Bacon's Rebellion

Democracy Thrives in Sunlight

AN IDEA BAD ENOUGH TO RUIN JIM BACON’S HOLIDAY

—

by

James A. Bacon
in

Peter posted a very good Labor Day statement concerning The Wealth Gap and here is another transect through that same frightening territory.

The current administration is proposing a $100 Billion tax break for Enterprise R&D.

There are four BIG problems here:

First: The obvious one that Jim Bacon will focus on: It drives the federal deficit even higher. Boomergeddon sooner!

Second: It puts more big and mid-sized firms on the dole and generates more political contributions for the existing political Clans.

Third: It will not provide jobs that the folks who Accurate correctly points out are not contributing their fair share of effort and are the ones who NEED jobs.

Fourth: R&D, if it is ‘successful,’ will drive Mass OverConsumption, not REAL conservatism – aka, conservation.

The Enterprises that are large enough to qualify to have an R&D program and have cash flow large enough that make tax breaks attractive are NOT the Enterprises needed to get Main Street to work. Picking up on TMT’s point, getting the tax break will justify even higher CEO compensation.

The US does not need Garmeen Foundation-scale micro loans but it does need Community Supported Enterprise loans. Bacon has done a nice job of pointing out that banks are using the past rounds of ‘incentives’ to improve their bottom line, not make loans.

Get citizens involved. Investments should be in activities and Enterprises that investors can see and understand, not in Gambling Venues.

There are a plethora of ideas that we have uncovered while preparing a series of talks on the application of Regional Metrics to Community prosperity. One is that the CSA idea is spreading from Agriculture to Enterprises. But that news is drowned in the Labor Day ads about discounts on goods made in China.

Time is short and getting out useful information is critical. The Administration is also proposing $50 Billion in new ‘infrastructure’ programs. There is a better way to spend some of that money:

Take the infrastructure money that would otherwise go to subsidize dysfunctional human settlement patterns – most of it outside the logical locations of The Clear Edges – and provide it to qualifying Community Colleges for education and information on Community support ideas and programs like CSE.

What is needed are investments in start-up Neighborhood, Village and Community scale Enterprises.

Want to support a sustainable economy in your Community, your SubRegion, your Region and by extension in the US?

Stop reading INC., The Wall Street Journal and The Earth is Flat. Start reading YES, and The Small Mart Revolution.

Start a study circle in your Cluster around Cheap, The High Cost of Discount Culture and The Story of Stuff. Read The Great Reset but focus on how to make Florida’s view of change benefit, not pillage, your Village and your Community.

Small is beautiful.

Happy Labor Day.

EMR

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18 responses to “AN IDEA BAD ENOUGH TO RUIN JIM BACON’S HOLIDAY”

  1. James A. Bacon Avatar
    James A. Bacon

    Great post, Ed. I saw the headline about the R&D tax breaks and had precisely the reaction you described. If we want to encourage R&D in the U.S., then we need to attend to basics — update intellectual property law, graduate more scientists and engineers from our universities, etc. — rather than rely upon tax gimmicks.

  2. Anonymous Avatar
    Anonymous

    The worst thing about these tax break gimmics is that they prolong the illusion that something (anything) will bring back the good old days.

    Economic 'growht' as it was known is DEAD.

    FER GIT ABOT IT!

    A sustainable trajectory is possible but time is running out and illusions delay the awakening.

    Observer

  3. Larry G Avatar
    Larry G

    Here's the question. If you believe that there is a very real risk of de-flation or stagflation – what would you try to do about it?

    Nothing? Just stop spending govt money anyhow?

    so that's what I'm trying to understand about folks.

    Do you disbelieve the potential threat of deflation – ergo – the stimulus money is just bad money after good…

    or do you believe that the threat of stagflation is real but you disagree with the stimulus antidote?

    which is it?

    do we have the real possibility of deflation but you still believe that a stimulus response is the wrong medicine?

    I don't know if these Obama guys have it right or not but I do believe that they believe that there are serious threats to the economy that require drastic – even deficit-causing responses to it.

    I don't think they are just garden-variety socialists showing money…

    I think if Bush or McCain was still in there that their respective economic teams would have strong pro-stimulus factions within them.

  4. Anonymous Avatar
    Anonymous

    Larry, I don't see that a national government engaging in economic stimulus with deficit spending is per se wrong. Obama was not alone in what he and the Democrats in Congress did.

    But other countries seemed to spend less and have better results. Outside saving a lot of public sector union jobs, there is not a lot to show for spending all this money and increasing the debt. And what did Congress do? Pass more save the public sector union jobs again.

    It's now a matter of competence — or lack thereof — as I see it.

    TMT

  5. Hydra Avatar
    Hydra

    "President Barack Obama would spend $50 billion on revamping highways, rails and airport runways to create jobs in the near term and improve the long-term US transportation network. "

    Whew, 150 billion, just like that.

    ======================

    TMT:

    I don't think it is clear that other countries spent less on stimulus.

    China spent more and bounced back faster. Britain spent les and bounced back slower. Japan sat on its hands and endured a decade of no growth.

  6. Hydra Avatar
    Hydra

    The problem is that we only have one economy, so there is no way to conduct an independent experiment to see if TMT is correct.

    We can argue until the sun burns out about what might have happened under a different regime and different policies. Without a control, we will never know, and we are so wrapped up in the political aspects, that we don't make a real effort to solve the economic riddle.

    Funny, we couldn't seem to find the money to work on roads when we had the money. Now we will spend money we don;t have on roads. But at least now, we can borrow the money at really low rates.

    I was in Sedona Arizona yesterday. The entire history of that place consists of building the roads that make it possible. If it had to bve done by the people that owned the property, it would never have been done and Sedona would not exist today.

    The original owners started building roads, as best they could, but eventuaqlly the Army stepped in and built roads to the Army post there, and later the county stepped in. I don't know what the road history was after the national forest wsas established.

    This is not an easy place to build roads, so why would the county make such an investment?

    Because, in the end, it was good for everyone.

  7. Hydra Avatar
    Hydra

    I mentioned the extensive bike lanes, which is a good thing.

    Except I've only seen two bikes, plus acouple of mopeds actually using the bike lanes. With 89 days so far this year over 100 degrees, that not a surprise. Locals tell me they do get some use in the winter time.

  8. Anonymous Avatar
    Anonymous

    Ray, the problem with road-building in Virginia is that we don't necessarily build the right roads. We need more input from engineers and economists. We build transportation facilities too often based on lobbyists' efforts.

    Transportation in Virginia is about enriching landowners and not moving people and goods efficiently and safely.

    TMT

  9. Anonymous Avatar
    Anonymous

    Bike lanes – we spend a lot more on them than they deliver. More lobbyists, but this time for the politically correct.

    TMT

  10. Hydra Avatar
    Hydra

    "Transportation in Virginia is about enriching landowners and not moving people and goods efficiently and safely. "

    ==============================

    You keep saying that, but I don't know how you separate the two, or how you account for the riches that flow back (or down) from landowners. Nor do I believe that riches for landowners are correctly categorized as "windfalls" when the owner(s) have had a long term investment in the land.

    This was the situaton in Culpeper. A family owned land near a former battlefield that had been zoned commercial for decades. Then, when WalMart wanted to build there it suddenly became a hot button political issue. The board of supervisors held that this was no time to try to change the rules, and if there was an issue with building there, it should have been brought up years earlier.

    Any time a road is built someone is going to benefit: that shouldn't be a reason to argue against road building. No one in their right mind would build a road over the mountain andthrough the canyon that leads to the (beautiful) site where Sedona is, except for the fact that the road created Sedona, which is arguably an economic benefit to the entire state, today.

    Likewise, Loudoun county has embarked on a rapid development plan that is not without its problems, but the end result is that (on average) everyone in Loudoun earns more money and owns more valuable property than people in neighboring Fauquier. So, yes, roadbuilding and other development in Loudoun enriched the landowners: what is the problem with that?

    Roadbuilding enriched the landowners and shopkeepers and wilderness outfitters, and tourguides, and even the park rangers in Sedona. Where is the problem?

    In order to solve this problem, you need to specify it a lot better. When, exactly, does a 200 year land commitment become a speculative windfall? And when, exactly, does a legitimate economic development become a raid on the taxpayers wallet, and a burden to future generations?

  11. Hydra Avatar
    Hydra

    The reason I started on the roads was an intro to a topic more related to this post, but for some reason every time I sent it up blogger threw an error.

    The gist of the post was that once you get off the main roads and out of the urban areas the broken human landscape illuminates an awful lot of dreams that are either bygone, failed, barely subsisting, or unfinished.

    I stopped at a roadside stand that was nowhere near anything one might call a road or a junction, with the improbable name of Jackass Junction. The proprietor sells home made beef jerky and raw honey. A hand lettered sign says "Bus parking or unloading, $10". I took the sign to be a joke, based on the looks of the place.

    I spent an hour chatting with the owner who described the bureaucratic hassles he faces to sell jerky, honey, and bottled water – his only three products.

    The authorities wanted to shut him down because the shack he used as astore had no water or electricity. He ultimately convinced the authorities that he needed no power to sell dried meat.

    He has a small farm and grows a couple of calves, chickens, and goats for his own consumption, but he buys the beef for his jerky from a restaurant supply company. He can get beef cheaper from Sam's Club, but that beef is not certified for re-sale. He operates another stand in the neighboring county, but that county requires a special permit for any truck hauling food items.

    The whole scene was surreal, a guy and his dog sitting under a mesquite tree, selling the occasional bag of jerky or jar of honey, in the middle of nowhere. He had two customers while I was there.

    According to what he said, he gets customers from throughout the metro area that come to him for his excellent products. I found that hard to believe, and anyway, the jerky was overflavored and too dry.

    Nothing much grows around here unless it is irrigated, so he told me he imports hay for his animals, at a cost of $16 a bale, which works out to more than twice what I charge for a similar quantity of hay.

    And his was a relatively successful and prosperous venture compared to what was around him: ventures like the Used Christian Book Store. Just looking around, you could see dozens of stories based on the detritus left behind or in storage for future efforts.

    But anyone who thinks small is beautiful, and is the future of American commerce, would think Jackass Junction was pure heaven.

    And here is the funny part. The owner told me he had a high electric bill from running all the dehydrators for his jerky business, but he was working on installing some energy aving devices and solar dryers – if he was awarded a government grant.

  12. Hydra Avatar
    Hydra

    Sorry about that. First it would not stick, then it gave multiple hits.

  13. Hydra Avatar
    Hydra

    "… we need to attend to basics — update intellectual property law,…."

    ===============================

    Why stop there? All our property rights need to be updated and reinforced so that people can have the rewards of their efforts and innvations guaranteed.

  14. Hydra Avatar
    Hydra

    The best R&D and the best ideas and the best marketing in the world isn;t worth much without property rights:

    "In 2002 Time named Richard Sandor a "Hero of the Planet" for founding the Chicago Climate Exchange (CCX). The CCX traded permits based on voluntary but binding commitments from firms to cutback on carbon emissions and other greenhouse gases. Without enforced limits, however, or, if you prefer, without property rights in emissions, the market is not self-sustaining and CCX is cutting workers and may be wound down."

    From Marginal Revolution.

  15. Anonymous Avatar
    Anonymous

    Re roads – I still like Del. Jim LeMunyon's HB 779. As he says on his website, the bill would "require that proposed transportation projects in the Northern Virginia construction district be evaluated quantitatively and rated according to which projects provide the 'biggest bang for buck' in terms of congestion relief. Road, rail, and bus service projects will all be included for evaluation. The ratings would be determined using objective computer simulation methods commonly used in transportation planning. The results would be made public, but the bill does not require that any project be funded in a particular order. Instead, publicizing the list would permit voters and taxpayers to evaluate whether public officials are using limited transportation dollars to fund priority projects, or for some other purpose."

    I suspect some of the biggest real estate developers would not like this bill as what brings the public the most bang for the buck might not be near any of the developers' holdings.

    TMT

  16. Hydra Avatar
    Hydra

    "…what brings the public the most bang for the buck might not be near any of the developers' holdings."

    =================================

    So, assume the models are halfway objective. That would mean they were predictable. The big developers could easily buy their own copy of the model and use it to predict where the road money might go, and then they would invest in properties in that area.

    I think the delagates idea is a good one, which probably means it will never see the light of day. But even if we used a method like that, I beleieve that critics would still sing the same song, about developers making thier profits at the expense of taxpayers.

    It's nice to think that we could ay for roads out of their porfits, but without their profits, they have no motivation to build and no one gets any roads,

  17. Groveton Avatar
    Groveton

    Google's Blogger is like President Obama … having a very rough patch. Every 30 days my Blogger invite from Jim Bacon expires as it has once again.

    Back in the days of GrovetonsVirginia I used Word Press. I notice that Jim Bacon now uses Word Press for the Boomergedon blog.

    I don't know the details of the agreement between Jim and the Thomas Jefferson Institute for Public Policy. Maybe we have to stay on the same blogger account to stay in synch with the TJ Institute. However, if we don't …. I think everybody would be happier if we switched over to Word Press.

    If not … Jim, please reinstate my Blogger invitation.

  18. E M Risse Avatar
    E M Risse

    Hope everyone had a good holiday.

    One observation on the topic of the post – EMR was on the road, sorry for the delay.

    Larry:

    Most knowledgeable citizens would say that ‘stimulus’ and ‘subsidy’ ARE a function of governance – the province of Agencies – The First Estate.

    The problem is not the existence of stimulus and subsidy per se – that is what citizens create Agencies to do – it is the allocation of the power to determine who gets what stimulus and which subsidy where the problem lies.

    The first overarching condition of governance vis a vis stimulus and subsidy must be that all stimulus and subsidy to support happy and safe citizens – aka, health safety and general welfare – must to be TRANSPARENT, not hidden AND

    The second overarching condition of governance vis a vis stimulus and subsidy must be that all stimulus and subsidy is EFFECTIVE – that is this Agency action achieves a well articulated Principle of governance that is adopted by a super majority. (TMT’s term is a good one).

    The problem with the current round of stimulus is that is will provide incentives for the wrong actions – they will make the unsustainable trajectory even more unsustainable.

    Bacon will say “first” by increasing public debt.

    EMR will say by increasing the rate of consumption and by making settlement patterns even more dysfunctional.

    The second and much more important problem is that there is NO governance structure at the levels of society where stimulus and subsidy would be the most TRANSPARENT (because they would be at smaller scale and thus closer to the citizens) AND they will not be EFFECTIVE. See threshold examples in the original post concerning scale.

    There is dangerous illusion at work confounding this issue: The One Economy Myth:

    The economy is so big and so complex citizens have to let Wall Street Enterprises and Central Banker Agencies ‘manage the economy.’

    It is not JUST human settlement patterns that are organic systems and subject to the laws of organic systems.

    As documented in “The Shape of the Future,” the economic, social and physical Spheres of human civilization AND the natural systems UPON WHICH HUMAN CIVILIZATION DEPENDS are ORGANIC systems.

    There is not ‘one economy.’ The human economy on planet Earth is made up of tens of MegaRegional economies, hundreds of nation-state economies, thousands of Regional economies, millions of SubRegional and Community economies and tens of millions of Village economies.

    The economies that matter most to citizens and their Households are Village and Community economies.

    (Because most nation-states (and states / provinces) are NOT organic components of human civilization they confound and confuse functional economics. NB: Some nation-states and a few states / provinces were at one time organic components of civilization but the Flat Earth has changed that.)

    Given the current mal-distribution of Agency, Enterprise and Institutional powers and resources at all scales, a crash at the nation-state and MegaRegional scales can wipe out lower-scaled economies but that is a fault of the current system, not proof that there is only ‘one’ economy or that bigger is better.

    EMR

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