Policy

California is the US equivalent of Europe’s Germany. Here are some of the similarities. Both are trying to replace fossil fuels with wind and solar. Both are ending their nuclear power production. Both have the highest utility cost in their respective continents. Both have strained their social safety net by allowing to many migrants Both are importing oil and natural gas Both are reducing the number of oil refineries Both are suffering from excess regulations Both are losing top industries and industrialist Both are experiencing rapid increases in debt Both are experiencing long term declines in native population Other than population, all of these changes are caused by government policy which is not changing. Just this month the Green Party achieved an election victory in Germany.

Populstion

Articles from the 1980s on world population highlighted a "population explosion" crisis, with global numbers reaching 4.4 billion in 1980 and 5 billion by 1987. Key themes included fears of environmental strain, the need for family planning in developing nations. Today the story is just the opposite in that they predict that the world is running out of people and certain countries like Japan, China and Italy are in dire straits. If indeed there is a shortage of people on the horizon, how will the world respond. First off, many experts have declared that AI will take over many jobs. Others suggest that AI will bring forth medical improvement that will allow people to work into their 80’s. A third idea is shortening the work week. This can be accomplished if productivity increases. In any event the experts had to reverse direction in just a few years.

Iran

In today’s world major changes take place almost overnight. As little as two years ago, Israel was surrounded by enemies whose stated goal was to remove Israel from the map. Syria was the pipeline of war materials to Hezbollah; Hamas and the Houthis were lobbing rockets into Irael and they were all financed by Iran. Today Assad is gone from Syria, and the others are mostly ineffective. While many of the Muslim countries restrict the rights of women, gays and Christians, Israel remains a beacon of freedom. In Israel, 21% of the population is Arab and they are citizens with all the rights accorded to citizens. Iran has been a state sponsor of terrorism since 1980 and their demise will bring peace to the Middle East and open the road to a two state solution for Palestine.

Rash actions

The change of heart in Hollywood happened over time. The mostly conservative Hollywood of the pre–WW 2 years has become a mostly liberal Hollywood. The change accelerated during the McCarthy hearings in the early 1950’s. Far right wingers motivated by their fear of communism pushed to rid Hollywood of its Commies. Many actors were black listed based on accusations and innuendo. This was followed in 1952 by the Supreme Court ruling that films were a form of free speech. Studies show that creative people are removed from reality and it allows them to empathize with others. Combine that with virtue signaling and you have a modern day progressive. This combination permits these creative people to champion minorities without thinking through the possible results of their actions. Releasing repeat criminals into society because of some past real or perceived injustice glosses over the risk of another crime. Bringing in migrants because they are escaping an intolerable situation in their homeland opens the door to molesting women and girls on their trip, leading minors into harm, making big profits for cartels who get paid to bring people to the border and reap profits from drug sales not to mention the strain on schools and healthcare facilities. Empathy must be moderated with reason before action is taken. This will minimize the possible unintended consequences.

Post Trump

Over the 250-year history of the US, the country periodically finds itself in turmoil, while it reinvents itself. The last time this happened was during FDR’s time, when the depression was followed by the Great War. During these times of crisis FDR was admired by many and feared by many. This was followed by 50 years of cold war and quiet long-term growth, which included the civil rights era and most important, the increased power handed over to the federal bureaucracy. The first step in reinventing is the violation of the norms and this can be heard in the way Trump is defined. He is not presidential meaning he is not like other presidents. He upset the republican party, the democratic party and the US relations with the rest of the world. Roosevelt also broke the norms and, in many cases, broke the laws but the country survived and grew. The current turmoil will continue for several more years and even after Trump is out of office. Some will desire to return to the world before Trump but going back will not work. Too much will have changed not the least of which is the effects of AI. The next ten years will see the greatest changes and growth in US history. Get ready young people.

Netherlands

The US income tax system has a special carveout for investors. The top income tax rate on earned income (wages) is 37% but the top tax rate on unearned income (investments) is only 20%. It has often been proposed to do away with the special break for investors and the Netherlands recent did the equivalent. They passed a law to tax the unrealized gains on investment. In the past the tax on gains would not take effect until the investment was sold. You buy stock for a dollar and year later it is worth 2 dollars but there is no tax until you sell then the gain of one dollar would be taxed at 20%. The Netherlands new law says that you will pay the tax even if you don’t sell and it will be at 37%. This in essence, removes the special tax status from the gains. If the US would adopt this then the special status for investment income would no longer exist. It would hit mostly higher income people and bring in about $10 billion per year. On the downside it would discourage investment.

National debt

Since 1950 prices have increased by 3.5% each year while government spending has increased by 7% resulting in a $37 trillion-dollar national debt. Public assistance programs including federal and state have increased by 6%. Raising taxes to reduce debt doesn’t work because when the government gets new income it spends the money on new programs. People believe that tax increases can lower the debt but polls show that people do not want their taxes raised. 70% favor taxing the rich. It is the old story, don’t tax you, don’t tax me, tax the man behind the tree. The US currently has the most progressive tax system in the world and most people want to tax the rich even more. History has shown that just increasing taxes will not reduce the debt. The answer is to reduce spending but that is very unpopular especially among people who receive public assistance. Politicians know this so it is just about impossible to stop the increase in benefits. Benefits include not only welfare (public assistance) to the poor but tax breaks for the rich, things like the home mortgage interest deduction. Once in a great while a politician will campaign on raising taxes but they do not get elected. The most famous case is the Mondale campaign against Reagan in 1984. During his 1984 presidential campaign, Democratic nominee Walter Mondale famously pledged to raise taxes to reduce the federal budget deficit, stating, Mr. Reagan will raise taxes and so will I. He won’t tell you. I just did. His plan aimed to raise $85 billion, primarily targeting corporations and wealthy Americans. Reagan won 49 states and 525 electoral votes, the most in history. He barely squeaked out a victory in his home state of MN by 3,761 votes….1,036,364 to 1,032,603. Reagan dramatically lowered taxes but he increased spending by far more and the debt ballooned from 33% of GDP to 53%. Today it is 120%.