Bill Flax: Was Jesus A Socialist, Capitalist, Or Something Else?

Spotted this excellent Forbes.com article this morning: Was Jesus A Socialist, Capitalist, Or Something Else? It's packed with gems; the two that are my favorites are quoted below.

I'm not posting this to express any endorsement or rejection of any particular theological point-of-view, which is really the point of the article. When you hear people of either left or right political persuasions leaning on scripture to make their case, it's very likely that they have no clue what it is that they cite as support and they sound silly. To wit:

"Although capitalism appears compatible with Christ’s teachings the Bible never specifically endorses free enterprise. Neither are markets anywhere condemned, only the sinful actions of those abusing others. Markets offer freedom, which amplifies character. Without room for good or ill, morality is irrelevant."

One of the secular gems, and a very clear, concise explanation of why individualism is good and why collectivism is bad, without needing any sort of false "biblical" justification (the author's apparent bias in that regard is demonstrated here, though not in a way that detracts from the main point):

"Capitalism forces the greedy to produce thereby growing the overall pie. To gain they must provide what others willingly purchase. It’s ironic that while those relentlessly pursuing materialism search for contentment in error, the rest richly benefit by the impoverishing lifestyles they pursue.

Those most responsible for increasing wealth accumulate more, they should, but in so doing lift their community’s living standards. Even America’s poor live well by any material measure.

In socialism, greed shifts from productivity into consumption. Without property rights or opportunities for profit, men quickly descend into mutually destructive envy. Our base instincts betray us. Output plummets. When we see someone slacking and still taking – we produce less. When we see others hoarding – we snatch more too.

If nothing can be acquired, advantage is only feasible by consuming beyond one’s share of public goods. As Adam Smith said of slavery, “A person who can acquire no property can have no other interest but to eat as much and to labour as little as possible.”

One criticism of the article I have (though maybe I'm operating from a false premise here, not sure) is that on page three, Mr. Flax writes, "capitalism is the best platform man has yet devised." To my mind, capitalism isn't a system, it is just what is: in the absence of any sort of institutionalized market, people trade, always with the aim of making an exchange in which each party considers themselves to have gained. A system of rules and procedures is not a prerequisite to this, quite the opposite. What was devised? Nothing, that's just how things are.

When You Light A Fire Under Someone, They Move

Following on the heels of President Obama's State of the Union address last night, I spotted this Barron's article this morning:

Barrons: Millionaires Won't Sit Still for Higher Taxes

This dovetails with the article I posted last night about U.S. citizens becoming former U.S. citizens to avoid taxes, though the methods described in the Barron's article are far less drastic. Bottom line: the minority of people being targeted here are a moving target (and they can afford to be very mobile). Unless they think the purpose of an individual human life is to support the whims of government (doubt that), then move they shall: leave New York for Florida, buy municipal bonds, offshore; the list goes on.

I also saw this U.S. News and World Report article: 3 Myths About Mitt Romney and the Rich

This one fits the theme I have going here this morning, too. This is all old hat stuff to people who are familiar with the topic, and it probably won't change the minds of the envy class about anything (it's nearly impossible to convince someone of the falsehood of their religion). The article does contain at least one gem that, old or new to you, is worth repeating again and again: wealth is not a zero sum game. Again: WEALTH IS NOT A ZERO SUM GAME.

Finally, on the SOTU address, read through this article at Zero Hedge: President Obama's State of the Union: Ten Skirted Issues

Good read, but I hope that Prins is wrong about her conclusion.

1,024 Became Former U.S. Citizens In First Half Of 2011 Over Taxation

"Rather than deal with the complexities of U.S. tax law, Americans living overseas are increasingly renouncing their citizenship in order to avoid paying their income taxes.

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their citizenship from fiscal year 2005 to FY 2010. Renunciations increased sharply within the past three years, from 146 in FY 2008 to 1,534 in FY 2010. And during the first two quarters of FY 2011 alone, 1,024 Americans ditched their citizenship."

Read more: Tax Evaders Renounce U.S. Citizenship

That headline, it's wrong. Tax evasion is not paying a tax that you are legally required to pay. Tax avoidance is doing something that legally exempts you from taxation of some sort. Renouncing your U.S. citizenship and being in the country for less than the maximum allowable time legally exempts you from a requirement to pay U.S. income taxes.

Rumple Minze: The Captain Is Right

I've been a reader of Captain Capitalism's blog for a number of years now, but it took until today to try one of his frequent recommendations: Rumple Minze.

I used to think to myself, "peppermint schnapps? Pffffft. Crap." Wrong. I bought a mini bottle as a test. Now I understand. It's good. In fact, it's "I'll buy more of this when I run out" good.

You might want to fix your Rumpie donation link though, Cappy. I'm not sure where exactly it goes now (I didn't pay much attention when the result was something along the lines of "this is an error"), but I do know that it doesn't lead to you getting more Rumpie.

Some Big Name Companies Refusing To Hire Smokers

This article contains a bit at its end about companies with names you'll recognize just flat out refusing to hire people who smoke:

Insurer Humana Inc. said this month it won't hire smokers in Arizona. And other companies, such as Macy's Inc. and Pepsico Inc., require those who smoke to pay more for their health insurance, according to a recent article in Businessweek. The story also said Union Pacific and Scotts Miracle-Gro will not hire people who smoke.

Follow this link if you would like to read the rest of the article, which is mainly about the new cancer and corpses labels that will be required to be on cigarette packs and advertisements soon. It says in the article that some tobacco companies are suing the government over this, which I'm glad to see. If the Feds want to piss away money putting up cancer and corpse posters, fine (though I'd like to see by what constitutional authority they could do even that), but compelling private companies to do so? What's next? Pictures of fat people on the sides of KFC chicken buckets?

I digress. This anti-smoker hiring trend, this seems a bit harsh to me, but I can't say I blame these companies given how insurers treat smokers. It all translates into higher costs in the end and that shows up in the premiums.

I do wonder though, would these employers react differently if smokers were in fact just using bionic cigs instead?

I certainly wouldn't mind that.

Oanda Gets Dumbed Down

I received this email from my Forex broker, Oanda, this afternoon:

Re: Important Notice on Gold and Silver Trading with OANDA.

Dear Paul E. Zimmerman,

As a result of the recently enacted Dodd–Frank Wall Street Reform and Consumer Protection Act, U.S.-based retail forex dealers such as OANDA are prohibited from offering leveraged trading in precious metals to retail clients after Friday, July 15, 2011.

As a client based in the U.S., you will not be able to trade our four precious metal pairs (XAU/USD, XAG/USD, XAU/JPY, XAG/JPY) on a leveraged basis, effective end of day July 15. Leveraged trading in other currency pairs will remain unaffected, with the same margin requirements.

You will still be able to trade precious metals, but only on a 1:1 non-leveraged basis (requiring substantially more margin). If you do not have sufficient margin to cover your open metal positions in full, you need to reduce your exposure to gold and silver pairs before end of day July 15, or risk a margin call of all your open positions when this change is implemented.

We sincerely regret any inconvenience caused by this change in legal requirements...

I sure am glad that Bawney Fwank and Chris Dudd came around to protect me from myself (and profits). I don't know what I would have done had they not forced me and tens of thousands of small retail traders to cough up ever-greater amounts of cash to use as margin for our trades. Someone had to stop this insane practice of accepting risk in pursuit of reward, especially inside of accounts like these Oanda accounts where losing trades will stop out before the account hits zero, meaning you can never lose more than you actually have and end up owing the broker. Good save, fellas!

I don't blame Oanda for this at all, of course. It's the law now, they have to comply. No one should take my comments on this to mean that I'm lumping them in with these jackass politicians.

This does make me wonder, too, if precious metals prices are going to crash when these new regulations are in full effect. Some portion of the presently high prices these metals are commanding (historically speaking) is probably in part due to leveraged trading in them. Take that away and it could cause a bit of a collapse (or a lot of one). We'll see.

Red Green: How To Kill Bees

I seem to be on a video kick lately (that's better than my bad habit of not posting though!).

I found this clip particularly funny because I work in pest control. This is definitely not the method I would use in this scenario, and I really don't think you should try this at home.



If the problem really is honey bees, I call a beekeeper to come and collect them. Most of the time my clients say "bee" generically and the pest is actually yellowjackets, hornets, paper wasps, etc., in which case I destroy the nest with an insecticide application (any stragglers that survive won't live long without the support of their hive).

Youtube: Ultimate Dog Tease

I saw this on Facebook last night. I can't honestly say why this makes me laugh when I watch it, but it does. The video was first posted to YouTube on May 1st; is has since logged over 28 million views. Apparently, I'm not alone!


Then I spotted this other video. It seems the Canadians have their own greeting beavers:


There's plenty more featured at the Talking Animals channel on YouTube. Have fun!

Ben Franklin on Welfare Policy

The Cablenator left a comment on my post from Friday about a recent WSJ article on the use of food stamps in the United States. His comment, in part, reads:

Food stamps offer little in the way of incentive to break free from the welfare system if they facilitate other areas of spending that are clearly non-necessities. Plain nutrition-cakes are entirely humane and discourage dependency.

I agree. This brought to mind something that Benjamin Franklin once said, one of my favorite quotes of his:

I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it.

7 Fallacies of Economics - Lawrence W. Reed

I found the following article this morning while cruising about the 'net during one of my habitual "coffee and internet" starts to my day. This is a good read on some common economic fallacies that frequently plague our social and political discourse. I remain convinced that absent these, a lot of the problems we presently have simply would not exist.

Here are two of my favorites, both of which Reed has written about in the article, the fallacy of collective terms and the incorrect notion that money and wealth are one an the same:

The fallacy of collective terms. Examples of collective terms are “society,” “community,” “nation,” “class,” and “us.” The important thing to remember is that they are abstractions, figments of the imagination, not living, breathing, thinking, and acting entities. The fallacy involved here is presuming that a collective is, in fact, a living, breathing, thinking, and acting entity.

The good economist recognizes that the only living, breathing, thinking, and acting entity is the individual. The source of all human action is the individual. Others may acquiesce in one’s action or even participate, but everything which occurs as a consequence can be traced to particular, identifiable individuals.

The fallacy of “money is wealth.” The mercantilists of the 1600s raised this error to the pinnacle of national policy. Always bent upon heaping up hoards of gold and silver, they made war on their neighbors and looted their treasures. If England was richer than France, it was, according to the mercantilists, because England had more precious metals in its possession, which usually meant in the king’s coffers.

It was Adam Smith, in The Wealth of Nations, who exploded this silly notion. A people are prosperous to the extent they possess goods and services, not money, Smith declared. All the money in the world—paper or metallic—will still leave one starving if goods and services are not available.

Read more: 7 Fallacies of Economics by Lawrence W. Reed

Field Capture: Female Wolf Spider

I see lots of interesting stuff in my line of work, pest control. Today was one of those days.

I arrived at a client's house and was promptly informed that there was "a really big spider on the front step." Usually when people say "really big" and "spider" in the same sentence, their varying degrees of arachnophobia increase the actual size of the creature by quite a bit in their mind's eye. I put down my spray wand and went to have a look.

Turned out to be a "pregnant" female wolf spider:


That white sack you see attached to her abdomen is specifically how you can know that this is a female wolf spider - other than such obvious clues, identifying the sex of a spider frequently requires such things as microscopes. Inside of the sack are eggs and/or hatched spiderlings. Once they have undergone their first molt, they'll emerge and climb onto their mother's back where they hitch a ride until they're big enough to fend for themselves.

Now, as to her size, to many folks she really is "really big." To people in many parts of the world, they probably wouldn't even take notice of her. In any case, I put a U.S. quarter dollar next to her to establish scale:


She'll now get to live out her days in a nice terrarium, going along with us (the pest control outfit I work for) to home shows and whatnot.

Quicken One Step Update Problems: IE 8

Recently I've noticed a sharp uptick in the number of hits my blog receives on a post I did a long time ago in regard to a problem I had with Quicken's One Step Update function. That post, Quicken 2008 One Step Update Problem: Privoxy, Vidalia, Internet Explorer Link to OL Error Code Issues, can be found here.

A comment left for me by a reader indicated that the reason I've seen a wave of hits on this post in recent weeks is that the release of Internet Explorer 8 may be to blame. I didn't install IE 8 on my machine so I haven't familiarized myself with whatever its default settings must be, but I know from experience (what I detail in that earlier post) is that IE settings can affect the functioning of other programs, particularly if you play around with LAN settings like I did.

If you're here because of a problem with Quicken and you recently installed IE 8, check your connection settings. Check out the post I wrote about my issues with IE and Tor for pointers.

This Is So Wrong

...but way too funny to pass up.


Happy Easter!

Online Privacy Through Virtual Private Networks

It's very easy for others to find out what you've been doing online. I know this makes a lot of people shrug and say, "but I'm not doing anything illegal, so who cares?" That's not a bad point, really. However, to those same folks I say, "How much do you like spam?"

Not the canned variety, of course, but the digital kind that fills up your inbox. Want a no document mortgage? You could flip those houses and grow rich, if you sign up for the super-secret e-course that hundreds of thousands just got an email about. And you'll probably want to get certain bits of yourself enlarged, because all of that money is going to get you a lot more action - never fear, you've got mail on that subject, too.

How many of you catch your "delete" key on fire each day from pressing it so much? Probably a lot.

One way to avoid the prying eyes of annoying marketers is to use a virtual private network, or vpn for short. A vpn is essentially a group of computers which grant exclusive access to each other, transmitting their encrypted data back and forth over a larger, third party network (the Internet). This allows an organization to enjoy the functionality of a private network without having to invest in actual physical connections between parties, allowing effortless scalability and reach.

In terms of internet privacy and general use, a vpn can act as an anonymous intermediary between your computer and the wider web. Your data (search requests, URLs, etc.) travel a secure, encrypted "pipeline" between you and the vpn's servers, which go out and fetch your data, then return it to you over your secure connection to the server. The site on the other end only sees the vpn server arrive, not you. This isn't a total fix for securing your identity from those annoying marketers, but it helps (I like to turn off third party cookies, too - this eliminates a lot of crap that is tucked away in banner ads and whatnot).

My Cash Flow As A Flow Chart

I use a method of cash management that I've cooked up over several years of trial and error. It was inspired by a great book I found referenced in the footnotes of a terrible Robert Kiyosaki book (that said, I haven't read a good Kiyosaki book...) called, The Richest Man in Babylon by G.S. Clason. In that book is described a method of personal financial management that is very simple: take your entire income, allocate 70% of it to "living," 20% to paying off debts, and the remaining 10% is directed to investments that are "inviolate" - you never cash them out or spend that money.

I ran with the basic system for quite a while and it worked wonders for me. My consumption came under control, my debts began to shrink and my net worth steadily increased. Little by little I began personalizing the system though. I had questions about what to do with "left over" amounts - should one keep separate ledgers for each of the three categories and roll over remaining balances in each when the next pay day rolls around? What about the investments? Clason preached reinvesting all interest and dividends and only tapping that income stream when one is too old to work - what if one doesn't live that long? Why not tap the income now while leaving the principal alone?

Little by little, these questions led to the development of my hybrid Richest Man in Babylon personal finance management method (I haven't come up with a snappy name for it yet). It's a bit difficult to explain quickly, which sometimes frustrates me when I'm trying to explain it to people. I was thinking about that today when the idea occurred to me to flow chart my method.

So, here it is:



As you can see, at the core of the method is Clason's idea, the three categories broken down by his recommended percentages. The investment and debt categories are obvious; "living" encompasses everything you do in day-to-day life - eat, go to the movies, drive your car, etc., and all of the related expenditures. Clason's prescriptions really did end at this point, however, so I added some features to tie up what I saw as loose ends. The result is something that I believe can push itself past the point of requiring inputs (new capital) and can continue to grow on its own, barring human error.

So, the flowchart explained...

It all begins on the left with wages, money from blogging, "windfalls" (found money, lottery winnings, legal settlements, etc.), which are the "inputs" into the system from outside sources (not cash generated within the system loop itself - more on that later). Initially, the system will not run without regular, steady inputs (sorry, you've still got to go to work for a while!). Together they enter the system as "income."

Income then gets divided into the three categories already mentioned.

When it comes to the living allocation, after using Clason's original method for a few months, I found myself at a point where I had cash left over from a previous pay period in this category when the next pay period rolled around. At first it seemed great that I could just roll leftover cash into the category in the new pay period, but I noticed "boom and bust" cycles developing in my spending habits - when this category swelled, I started living it up, and eventually I would find myself reduced back down to just the 70% of my latest pay period. This is fine in one sense because I had created no new debts, but I didn't like being able to have fun one week and then be "in the black" but stuck at home anyway in the next.

That's when I came up with a notion of creating my own "paychecks" out of remaining balances from this category. My idea was to shuttle remainders off to a money market account if a remaining balance existed in the living category each pay period. Then, in between normal pay periods, I would divide the balance of the money market account by 26 - the number of pay periods I have per year currently - and draw the resulting amount, which then gets sent back to the income stage of my cash flow process and allocated among the three categories. The result is that irregular periods of plenty get spread out over one year's time rather than feeding boom and bust cycles, which have been all but eliminated from my financial life by this, and my debt and investment activities get a small boost since a percentage of these money market account withdrawals is allocated to them. Additionally, if something unexpected comes up that would exceed the cash in the living category - car repair, Christmas gifts, a new electric fireplace for your living room (yeah, I want one) - this account can be raided to provide for such things. This account is, after all, a pool of money that exists because of and for deferred consumption (but don't use that as an excuse to constantly raid the account!).

In the debt category, the only question I've ever had is, "what does one do with this category when there is no debt to pay off?" One couple in Clason's book who wrote about their experiences using his method desribed reallocating their income into just living and investing, at 80% and 20% respectively. This idea makes sense given Clason's admonitions to never touch the principal nor the interest and dividends of one's investments until old age, but for the way I treat that category (more on that in a moment), it made no sense at all - it gives one an increased standard of living from wages, but what about investing more while simultaneously having more money for living and potentially working less now? (Not to mention that one's wages might be stagnant for an extended period of time, meaning no increasing standard of living in the present). Instead, my plan is to divert the full debt category percentage into investments, achieving a 70% living and 30% investment cash flow allocation split, which will slowly increase the actual amount of the living category over time, as I'll now explain.

I like investing for income. I understand and appreciate compounding, and I know the advantage and benefits of pursuing capital appreciation; as such, I have accounts where that goes on, namely my IRA account that I have through work. Outside of that though, I prefer to pursue passive income investments that pay me now. My reasoning for this is rather simple: though the long term gains of such investing may be smaller relative to longer term, non-income oriented investing such as growth investing (and this is frequently the case), I am alive now, I may not be tomorrow, and I can boost my income and standard of living now by pursuing such investments whereas the other type offers a payoff at a point in time in which I may not be here anyway. Plus, pursued regularly and systematically, passive income investing can within one's lifetime reach a level where it continues to grow on its own even as it throws off more income than what is required to sustain one's day to day living.

So that's how I arrived at the last box in the chart, my brokerage account box where 10% of all of my income goes. I draw the interest and dividends generated by my investments from my various brokerage accounts and "send" them back to the income stage of my method. Thus, 70% of my passive income supports my daily living, 20% takes care of debts (if any), and 10% goes right back into my passive income investments (or 30% if there are no debts as I mentioned before). I achieve an increasing standard of living now while still getting some benefit of compounding, which increases my income, standard of living, and available cash for investing...

(If you haven't noticed, other than expenditures from the living category, and debt servicing, if any, all cash in my method eventually flows toward my investments, thus feeding the growing snowball...)

I think you see by now where this is going. Done right, I believe my method builds an ever-increasing income and standard of living, and my own experiences prove to me that this is the case. When I say "done right," however, I mean that, as there are several things that can derail this method: overspending in the living category increases debt; increased debt can lead to a situation where 20% of one's income is not enough to cover the payments, and having debt in the first place slows the growth of one's passive income; rash investment decisions can compromise your passive income stream and/or wipe out your capital, etc. This is no "autopilot" method; there needs to be an engaged human brain involved, a willingness to delay gratification, and patience.

Quicken 2008 One Step Update Problem: Privoxy, Vidalia, Internet Explorer Link to OL Error Code Issues

I decided to post this bit about Quicken 2008 One Step Update because of a problem I managed to fix today. I figured it would be good to cast this line into cyberspace because Quicken absolutely lacks publicly available information that could lead one to the simple fix for this problem.

For a few weeks I have not been able to use One Step Update from within Quicken 2008 to download information from my various financial institutions. I kept getting various "OL" error codes - OL-221-A, OL-221-B, OL-254-B, etc. This was the case if I initiated an update from within Quicken or if I tried to download my info from a particular financial institution and import it into Quicken.

If you are experiencing this error and you use the Vidalia/Privoxy bundle with Tor and you have LAN settings set accordingly in Internet Explorer, or any LAN settings that route traffic through localhost, here is your solution: turn them off.

I don't recall exactly why I did it, but recently I shut down Vidalia (probably to speed up my computer's boot up sequence). I normally use Firefox, not IE, so when I shut down Vidalia I wasn't using IE anyway and I never thought to turn off the LAN settings within IE that are used with Vidalia/Privoxy. Without Vidalia active but with the LAN settings in place to route IE traffic through it, communication for IE dependent programs (which Quicken apparently is, along with a few of my spyware sweepers) is impossible. I think everything will still work if these LAN settings are active and Vidalia is active, but if the LAN settings for Vidalia are toggled without Vidalia being online, no dice.

I tried contacting Quicken tech support. Ultimately doing so led to the solution, but not because of any great advice they had. When it comes to this particular issue, there is basically no help available at all, and live tech support will only take you through a series of steps that do not address the problem.

What led to the solution was the tech I was chatting with directing me to go to Quicken.com from within Quicken. Quicken attempted to open an IE browser window which revealed that it was attempting to route through my inactive Vidalia client. That was the "ah ha!" moment. Before continuing to the next step the tech was expecting us to go through, I told him/her that I had solved the problem. I tried a few of my institutions, found everything working smoothly again, then explained the whole thing to the tech. That was that, I'm back in business, and Intuit (the makers of Quicken) were basically no help at all.

Judging by the Quicken user community forums, this could be a widespread problem for which Intuit is not offering much help. So if you are a frustrated Quicken user (this possibly would affect a wider range of Quicken versions than just 2008 Deluxe, the one I'm using) and if you use the Vidalia/Tor bundle, other anonymous surfing clients, or if you are behind a firewall, look there for a solution to this problem. Quicken tech support's various hoops to jump through - checking the system date and time, attempting to download into a new data file, etc. - all miss the mark by a long shot.