Christian Renaud's Blog

Death and Taxes

First and foremost, allow me to apologize for the lengthy delay since my last post.  Pursuing the 'Hollywood style of work', as I do, means that my work is sometimes very busy and sometimes the opposite.  The months of November and December were very, very busy.

The reason for tonight's late post is a series of twitters that occurred today surrounding a relatively innocuous Ars Technica posting.  The posting concerns a 'Taxpayer Advocate' that recommended to the IRS that virtual worlds should be taxed.  Other than the sheer complexity of taxing virtual economies, which has been extensively discussed elsewhere by such august minds as Professor Richard Bartle and Professor Edward Castronova, among others, the idea of taxation at a micro-transactional level caused me to fire off two quick twitters:

"Struggling to explain how much of an asshat Nina Olson must be"

(Nina Olson being the taxpayer advocate in question)

quickly followed by:

"And WTF is a 'Taxpayer Advocate'? Someone who tries to Jedi-mind-trick people that taxes are good? The Romans paid taxes 3 days a year!"

This set off a storm of direct messages and public replies asking me about taxation, mostly defending it.  Most specifically, how are we to pay for police and schools.

To begin, as most of you know, I am a libertarian and am not the least bit frightened by the thought of a complete lack of federal, state, and local government intervention and services.  I have yet to see an instance of a government program that worked as advertised and was delivered at or under budget. Most recently, the TARP program came under fire as there were no reporting guidelines on how the public funds were used.  When this proposal, that the bailout-ees would have to account for how the largess was used to the baleout-ors, their reponse was:

"Iowa Banking Superintendent Tom Gronstal said he believes it will take some time before specific tracking mechanisms are put into place."

Ok, it was a 25 question application to apply for TARP funds, which went speedy quick.  But when the people who give you the funds want to know how the funds are being spent, 'it will take some time'.  If you had a stockbroker who refused to tell you how your deposits were performing, would you wait or find a better option.  Would you have even put your money with him/her in the first place?

So, my response regarding taxes, like all government programs, is that they are perpetuating an unsustainable model.  There will never be enough programs to make the government happy, and the government never shrinks itself.  It's self-perpetuating, because the people in charge of deciding what to shrink are the people who stand to gain by expanding instead of shrinking the programs in question.  Compound this extensive human self-gratification and you have a tax rate of >50% for many of us.

'The closest thing to immortality on this earth is a federal government program'- Reagan

I live in a house that I own outright.  I still pay a five-figure property tax bill, of which the monthly payments would afford me a lovely Italian or German sports car.  In addition, I pay ~50% in income taxes, and am taxed a 6% consumption tax (sales tax) on any of the remaining proceeds I try to utilize.

"The hardest thing in the world to try to understand is the Income Tax"- Einstein

On top of this, I write hundreds of dollars in monthly checks for both of my childrens public schools, for supplies and the like.  Even given the $33 billion allowance afforded to the k12 system through the 2007 federal budget (and not including any additional funds from state or local sources), the teachers are still overworked, horribly underpaid, and begging parents like me for more money for supplies.  If you were really generous with this allowance, and gave everyone in the U.S. 19 or under an equal share, they would each walk away with nearly $400 a piece, not counting any state/local sweetners.

My advice for those that are concerned that lack of taxes would render us school-less?  Try it.  Privatize all of it.  Watch how capital efficient and quality-competitive education would become.  It works every day in industry (barring misguided government regulation of energy and finance sectors), so why not education?  Look at the quality of private higher education, like Stanford, and tell me that education is a unique snowflake that cannot be privatized without severe damage.

"In large states public education will always be mediocre, for the same reason that in large kitchens the cooking is usually bad. "- Nietsche

Public services such as Police and Fire are trickier.  The Romans, who at one point only paid taxes three days a year, individually contracted private security and fire services.  This was rife with problems as one would expect, with Julius Caesar's own cash-heavy-friend Crassus having made his fortune by instituting the first Roman fire department.  That Crassus used it to extort the flaming homeowners to sell to him at remarkable discounts is unconscionable, however does not invalidate the private security model (e.g. ADT, Westec, Secom, San Francisco "Police Specials") and other more recent success stories. 

Do you think that you know more or less than some administrator how and where your children should be educated?  Do you think that a private company with a service-level-agreement for pay/profit would be faster or slower than your local police/fire/ambulance?  I worked for an ambulance company at one point, and discovered that municipalities 'bid out' these franchises to private companies who run them at a profit.  If you can do that for ambulances, why not fire and police services as well?  Why not let the homeowners themselves decide what security/fire/ambulance companies they want a contract with, rather than some overpaid local administrator?

Net-net, taxes are a bad idea in the virtual world just as they are in the real world.

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”- Churchill

Hannibal and Scipio, the missing closure

If you have been reading this blog for long, you know that I am prey to flights of orthogonality from time to time. This is one of those times.

While driving today, I was listening to Mike Duncan's excellent podcast series 'The History of Rome'. I have read more than my fair share of ancient history, however Mike mentioned a portion from Appian's Foreign Wars that I had somehow missed in my readings that was just priceless. I have to share it.

Hannibal Barca, the 'elephants-over-the-Alps-general' and motive force behind the second Punic war between Carthage and Rome, evidently left the employ of the Carthaginians years after his defeat at Zama at the hands of Publius Cornelius Scipio and found himself in the employ of Antiochus of Syria. Antiochus was agitating to go to war with parts of Greece (an unoffical-Roman province at the time) and the Romans sent a delegation to Antiochus to dissuade him from his designs.

Evidently, one of the Romans sent was no less than Scipio, Hannibal's old adversary. The two, being not formally at war and in delicate negotiations regarding Antiochus going Northwards, actually had time to socialize a little. During one of their socializations.....

".....Scipio and Hannibal had a conversation on the subject of generalship, in the presence of a number of bystanders, and that Scipio asked Hannibal whom he considered the greatest general, to which the latter replied, "Alexander of Macedonia."

To this Scipio assented since he also yielded the first place to Alexander. Then he asked Hannibal whom he placed next, and he replied, "Pyrrhus of Epirus," because he considered boldness the first qualification of a general; "for it would not be possible," he said, "to find two kings more enterprising than these."

Scipio was rather nettled by this, but nevertheless he asked Hannibal to whom he would give the third place, expecting that at least the third would be assigned to him; but Hannibal replied, "To myself; for when I was a young man I conquered Spain and crossed the Alps with an army, the first after Hercules. I invaded Italy and struck terror into all of you, laid waste 400 of your towns, and often put your city in extreme peril, all this time receiving neither money nor reinforcements from Carthage."

As Scipio saw that he was likely to prolong his self-laudation he said, laughing, "Where would you place yourself, Hannibal, if you had not been defeated by me?" Hannibal, now perceiving his jealousy, replied, "In that case I should have put myself before Alexander." Thus Hannibal continued his self-laudation, but flattered Scipio in a delicate manner by suggesting that he had conquered one who was the superior of Alexander." - (Appian, The Foreign Wars)

It was said that the gentlemen actually were quite cordial and gentlemanly towards one another in their post-Punic days, reminiscient 2000 years later in similar gracious conversations between Gens. Ulysses Grant and Robert Lee in the last twitches of the United States Civil War.

Unfortunately, it seems this cordiality with Scipio underminded Antiochus' trust in Hannibal, and Hannibal later left for Bithynia. I wrote a blogpost two years ago about the rather amusing mischief he entered into there that led to his ultimate demise.

Sorry if this is completely non-linear, but both of these generals and gentlemen were such dominant forces in world history, and this anecdote so unknown (to me anyway) yet so dignified, I had to share it.

The Radiated Library

One of the organizations that I belong to is The Long Now Foundation, which is an eclectic group of thinkers focusing on, not surprisingly, the very long term. They have fascinating talks regularly (always on a Friday in San Francisco when I am just landing in Iowa from my week in San Jose, argh), and this month they featured a talk by Alex Wright on 'Mastering Information through the ages'. The podcast hasnt been posted at LongNow yet, but one of the excerpts from his talk was in regard to a Belgian gentleman by the name of Paul Otlet, who lived from 1868-1944. The YouTube video below is an illustration of some of his prognostications from around 1930. This reminds me of the first time I saw the work of Piet Mondrian....I enjoyed it immensely until I realized that he had painted it when my Norwegian forebears were still sleeping in trees in Northern Minnesota to avoid the wolves, at which point I enjoyed it even more.

I love this kind of foresight.

A bit of perspective

Today I was fortunate enough to visit the tomb of the third emperor of the Ming Dynasty, Zhu Di. (pictured at right)

Zhu Di was emperor in 1400 and had an inauguration ceremony for the Forbidden City, which he commissioned.  Here is an excerpt from '1421' by Gavin Menzies that sums up the disparity between East and West in 1400.

"The formal inauguration of the Forbidden City was followed by a sumptuous banquet.  Its scale and opulence emphasized China's position at the summit of the civilized world.  In comparison, Europe was backward, crude and barbaric.  Henry V's marriage to Catherine of Valois took place in London just three weeks after the inauguration of the Forbidden City.  Twenty-six thousand guests were entertained in Beijing, where they ate a ten-course banquet served on dishes of the finest porcelain; a mere six hundred guests attended Henry's nuptials and they were served stockfish (salted cod) on rounds of stale bread that acted as plates.  Catherine de Valois wore neither knickers nor stockings at her wedding; Zhu Di's favorite concubine was clad in the finest silks and her jewelry included cornelians from Persia, rubies from Sri Lanka, Indian diamonds and jade from Kotan (in Chinese Turkestan).  Her perfume contained ambergris from the Pacific, myrrh from Arabia and sandalwood from the Spice Islands.  China's army numbered one million men, armed with guns; Henry V could put five thousand men in the field, armed only with longbows, swords and pikes.  The fleet that would carry Zhu Di's guests home numbered over a hundred ships with a complement of thirty thousand men; when Henry went to war against France in June of that year, he ferried his army across the Channel in four fishing boats, carrying a hundred men on each crossing and sailing only in daylight hours."

The Chinese government has not opened his tomb yet, as they are concerned that the rapid oxidation may damage the contents of the tomb.  I, for one, am glad they are being deliberate about it.

BRIC this!

There has been a trend in recent years, in economic conversations, to refer to 'BRIC' opportunities.  BRIC, which stands for Brazil, Russia, India and China, is another way of saying 'look at all the markets that will open up for us to exploit', as well as the potential threats to US global economic hegemony.  Goldman Sachs has a  great paper on the ramifications of the rise of the BRICs here.

About a year ago, I read a very interesting book on the history of tea (being an avowed Teaist), Tea: Addiction, Exploitation, and Empire by Roy Moxham, which spend a considerable amount of time on how the English and Dutch exploited their territories in India, Sri Lanka, and China for the Opium and Tea trade.  My wife recently read me  excerpts from Empress Orchid by Anchee Min, which spent some time on how the British diplomatic efforts within China to make sure that they would continue to buy their opiates.  Not only that, but when the Chinese tried to resist the opiate trade from the British, the Brits pummeled their opposition brutally, then made the Chinese pay them reparations for their resistance.

I stumbled upon this item in my inbox this morning showing the historic percent of GDP of China and India versus the United States.  We tend to think of China and India as just now being rising powers, but history shows us otherwise.

What I want to hunt down is, during the same period, what the British and Dutch percent of GDP was.  Since the majority of profits from the legal opium trade at the time went to the East India Company, it should be reflected in the data, right?

Addition: Here is another interesting graphic on GDP stats, with countries represented as US States.  I dont know exactly how this maps to size/contribution, but it's a cute graphic nonetheless.

Out of the box thinking

There is an anecdote that I have always enjoyed from the first bio I read of Hannibal Barca, of 'Hannibal ad portas' fame.  I heard another anecdote from my amazing wife today that is actually comparable in it's audacity, however (warning, disclaimer, warning) not proper nor condoned by yours truly in any way.

Hannibal:

A small but critical Kingdom in what is now Turkey was being assailed by the Roman Navy, and the king knew that a very-aged Hannibal had retired to a small home in exile there after the sacking of Carthage in the Second Punic War.  Although he had agreed never to wage war on the Romans as terms of his exile, the King sent an emissary to Hannibal to entreat his help in defeating the Roman Navy.  After much persuasion, he reluctantly agreed to assist. 

They led him to a bluff overlooking the scene of the battle.  The Romans had large (but slow), open and high-walled ships that they were using to ram the smaller and faster local ships.  When they couldn't catch them by ramming, their archers would fire through portholes in the side of the ships.  They were quickly making short work of the King's inexperienced Navy.

Hannibal stood there silently for a number of minutes, then turned to the emissaries and said 'Get some earthenware jars, fill them with poisonous snakes, and lob them into the Roman ships.' He then turned around and went home. The emissaries promptly relayed these instructions, and shortly thereafter the tide of battle turned as the Romans, unable to easily escape their high-walled ships, died from poisonous venom.

Needless to say, the Roman generals knew that the local king would never have had the brilliant insight with the snake-grenades.  They tracked Hannibal back to his home, where he saw them coming,  promptly took poison, and died.  A tragic end to an amazing career.

CIA:

Fast forward 2200 years, and there is an anecdote in See No Evil by Robert Baer, the basis of the film Syriana.  Baer was an active intelligence operative in the Middle-East, and was relating an story he had heard at CIA training camp (aka 'The Farm').  Another example of out-of-the-box-thinking, albeit very politically incorrect:

"One of the instructors at the Farm had told us a story of how, after the 1967 Arab-Israeli war, the agency's skunk works had come up with the idea of filling a captured Soviet transport plane- Soviet markings and all- with live pigs and dropping them over Mecca, Islam's most holy city.  The idea was to light the Middle East's fuse and direct the blast toward the Soviet Union, whose influence had been growing in the area."

I wonder if being exposed to constant bloodshed catalyzes some innovation function in the brain. I am pretty sure two guys didn't think this one up in the stands of their kid's T-ball game.