Archive for the ‘Politics and Economics’ Category

Jul 28

The Public Debt

Time’s UP. The chances of repaying this debt are slim to none.



The Public/National Debt. <Click here for the National Debt Clock




Aug 23

The Electric Highway


There is no such thing as a hybrid automobile powered by gasoline and electricity.

There are only gas powered cars and coal powered cars.

We must stop pretending that we haven’t been duped by a clever oligarchy of pseudo”progressive” lackeys.

Electric cars are a great idea.  But they run on electricity that is generated by burning carbon based fuels such as coal or natural gas, and with some exceptions, nuclear.  So what is the advantage? It can only be political when pandered to a constituency of willing fools.

If we want electric cars, we will first need to build electric highways and service roads.  They will have to deliver their electric power to the cars and other vehicles by induction systems.

The power to the induction system must come from abundant and cost effective supplies of electricity.

The electricity must be provided by a plethora of nuclear power generators.

The nuclear generators must be powered by an alternate, much safer, more abundant and cost effective nuclear material than Uranium or Plutonium.   It’s called Thorium 232. It is #90 on the Periodic Table of Elements. It is several times more ubiquitous in nature than other potential fissile fuels.  You’ve probably never heard of it.   Look it up. Or click the links at the bottom of the page.


Note: Some are now saying that we have enough carbon based fuels to last 100 years.  This begs the question, WHAT THEN??

Rumblings are beginning to sound about our crumbling infrastructure, particularly our highways and bridges.  Many are now 50 to 70 years old. To any one who travels by car or truck and pays any attention the flaws in existing structures and pavements are ever more evident.  Unfortunately the remedies being touted so far seem to be confined to patching the system using essentially old and expensive (20th century) technology and will not mitigate ongoing and costly maintenance problems serving only to temporarily extend the life of an outdated and obsolete infrastructure.  This is the 21st Century and the technology for a dramatic paradigm shift in rebuilding our dilapidated highway and transportation system is now on the shelf within immediate reach.  These technologies portend an ultra modern interstate and ultimately urban and suburban way of getting ourselves not just across country at very high speeds but around town and to the grocery store as well.  And ultimately at much less cost per mile if we can just keep the hands of the corrupt (read unions and their bosses) from perverting the mission.

To illustrate let me throw out some of the possibilities and ideas pertaining to such a task and the goals to be achieved, but not in any particular order.

Suppose, for example, you wanted to travel between two major metropolitan areas.  On the day of your departure you and your family with a few pieces of luggage step into your garage.  Upon approach to your vehicle, one powered by a sophisticated electric drive system supplemented by an efficient internal combustion engine using LPG, NG or gasoline for a fuel source, you simply speak to your “car”. On your command, the doors open as well as the luggage compartment.  Upon stowing your travel bags and boarding the vehicle you instruct the computer as to your destination(s) and give the command to execute.  The garage door rises and you begin to move onto the street and head automatically to the nearest elevated automatic electric causeway.  (In the countryside elevation allows for unobstructed migration of land bound species and support for high load power distribution as well as several other amenities.)

As you draw near the causeway the on board computer informs you of your approach and that it is synchronizing your vehicle with the line of traffic already moving on the causeway.  An instant latter you are accelerated up a controlled on ramp and as your speed synchronizes with the flow of traffic you are automatically inserted between vehicles and match their speed, about 150mph.  So far, you have not touched the controls.  Voice command has been your only tool of navigation since you entered the vehicle.  The control system from the garage to high speed travel on the causeway has been entirely automatic and under the control of your on board computers and those of the causeway system.  The systems and sensors involved are multiply redundant and are in constant communication and millisecond update with each other.  Your only duty is to respond to queries, alerts or notices keyed by their programing.

If you have a health problem you may be wearing a small wireless monitor that communicates with this system and should a health emergency be detected en-route the system would immediately respond and begin to query the wearer.  If an emergency is declared by the wearer or by the diagnostic system the nearest emergency response system is alerted and your vehicle is automatically shunted to the nearest appropriate facility.  Other than that the system will simply query as to your comfort and needs or desires as refreshment facilities or destinations are approached.  Otherwise the occupants have at their immediate disposal WIFY communication for work projects, entertainment, class assignments for young students on board, print articles or oral/visual renditions of other materials etc. and so-on.  These services are built into the causeway system and are uninterrupted.

There is no need to stop for gas or to recharge your vehicle’s batteries.  They they are powered and recharged constantly while you remain under way on the causeway.  Batteries would be fully charged when leaving the causeway.  On-board computers with a  metering system automatically charge your account for the energy consumed from the induction system that powers your vehicle.   The induction system is imbedded in the ceramic panels that make up the driving surface of the causeway.  You may also be charged a toll for use of the causeway itself thus making the system self funding.

Power for this technological paradigm of high speed Eco-friendly systems is derived from something called Stage IV nuclear reactors.  A dedicated series of MSTRs (MoltenSaltThoriumReactors, sometimes called LFTRs or LiquidFlorideThoriumReactors) would be positioned along the causeways as the constant and redundant power source.  The basis of this technology is the same that powers the core of the earth itself.  You are standing on it many miles below your feet.  Slowly decaying Thorium is responsible for generating at least half of the heat rising from the Earth’s core.   This type of reactor (considered a stage IV generation reactor) is simpler, more efficient and walk-away safe should it begin to overheat or fail for any cause. Its fissionable fuel (Thorium232) would be a useless target for those with nefarious intent and impossible to access without detection.

The MoltenSaltThoriumReactor concept and model was first invented by scientists in this country back in the 1950’s and 1960’s.  It ran for several years and then was shut down and abandon for lack of interest and funding.  So what was the problem?  It produced abundant energy, was far more efficient, had the potential to not only burn its own fuel to completion, but also nuclear waste along with it.  It was so safe it was sometimes referred to as a “walk-away” reactor, i.e. it was meltdown proof, needing no “containment” vessel,  left no nuclear waste, was much cheaper than uranium and more efficient, etc. and so on.  It had just one major problem.  Remember what President Eisenhower warned about the “military-industrial complex”?  The fatal flaw was that the Thorium reactor did not lend itself, and could not be used, to produce weapons grade nuclear material for use in atomic bombs. And therefor would not be funded.  Another problem was the Nixon administration wanted all further nuclear reactor research and funding moved from Oak Ridge to California.

I would like to add to Eisenhower’s admonition:  Beware of the military-industrial-POLITICAL complex.

Also, since the interstate causeways would mostly run coast to coast East to West the South side would constantly face the sun.  High efficiency solar panels could be mounted at every opportunity along the entire length.(Granted, this may prove impractical and completely unnecessary. )  Power for this system and for many other purposes would then be abundant, ubiquitous and cheap. Transmission lines would be  carried beneath the causeways and highly efficient due to greater proximity to the modular reactors.  Shielding by metal conduits would help prevent damage from the environment, lightning strikes, natural or man-made EMP events, and so-on thus enhancing strategic value.  Reduced transmission loss and low maintenance requirements in the induction system, along with multi-use applications would result in increased cost effectiveness.  Indeed, enclosed transmission lines would lend themselves to cooling and increased transmission efficiency if the proper materials were used in their manufacture.

The problems of ice and snow removal would be dealt with using microwave emitters just below the ceramic pavement to raise the temperature enough to melt any accumulation of snow or ice forming on it.  This is controlled automatically as needed by sensors imbedded in the causeway.  The need for mechanical removal and the use of potentially harmful chemicals are eliminated.

The causeways themselves would be elevated and constructed of reinforced waterproof cement. (invented by by the Romans in the 1st Century A.D.) Maintenance requirements are reduced to a minimum and the systems designed to last with minimum attendance for hundreds of years.  Pavement panels designed and constructed of ceramic material so as to be used twice during their life cycle simply by being flipped over and reset.  Detectable flaws are removed or panels replaced as needed by automated machines dedicated to the function.  Such machines would straddle the width and above the lane and ride on the elevated lane guard rails dedicated for the purpose.  Dedicated emergency vehicles with EMT and life support systems and vehicle removal capability make this mechanism dual purpose.

This is just an outline of what is a possible potential paradigm shift in the way we transport ourselves through the 21st Century.  There are plenty of naysayers who would raise a cacophony of objection to such a project claiming there is enough natural gas and other fuels to see us through to the end of this Century.  But what then?  These fuels too will eventually be used up.  If we want to be truly energy independent and maintain and even elevate the social and economic standards of the nation (and the rest of the planet) what are our choices?

The coin of every modern technological society is abundant but inexpensive energy.  It is time we moved away from coal and other carbon based fuels and develop an efficient and  plentiful fuel that is right under our feet, if indeed not under our nose.

There may be enough Thorium beneath our feet to power every civilization on the planet for thousands or years.  But there is no time to waste on the build out of a comprehensive new system of transportation and the power to bring it into reality.  But before we squander assets on energy systems that are of limited value and are not cost effective and before we build fleets of coal powered vehicles let us make haste to develop this long neglected power source and get down the road to a potentially very abundant future.

Granted, the challenge may seem insurmountable.  But the interstate highway system cost over $1,000,000 per mile starting back in the 1950’s.  The system we are talking about here will eventually cost many times that.  But it can be started with pilot programs linking two major metropolitan areas together.  Two on the West coast and two on the East coast.  Once proof of concept has been established and the system refined and perfected build out can proceed across the entire nation.  We may just have time enough to accomplish the major portions and connect all major population areas by the end of the century.  Just before the next carbon fuel depletion crisis comes to bear ONCE AGAIN and leaves us no affordable options.


NOTE: Additional applications of abundant Thorium sourced energy and ubiquitous power distribution of point of need applications in proximity to the causeways:  agricultural equipment, desalinization of remote water sources, low cost irrigation, waste reprocessing and recycling, year around illumination of particular crops and increased food production,  very low cost heating and cooling, lower manufacturing costs, and whatever else you can think of.

It is time for the American people to stop thinking with every organ in their body except the one that was designed for the purpose.  If we are to survive as a democratic republic we need to develop solutions now, and not be led into this century by others whose interests may not be our own.



The London Telegraph’s Challenge to Obama

Thorium: What is it?  THORIUM: THE GOOD REACTOR

Click here: China’s Thorium Reactor Project

Jun 02

Taxes and the death of the Republic


Taxes and the death of the Republic



If you are under the age of 30 pay attention.  Only your generation has the potential to change this destiny.  The rest of us wouldn’t do it. It’s up to you from this time on.  Remember, economics are fundamental to everything.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on the majority always votes for the candidates promising the most benefits from the Public Treasury with a result that a democracy always collapses over loose fiscal policy always followed by dictatorship. The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through the following sequence:”

From Bondage to Spiritual Faith
From Spiritual Faith to Great Courage
From Courage to Liberty
From Liberty to Abundance
From Abundance to Selfishness
From Selfishness to Complacency
From Complacency to Apathy
From Apathy to Dependency
From Dependency back into Bondage

From “The Decline and Fall of the Athenian Republic”
by Alexander Fraser Tytler Lord Woodhouselee (1748-1813)
(Scottish judge and historian at Edinburgh University)

As Ben Franklin descended the steps of Constitution Hall a lady asked him,  “What sort of government did you give us sir?”  He replied, “a Republic madam, ——–if you can keep it” I think he had read Lord Woodhouslee.  What do you think?

Slavery,” he wrote, “is a form, and the very best form, of socialism.” Fitzhugh Southern philosopher and advocate of slavery.  1849

The power to tax is the power to destroy.”  Daniel Webster 1782-1852.

The American income tax system is an instrument of servitude and was never compatible with a society of free people.   It is, however, the ideal instrument for funding a Socialist agenda and the coerced collection and spurious distribution of wealth.   The most glaring and evident example of this truth is the so-called Social Security system.  Here is the obvious model and mechanism of usurping the wealth of one demographic group, those who labor, by force of law and transferring it to another demographic group who do not labor by virtue of age.  This is forced servitude of one group for the benefit of another.  This circumstance has evolved negatively as the ratio of the group in service has dwindled in relation to the group that is served by 5 and eventually 2 or 3 laborers to one recipient.  A clearer and more compelling argument cannot be made.     This is the modern form of slavery.  It can be no other.

This relationship also clarifies the fatal flaw of a transfer system of funding pensions and retirement based on speculative assumptions of the future economic environment of the labor force versus an equity based system by which the individual participates in and accumulates the ownership of equity in the means of wealth production and the resulting revenue flow he or she can share in.  Simply stated, which is preferable?  The ownership of the productive labor of one person by another, or the individual ownership of the means of wealth production?  Which has the greater potential of certainty and endurance?  If the means of production fails, for whom does the laborer produce?  Does not the  ”factory” produce long after the laborer retires? If layer upon layer of retirees emanates from the factory how many times must productivity increase for the remaining workforce to compensate an ever extending retirement demographic that produces nothing?  If the economy is maintained which is best, the ownership of equity, or the ownership of each other?   Which is the true parasitic relationship?  Which party is the liability and which represents the asset to the overall economy?  Which individual drives the economy through genuine tax contribution and valid consumption and which bears the burden of redundant double or even triple payment?  Further, is a child born today to be regarded as a future economic liability or an ultimate asset?  If his retirement is funded by personal ownership of equity rather than dependence on the labor of others the answer should be obvious to all but the ambitious demagogue or the fool.

Freedom: noun; the responsible exercise of individual authority. theBushwhacker™ (Why is this seemingly trite definition of freedom important?  Because whenever the State usurps any portion of responsibility  for the individual or any group of individuals it must also usurp that portion of authority necessary to discharge that responsiblity and with that authority goes freedom.  For personal authority is the very essence of freedom.  Without personal authority we have nothing.  We are then slaves to the men with the guns.  “Pollitical power grows out of the barrel of a gun” Mao Zedong.  China.  The only legitimate duty of the State of a Free  people is not to usurp, but rather to enhance a facilitate the responsible exercise of individual authority.  This particularly includes economic authority and responsibility.  Economic integrity empowers individual responsibility. ) 

This is the standard by which all law must be measured.  In 1821 Jefferson stated that all authority rested with the people.  This was reflected in his Declaration of Independence in the keyword “consent”.  Any law that does not serve the establishment of justice can only be an instrument of tyranny and intimidation.  Any law that only serves expediency can never serve justice.  The duty of the state of a free people is to enhance and facilitate the ability of the individual to exercise responsible authority over him or herself. Not to usurp such responsibilities and authorities and the freedoms they represent.

The Bill of Rights was a set of Amendments to the Constitution by which the sovereignty of the individual was to be guarded against intrusion by the power of the State.  It was intended to forestall policies that create an adversarial relationship between the innocent citizen at large and his government.  The income tax amendment is contrary to this purpose.  It was unconstitutional on its face.  Indeed, it required a special amendment to the Constitution to qualify it as “Constitutional” and enter into law as enforceable.  As such it became an instrument of servitude and expediency that has no legitimate place in the business of our country.  Its force trumps other protections contained in the Bill of Rights and natural laws presumed to protect the innocent at large.  It has become an extortion against liberty.

Examples of Amendment and fundamental rights violation:

The 4th Amendment: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Be aware that by doing nothing to comply with the disclosure requirements of the State you have committed a crime.  This is a crime of inaction, noncompliance and disobedience to the State for which you can loose everything you “own”.

The Income Tax Amendment allows presumptive ownership by the State of all earnings of the individual arising from his activities and requires involuntary affirmative compliance and response which may result in self incrimination (a 5th Amendment violation) and is an extortion against the right of security against unreasonable searches and seizures. Further, failure to comply with the demands of the state may result in severe penalties and even imprisonment.  Does this not speak to the presumptive primary ownership by the state  of the product of production by the individual?  

The 8th Amendment: Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

The penalties for failure to file income tax forms can be highly disproportionate to the principle owed and accumulate interest as long as they endure.  Where else and against what violations can such aggressive penalties be imposed except here?  Such failure can be and often is interpreted by the State as deliberate evasion of the duty imposed by the state to render that portion of production assessed by the State.  Since there is no way to reliably determine the actual tax liability to the State this can only be an arbitrary and spurious liability.  But the burden of proof, unlike common criminal law, is not on the State, but on you to prove your innocence for failure to “voluntarily” comply.  (Warning: the EPA can also impose such draconian penalties, as can other bureaucratic agencies.)  

The 13th Amendment: Sec.1. Involuntary Servitude.  Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. (Think of the irony of this Amendment.  You can become a criminal by simply ignoring the compliance demands of the State.  And what do we now suffer under as the consequences of the self serving elected or appointed officials and bureaucrats  who formulated these laws and the bureaucracies who enforce them by regulations that carry the force of law? And what has become of the wealth they consumed and for what?)   

Here is where the most obvious infringement of liberty can be brought into focus.  The State can take as much or as little of the peoples “earned” income as it’s arbitrary and voracious appetite desires and distribute it to whomever it determines it has expedient favor to cull.  This is how the incumbents in both Houses curry favor with their constituents and keep themselves in power, sometimes for decades.  This is the essence of involuntary servitude.  It is as ancient as civilization itself.

Our current system of taxation has long outlived its usefulness and must soon be replaced with one that is more compatible with a society of free people.  The income tax is now composed of thousands of rules and regulations that few if any citizens or even our Congressional representatives nor professional accountants can understand in part or in whole much less comply with.  Further, in the hands of a dominate political party the codes can be used for political reward or punishment.  They may also be used to intimidate or destroy targeted enterprises and their owners for any number of reasons.  Its most favored purpose is its ready application facilitating liberal or socialist agendas for “redistribution of wealth” according to the political discretion of powerful interests within or influential parties in proximity to the instruments of government.  It permits the intrusion of questionable government interests into the affairs of virtually anyone at large in society.  The adversarial relationship that has been created between the state and the citizen at large has grown to unacceptable proportions and must be redressed.  It threatens our economy, retards opportunity, consumes extraordinary resources in compliance costs (*approximately 20% of receipts each year)   and bureaucracy, and produces no wealth in the process.  It is a parasite that needs expulsion from the workings of a modern free and productive nation.

To that end, we must look at alternatives that better and more efficiently facilitate the needs of a society of free and independent citizens and the government  whose duty is to serve them facilitating their ability to exercise responsible authority over themselves.  The best model to emerge to date seems to be the FAIR TAX initiative.   Unfortunately the current income tax system is deeply embedded within the mechanisms of our government and resistance to a new paradigm will most likely prove intimidating and ineffective.  However, we must call out the truth and obvious defects at play.  The most succinct and clarifying description is this:  the income tax is an instrument of involuntary servitude.  It is most compatible with a socialist mechanism of subjective wealth collection and arbitrary redistribution. It incorporates powers that are intimidating to the otherwise innocent at large and therefore constitutes an extortion against liberty.  The best alternative is the so-called Fair Tax which might more aptly be labeled the Freedom Tax.

The Fair Tax would eliminate the need for all income taxes and hidden taxes and replace them  with a national sales tax the cost of which would be posted on every receipt just as it is now.  It would necessarily be higher than current sales taxes.  However, the elimination of hidden taxes would reduce the retail and hidden prices considerably and overall prices would be very nearly the same and in many cases less than they are now.  Also, they would be applied only on new production of goods and services at the retail level and not on second hand or previously owned items or housing and automobiles.  The citizen at large would pay no taxes except when accessing the retail market.  What ever he earned he could keep.  He would pay taxes only on what he decided he could afford to consume.  He would receive a “pre-bate” at the beginning of each month to cover taxes on essential necessities for himself and his family.   He would (eventually) no longer be forced to forfeit any portion of his earnings to support any party in another demographic group, such as Social Security or F.I.C.A tax.   What remains of Social Security will inevitably become an obligation of the General Treasury.  (This has already begun.) 

Indeed, all retirement funding and pension mechanisms must be equity based and funded at the outset, even at birth.  Indeed, at the present, every child born it our society becomes an immediate and inevitable economic liability to the State and the economy.  Pre-funding retirement with equity would remove this liability and turn the child into an economic asset to the nation in his or her old age.  This would eliminate the need for entitlement funding and further taxation for such over time.  Such government sponsored retirement funds might very well be established for each child within the first year of life and funded within a tax exempt Roth type IRA. With an initial contribution of $12,000 (from a loan from the Treasury) combined with investment into an S&P 500 type fund would grow to over $1 million to $2 million at age 65 ($1,700,000+ at 8.0% per year) thus making every child an ultimate economic asset to society rather than an eventual liability. ( Note: The average Social Security recipient currently receives over $12,000 per year.  This payment continues and increases year after year until death. The above estimates are based only on a one time loan to the birth IRA of the same amount.) Such individuals choosing marriage could almost double their retirement equity even if they had made no more effort to increase their personal wealth during their lifetimes.  They would only be required to repay the initial funding upon entering the work force through contributions from family sources, service opportunities such as a four or five year military or public service tour, or direct repayment at low interest.  The debt obligation could also be satisfied by diverting the employe’s portion of his FICA obligation, if retained for  a period of time, to the debt as well.  These things would of course require modification of the FICA mission.

If the requirement was to repay the Treasury loan by the age of 30 or 35 years of age at, for example, at a .5% to 1% annual charge at that time the system would become self funding as the repayments were revolved into the trusts of children then being born.

At the end of life, and if married, the survivor would inherit the entire remaining contents of the deceased’s trust to maintain the survivors life needs.  Upon the death of the survivor their progeny, if any, would inherit the remains into their trusts thus growing the wealth of families into the future for generations to come.  The need for government sponsored entitlement programs would fade into the dustbin of history along with the tax burden required to fund them.

This approach would endow every individual at birth with direct and protected ownership of his or her economic destiny through equity and restore his personal sovereignty, and that of his progeny, as  free citizens.  The people, as individuals, would then directly own the means of wealth production and distribution of the domestic and even international economies but in common with each other.  Goodbye Karl Marx. Hello the legitimate uses of Capitalism.

I have no patience with fools or nay-sayers.   It you have a better or more reasonable, efficient and certain pathway to funding retirement for the free individual register and post it here.
theBushwhacker ©2012 and prior.

Jan 21

The Duty of the State of a Free People. Universal Healthcare and Life

The Duty of the State of a Free People. 

Universal Health Care and Life.

In “Freedom Defined” we put forth as a duty of the State of a free people is to enhance and facilitate the ability of the individual to exercise responsible authority over him or herself.   One area of action that lends itself to this duty is the issue of health care.  While the State should never be a direct provider or insurer of health services or procedures it can and should be an appropriate regulator and facilitator of access to such services and the economic empowerment thereof.  How can this be done without direct involvement in some socialist mechanism and the usurpation of individual authority and responsibility from the citizen at large?

The answer has been with us almost from the beginning.  Capitalism’s equivalent of socialism is an insurance company.  Private insurance is superior to socialism due to the more efficient management of specific risks.  The problem has been the ever increasing cost of medical services and the insurance premiums that drive a very significant minority of the population away from participation in this relationship,  instead relying only on mandates placed on services by the State resulting in a limited range of access to the health care system usually in the least cost effective ways.  Capitalist mechanisms work only when the devices of fraud are effectively deterred and when individuals are incentivized to manage their access to the products of capitalism in their own economic best interests.  The success of any enterprise is a function of efficient and effective management.  Efficient and effective management is a function of incentive.  Incentive is a function of self interest.  These principles must predominate in every market for economic success and harmony to prevail.

One problem that must be overcome in the insurance industry I call “the squeeze”.  It is the practice by health insurance companies of pushing a succession of “books” of insurance.  It works this way.  Company XYZ opens a book of health insurance policies dictated by its actuarial statistics and marketing appeal.  It markets and sells this product throughout a given region permitted by local laws.  Clients who qualify by virtue of acceptable health conditions allowed by the company are encouraged to purchase such policies to protect themselves against potential health hazards such as illnesses and accidents requiring expensive health care services.  Those with pre-existing and potentially chronic health problems are excluded from these policies and must rely on special and expensive policies subsidized by the state they live in, if at all.

Here’s the catch.  As the “book” ages, along with the clients in it, more health problems begin to appear among the subscribers to that book.  Premiums rise among all clients retained in that book.  As premiums rise, clients who are still healthy seek less expensive plans, sometimes with other companies, but often with the same company which has responded to this situation by opening another “book” of insurance for which still healthy clients of the old book still qualify for.  And the process repeats with the clients in the old “books” facing the choice of unaffordably higher premiums in their old “book”, which has fewer and fewer clients sharing premium costs,  or dropping their insurance and, since they are now uninsurable, going without, i.e. going bare.  If they are lucky they have reached, or are near to, retirement age and are eligible for Medicare.  If not, they may be faced with bankruptcy and fall on whatever merciful services the state may, or may not, provide.  In other words, once responsible people who accepted the burden of purchasing self insurance against such untoward circumstances have been effectively “squeezed” out of the system.

Outline of Possible suggestions for insurance protection against the hazards of life and liabilities thereof:

The following comments are in part deliberately redundant for ultimate clarity.

  1. The key is to provide the availability of low cost basic insurance products with high deductibles that could be waived or reduced on a cost deferred basis if circumstance require.  Such a health insurance standard could provide a minimum threshold of access by using the following formula:
  2. Availability of Major medical insurance products for catastrophic injuries and illnesses with up to a $2 million dollar upper limit of  services and a range of deductible expense from $1500 to $3500 dollars.  Such policies are already available in most markets at relatively low cost.  This, along with suitable life and disability policies, would maintain the liability protection the employer enjoyed under Workman’s Compensation.
  3. Premiums shared between employer and employee at a ratio reflective of the employers Workman’s Compensation insurance costs per employee.  If the employee also carries a basic amount of life, disability and long term care insurance and the employer also shares these premium costs then the employee could be removed, by contract, from the employers Workman’s Comp coverage allowing/requiring that the savings be used to pay for his portion of the employee’s benefit or insurance premiums. It must be remembered that the purpose of Workman’s comp insurance is not to protect the employee, but to protect the employer from liability.  The same dollar could and should be used to do both. 
  4. Continuous coverage of all clients and their immediate family members regardless of age.  Once covered, always covered.
  5. Tax incentives for insurance companies for acceptance of pre-existing conditions with possible premium subsidy during build out of these regulations.
  6. Interstate marketability of all health insurance products and services to achieve maximum portability.
  7. Individual ownership of all insurance policies and the elimination of preferred group policies.  The American people are the “group”.  Premiums would vary according to personal lifestyle choices and regional cost of living indexes as well as deductibles selected.
  8. General Economic Goals: Promotion of ubiquitous ownership of insurance by all citizens by favoring employers who pay a substantial portion of the premiums for health insurance and other policies, such as life, disability, long term care and even individual unemployment policies that would serve to replace the inefficient, redundant and costly Workman’s compensation policies.  By doing so the savings from elimination of Workman’s comp policies could be applied directly to the totally portable individually owned policy premiums of the employee.  This in turn would result in more productivity on the part of the employee and his employer thus making both more competitive with their foreign counterparts and increase job security.
  9. A required health savings account that would be invested in a suitable index fund and grow over time such that the eventual earnings would supplement or even replace almost all premium payments on the part of the employer thus increasing the productive value of the older employee and job security for the same.  The employer would maintain a self-insurance fund to cover deductibles for workplace incurred injuries or illnesses.  Mandatory deductibles and/or waiting periods would discourage frivolous access to benefits since out of pocket expenses would be incurred first.
  10. NOTE: In the case of the younger employee or individual that incurred a catastrophic accident or debilitating health problem it would be more cost effective for the state to provide a program that would continue to pay the premium package for the victim than to assume total expense for his or her care upon bankruptcy.  However, an appropriate disability policy within the individuals personal health care trust should render this problem moot.  In addition, premium funding in such cases might become a proper role for remaining Workman’s Comp. duties.
  11. Such long term policies would not have age related limits and continue until death. Premiums could be required to contain a cash value account or the individuals health savings account could fund premiums into retirement as an annuity.  Any assets otherwise left in the individuals health care savings or trust would pass to the health care trusts of any and all direct survivors or descendants tax free, thus growing health care security in generations going forward.
  12. The individual could exchange any current policy contract for that of a more competitive company without loss of seniority or any such conditions at any time.
  13. These changes, when combined with a program of funding of an equity based individually owned retirement program for every child within the first year of birth, would eventually convert every citizen into an economic asset to the nation going forward instead of a liability requiring the forced servitude of others.  This or a similar approach would facilitate ownership of the economic destiny of the free individual by the individual. 
  1. (Note: the cost of deductibles might legitimately be mitigated by withholding payment of same until the health provider submits the unpaid debt to a collection service from which a lower payment may be negotiated without jeopardizing the deductible requirement.  This would depend on a providers unspoken willingness to defer up-front payment against the deductible in whole or in part and acceptance of differed and reduced compensation at a later date.  This could not, however, be a pre-arranged agreement between the patient and the provider.  The better solution would be payment of deductibles directly from a Health Savings Account or from a similar fund held by the employer and/or the employee for the purpose.  Certain economic conditions may deter collection agencies from purchasing such debt thereby rendering this approach unworkable. Workman’s Comp might be modified to cover upfront deductibles if private insurance is maintained by both parties. i.e. employer and employee. )

The efficient delivery of the above also requires cost stabilization procedures such as aggressive tort reform.  The health care environment can no longer sustain the gross expense of costly malpractice premiums that must be met by all those who are engaged in health care services and passed on to their patients. Life is not without inherent risk.  When the individual submits him or herself to the paid care of others they do so by their own authority, i.e their consent.  But the responsibility for the consequences remains with the individual giving that consent.  Only when behavior of the parties rendering such services rises to the level of gross and knowing negligence tantamount to fraud does reasonable cause for tort arise.   The Courts must cease to function as dens of legalized piracy by clever opportunists.   Eventually, with nearly everyone covered by their own full benefits package, the need to resort to litigation should subside except in the most egregious and compelling circumstances.

The management of risk  is the fundamental reason for the existence of the insurance industry in the first place.  It is a legitimate mechanism for reasonable compensation, not a mechanism for redistribution of wealth.  When we submit ourselves to treatments that are standard in the pertinent areas of endeavor we do so by our own authority.  The risk for untoward consequences remains with us.  We are therefore responsible as individuals for managing that risk rather than the presumption that some court of law will feel obligated to burden others with that liability even though compelling circumstances may be tenuous or even absent.

Many of the advances in medical and drug technology have their genesis within American based companies and research facilities.  As a consequence the use of the products of such research is highly costly domestically while available at much lower cost internationally.  Several remedies to this situation might be available.   We might consider extending the life of patent rights for effective new treatments and drugs to companies that reduce their initial domestic costs substantially and eliminate or greatly reduce income taxes earned on products and devices that are not redundant in the market and have a high proven efficacy.  Research on commonly available remedies should be studied and effectively enhanced and made available for use over the counter.  The barrier between highly advanced and expensive remedies and more commonly available agents such as aspirin and other possible compounds such as turmeric, niacin, or artemisinin, etc. should be aggressively evaluated and modifications, enhancements, and applications expanded wherever possible.

(E.G. It is ironic that artemisinin, for example, has proven to be a highly effective naturally occurring agent for curing malaria.  As such it has been available OTC over the internet for very low cost for several years.  There is some evidence that it may be useful in treating some types of cancer in animals and even humans.  However, in order to make it available to populations living in tropical malarial ridden environments a well known pharmaceutical company combined it with its older, less effective anti-malarial compound to make it patentable,  marketable and profitable.  This is similar to combining aspirin with caffeine or other ingredients, branding it, and marketing it at much higher prices than a more generic counter product even though the effectiveness is the same.)

Perhaps an intermediate level and more generic drug industry needs to be funded for research purposes to produce low cost products with evaluated efficacy and potential benefits over a broader range of maladies.  This is in keeping with the goal of empowering the individual with accurate information, inexpensive testing technology and more commonly available resources at lower costs thus enhancing his or her ability to exercise responsible authority and the choices thereof over themselves.

Note: artemisinin is a natural substance derived from the sweet wormwood plant, just as aspirin was derived from the bark of the willow tree.

Attention: Notice this in not a whine site.  This is a site for ideas. I do not suffer fools or naysayers well.  If you cannot make serious and thoughtful contribution to these ideas, begone.  I have no use for those who already “know everythingl” but seem to understand nothing.  Without understanding effective wisdom pertinent to any endeavor cannot be acquired.  I am about understanding.  Someone once said “success comes in cans, not in cant’s”.  I agree. © 7-16-2012 and prior.  Any copied work of must preserve this copyright and Trademark.   “thou shalt not steal!”

Jan 05

The Greatest Irony of Economic History

The Greatest Irony of Economic History

By James Hahn © 2012 and prior.

Much criticism is offered up from time to time about the shortfalls and negative aspects of modern capitalism.  Many would seem to abandon the free market capitalist system of generating and distributing wealth, or at least the productive fruits of the system we call capitalism, for some notion of a socialist economy where all wealth is shared equally, more or less.  It usually winds up being less because of the inherent corruption it brings with it.  Those charged with distributing the wealth equally never seem to get it quite right.  Funny that.  It seems managed economies never quite work out as intended.

But lets take a more circumspect look at the two systems taken to the extreme.  The Marxist model of a socialist economy holds that the wealth producing engines of said economy should belong to the people.  The Marxists called it the means of production.  In practice, this meant that the State should hold such industries, the means of production of goods and or services, i.e. the wealth of the nation, in trust as a surrogate for the people.  Individual ownership was to be eschewed across the board.  The people were deemed inherently corrupt or corruptible and only a select elite of true believers could be capable of managing such industry and the people in any equitable fashion.  The individual and the individual family unit were thus disenfranchised economically in favor of the common good, the collective, the communist way, the manageable masses.

Very idealistic, very noble of intent, some might say, but also very vulnerable in itself to corruption of both the hierarchy and the masses at once.  The same lesson that was learned over 70 years by the Soviets, ironically, was learned by William Bradford, Governor of the Plymouth colony, in much less time during the early 17th century while searching for a solution to the economic problems of the new colony at the Plymouth Plantation.

“For their first two years in Plymouth, the settlers conducted an experiment in communalism. It wasn’t until 1623 that they divided the land into individual plots (with each family working their assigned plot) and could look forward to the kind of bounty that many of us enjoyed yesterday.”

He found that privatizing property and eliminating the mandatory communal dispersal of collective resources with the “no work, no eat” principle derived from the Bible stimulated production and rescued the colony from starvation and ruin. (ironically, this admonishment was also used by Lenin during the early days of the communist revolution and the establishment of the communes.) This epiphany took only about two years to prove. Or so the story goes. The plots were not actually privatized until by individual usage and productivity granted ownership by acknowledgment .

Communists and socialists learn much more slowly due partially to the enabling productive advantages of technologies developed and borrowed from Western societies.  The subjects, already subdued by the authoritarian rule of the Czars and previous oligarchs, seemed more willing to submit to ongoing oppression rather than risk the heavy hand of state authorities. Those that did not, were simply re-educated or liquidated. (some by the millions) But when the State pretends to usurp responsibility for the people it must also usurp corresponding authority over them, for authority cannot be separated from responsibility.  However, such burden requires the establishment of enormous bureaucracy to manage such duty and the people cease to be, or never become, individual agents free to prosper by their own efforts.  Instead they become, or remain, only members of the masses to be managed as liabilities of the State rather than assets of the economy whose talents and efforts are naturally rewarded as their productivity provides.  (The current Chinese model seems to have discovered, for the time being,  a way to frustrate this mechanism while retaining absolute political power.  Time will tell. It may be only an illusion.)

But the rewards for diligent labor and effort in a free society are always uneven.  Some are able to benefit far greater than others.  Is there a remedy in a free economy that has the potential to include everyone in the benefits of the wealth producing engines of the economy as a whole and insure a greater distribution of the fruits of production?  Of the wealth of the Nation?  Yep. It’s called Capitalism. and it works like this.

We must think about it using the same language Marx used to describe his Communist utopia.  The fundamental cornerstone of communist economic theory required that the people should own the wealth of the nation, the means of production.  That wealth was produced by the various essential engines of production including agriculture.  The people then, should own the means of production, not the so called bourgeois capitalists of industry. Carried even further than Marx intended, all private property was to be eliminated and the needs of the people were to be provided directly by the state. The State, then, was to become the surrogate of the people and assume ownership of all production and “wealth” distribution. The consequence, however, was greatly reduced incentive and much lower productivity to be shared.  But there is another way.  And this is the great irony of economic history.

When a small Capitalist company that produces goods and or services, i.e. wealth, desires to expand its business capacity to produce more wealth and greater variety it may go to the people to raise capital for that purpose.  It may apply to the government to issue for sale on a public exchange certificates of ownership in the company or corporation.  The capital raised may then be used for such purpose.   To those of you who have never seen such a certificate of ownership i.e. a stock certificate, I will describe it for you.  (I hope to have a graphic of an actual certificate posted here in the future.)

The Stock Certificate of Public Issue and Individual Ownership. (description)

At the top of the stock certificate is the name of the company or corporation, a means of production of goods and/or services.

On one corner is the name of the individual or individuals who bought and own the certificate of ownership of the company, a means of production of goods and/or services.

On another corner is the number of equity shares of ownership represented by the certificate, a means of production of goods and/or services.

And finally, somewhere on the face of the certificate of ownership of the company, a means of production of goods and/or services is the word “common”. This means that the certificate is the commonly issued instrument of ownership of the company.  That word also means that the owners named on the corner of the stock certificate own the number of equity shares stated on the certificate in common with everyone else who owns common equity shares in that company, a means of production of goods and/or services.  This represents the communal but also individual ownership in this company of those who are entitled collectively but as individuals to share in the wealth that company produces and the value it represents and distributes.

This is the real practice of true economic communism or communalism.  This is the common ownership of the means of production by free individuals participating in a free and open economic system we call Capitalism. And indeed, this is the great irony of economic history.

Again, we Americans, as a free people, can elect voluntarily to participate, along with millions of our fellow sovereign citizens, in the ownership of the means of wealth production and distribution.  We Americans, then, are the true default proletariat practitioners of economic communism. And always have been.  Sort of takes you breath away, don’t it?

That this fundamental and efficient mechanism has not been employed ubiquitously by ALL citizens in favor of artificially contrived Socialist alternatives, such as Social Security, Medicare, State owned or public pension funds, labor unions  and other indirect substitutes for equity ownership have caused enormous burdens on taxpayers and businesses.   Many of these extra equity funding mechanisms will and are failing to accomplish their intent, leaving millions without ownership of any wealth producing assets to sustain them.  The common reason, they rely only on the transfer of earnings from the labor of others. No equity is retained.

I make no apology for the redundant language used herein.  It was purposely employed to imprint on the mind of the reader the essential elements of these ideas.  Capitalism created a mechanism by which any individual that could accumulate some savings could buy equity shares in any publicly traded corporation or an index thereof.  Americans and their governments simply have not taken full advantage of this mechanism.  The duty of the state of a free people is to enhance and facilitate the ability of the individual to exercise responsible authority over himself and protect him from any and all fraudulent aspirations of others.  This includes the facilitation by which the individual and individual family unit can and should accumulate adequate wealth, immune from the fickle vagaries of politicians, to ensure the economic destiny of himself and his family.  As such wealth is passed from generation to generation no public subsidy is required.     theBushwhacker


Examples of growth of a single deposit into an inviolate tax free retirement trust for a newborn child over 65 years:

Note: At present each child born in the United States under our existing entitlement system immediately poses an economic liability to the economy and to the state going forward.  The following proposal converts the newborn child into a economic asset to the nation as he or she grows to retirement age by pre-funding his retirement portfolio and giving the individual ownership of his or her economic destiny using assets of the means of wealth production.

Currently the average Social Security check sent out from the Treasury is about $1000.00 or about $12,000 per year per recipient.  (Since this is an approximate average we must assume that there are many recipients that receive much less than this.)  But all of them will receive it year over year as long as they live.  Here is the alternative.  See if it makes more sense to you than what we are doing now.

For an individual born today a single one time deposit of $12,000 would grow, at the historic rate of the S&P 500 of 8% to $1,785,000 by age 65.  The same deposit at 7.5% would grow to $1,320,000. Both would require no further additions of capital.   Alternatively, if the average rate of return was 8% and the individual contributed an additional $1000 per year at age 65 he or she would be worth $3,780,000 after a total contribution of $72,000 over his or her lifetime. In each case the spouse would be worth a like amount at the same age.  The surviving spouse would inherit all thus maintaining the existing standard of living.  Upon the death of the survivor their progeny would inherit, tax free, the remaining assets into their own inviolate trusts and so on for generations to come.  Their trust would be equity based on ownership of the means of wealth production, not the ownership of the labor of any other party, thus making the child, upon birth, a future economic asset to the economy and his fellow citizens in retirement, rather than an economic liability to be managed by the State.(The above calculations assume reinvestment of dividends.  It should also be noted that productive sector equities tend to increase in value along with inflation, albeit lagging somewhat.  Also, the index fund utilized, while modeled after the S&P 500 should contain both domestic and international dividend paying equities.)

But what about the cost?  At present about four(4) million children are born in the US each year.  4,000,000 X $12,000=$48,000,000,000 (billion) per year of outlay to be repaid by the recipients by any of  one or more methods. e.g. Parents or relatives could reduce or resolve this debt at birth or, as the child enters the age of majority and the productive work force or other service (military?) or the generosity of family, as a very low interest liability against his ongoing Social Security debit etc. with the goal of having completely repaid the obligation to the Treasury by the age of 30.  By this time the system should become self-funded from the return of premiums on the grant.  There are numerous permutations beneficial to the individual as well as a few restrictive regulations that need apply.  However, compare this pre-emptive method and costs to the current growing and ongoing liability we now face and must deal with for many years.

In 2009 there were more than 51 million Americans receiving $672 billion in Social Security benefits.  This number will grow substantially in the next several years.  Currently this amounts to a net ongoing debt obligation liability of nearly $700 billion per year and growing over time will exceed over one trillion dollars a year.   Pre-funding an equity based plan as just described would, over the rest of this century, eliminate this debt obligation and give hope of a decent economic destiny to those who will inherit this burden and eventually remove the people from the servitude of serfdom.  In addition, since his assets would be in equity his expenditures and taxes on retail consumption only would be a net driver of the economy.  The present system requires redundant taxation of the same dollar at several levels. The logical taxation option would be the “Fair Tax” on consumption and elimination of all hidden taxes and all Income Tax systems.

Consider: What would you rather own to protect and ensure your own economic destiny and that of your loved ones?  Would it be equity ownership in the wealth producing engines of our Nation, or the labor of the people who work for those engines of wealth production?  Which would be more compatible with a society of a free people?  The ownership of the means of production as individuals or the labor of each other? You decide!

Think long and hard before reacting with the standard “oh, they will never do that!”  Take a long look in the mirror.  That is “them” looking back at you!  Consider, if we could travel back in time 25 or 30 years and describe what we are experiencing now, who would believe us? Would they respond with “oh, that’ll never happen. They’ll never do that!” The authority is yours.  Use it wisely.

For S&P 500 Data click here>

Financial Calculator