Coyote Blog

Via his end of year roundup, about the election:

In Washington, Democrats who believed in a strong president wielding power via executive orders instantly exchange these deeply held convictions with Republicans who until Election Day at roughly 10 p.m. Eastern time believed fervently in filibusters and limited government.

The two parties' attitudes about Russia are another great example.  Through Russian invasions of its neighbors and a variety of hacking episodes on US government infrastructure, Republicans wanted Russian blood and the Democrats were in forgive and forget mode (remember also the "reset" and Obama's poo-pooing of Romney's claim that Russia was our #1 geopolitical adversary).  But as soon as Russia is accused of stealing and releasing private emails from (non-government) Democratic Party servers that made some party officials look bad, suddenly everything changes.  Republican President-elect Trump wants to forgive and forget and Obama is suddenly, and for the first time that I can remember, putting (mild) sanctions on Russia.  And the attitudes of the rank and file have shifted on a dime:

Even more surprising, however, is the change in Republican attitudes toward Putin. He is still viewed unfavorably, but much, much less so. Putin’s current net favorability among Republican voters is now -10, meaning that Putin’s net favorability among Republican voters has improved an astonishing 56 points in the last two years.

Among Democratic voters, meanwhile, Wikileaks and Putin have remained relatively unpopular. Wikileaks’ net favorability among Democrats was -3 as of June 2013, and it has fallen today to -28. Putin’s net favorability among Democrats in July 2014 was -54, according to YouGov; it has now fallen slightly to -62.

I am more convinced than ever that our political parties are two tribes who are just going to take the opposite side of any issue from the other tribe, without any need for intellectual consistency either across positions or over time.

I was doing a radio interview and was reminded of this article I wrote in response to the famous Obama "Life of Julia" piece extolling the virtues of government in our lives.  Since I spend so much of my time in the last few years finding ways to comply with ever more onerous regulations (rather than actually improving my business or customer service) I thought I would offer a different view.  When I argue that free market proponents need to talk about taxes less and regulation more, this is what I am thinking about.

Since it has been several years since this went up at Forbes, I want to reprint it here in full:

Last week, the Obama Administration released a campaign piece about the life of Julia, showing how Julia benefited from taxpayer largess and oversight by the state at many points in her life. But the campaign piece was incomplete, and missed the part where Julia attempted to start her own business. Long before she started a web business out of her home, she tried to start a retail business.

Julia always liked the outdoors — remember that taxpayers helped her retire from productive work so she could work in a community garden. Well, as she was growing up, Julia loved to camp outdoors. For years she camped at a lovely lakefront public campground until it was forced to close — unfortunately, the government agency that ran the campground had operating costs that were so much higher than the fees charged to visitors that they couldn’t afford to keep it open any longer.

But Julia had an idea. After forming a corporation (a surprisingly easy task with lots of private companies competing to help one complete the proper legal steps), Julia approached the public parks agency about the possibility of her leasing the campground and reopening it under private management. She was surprised, though, at the tremendous opposition she encountered in the agency. Despite the fact that she was willing to adhere to operating standards and restrictions set by the public agency, she initially encountered tremendous resistance. She had assumed a parks and recreation agency would welcome the opportunity to reopen a park to the public, be she had underestimated the near universal opposition to private enterprise she found among the agency’s employees.

Eventually, though, with a lot of hard work and some help from a local TV station that rallied park users to her cause, the public agency agreed to a one-year pilot of her idea.

So the hard part was behind her, right? Probably not. In fact, Julia expected entrepreneurship to be tough. She was worried about the challenges of hiring good employees, getting financing for new equipment, and marketing her new campground. As it turned out, though, she would have little time for any of these concerns.

Before she could even think about hiring employees, she had to get a federal tax ID number, or FEIN, for her company. This identification number allows her to collect and pay her employee’s Social Security and Medicare taxes, as well as withhold and submit the Federal income tax obligations of her employees. In addition to these reports, she also learned that she had to file a separate report each quarter on her employee’s earnings in order to file and pay Federal unemployment taxes.

But her state has its own income tax, so she had to register for a separate ID number to report and pay employee state tax withholding, and then had to fill out yet another registration for another ID number to file another regular report to pay state unemployment taxes. Her state also has a public rather than private workers compensation system, so she registered for another number so she could fill out another monthly report to pay state workers compensation premiums.

And of course, since Julia intends to make retail sales, she needed to register with the state (yet another number and report) to collect and pay sales tax — though her state calls it a “privilege” tax rather than a sales tax because, as the state’s web site explains, conducting commerce is a privilege that can only be exercised with the state’s permission. She is momentarily encouraged when she finds out her state sales tax does not apply to camping, only to eventually find out this is because the state has a completely separate system (yes, another registration number and monthly report) for collecting and paying lodging taxes. So sales in her campground store will be at one tax rate on one report while campsite rentals in the same park will pay a different tax rate on a different report. Which seems overly complicated until she finds out her county also has a separate sales and lodging tax that are added to the state’s, and must be reported separately under a different registration number to the County. Thank goodness she is not in a city, or she could easily have had to file and pay three separate sales taxes and three separate lodging taxes (city, county, state). If she ever decides to rent boats on the lake, she will have to get another state registration to pay a special state boat rental tax, the percentage of which varies based on whether a boat is motorized or human-powered.

Whew. Julia thought she had finally tracked down all her tax registrations, but she was wrong. Her corporation is an S-corporation, so she files and pays her corporate income taxes on her individual return. But it turns out her state also has a franchise tax on corporations she must pay separately, based on her total revenues. In addition, it turns out that each year she must produce a complete list of all her businesses personal property, from lawn mowers to computers to radios to chairs, and submit this list to the County so she can pay property taxes on all these items. Unfortunately, in her state the property tax bill does not end there. When the public agency was running the campground, the county was not allowed to charge another government agency property taxes on the assets. The agency still owns the property — it is just leasing it to Julia so she can operate it — but the county has a mechanism called the Leasehold Excise Tax to make Julia pay the property taxes the agency doesn’t have to pay.

So twelve registration numbers and 12 monthly/quarterly/yearly reports later, surely Julia has fulfilled all her obligations to the government. Unfortunately, no, because she has not even begun to address licensing issues. To begin, the County will require that she get an occupancy permit for her campground, which must be renewed annually. This seemed surprisingly easy, until someone from the County noticed she had removed an old rotting wooden deck from the back of her store that had been a safety issue and an eyesore. It turns out she was in violation of County law because she did not get a removal permit first. She was required to get a permit retroactively, which eventually required payments to seven different County agencies and at one point required, for a reason she never understood, the collection and testing of a soil sample.

Because she will be selling packaged foods in her store (e.g. chips and pop-tarts), she also has to get a health department license and inspection. She had originally intended to keep some fresh-brewed coffee for customers in the store, but it turned out that required a higher-level health license and eight hours training in food handling. She might have been willing to pursue it, but the inspector told her that to make coffee, she would need to install a three-basin stainless steel wash-up sink plus a separate mop sink in her store, and she decided that coffee would have to wait.

Once through the general health licensing process, she then needed to obtain licenses for individual products. She wanted to sell aspirin, so she had to get a state over-the counter drug sale license. She knew that customers would want cigarettes, so she had to obtain a tobacco sales license. One day as she was setting up, a state inspector noticed she had a carton of eggs in her cooler, and notified her she needed a state license to sell eggs (as Dave Barry would say, I am not making this up). And then there was the problem of beer.

She knew that selling beer would require an alcohol license. In addition to requiring a long, tedious application, getting such a license required that she be finger-printed at the local Sheriff’s office, that she measure the distance in feet to the nearest three stores that sold alcohol and the nearest school and church, and that she attend eight hours of special alcohol sales training. The whole application process took many months — at one point her application was kicked back to her because she included a computer CAD drawing of the store when the instructions require the drawing be made by hand (I repeat, I am not making this up). She finally thought she was home-free, when she found her state requires a public hearing as a final step to determine if the market really needs another liquor retailer. At that hearing, several large, powerful local liquor businesses testified that the market was already saturated and that they already had plenty of competition, thank you very much, and her application was denied.

By the time Julia called it quits, she still had multiple applications pending. She hadn’t yet figured out how to create the stormwater runnoff management plan needed for her stormwater permit. She hadn’t been able to satisfy the state air resources board in permitting her small above-ground fuel tank. And she was still going back and forth with the state department of water resources for her drinking water sampling and testing plan.

Julia gave up her dream of working outdoors, and spent the rest of her life closeted in a room staring at a computer screen. It wasn’t what she really wanted to do, but web design does not require a license (yet) and she could avoid the hassles involved with having employees. The public never got its park back, and the campground still sits closed, the facilities falling apart from neglect. But a few months after Julia gave up, a park agency employee wrote a scathing editorial in the local paper, citing Julia’s failure as a great example of how private enterprise has failed and the need for public agencies to do more.

Julia’s experience is a composite, but is based entirely on my personal, real experiences. Every tax, registration, report, inspection, and license mentioned is a real one my company has had to obtain at some point in our expansion to new states. The only difference is in the story of the liquor license, where after my local competitors initially blocked the license I had the wherewithal to fight and eventually get it issued.

Since I blogged on the colonoscopy run-up, I supposed I am obligated to close the loop.  As Dave Barry warns, the prep is the bad part.  A day of eating lime jello combined with five or six hours of massive diarrhea.  Uncomfortable, mildly embarrassing, but quite manageable. The good part is that you know it is coming, you can prepare for it, and you know it is going to be over by the end of the day.

The procedure was a breeze.  The drugs are like a time machine.  One minute you are laying down, with the IV inserted and the next minute you are teleported 45 minutes into the future and in recovery with the whole thing done, feeling mellow.  No pain, before or afterwards.

Only two after-effects.  One, they apparently inflate your colon with air, like a bicycle tire tube, so they can see better.  Once I woke up, I passed gas in epic style, reminiscent of Peter Griffin in a Family Guy episode.  Second, I was freaking ravenous, since I hadn't eaten anything solid for 36 hours and anything at all for 12 hours.  That was solved by picking up the largest steak I could find at Whole Foods on the way home.

All is well medically, by the way.

Off for my, uh, purge and then colonoscopy.  I will leave you with this Dave Barry article to describe the process.  My dad used to say derisively that toilet humor was the cheapest laugh you could get.  But all due respect to my dad, that Dave Barry piece is the most laugh-out-loud funny article I can remember ever reading.

I already had this column at Forbes in the works, but I could not resist switching the protagonist from myself to Obama's Julia.  Every tax, license, and story here are real ones I have experienced in my business.  Here is just a small sample:

So twelve registration numbers and 12 monthly/quarterly/yearly reports later, surely Julia has fulfilled all her obligations to the government.  Unfortunately, no, because she has not even begun to address licensing issues.  To begin, the County will require that she get an occupancy permit for her campground, which must be renewed annually.  This seemed surprisingly easy, until someone from the County noticed she had removed an old rotting wooden deck from the back of her store that had been a safety issue and an eyesore.   It turns out she was in violation of County law because she did not get a removal permit first.  She was required to get a permit retroactively, which eventually required payments to seven different County agencies and at one point required, for a reason she never understood, the collection and testing of a soil sample.

Because she will be selling packaged foods in her store (e.g. chips and pop-tarts), she also has to get a health department license and inspection.  She had originally intended to keep some fresh-brewed coffee for customers in the store, but it turned out that required a higher-level health license and eight hours training in food handling.  She might have been willing to pursue it, but the inspector told her that to make coffee, she would need to install a three-basin stainless steel wash-up sink plus a separate mop sink in her store, and she decided that coffee would have to wait.

Once through the general health licensing process, she then needed to obtain licenses for individual products.  She wanted to sell aspirin, so she had to get a state over-the counter drug sale license.  She knew that customers would want cigarettes, so she had to obtain a tobacco sales license.  One day as she was setting up, a state inspector noticed she had a carton of eggs in her cooler, and notified her she needed  a state license to sell eggs  (as Dave Barry would say, I am not making this up).  And then there was the problem of beer.

This has to be the bottom headline of the day:  Joe Arpaio: Craigslist Used To Find A Dog To "Fornicate" With Woman While Husband And Friend Watched.  Sheriff Joe certainly does seem to be the last bastion against a total breakdown of civilization.  I am so relieved he is on top of this.  Gives me the willies to think he might have been chasing murderers or something and let these guys escape.

Dave Barry used to joke that whenever he would argue for a free society, the first objection people would have is "but people would all have sex with dogs." ** Now, Barry is just being funny (as usual) but as in all humor, there is a strong core of truth in his observation.  For years, when I argued that private property rights should be absolute, folks would argue "but then everyone would trash their land."  It in fact became incredibly predictable that someone would ask "how would you stop people from burying nuclear waste on their property?"

Um, why would they?  Would you bury nuclear waste in your backyard?  Well, No.  Why not?  Because it would be dangerous to my kids, and it would reduce my resale value.  OK, so why would anyone else?  No answer.

I call this the "you can't give people freedom because they will do malicious things even if it is against their own self-interest" argument, and George Will observes that it is alive and well in the Democratic Party:

Speaking ill of lenders began when homo sapiens acquired language,
hence it is unsurprising that many people who until recently were
criticizing lenders for not making money available to marginally
qualified borrowers are now caustic about lenders who complied. Clinton
is fluent in the language of liberalism, aka Victimspeak, so,
denouncing "Wall Street," she says families were "lured into risky
mortgages" and "led into bad situations" by those who knew better. So, lenders knew their loans would not be fully repaid?

Jesse Jackson speaks of "victims of aggressive mortgage brokers." But
given that foreclosure is usually a net loss for all parties to the
transaction, what explains the "aggression"? Who thought it was in
their interest to do the luring and leading that Clinton alleges? While
granting that "borrowers share responsibility," her only examples are
those "who paid extra fees to avoid documenting their income" and
"speculators who were busy buying two, three, four houses to sell for a
quick buck." Everyone else has been victimized.

This is exactly the point I made back in April, when I said that the mortgage market was about to become a capitalism Rorschach test, acting a a catalyst to reveal everyone's core beliefs and biases about free markets.  Which it certainly has with Hillary.  But we already knew where she stands, didn't we?

** You wouldn't believe the Google hits I get since I made this post. 

Dave Barry has his end of year review up:

As the campaign lumbers to the finish line, the Republicans desperately
hope that the voters will not notice that they "” once the party of
small government "” have turned into the party of war-bungling,
corruption-tolerating, pork-spewing power-lusting toads, while the
Democrats desperately hope that the voters will not notice that they
are still, basically, the Democrats.

In a really funny interview, Dave Barry lamented that the first argument he always heard against being a libertarian was that in a free society, "everyone would have sex with dogs."  Among other funny stuff, he said:

I got a few letters, mostly pretty nice. One or two
letters saying, "Here's why it wouldn't work to be a libertarian, because people
will have sex with dogs." Arguments like, "Nobody would educate the kids."
People say, "Of course you have to have public education because otherwise
nobody would send their kids to school." And you'd have to say, "Would you not
send your kids to school? Would you not educate them?" "Well, no. I would. But
all those other people would be having sex with dogs."

He was right!  Here is Sean Gleeson, via Glen Reynolds, arguing that libertarians are wrong, because they ... wait for it .. will allow people to have sex with animals.

These pro-bestial arguments are disarming to any honest and consistent libertarian. Even Instapundit Glenn Reynolds allows
that he's "got nothing against" bestiality, explaining "since I'm happy
to eat animals it's hard for me to consider people having sex with them
to be, you know, more exploitative."

That's because libertarianism is fundamentally wrong.

The worthiest argument against bestiality is not that it is "cruel," nor that it is "exploitative." It is that it is a violation of human dignity.

Bestiality
is so very wrong not only because using animals sexually is abusive,
but because such behavior is profoundly degrading and utterly
subversive to the crucial understanding that human beings are unique,
special, and of the highest moral worth in the known universe"“a concept
known as "human exceptionalism."

Within the
narrow blinders of libertarianism, laws can only be justified by appeal
to an unconsenting victim. Human dignity has no place in the
libertarian worldview, and the libertarian is left with no basis to
outlaw what he calls "victimless crimes." Prostitution, polygamy,
pornography, incest, drug abuse, bestiality, and a host of other
crimes, being consensual, must be legal, and that's that.

And
this is libertarianism's greatest failing. The libertarians happen to
come to the right conclusions on a great many issues of policy, and I
am happy to ally with them on those issues. But libertarianism is not
an adequate theory of governance.

By the way, just so all of you can think less of me, I have no problem legalizing prostitution, polygamy,
pornography, incest, drug abuse, and bestiality involving consenting adults (kids, who by definition are not legally capable of making adult decisions, are a different legal matter).  Here for example is my rant on legalizing prostitution.  Here is my favorite ode to Polygamy.  Here is my summary post on letting individuals run their own damn life.

When people come to tell you that it is OK for them to use coercion and force against you, but only to protect you from yourself, or even more nebulously to protect your "human dignity," run away screaming.  Here is a bet:  Give me absolute dictatorial powers but limited only to things I could justify as "protecting human dignity" and I would have a full-bore fascist state built by the end of the week.  Because that phrase can freaking mean anything at all.  And it is always, always, always the person who makes such statements who envisions themselves (not you our me!) defining the terms.

I am not sure what my "dignity" is or where it rests, but please, as long as I am not hurting anyone else, leave the protection of it to me alone.