Why keep tax rates low?

We know what happens when there are high tax rates for high earners. They pay less.

During the Carter Administration, the tax rates were 70% at the highest level. The top 1% paid only 18% of the income tax. Now when they pay about 30%, the top 1% pays 30% of the income tax.

If you increase the top rate to 100%, they will pay zero. Who would work if they would not gain? Of course productive people, if they work less, produce less, so we are all poorer, with fewer houses, cars, cloths, or electronic devices.

The productive workers are not slaves. We can't whip them to force them to work. We depend on them handing the products of their work over to the government willingly. That happens best at low rates.

Better than a single tax at high rates, is many taxes at low rates. At low rates, it is easier to pay the tax than to change your behavior to avoid the tax. That means willing compliance.

Democrats like high rates, apparently. They can then broker tax exemptions for the very few in return for campaign contributions. GE used tax exemptions last year to pay less than no income tax. The Democrats then use the campaign contributions to tell stupid people how lucky they are that the rich have high tax rates, not that Democratic rich ever pay those rates.

Republicans seem to prefer lower rates. They use the threat of higher tax rates promoted by the Democrats to get campaign contributions from the mass of people who can't manage a special tax exemption.

Why a recession?

http://modeledbehavior.com/2011/11/13/prices-clear-markets-ctd/

Above blog post has a good explaination of why there is a recession.

People want too much money for what they do. They don't understand that the value of money has increased. People are pulling their money from investments, and buying gold, a practically worthless commodity with high liquidity costs.

So the work that their money does leads to no production. Why do it? Because we don't trust the government's fiat money. We expect the government to respond with inflation. The government can create money from nothing, and increases in productivity can't keep up with that.

Why do people want too much money? Because they expect inflation, just as they expected inflation in the Carter Administration, and demanded a new job pay them in advance for the inflation they inspected. Inquiring minds may recall that the Phillips curve asserted that some inflation encouraged consumption, and it was thought that creating inflation would decrease unemployment. But that only worked until people caught on and expected unemployment. At that time, rather than accept a job that resulted in lower pay from inflation, they demanded higher wages to pre-empt the inflation they inspected. If they didn't get that job, they stayed unemployed or under employed for longer, and so the unemployment rate of the later Carter administration remained high.

Under Reagan's first term, the Fed chief cut money creation, and thus inflation expectations. People didn't expect so much inflationary compensation, and accepted jobs.

What is wrong with prices now? We have a Socialist as president. So soon as it became likely that he would be elected, it was expected that taxes would increase, that money would be created to pay for the government programs, and eventually inflation would be the result. People know that drill, and want to be paid up front for the money they will lose to inflation, and so don't take jobs. Company management don't see how they can raise prices for their products, and so don't increase production. Government has stopped or slowed the forclosure process to clear the housing glut. Housing prices are wrong, but not allowed to change.

Recession. Not man caused- Government caused.

Prices clear markets.

Illegal Immigration

The US has about 9% unemployment, and about 10% of the people in the US are illegal aliens. One way to reduce unemployment is to reduce the number of illegal aliens.

1. Build a fence.
2. Patrol the country within the borders to capture and remove illegal aliens.
a. Offer a cash reward to state and local police for illegal aliens who are turned over to INS/Border Patrol
b. Offer a cash reward to private citizens for information on illegal aliens.
3. Require "instant check" of citizenship for schools, hospitals, landlords, employers.
4. Increase significantly the number of legal immigrants permitted from Mexico. Legal immigrants would have to apply at the US consulates in Mexico. Evidence of illegal entry into the US would be disqualifying.

Thus illegal immigration would be reduced, unemployment would be reduced.

A good site to add to blog rolls.

http://politicalcalculations.blogspot.com/

Site for political surveys.

PQ Survey Results

Here’s your PQ: 4.1

Politicians with similar PQs are:

Michele Bachmann (R-Minn, 2007-09) PQ=-4.1
James DeMint (R-S.C. 1999-2009) PQ=5.1
Newt Gingrich (R-Ga., 1979-94) PQ=11.4
Richard Nixon (R-Calif., 1947-52) PQ=12.5

http://www.timgroseclose.com/pq-survey-results/

No surprise, except I was surprised how good taking this survey was at bringing back to mind how many seriously bad legislative and budgetary ideas have been passed in the last few years.

Sherman Tanks

"If you can be seen, you can be hit. If you can be hit, you can be killed."

That was the mantra repeatedly drilled into our heads when I was a young Second Lieutenant of Infantry.

Observe
Orient
Decide
Act

Those are the 4 steps of John Boyd's decision making process. In combat you have to Observe what is going on, Orient yourself based on what you see of your enemies' acts in terms of what you understand of his doctrine, and make an attempt to understand what he is trying to do. Then you Decide what you do to counter, and you Act. If you can go through the 4 steps faster than your enemy, you have a big advantage. If your enemy goes through the 4 steps slower, then his fires are inaccurate, his maneuver is uncoordinated. Your advantage increases with each time you cycle through the OODA loop. Eventually your enemy will lose his will to resist, and attempt to escape.

The Sherman tank had superior ability to Observe. The Sherman gunner had a gunner's periscope that gave him better ability to pick up a target, rather than the very small optics of German tanks. The US tanks also were faster to act, having the ability to train their tank cannon while moving over fairly rough ground. The M-4 main gun stabilizer was, over fairly rough ground while moving at 15 miles per hour, had about a 70% probability of hit from 300 to 1200 meters. That meant they could hit repeatedly with the coax machine gun, and had a good chance of hitting with the main gun. The turret traverse was fast, 15 seconds to traverse 360 degrees, and for a 30 degree traverse, about a second and a half. In short, the Sherman could be the first to see, the first to hit, and its advantages would continue the longer a battle lasted.

By contrast, A Panther had to identify the target, command the vehicle to come to a halt. The driver would haft to shift to neutral, and then race the engine to permit the Panther's hydraulic traverse to use high rate. The Panther gunner had to pick up the directed target through the sight, and then make small corrections with hand wheels. The Panther had a very good gun (so good it was copied by the French and mounted by the Israelis to the Sherman after the war). and began many battles from an ambush position. There was a high price paid by US tankers when they were ambushed by Panthers. But as the battle continued, the US advantages increased as the battle continued. German fire became less effective. German maneuver became increasingly disjointed from the units mission.

The Sherman had lighter frontal armor, and its crews tried to engage M-4 front to Panther flank. LtC Abrams of the 4th Armored division was sent to the 12th Armored division to coach them in how to use the Sherman to win. M-4 has a weaker gun, thinner armor, but greater reliability, narrower width, and shorter height than Panther. Its fast traverse and ability to train the gun while moving gave the M-4 crews a great advantage when attacking from flanks. So get to the enemy flanks, sneak up on them. Play cowboys and Indians. Use covered and concealed routes.

And so, when US tankers took his coaching to heart, they were able to win. Not without losses, and not without risk. but in battle after battle the US was able to take ground defended by Panther, and take ground where there were no Panthers.

German armored units were only 5% of German combat units. The M-4 with its 75mm gun had a great HE round with good effectiveness against those 95% of German combat units. Against the 5% of German armor units, the US was able to concentrate more units. That itself was a great advantage.

The Lanchester equations are differential equations which describe combat effectiveness based on relative strengths. The relative strengths provide an advantage to the larger force, how much advantage is expressed as an exponent in the equations. When armed with spears, the exponent is 1. (A 5 to 1 numerical advantage gives to a 5 to 1 combat advantage). when armed with repeating weapons, the exponent is 2 (a 5 to 1 advantage in numbers gives a 25 to 1 advantage in combat power). The ability of the M-4 to conduct long road marches and still be able to fight at the end was of great advantage.

A German officer, captured by the 2nd Armored Division asked "how many 2nd Armored Divisions do you have?" His intelligence appreciation put the 2nd Armored Division 70 miles north of the Ardennes. It was not possible for an armored unit to break contact, drive 70 miles in winter, and fight at the end of such a road march. Well it wasn't possible for the German armored divisions. That is exactly what the 2nd Armored division had done. Nor was that rare. The 10th Armored Division at Bastogne, and the the 7th Armored Division at St. Vith had made similar road marches.

What happened during the Ardennes Offensive? The German main effort was to be made by the 6th Pz Army. They were to lead with an artillery barrage, and exploit with an infantry infiltration. Then the Armored striking force was to dash through the holes thus created. The artillery barrage was of little effect. The infantry infiltration did not succeed. The armored units were able to punch through a weak point, but had little backup. without the infantry followup, without the German artillery able to move forward, and above all without German air cover, the US engineers were able to blow bridge after bridge in front and on the flanks of the German attack. US truck companies were able to move fuel depots away from the identified attacks.

The main battlegroup of the 1st SS Panzer Division was Kampfgroup Peiper. He got the job because as a battalion commander he had taken two Russian towns, and murdered all the inhabitants prior to burning the towns. His mission was the bridges over the Meuse. He never came close. He lead his 5,800 men against the US, and only 770 were able to walk back without their vehicles. Over 500 were captured and interrogated as POWs on his actions, and their testimony was instrumental in his war crime trial. Peiper's unit murdered over 350 Belgian civilians, and about 135 US soldiers.

Further south, the 5th Panzer Army was also able to penetrate, and captured two regiments of the 106th Infantry Division. The 5th Pz Army was unable to accomplish their mission and that of the 6th Pz Army too. Their losses were too heavy, their progress too slow. The 2nd US Armored division was able to move from the north, the 4th Armored division from the south.

And so the Ardennes battles were decisive. Germany lost 6 months of their increasingly anemic armor production. They would never attack again.

Government Policy

Now that the Republicans have increased the budget ceiling, there is no chance to cut back on government spending in the short term. What a revolting development.

What government departments should be cut 100%?
1. Department of Education: Department of Defense schools should be returned to Department of Defense. The rest should be cut.
2. Department of Energy: Nuclear weapons production facilities should be returned to Department of Defense. The rest should be cut.
3. Veterans Affairs should returned to Department of Defense.
4. Labor should be cut, without exception.
5. Health and Human Services should be cut without exception. To enable the market to adapt to the changes, the cuts would be scheduled to take effect over 10 years.
6. Housing and urban development should be cut without exception. To enable the market to adapt to the changes, the cuts would be scheduled to take effect over 10 years.
7. EPA should move portions that regulate government property to the Dept of the Interior. The rest is cut without exception. Laws that pretend to regulate emissions by protecting emitters from liability be repealed. Emitters would become liable for damages done by their emissions.
8. Department of Agriculture should be cut without exception. Government's regulations which permit substandard products to be sold without liability would be abolished. The death penalty for the organization is fitting for the perpetrators of the Pigford discrimination.

The government unilaterally made promises by law, they can change the terms or abolish the promise through law. If they were privatized, losing the right to coerce money, but having to provide cost competitive services or lose customers, then Social Security would offer more than a tenth of a percent of interest per year in benefit, or people would be free to make alternative arrangements. The money in the 'trust funds' would become available to productive businesses to borrow. Social Security could be cut up into many smaller funds, (A through Z) each in competition with each other, and in competition with OTHER PRIVATE ENTITIES. None of the new SSA-SSZ entities would be too big to fail.

How to Fix the Budget Crisis

The proper legislation that the Republicans can use to fix things is to not extend the debt ceiling. The US govt revenue is 2.2 trillion a year. without borrowing, spending will have to drop to that level, rather than continue on at 3.7 trillion a year.

That will mean that the unconstitutional government Ponzi pseudo-insurance programs will have to be cut. They are about 60% of the budget, and cutting them to nothing would solve the problem nicely.

Happy New Year

More on the Navier Stokes Equations:

Edward Lorenz developed a sample set of equations that use nonlinearities from the Navier Stokes equations. He has, kindly published "The Essence of Chaos" setting forth his developing understanding of the importance of that non-linearity. I recommend that book.