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When All Else Fails….

from Scott  Grannis at The Calafia Beach Pundit, Why the Global Gloom:

excerpt:

Despite all the gloom out there, and despite all the disappointment, there is reason to be optimistic. If we’ve learned anything in the current recovery it’s that 1) fiscal stimulus (e.g., the ARRA) doesn’t work and 2) monetary stimulus (e.g., QE and zero interest rates) don’t work either. Government policymakers cannot conjure up prosperity by spending more money or cutting interest rates. What’s needed is for government to get out of the way and boost incentives for the private sector to jump-start the economy. That means lowering marginal tax rates, simplifying tax codes, eliminating subsidies, and reducing regulatory burdens.

This is not rocket science. The entire world has witnessed massive, almost laboratory-type experiments in fiscal and monetary stimulus fail to deliver the promised results. There’s nothing left to try except what is most likely to work. Politicians need to hand the reins over to the private sector and market forces and step aside. The world’s stock markets seem to be saying that this is a real possibility that may come to fruition within the foreseeable future.

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A Parabolic Tax Curve

From Mark Perry at his AEI- Carpe Diem Blog, Top 400 taxpayers paid almost as much in federal income taxes in 2010 as the entire bottom 50%

Early last year Obama reiterated his belief that the wealthiest Americans still aren’t paying their “fair share” of taxes. Here’s an analysis using recent IRS data that suggests otherwise.

1. In 2010 (most recent year available), the top 400 taxpayers based on Adjusted Gross Income earned $106 billion collectively, and they paid $19.1 billion in federal income taxes at an average tax rate of 18% (see chart above).

2. In 2010, the bottom 50% of taxpayers, a group totaling 67.5 million Americans, earned collectively almost $1 trillion and paid $22.4 billion in federal income taxes at average tax rate of 2.4% (see chart above).

Bottom Line: A small group of 400 of America’s most successful earners in 2010, about the number of residents living in a typical apartment building in Washington, D.C., paid almost as much in federal income taxes as the entire bottom half of America’s 135 million tax filers, which is a population equivalent to the combined number of residents living in America’s 29 least populated states, plus the District of Columbia. What makes this disparity possible is the fact that 41% of individual income tax returns filed in 2010 had a zero or negative tax liability, according to The Tax Foundation. And a recent CBO study (featured on CD here) found that the entire bottom 60% of American households are “net recipient households” and received more in government transfers than they paid in federal taxes in 2011.

When you have only 400 Americans paying almost as much in federal income taxes as the entire bottom 50% of Americans filing income tax returns, I think we can dismiss any notion of the rich not paying their “fair share” of taxes. In fact, maybe the IRS should publish the names and addresses of the Top 400 taxpayers (or provide a forwarding service to protect anonymity), so that we can all send them “Thank You” letters to express our gratitude for shouldering such a disproportionately large share of our collective tax burden.

HKO

An amazing statistic.

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The Uber Factor

Lateefah

I  flew into Houston Hobby Airport a few days ago, touched the Uber App (i had set up some time ago).  I put in the destination and It said there was a ride two minutes away.  I learned that even if the driver is standing right next to you it will say they are two minutes away. This was my first Uber booking.

A nice face shot of Lateefah and her license plate showed up also noting she had a Honda Pilot. (you can spec SUVs and Black Cars if you want a more limo style ride.)  She had just dropped off a fare at Hobby and responded literally in seconds (they have 15 seconds to respond).  She quickly called me to establish a rendezvous,  I noticed the phone number was a Cleveland number.  She explained that was because it was provided from Uber.  The App also quoted the fare as between $20 and $28 depending on traffic and delays.  It ended up being $22.12

After I was dropped off the fare is charged to my credit card.  No cash changes hands, no tips.

I was able to see a rating of Lateefah before I accepted .  She had a 4.8 out of 5.0.  I gave her a 5.0. The drivers also rate the passengers.  If you are a rowdy trouble maker who has thrown up in a cab, you may have a tough time getting a ride.  Lateefah will not pick up a low rated passenger.

Drivers with a lot of customer complaints get yanked.  Lateefah said some cabbies who have driven for years bring bad attitudes with them when they drive for Uber and do not last long.

In Houston a low end ride – the Uber X charges $1 base, $.15/ minute, $1.10 per mile, a minimum of $5 and a cancellation fee of $6

The Uber XL (bigger car)- $2.85 base, $.30/ minute, $2.20 a mile, $7 minimum and $6 cancellation

The Black car (Luxury – Cadillac/ Lincoln/ Mercedes)- $7 base, $.35 a minute, $3.45/ mile, $15 minimum and $10 cancellation.

The SUV- $14 base, $.45/minute, $4 per mile, $25 minimum, $10 cancellation.

The final charge is computed by Uber and a invoice is on your phone within a minute of reaching your destination. Your then rate your driver from one to five stars.

The big losers are clearly the cab companies which are slow to respond and generally a poor quality ride.  The rental car companies will also take a hit.  I would rather Uber than rent, if it is an Uber friendly city.  Less stress, no hassle or time wasted at the rental car kiosk(even thought this has been streamlined quite well) and no parking fees  Short Hertz and Avis.  No more worrying about getting ripped off with their gas reimbursement or insurance charges, or worrying about how to find the drop off when you return to the airport.

The winners are consumers who get a whole new level of quality and service that was not there before for a wide market.  Downtown bars and restaurants benefit from customers who no longer choose between driving and drinking or staying at home.  Safety improves. You can afford a bit of luxury by getting a Black car on very short notice (literally minutes)  without having to book a limo for an entire evening. Uber offers more than a replacement for a cab ride.  It is a whole new experience.

Uber has unleashed  idle asset and thus created an opportunity for thousands of car owners who would like to supplement their income.  Most of the drivers were part time, or were able to work whenever they wished.  They were given an opportunity to run their own business.  They had to meet certain standards but their real boss was the passenger and their very simple and very timely rating system.  Bad customer service and you are quickly out of job. Imagine that level of accountability with your cab experiences.

I had two more Uber experiences before I left Houston and both were great. The App allows you you to see how many vehicles are in the area and the approximate wait times.  You can check on the various quality rides: X, XL, Black Car r SUV, and see which one will get to you faster.

Uber has fostered a community.  If you had presented to me a business model that consisted of an App to allow me to quickly contact a perfect stranger in an unmarked car to transport me in a strange city, I would never have given it a chance.  I would have been very wrong.  The highly regulated taxi business is understandably outraged at this new unregulated competition.  The biggest loser may not be the cabs, but government regulations of the industry and the income this regulation generated.   The rapid growth of Uber has caught regulators off guard.  The conflict is more than between Uber and the cab companies; it lies more predominantly between the Uber Community (independent drivers and very satisfied customers) and government regulators.

Uber now has a market cap of $18 billion.  AirBNB is the Uber of the hotel business and this story is largely repeated there.  I imagine the users are largely younger and will have a new more involved look at the impact of regulations on their lives.

Uber seems a near perfect name from a marketing perspective.  They now own the word and it has become synonymous with the industry.  You do not call a”private contractor transportation service”, you “Uber” a ride.  A marketing dream name.

 

 

 

 

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The Bigger Benghazi Question

benghazi

From The American Interest, The Case for More Congress In American Foreign Policy, by Walter Russell Mead:

Excerpt:

At the same time, with our Libyan policy, like the country itself, in ruins, one has the sense that the Benghazi investigation missed the larger point. The United States participated in the overthrow of the Qaddafi government, largely on humanitarian grounds, but we were utterly unprepared for the aftermath. Libya is in chaos today, radical jihadi groups have proliferated in the ruins, Qaddafi’s arms and fighters have fanned out across North Africa and the Middle East, and arguably more Libyans have died as the result of the intervention than would have perished had we stayed home. On top of this, there are credible allegations that the U.S. had guaranteed Qaddafi’s safety when he gave up his WMD program. Did our intervention in Libya break a pledge, or did it reduce our ability to persuade other countries to abstain from WMD programs? Did the decision to intervene in Libya also mean that the U.S. was less ready and able to respond appropriately to the much greater humanitarian and strategic crisis that holds Syria in its grip?

Benghazi was one consequence of a much larger and more serious policy failure, and the costs of that failure are still mounting up. By focusing narrowly on Benghazi, Congress missed the bigger question and the more consequential failure. Again, the question is less one of partisan politics than of the national interest: what can we learn from policies that go awry so that in future we can make better choices?

A review of our policy failure in Libya (or earlier ones in Iraq and elsewhere) isn’t just about second guessing and assigning blame. It is about making sure that the nation’s foreign policy infrastructure is up to the tasks that our turbulent century has set for us.

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A Harsh Political Lesson

Charles_Schumer_insert_c_Washington_Blade_by_Michael_Key

Chuck Schumer lays a harsh and accurate assessment on his fellow Democrats.

From The Wall Street Journal,  Schumer’s ObamaCare Mea Culpa (link may require a subscription)

excerpt:

The Senator called the law a distraction from the “middle-class-oriented programs” his party should have pursued after 2008: “Unfortunately, Democrats blew the opportunity the American people gave them. We took their mandate and put all of our focus on the wrong problem: health-care reform.”

Mr. Schumer said he still supported the entitlement’s goals, but “it wasn’t the change we were hired to make. Americans were crying out for the end to the recession, for better wages and more jobs.” We’re glad he’s finally taking our advice from 2009-2010.

Ever the politico, Mr. Schumer put the problem to Democrats in terms crass enough for them to understand—“only a third of the uninsured are even registered to vote,” he said, and only “about 5% of the electorate” benefits from the entitlement. “To aim a huge change in mandate at such a small percentage of the electorate made no political sense.”

Mr. Schumer is still missing the crucial point. ObamaCare is not merely a disaster for big government but a disaster of big government. The law is unpopular because its mandates, taxes and central planning are harming the economy and the insurance and medical care of average Americans.

HKO

He is spot on in my opinion.  There are many improvements in the economy from the bottom when he was first inaugurated, but the critical flaw that cost them dearly was the stagnation and decline in middle class VOTERS’ incomes. This is why so many feel we are still in a recession even though all of the technical data indicates otherwise.

The political lesson the GOP should study as well is that a broad victory is not a mandate to do whatever you want.  The winners need to remain humble (if they ever were) and listen.  It is important to have a broad representation in the cabinet, not just of the ethnic and special interests, but of the intellectual ideas we hold.  Obama’s administration represented a far too narrow cross section of the electorate, and much of the media (except Fox)  never held his administration accountable until the failures mounted and became impossible to ignore.