Why I pay with $2 bills

First, as a disclaimer, this idea of mine wasn’t original and what inspired me was this article from Mises.org: http://mises.org/story/3584.  Thus, I went to the bank today and asked for some $2 bills and was able to get as many as I needed (I requested $20).  Paying with these is a purely symbolic gesture and I anticipate it bringing up some questions, in which I’ll respond by having the person Google “Why I Pay With Two-Dollar Bills” to find my underlying reason (the first article that appears on the search results is the one I have aformentioned).  After awhile, I may eventually start stamping them with an End the Fed logo to make it a more literal message for people who would fail to grasp any symbolic meaning behind my action or who would be too disinterested to pursue a Google search.

As a collector of coins and someone who used to save $2 bills, I think it’s going to be really strange at first when using these as normal currency (despite the fact that the are readily available at most banks).  Some interesting facts about the $2 bill is that it is the least circulated bill, but is still legal tender (ie businesses are legally obligated to accept them as payments).  The person on the front of the bill is America’s third president, Thomas Jefferson, who was one of the most patriotic figures in American history and the first president to dismantle the first US central bank (Andrew Jackson was the next president to abolish the second central bank…who’s going to be the third?).  On the back of the bill is one of the most important events in our nation’s history, the signing of the Declaration of Independence.  Not a bad note to represent the Freedom Movement if I may say so myself.

The Path to Hell is Paved with Good Intentions – Minimum Wage Laws

On July 29th, the national minimum wage will get increased to $7.25 an hour.  In a time when our economy is suffering, this will cause many more jobs to be destroyed.  Have you ever wondered what happened to movie theater ushers, or gas station pumpers, or airport luggage porters?  Minimum wage laws destroyed these jobs because they weren’t worthwhile for businesses to continue to offer those services.  Peter Schiff does a great job explaining how minimum wage laws has resulted in these “lost jobs” in his video blog here: http://www.youtube.com/watch?v=I_IMuxMXd3E.

Bill in Question: Minimum Wage

The good intentions: To provide low skill workers a living wage to keep up with inflation.

The reality: Less jobs and more poverty.  The poor, who this law is intended to help, will get hurt the most.

Those who benefit: Those who are lucky enough to keep a minimum wage job.  Labor unions because there will be less job competition. Also, the politicians because they will be viewed as friends of the working class for their next election.

Conclusion: This is a classic example of an “innocent” solution to a problem.  Unfortunately, as most government solutions go, it’s not so innocent when you realize the truth: it’s coercive and promotes self sacrifice (one of the main themes in Atlas Shrugged if you haven’t read it).  The problem politicians are trying to address is to give low skill workers a living wage to keep up with inflation and the cost of living.  But businesses aren’t in the market for charity.  They are in the market to make profit.  Therefore, this law prohibits businesses from hiring a worker for their true wage.  In a sense, it’s discrimantory.  It prevents businesses from hiring more workers and forces it to choose the few it wants to keep on the payroll.  Also, businesses operating on tight margins will find themselves no longer viable, resulting in more job losses and further unemployment.

Consider looking at this using basic economics 101.  Politicians can’t just set a price without consequences of upsetting the equilibrium that is supply and demand.  When prices are set artificially low, this causes an increase in demand and shortages in product.  When prices are set artificially high, this results in a decrease in demand and a surplus in product.  Wages work the same way when you consider the employee as a product.  When the employee’s wages are artificially set too high, then you are going to see a decrease in demand for them and a surplus of workers (ie. unemployment).

If politicians really wanted to tackle this problem then they should look at the heart of it, which is inflation.  Battling inflation is a beast in itself and would require a much bigger solution than a simple “fix” like minimum wage.  But I think understanding basic economics would be a start.  You can’t base a currency on nothing and expect it to maintain a constant value.  Our dollar now is worth 95% less than it once was before we moved off the gold standard and created the Federal Reserve to print our currency.  Allowing a free market with competing currencies and wages would be a great start, as well as loosening regulation which stifles business and makes it less viable to produce in this country.  But that is a whole new blog for another day…

For additional info, check out this Milton Friedman clip on minimum wage from over 50 years ago: http://www.youtube.com/watch?v=ca8Z__o52sk

Also, check out this great article from Peter Schiff on LewRockwell.com: http://www.lewrockwell.com/schiff/schiff34.1.html

Looking Forward – Liberty Candidates for 2010

The Freedom Movement has been rolling!  Ron Paul’s presidential run in 2008 ignited the wildfire of freedom in American’s minds and transitioned his efforts into the Campaign for Liberty, now a full blown PAC.  Several freedom candidates endorsed by Ron Paul, such as BJ Lawson in North Carolina and Murray Sabrin in New Jersey, tried riding Paul’s groundswell of support to also run for Congress but they fell short.  I felt their timing was a bit too early as the public was still in their “distaste for Republicans” phase and voted any liberal candidate to office they could.  But come 2010, a huge chance will arise for the freedom movement to strike back and to send many new Ron Pauls to Congress to break down the Big Government stranglehold.  Who are these candidates?  If you look on the right side of my blog, I have added a new section titled “Liberty Candidates 2010″ that lists out some of the next Ron Pauls for Congress that I support and what position and state they are running in.  Some have officially announced their candidancy while some are still in the exploratory phase:

• RJ Harris (http://www.rjharris2010.com) – A republican candidate running for House of Representatives in Oklahoma.  Served in the army and has made a tour in Iraq.  Was once a neo-con, but changed to a Ron Paul republican after reading the constitution.
• Adam Kokesh (http://www.kokeshforcongress.com) – The “winter soldier.”  Adam is a young candidate running for the House of Representatives in New Mexico.  After having served in the Iraq War and having woken up to the truth, Adam is now the founder of the Iraq Veterans Against the War (IVAW).  Adam is a revolutionary patriot and a very passionate and outspoken leader in the freedom movement.  If you have never heard him speak, check out this clip of his speech at the revolution march in DC: http://www.youtube.com/watch?v=PbOp_9VfR6o
• Rand Paul (https://www.randpaul2010.com/) – Son of Ron Paul and a doctor by trade (eye sergeon), Rand Paul is running as a Republican for Senate in Kentucky.  The apple hasn’t fallen far from the tree as Rand Paul is a great voice in the liberty movement just like his father.
• Peter Schiff (http://www.schiffforsenate.com/) – Ron Paul’s economic advisor for his 2008 presidential run and the CEO of Euro Pacific Capital, a brokerage company specializing in the investment in foreign stocks.  Schiff is still in the exploratory phase, but is considering running as a republican candidate for senate in Connecticut.  He is one of the few economic experts who predicted the current recession and has been writing books to warn people about how to preserve their wealth, such as Crash Proof and The Little Book of Bull Moves in a Bear Market.

Tea Party Protests – July 4th

There will be another nation wide Tea Party protest this coming weekend on Sat., July 4th.  For those in Santa Barbara, we are having events on Friday and Saturday.  Here are the details (from the website http://www.santabarbarateaparty.com/):

Santa Barbara Tea Party & Culpepper Society Presents

Independence Day Events
Two Days of Celebrating America’s 232nd Birthday

Friday, July 3 @ 7 PM
De la Guerra Plaza

Wild West Show & Freedom Rally Starring Buffalo Bill and Friends ~ On stage at De la Guerra Plaza, Hollywood actor Peter Sherayko headlines 4th of July Kick-Off Event as Buffalo Bill.  The show incorporates musical performances & retro Buffalo Bill acts and a non-partisan political rally. Appearances by “Calamity Jane,” “Annie Oakley,” Tax Pro Joe Armendariz, Ryan McNichols and others make the evening memorable.

Saturday, July 4 @ 11 AM
Assemble @ State @ Micheltorena Street

Buffalo Bill arrives on Horseback to lead SBTP & Culpepper Society Contingent in Santa Barbara’s 4th of July Parade. Our group is positioned at the end of the parade. Route begins at Sola and ends at Cota Street. Assembly is at Micheltorena Street @ State. Register for further information and updates if you are not already on our email list. Signs are permitted per our online Policy Statement and in respect for Spirit of ‘76, the parade host.

For people looking for more information on Tea Parties near you, check out the following website: http://www.teapartyrevolution.com/Default.aspx

Also, the following website can be of help: http://www.nationwidechicagoteaparty.com

Atlas Shrugged Quote of the Week

“As there can be no causeless wealth, so there can be no causeless love or any sort of causeless emotion.  An emotion is a response to a fact of reality, an estimate dictated by your standards.  To love is to value.  The man who tells you that it is possible to value without values, to love those whom you appraise as worthless, is the man who tells you that it is possible to grow rich by consuming without producing and that paper money is as valuable as gold.

“Love is the expression of one’s values, the greatest reward you can earn for the moral qualities you have achieved in your character and person, the emotional price paid by one man for the joy he receives from the virtues of another.” – John Galt

A lesson from taxing the rich in Maryland

Here’s another popular article on the failures of “fleecing the rich” via taxation thanks to the The Wall Street Journal: http://online.wsj.com/article/SB124329282377252471.html.

Thanks to America, people can vote with their feet and get out of oppressive states that threaten their livelihood. The rich aren’t stupid and know how to preserve their wealth, therefore when Maryland decided to increase the taxes on the highest earners in order to make up a budget shortfall, 1/3 of the millionaires left town and now the state is earning even less in tax revenue. Well done Maryland! A lesson learned from progressive taxation and class warfare.

Here’s the article for your convenience:

Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”

One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.

No doubt the majority of that loss in millionaire filings results from the recession. However, this is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions. For evidence, consult California, New York and New Jersey (see here).

The Maryland state revenue office says it’s “way too early” to tell how many millionaires moved out of the state when the tax rates rose. But no one disputes that some rich filers did leave. It’s easier than the redistributionists think. Christopher Summers, president of the Maryland Public Policy Institute, notes: “Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it’s easy for them to change their residency.”

All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O’Malley’s “fair share.”

Bar Stool Economics

This has been a popular article being sent around via email and other new media sources, so I figured I’d share it here as a lesson about taxation:
http://www.wisebread.com/bar-stool-economics-0

Here’s the text of the article for your convenience:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.
“Since you are all such good customers”, he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Cartoon from the 50’s

If only our politicians weren’t tempted to sell our freedoms to the snake oil salesmen these days….

The gay marriage “loophole” (from Onion news)

 Hilarious video, please watch:

Conservatives Warn Quick Sex Change Only Barrier Between Gays, Marriage

Rand Paul’s first money bomb is tonight!

Rand Paul, also a doctor, is Dr. Ron Paul’s son and is running for senate in 2010 representing  Kentucky.  The first official money bomb is tonight and they are hoping to raise $50K (they’re very close to meeting their goal).  More info about it here: http://www.humblelibertarian.com/2009/05/june-1st-rand-paul-money-bomb.html