Community Blog: Ralph Shnelvar

The following was published as a Letter to The Editor.

http://www.dailycamera.com/letters/ci_20004563

I have added more that was not published below.

Coming in 2013 (after the election) is a new tax 2.3% Obamacare excise tax on medical devices. That’s like a sales tax. It’s a tax on revenue, not profits.

That 2.3% tax will, according to Cook Group chairman Stephen Ferguson, raise their federal corporate taxes from 35% to 50% of profits. Let’s not forget to kick in another 4%-or-so in state income taxes. 25% of the profits that could go towards R&D vanish into the government’s maw.

This will raise, maybe, $20 billion in taxes.

Now, if you want innovation in health care, why in the world would you levy a special tax on it? For the tiny tax revenue, 0.005 of the federal budget?

I can come up with an answer: the government does not want innovation in health care.

New technologies can be expensive. For instance, MRI machines are $1 to $3 million each.

Clearly, one cannot stop innovation but one can slow it down. As Ferguson says, “”Many companies are being forced to limit investments in R&D in the U.S. and go abroad.” The U.S.’s competitive advantage in innovation will be shipped abroad. And those are GOOD jobs. But innovation will slow for a while.

So the government bean counters compute that if you slow down innovation, the cost of health care doesn’t go up even faster.

Of course, people will die because treatments weren’t brought to market. No need for death panels when the government-distorted market in health care will do it for them.

Not published in the letter is the following:

As if the effects listed above aren’t bad enough, there is a horrid effect on medical devices investment.

Consider two companies. Company X makes a computer-controlled electrical distributor for car engines. Company Y makes a computer-controlled pacemaker for human hearts.

Both companies are equally profitable before taxes. That is, they each make $10 on a sale of $100.

It really doesn’t matter what the federal corporate income tax is for these companies in terms of their relative merits but let’s say they have good accountants and have gotten the effective tax rate down from 35% to 20%.

On sales of $100, Company X gets to $8 ($10 less 20%) o distribute to investors as dividends or reinvest in R&D.

Company Y will also have $8 in the absence of the excise tax. But it’s going to be hit with an extra $2.30 (2.3% of $100) in taxes leavening Company Y with $5.80 in profits.

If you were going to invest in X or Y, which one would you invest in? Of course you’d invest in the car company rather than the medical devices company because it will spin off more cash. It;s like asking which bank you would put your money into: one which offers 1% or 2% on its CDs.

It should be easy to see that the medical devices companies will be starved for investment capital.

Which, I believe, was the intent of the drafters of the Obamamcare legislation in order to hold down the cost of health care by robbing us and our children of the innovation that these companies would create to make all of our lives better.

Why is it that policies that seem utterly obvious and in the public interest to me are … . Well, read below.

I posted this on the Camera’s Jan 28th 2012 LTE blog.

Shnelvar: Why not let the insurance companies determine who can and can’t drive a car and under what conditions?

Heinlein: I think the technical term for that is “insane.”

Why is it that the first reaction to a market solution is deemed insane?

What I was proposing — and am proposing — is that insurance companies determine who gets a license to drive.

We actually have this market system already: If you have no insurance then you can’t drive the car.

If you are under 25, you likely can’t rent a car. No law says you can’t. It’s just that the car rental companies won’t rent to a high-risk group even if they have a state-approved license.

So let’s see what really happens in our world.

Parents send their kids to a state-approved 30-hour driving school course. (Did you know that a 14.5 year-old can actually take a correspondence course to get a permit?)

So a 14.5 year old, under the law, can get a permit. This means, of course, that some 14.5 year old kid is in control of a couple of tons of steel barreling down the highway while some adult is sitting next to them. I don’t mind this. The system seems to work.

In America we accept this risk of a 14.5 year old driving and we allow a 16-year-old to get a license and drive alone. Many parts of the world think we’re nuts as the minimum age for a driver’s license is 18.

So we take this hypothetical 16-year-old and drive them to the DMV and they get a 15-minute road test after passing a written test that is, mostly, irrelevant to safe driving. We all know what’s important and it sure ain’t on that quickly-forgotten written test.

Somehow, the waving of the magic wand by the state inspector allows us to ask an insurance company to insure our kid. If the child is male, the insurance will be “outrageous” because the insurer knows that young males as a group drive more recklessly than women of the same age. Perhaps we need to pass laws on the heinous kind of sex discrimination? Hell no! I’ve got two daughters.

So I ask the Gentle Reader, what is the purpose of that state inspector? The real filter on driving are the insurance companies. Why not let them decide who drives and who doesn’t?

“In order to help young drivers keep insurance affordable, some companies offer special training courses which, upon completion, result in lower rates for young drivers.” (http://www.directautoinsurance.com/why-are-young-drivers-so-expensive-to-insure/ ). Does this have anything to do with state regulations? No.

Would an insurer insure an eleven-year-old? I don’t know. But I wonder what a jury might say if that eleven-year-old injured someone. Would we scream about age discrimination of an insurer refused to cover an eleven-year-old?

So let’s get rid of that state inspector and state driving license exam (and save the taxpayer some hassle and a few bucks in the process) and pass that responsibility to the insurers. It’s their cash on the line if the driver does something wrong.

SHARON LAROCQUE : Does anyone notice the manner in which drivers approach a traffic circle? It’s full speed ahead and never mind who is in the circle already.
…
Anyone have an answer?

Read this article about REMOVING traffic signs to make things safer: http://www.wilsonquarterly.com/article.cfm?aid=12…

I’m sorry to pull a 123 here but the quote is worth reading because of the astonishing results and conclusions:

And Monderman certainly changed the landscape in the provincial city of Drachten, with the project that, in 2001, made his name. At the town center, in a crowded four-way intersection called the Laweiplein, Monderman removed not only the traffic lights but virtually every other traffic control. Instead of a space cluttered with poles, lights, “traffic islands,” and restrictive arrows, Monderman installed a radical kind of roundabout (a “squareabout,” in his words, because it really seemed more a town square than a traditional roundabout), marked only by a raised circle of grass in the middle, several fountains, and some very discreet indicators of the direction of traffic, which were required by law.

As I watched the intricate social ballet that occurred as cars and bikes slowed to enter the circle (pedestrians were meant to cross at crosswalks placed a bit before the intersection), Monderman performed a favorite trick. He walked, backward and with eyes closed, into the Laweiplein. The traffic made its way around him. No one honked, he wasn’t struck. Instead of a binary, mechanistic process—stop, go—the movement of traffic and pedestrians in the circle felt human and organic.

A year after the change, the results of this “extreme makeover” were striking: Not only had congestion decreased in the intersection—buses spent less time waiting to get through, for example—but there were half as many accidents, even though total car traffic was up by a third. Students from a local engineering college who studied the intersection reported that both drivers and, unusually, cyclists were using signals—of the electronic or hand variety—more often. They also found, in surveys, that residents, despite the measurable increase in safety, perceived the place to be more dangerous. This was music to Monderman’s ears. If they had not felt less secure, he said, he “would have changed it immediately.”

This is libertarianism at its heart. Increase perceived risk (you’re on your own, folks) and everyone looks after their own tushie and safety goes up and traffic flows more smoothly.

Is the system perfect? Of course not. There are still accidents. But there are 50% fewer accidents according to this article (but see below) and the world is a better and more organic place.

- – -

For those of you into traffic studies, you can find the traffic study here: http://www.cyclox.org/wp-content/uploads/2010/03/…

I refer you to page 26. Truly remarkable. Accidents seem to have dropped about 90%.

There may be no libertarian utopia anywhere in this world but this example shows what can (and in my experience what usually does happen) when regulations and controls are relaxed and people are allowed to “do their own thing.”

Ralph Shnelvar
Chair
Libertarian Party of Boulder County www.lp.org www.lpcolorado.org www.lpboulder.org

SwitzTrail :
Mr. Seigal, one of the quickest and least painful ways of balancing the budget would be if we could halve the roughly %9 unemployment rate with good paying jobs. If more people were receiving a decent paycheck, there would be more money to pay taxes, people would have more money to spend on stuff, and the companies that made that stuff could pay more taxes.

My stupid suggestions for getting the economy moving.

1) Raise the minimum wage to $50/hr. People will have more money to spend if we do. If that doesn’t get more money in people’s pockets, raise the minimum wage more.

2) Raise the capital gains tax so that people don’t invest in the stock market but pay their fair share to the government.

3) Give employers $4,000 per employee for jobs they have saved or created.

4) Give everyone a check for $20,000 pad for by a tax of $25,000 on everyone.

5) Eliminate the marriage penalty by offering an adultery permit.

6) Get rid of the deduction for charities. Make up for the lost revenue to charitable organizations by forcing people to volunteer.

7) Reduce the speed limit to 15 miles per hour. Since people will now spend more time in traffic, employers will be forced to hire more people.

Cash for Clunkers didn’t work. Make all those people give back that money so that we can try it again.

9) Solyndra failed because we didn’t give them enough money. We need to give Solyndra more money so they can hire those 1100 people back.

10) Tax Fox News $1.00 per viewer stolen from the fair news outlets.

STEVEN SEIGAL: We need to live within our means, plain and simple, and we should demand the same of our politicians as they spend the public’s money.
Chuck Wright wrote:

As long as it’s legal for the government to live beyond our means, politicians of both parties will buy votes now and worry about paying for it decades later. Nothing short of a Constitutional amendment will stop the madness.

I don’t like any of the proposed balanced budget amendments. They’re too complex, gimmicky, or tie Congress’s hands too tightly. Here’s my proposed amendment to the U.S. Constitution:

“A three fourths majority vote of both Houses of Congress shall be required for any Bill that increases the debt of the United States of America.”

My proposal is short (we shouldn’t clutter up the Constitution with lengthy amendments), simple (everyone can understand it), it fits in with the rest of the Constitution, and it doesn’t bind Congresses hands too tightly.

FYI today a simple majority vote is required to increase the debt, but to make a vote filibusterer proof, effectively a 60 percent vote is required. My proposal raises the bar to 75 percent.

I’d really like to hear what people think of my proposed amendment.

Chuck Wright

http://www.lp.org/

To which I responded:

As much as I like the sentiment, I don’t like the execution, Chuck. Here are my reasons why:

(1) Debt is not defined. Thus future Congresses will spend money that is defined to be “off book”.

(2) 3/4 is likely too low. Think of Colorado’s notorious “safety clause”. Only 52 of 156 bills passed this year out of the Colorado General Assembly don’t have the clause ( http://www.state.co.us/gov_dir/leg_dir/olls/sl201… ). Thus, if it comes to spending money, “you scratch my back and I’ll scratch yours” will trump a 3/4 vote.

(3) There is no check and balance and/or no enforcement mechanism. If Congress … like Colorado’s general assembly … decides that, say, a “Certificate of Participation” is not debt … well … who is going to argue with Congress? Or they could issue non-binding “moral obligation” bonds (wink, wink, nod, nod) that they determine is not debt. ( http://www.anchorrising.com/barnacles/011041.html )

You missed a great lecture by Tom Woods on Friday night at CU Boulder. He answered a question I posed to him about the lack of explicit states rights enforcement mechanism in our constitution. The 9th and 10th amendments have no enforcement mechanism, thus they are ignored.

Unless there is a separate body (answerable to whom?) whose sole function it is to judge whether a piece of legislation raises the debt and if so can shut down the legislation, there will be no enforcement mechanism in your Amendment.

Colorado’s constitution has multiple clauses that prevent Colorado from taking on debt ( http://www.michie.com/colorado/lpext.dll?f=templa… ) . A fat lot of good it does Colorado.

Chuck, come up with a check-and-balance enforcement mechanism that will work. A 3/4 vote, in my estimation, won’t.

I urge the Gentle reader to read http://www.dailycamera.com/guestopinion/ci_14059029

A poster, btm1001, wrote:

“And since the new minimum wage means employers will hire the most skilled applicants first, teens find they are left out in the cold.”

So prior to the new minimum wage, employers hired the least skilled applicants first?

It’s the economy stupid! In ALL recessions, teenager unemployment increases faster than general population.

If anything, the increase in minimum wage helped teenagers more than the general population, as 19.9% of teenagers are in minimum wage jobs, compared to only 1.1% of the general population.

It’s amazing how the story changes when you use actual historical study, statistical analysis, and FACTS as opposed to lies.

http://www.epi.org/analysis_and_opinion/entry/tee…

I responded as follows:

I urge the Gentle Reader to look at the graph in http://www.epi.org/analysis_and_opinion/entry/tee… carefully.

In previous recessions the teen unemployment rate went down about 10%. In this recession it went down about 33%.

But that hardly tells the whole story. Teen UNemployment has been going UP because (in my opinion) of the increases in the minimum wage outside of the recession.

- – - – - –

btm100: So prior to the new minimum wage, employers hired the least skilled applicants first?

No, employers hired the best fit for their needs. That’s usually a spread of skilled and non-skilled workers.

But if you raise the minimum wage, employers will often substitute automation and skilled workers for unskilled workers.

For instance, if you are, say, a home builder and you normally hired ditch diggers at $5/hr and now the minimum wage is $10, it is very likely that you will substitute ten ditch diggers for a $15/hr heavy equipment operator and some heavy equipment.

Or the local hamburger joint will install an automated hamburger griller instead of a teenage hamburger flipper.

Here’s the bottom line:
Raising the minimum wage will screw people out of jobs. SOME people (e.g. some ditch digger who can’t be substituted out) will be better off … but many other unseen and desperate people will be out of a job and not even know why they are out of a job.

- – - –

It would be awfully nice if government could wave a wand and magically create wealth.

It can’t. It can only distort the economy by fiat and force.

Sadly, it is always able to point at successes “Hey, that $15/hour heavy equipment operator has a job!” but it does not and cannot point to the want ad for ditch diggers or entry level hamburger flippers that never happened.

Ralph Shnelvar
Chair
Libertarian Party of Boulder County

In response to a letter published in the LTE of the Camera on 2009-09-15.

PAUL DOUGAN : “And if you want to stop further Nat Turners, being harsher with the enslaved won`t help. You need to abolish slavery.”

There are two solutions to the problem. More terror or freedom.

The Roman Empire had Spartacus. He terrorized far far more than Nat Turner. The Roman Empire crushed his rebellion and further terrorized the slaves. It was a successful strategy of terror that worked for five hundred years. So, yes, being harsher does help.

Continuing to crush the slaves cost the Roman Empire dearly. Instead of having people who contributed to their society willingly, the Romans had to allocate vast resources to suppress people’s very intense desire to be free. Is it any wonder that Spartacus managed to raise an army of 100,000 slaves; many of them well-trained gladiators (as Spartacus was)?

The enslavement of all those people was part of a “Bread and Circuses” culture that celebrated violence and entitlement. Did the Roman Empire fall when Spartacus failed. No. Rome fell into disarray five hundred years later, which, in turn, led to the Dark Ages.

Our politicians have learned well from the Romans: Give them bread, wine, and circuses (i.e. free stuff) and stay in power.

Would Rome have been far better off not having slaves and a Bread and Circuses (Welfare and Entertainment) culture? This Libertarian thinks so.

This Libertarian knows in his gut that it would be so.

Ralph Shnelvar
Chair
Libertarian Party of Boulder County

Lessons not learned

PAUL DOUGAN