Wealth gap

The state of Washington is proposing a wealth tax of 10% on all income over $1 million and a one percent tax on all assets over $250 million. The amount owed on the first will be easy to calculate but not so the second. Very rich people will have to disclose all of their assets and they don’t want to do that. Some will choose to leave the state. This was tried and failed in Europe. Wealth taxes in Europe largely failed to meet expectations, leading most countries to repeal them by 2019. While intended to raise revenue and reduce inequality, these taxes generated minimal income, triggered significant capital flight, and were costly to administer’ Major countries that abolished these taxes include Austria, Denmark, Germany, France, Sweden, Finland, Iceland, Luxembourg, and the Netherlands. The easiest way to tax the rich is using the progressing income tax system. The current top tax bracket is 37% with another with an extra 3.8% on capital gains. When Reagan took office in 1981 the top tax rate was 70%. Another approach is to remove the capital gains category which is now taxed at 20%. The first step in doing that is what the Netherlands just did and that is taxing unrealized capital gains. In the US if you have a large gain in stocks you do not pay any tax until you sell but in the Netherlands you pay tax on gains each year whether you sell or not.

Climate

Virtue signaling is a new phrase and means the public expression of opinions or sentiments intended to demonstrate one’s good character or social conscience or the moral correctness of one’s position on a particular issue. This can also happen with entire nations. Starting about 20 years ago Germany announced that it would be zero carbon by 2045. That represents a good example of virtue signaling. They would do this by shutting down their coal plants and their nuclear plants and buying solar panels and wind mills from China. As so often happens, this only tells part of the story. It turns out that China is using coal and natural gas to make the solar panels and windmills. This same thing happens in California. The state has many solar fields and during the high sun times produces more energy than is needed, so the excess is sold to neighboring states. Later when the sun goes down, California buys back the energy from other states but that energy was produced using fossil fuels. Most of the world is slowly coming around to understand that wind and solar cannot replace fossil fuels but nuclear can. Germany is now increasing its coal production and considering reopening its nuclear plants. If science had prevailed instead of climate activist, all of this back and forth could have been avoided and the world would be closer to zero carbon. Yet even today the activists are hanging on to their old way of thinking and many still oppose nuclear power.

AI hires

In economics 101 they teach that the two main drivers of the economy are labor and capital. In Europe’s social democracy they lean toward labor while in the US the emphasis is on capital. Both of these systems are based on consumption and thus both require population growth. Countries around the world, other than Africa, are in the throes of population decline meaning less consumption. Since consumers are also the producers, will automation be the solution. If there are fewer people and the productivity increases because of AI, will that balance the loss of workers. Just at the time when robotics can replace workers there will be fewer workers. Over the past year I have been to two eye doctors and working at both were a dozen young people, most of whom did not go to college. They were all trained on the job to use complicated electronic machines used to provide the doctor with information. This is the future of AI hiring and will occur in many businesses.

Nuke power

France and Germany are the two biggest economies in Europe and they border one another. France gets 70% of their electric power from 57 nuclear reactors at a cost of 26 cents per kWh. Germany shut down their 17 nuclear power plants and the cost of electric power is 38 cents per kWh. In addition, France exports electric power to Germany. Germany was controlled by the green movement which pursued a policy of denuclearization. This happened in the US in the 1960’s. The Atomic Energy Commission (AEC) projected in 1967 that by 2000 there would be 1,000 nuclear plants. If the greens had not interfered the US would never have gone down the road of trying to replace fossil fuels with wind and solar and would probably be close to achieving the goal of zero carbon. With the revitalization of nuclear power now underway the goal may still be achieved but not without interference from the green people who are mostly motivated by social change not climate change.

UFO

Visitors from outer space are once again in the news, as Trump prepares to release the UFO files. While those with romantic hearts long for company in this vast universe the odds are against any nearby intelligent life. The distances are just too great unless there are some laws of physics that remain unknown to science. The nearest star is Proxima Centauri and it is 4.25 light years away or 25 trillion miles. A space ship traveling at 100,000 miles per hour would take 28,000 years to get there. When looking at the entire cosmos the odds of finding intelligent life are a mathematical certainty since there are trillions of stars but they are just too far. Man’s best attempt is Voyager 1 which is 16 billion miles from earth and it has been moving at 34,000 miles per hour for almost 50 years. The first radio signals were sent out 130 years ago so if anyone in space heard them and responded they would have gone 65 light years out and 65 light years back. There are about 2,000 stars within that distance. 2,000 out of trillions would likely not have any intelligent life to answer our signal. Radio telescopes, designed to pick up signals for all of the 65 years have heard nothing. Whatever mysterious stuff is going on, it is originating from earth. The thinking of the dreamers is, why is there so much creation if we are alone.

China WTO

When China was allowed entry to the WTO in 2000, it immediately declared itself to be a developing nation which gave it special privileges. It then proceeded to disregard some of the basic conditions. One of the most egregious actions was the dumping of cheap products on the world market. Adding to this they used currency manipulation to lower the cost of their exports. A prime example is steel production. The government would subsidize the companies which would then sell steel at below production costs. Once the competition was eliminated the price would be raised. Bethlehem Steel was one of the western countries that fell victim to this

NY City

Republicans often refer to democrats as tax and spend and there is good evidence to support this and the latest example is NY City. The city has a population of 8.4 million and a budget of $127 billion while Florida with a population of 23.3 million has a budget of $117 billion. The Mayor of NY is facing a $5 billion deficit and is recommending an increase in property tax of 9%. He is cutting the police budget from $6.4 billion to $5.4 billion and placing a hiring freeze on police. Then he is proposing the city pay for free childcare.