S. B. Leakey and his wife Mary, and Raymond Dart.  He would cheerfully admit that little of African Genesis was original with him, most of it having come from cocktail party chatter and long talks on the veranda.

The African anthropologists, of course, hold that the human species arose in Africa and sprang from the likes of Australopithecus, so it is not a surprise that Ardrey does so as well.  What makes African Genesis so valuable are those insights that are original with Ardrey.

Ardrey points out — and I can still recall the chill that ran down my spine as I read the words — that the human species has survived only because of our inventiveness — our lethal inventiveness.  Look at our cousins, the chimpanzees and baboons.  Observe their dentition.  Observe their musculature.  Observe their agility.  Compare and contrast with our dentition, musculature, and agility, and remember that we are separated by not so very many eons.  Our DNA is said to be nearly identical with chimpanzee DNA;  A fraction of a percent difference is all that makes us us.  Yet, if you are attacked by a chimpanzee, you had better be armed, quick on the trigger, and deadly accurate.  You will not get a second chance.  Ardrey's challenge to us is to spend one night on the veldt and in the morning still hold that weapons and violence are not an integral part of our genetic makeup.  It can't be done.  No one who experiences the 'night life' of Africa's wilderness comes away with any impression other than 'an unarmed human on the plains of Africa is food'.  Australopithecus passed along its genes only because it could kill with terrible efficiency, and we are its children.

The most important insight Ardrey had for African Genesis was what he called "The Romantic Fallacy".  TRF (for short) holds that human behavior springs from human experiences, and it is a fallacy because there are human behaviors that clearly do not spring from any recognizable human experience, and plenty that mimic animal behavior in species as remote as birds.  Lord Acton brushed against TRF when he said "Power corrupts; absolute power corrupts absolutely."  The drive for power exists across all human ethnicities and cultures.  Not everyone seeks power, but every nationality and ethnicity exhibits the syndrome.  How can we humans hold that the single best route to the future is The Golden Rule, and then say that our behavior is shaped by our experience?  We may know intuitively that TGR is a good plan, but we don't act as if we believe it.  We act, in fact, as if we think it's utter nonsense:  we lie, cheat, steal, fight, and even kill to get what we want, and the thing we almost always want is power or privilege.

"That's human nature," is the typical brush-off response.  Yes, it is human nature, but what in human experience drives this behavior?  The answer:  next to nothing.

The truth is that much of human behavior is rooted in genetics and is older than our species itself — we got it from Australopithecus.  We seek power because the alpha male is the one who gets to pass along its genes and the others don't.  That's not absolutely true in our current society, but only because there's so much opportunity for other than alpha males.  We're taught from infancy that we must succeed.  Why?  Because you want a nice house (territory), don't you?  Of course, you do!

To conclude that feminine attraction for wealth and rank, and masculine preoccupation with fortune and power and fame are human abberations arising from sexual insecurity, hidden physical defects, childhood guilts, environmental deficiencies, the class struggle, or the cumulative moral erosions of advancing civilization would, in the light of our new knowledge of animal behavior, be to return man's gift of reason to its Pleistocene sources unopened.

The Golden Rule is a worthwhile philosophy for life, and yes, we ought to follow it, but when someone acts in violation of it, don't say "he must be having a bad day".  He's acting on instinct, even if nobody recognizes it.

Tuesday, September 30, 2014


A company at which I once worked had to solve the "Y2K problem" where comparing year 99 with year 00 gives you the wrong result.  The comparison yields "99 is greater (later) than 00" and that's wrong because it's really [19]99 vs [20]00.  The solution they implemented was to subtract 28 from every year they had to process so that "99 v 00" became "71 v 72" which yields the correct result: '71 is smaller (earlier) than 72".  Why 28?  Because every 28 years the calendar repeats itself and days-of-the-week exactly match date-of-the-year.

Of course, this only works because 2000 was a leap year.  "Of course, 2000 was a leap year!" I hear you exclaim. "It's evenly divisible by 4!"  Well, actually, no, that's not the whole rule.  A year is a leap year if it's evenly divisble by 4, but not if it's evenly divisible by 100 — unless it's also evenly divisible by 400.  1900 was not a leap year, and 2100 won't be, either.  Wait;  you'll see.  1600 was a leap year, and 2400 will be, too, although I doubt very much that you care.

This got me to thinking about why our calendars repeat, and why every 28 years and not every 14 years.  Here's why:

There are only 14 unique yearly calendars.  There are seven for "January 1st is sUnday, Monday, Tuesday, Wednesday, thuRsday, Friday, and sAturday.  We'll call these calendars U, M, T, W, R, F, and A.  There are seven more for "this is a leap year"; we'll call those U*, M*, T*, etc.

If a year were 364 days long (52 x 7), every year would begin on the same day of the week.  Since the typical year is 365 days long, succeeding years begin on succeeding days of the week: if this year began on a Tuesday, next year will begin on Wednesday.  When it's a leap year (366 days), next year will skip a day;  instead of beginning on Wednesday, it will begin on thuRsday.  Every 4th year will be a leap year.  So, let's see how they line up.

Let's assume a starting point where January 1st is sUnday, and it's a leap year.  The first calendar is U* and it's 366 days long.  The next calendars will be T, W, R, and F*.  Next is U, M, T, and W*, then F, A, U, and M*, then W, R, F, and A*, then M, T, W, and R*, then A, U, M,and T*, then R, F, A, and U*.  We are now back where we started, at a calendar with January 1st on sUnday, and it's a leap year.  Let's see how we got there.

U* T W R F*
U M T W* F A
U M* W R F A*
M T W R* A
U M T* R F A

In 28 years, each day of the week gets to be associated with 'starting a leap year' once and 'not starting a leap year' thrice.  Neat, but it only works if every 4th year is leap.  As long as you don't cross a non-leap-century-boundary (and that only happens three times every four hundred years) you're okay.

While we're on the topic...  Every once in a while I see some nonsense either on FaceBook or via e-mail that says something like "This May has five Fridays and five Saturdays and five Sundays! That only happens once every 42 bazillion years!"  Well, as a matter of fact, no.  It happens four times every 28 years and now you know why.

Wednesday, July 23, 2014

Heidelberg, 23 July

The boat docks on the Neckar River somewhat downstream from Heidelberg and buses take us the rest of the way.  It's a time-saving gimmick: the boat is slow compared to buses; while we're touring Heidelberg castle and its town, the boat can complete the trip to Speyer and we'll be that much further along.

Heidelberg is impressive, but much less so than I had expected.  In that sense, I guess, it was a disappointment for someone who has watched The Student Prince once too often.

No pictures here, alas.  Viking River Cruises' free Wi-fi is worth every penny I paid for it -- uploading anything is next-to-impossible.

Koblenz and Marksburg Castle, 22 July

Great weather again.  Temps in the high-70s and bright sun. The boat docks at Koblenz, a name which derives from 'confluence' because here the Main River flows into the Rhine.  

Buses take us up to Marksburg castle, the only German castle never successfully attacked.  As a result, it is in pristine condition.  "Pristine", in this case, means it looks and feels like something out of the Middle Ages.  There are few, if any, alterations beyond basic creature comforts like toilets.  I'd show you images, but I've already spent nearly an hour unsuccessfully trying to upload two using Viking's 'free Wi-fi'.  You'll just have to take my word for it.

Cologne, 21 July

(Posted from Speyer DE.)

It's raining in Cologne, but not heavily, and our guide is a hoot!  He's got a Masters in History, so he knows where all the bodies are buried.  We avoid the cathedral (which is closed, anyway, thank heaven) and prowl the downtown area, finally settling on a tractor-driven tram that gets us back to our ship.

At dinner, the waiter looks at our table and whispers in my ear: "I've seen tables of six with only one man, but never a table of eight with only one man.  How did you do that?"  If I ever find out, I may sell the secret to him, but he won't get it for free.  At 'my' table is Norene, Patricia, Cathy, Gail, Carolyn, and Marcia 1 and Marcia 2.

Post-dinner entertainment is a cello-piano combo performing (excellently) selected short pieces.

Monday, July 21, 2014

Kinderdijk, 20 July

(Posted from Cologne) 

Windmills don't grind grain; they pump water to keep The Netherlands dry. 

They were going to demolish the windmills at Kinderdijk because the newer pumps are so much more efficient, but a Dutch princess pointed out that the rest of the world knows only a few things about Holland: tulips, dikes, wooden shoes... and windmills.  They kept these 19.  Now they can't pull them down because it's a UNESCO World Heritage site.  

There is a message told by the way the vanes are parked: horizontal is 'taking a break'; 11:00 is happiness (births, weddings); 1:00 sadness (sickness, death); 9:30/1:30 is 'permanent stop'. These vanes mark the loss of many Dutch aboard MH17.  (You're seeing them from the back.) 

Re-board and we're outahere for Cologne. Internet service will be spotty the whole trip.