Tidbits Quotations
To Accompany April 30, 2014 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

When President Obama holds back approval of the Keystone pipeline, for the umpteenth time, it's bad enough that he's politically pandering to Tom Steyer, the hedge-fund billionaire and manic radical opponent of fossil fuels. If he gives in to Steyer by blocking the pipeline, Steyer gives $100 million to Democratic candidates this fall.
Larry Kudlow

Democracy is Wrong for the World and Belgium is a Test Case ---

Three American doctors were killed early Thursday morning at a hospital in Kabul, Afghanistan by an Afghan security officer ---

Thomas Piketty’s 696-page book Capital in the Twenty-First Century is No. 1 on the Amazon bestseller list. It’s a serious economics book that takes a long, hard look at the dynamics affecting the distribution of capital, the concentration of wealth, and the long-term ---

Reviews of this Piketty book ---

Review of this Piketty book ---

. . .

he bottom line: You can appreciate his economic history without buying into his forecast.  And even if you are convinced by his forecast, you don't have to buy into his normative conclusions.


Ten ways to fight inequality without Piketty's Wealth Tax --- http://qz.com/201695/ten-ways-to-fight-inequality-without-pikettys-wealth-tax/

But just as there is more than one way to skin a cat, there’s more than one way for society to push back against growing inequality. Commentators reacting to Piketty’s thesis have offered up a bevy of policy options they see as more feasible or with fewer unintended consequences.

1) Open the borders.
African migrants sit on top of a border fence covered in razor wire between Morocco and Spain's north African enclave of Melilla during their latest attempt to cross into Spanish territory, April 3, 2014. Spain has more than doubled the strength of security forces at Melilla, after about 500 people stormed its fences in the biggest border rush for years earlier this month. Immigrants from all over Africa regularly dare the razor-wire fences of Spanish enclaves Ceuta and Melilla, which are surrounded by Moroccan territory and sea. African migrants try to get into Spain. Reuters/Jesus Blasco de Avellaneda

By intent and necessity, Piketty’s book is focused on wealthy countries, but we know well that emerging markets are only becoming more important to the global economy. Economist Suresh Naidu notes that “if we’re aiming for politically hopeless ideas, open migration is as least as good as the global wealth tax in the short run, and perhaps complementary.” More migration would redress global inequality by giving more earning power to migrants from poor countries, while lowering capital’s share of income in wealthy countries. 1

2) Get rid of some intellectual property protections.
A police officer displays seized Parvon Spas capsules, a type of analgesic and anti-spasmodic, in Jammu July 28, 2009. Police said on Tuesday their men recovered 20,000 capsules from three drug peddlers during a routine search at a police check post on the outskirts of Jammu. “Contraband” drugs in India.REUTERS/Mukesh Gupta

One of the scary ideas in Piketty’s vision is the rise of a new class of rentiers who earn their money not by working but simply from the capital returns on their assets. One solution is to get rid of a major source of modern rents—patents on software and pharmaceuticals. The case against software patents has been made, even by software companies, as a way to stop wasteful patent trolling and unleash innovation. For medicines, that an Indian factory can make the same drugs far more cheaply than an American factory, with the only difference being patent protection, means there is already pressure on the current system. While drug companies say the research that leads to new cures wouldn’t be possible without restrictive patents, economists wonder if pure competition wouldn’t do the same job. 1

3) Cut taxes.
The mosaic on the the patio of the South Beach mansion formerly owned by fashion designer Gianni Versace in Miami Beach, Florida July 23, 2013. Versace spent $33 million renovating the house, which features a 54-foot mosaic pool lined with 24-karat gold, according to Fisher Auction Company. The mansion will be offered for sale at an auction on September 17, 2013. The wealth Americans are already taxing.Reuters/Gaston De Cardenas

This one is actually stolen from Piketty himself, who responds to skeptics of his wealth-tax idea by saying that the US already has a wealth tax. It varies from locality to locality, but the average American real-estate owner pays an average property tax of 1.38% of a home’s value. Piketty thinks that merely turning this into a tax on “net” and not nominal capital would help reduce inequality: +

[The United States] has a property tax which is a pretty big wealth tax. I would prefer it to be a progressive tax that was proportional and I would prefer it to be on net wealth rather than the gross value of real estate—if you take someone whose house is $500,000 and they have a mortgage liability of $490,000, his net wealth is $10,000, I would propose he would pay no property tax, no wealth tax. Right now he is paying as much property tax as someone with no mortgage who inherited his apartment 20 years ago. My premise is not to tax to destroy the wealth of the wealthy, it’s to increase the wealth of the bottom and the middle class. +

Of course, the missing tax revenue would have to be made up for somehow—higher taxes, less public spending, more public borrowing—elsewhere. 

4) Crack down on offshore tax havens.
The island of Grand Cayman, a British dependency that covers 76 square miles (197 square kilometers) in the northwest Caribbean Sea, is visible in this near-vertical photograph. Geologically similar to The Bahamas, Grand Cayman is a low-lying, limestone island located on top of a submarine ridge. The city of George Town, the capital and chief port of the Cayman Islands, can be seen at the southwest end of the island. Grand Cayman’s 7-mile beach can be seen on the western side of the island. All 76 square miles of Grand Cayman, one of the largest sources of foreign investment in the US.NASA

Many objections to Piketty’s wealth tax include a reference to how hard it would be to tax wealth, because wealth is so very good at hiding in shell companies and secretive offshore trusts. But that’s a problem already: Perhaps $34 to $109 billion in US-owned financial assets are hidden from the tax man in Caribbean tax havens, just to avoid income on capital gains, a recent study found. The good news from that same study is that a push for tax information exchanges is cutting down on assets hidden overseas. But there’s lots more to be done on that front, whether it’s demanding public registration of the true owners of shell companies, or getting more countries to sign tax information exchange agreements. +

5) Open up the city.
Oracle Team USA sails near the city skyline against Emirates Team New Zealand during Race 14 of the 34th America's Cup yacht sailing race in San Francisco, California September 22, 2013. Nothing says inequality like a rich man’s yacht in front of a city where no one can afford to live.Reuters/Robert Galbraith

One wealthy countries manifest inequality is the high cost of living in large cities. This cost is partly a result of high demand to live there, but is also the more artificial product of zoning decisions, building codes and nostalgia that prevent the optimal utilization of space. Changing building codes to allow more development of affordable housing, taller buildings and fewer subsidies for cars would help alleviate inequality.

6) Wait for China’s labor costs to catch up.
An employee yawns as he works at a garment factory in Humen township, Guangdong province November 24, 2013. Activity in China's vast factory sector grew at a milder pace in November as new export orders shrank, a preliminary survey showed on Thursday, bolstering expectations the economy could lose some of its vigour in the fourth quarter as Beijing shifts its focus to structural reform. Picture taken November 24, 2013. Workers of the world, unite.Reuters/Stringer

One big reason wages have stagnated in the American middle class—thus widening the gap between them and the rich—is competition with cheaper labor in China and other countries. It has pushed many manufacturing jobs offshore, or forced US factories to automate faster than they might have otherwise. But wages won’t be low in China forever: Labor costs are already rising there, as low-wage jobs move to other places. It’s not inevitable, but some economists think that the trend could continue, as so-called “catch-up” growth spreads across the world—Africa, perhaps, is next. This growth lifts living standards and makes workers demand raises. On a globe without an obvious source of cheap labor, wages have to rise. Smarter trade rules might help accelerate this process.

7) Unleash antitrust.
Carlos Brito, Chief Executive of Anheuser-Busch InBev, poses during a news conference on the company's 2012 results in Leuven February 27, 2013. Anheuser-Busch InBev, the world's biggest beer maker, forecast a weak start to the year in the United States and Brazil after slightly lower earnings than expected in the final months of 2012. Carlos Brito’s InBev empire—which controls 25% of the world’s beer production—is often dinged for monopolistic practices.Reuters/Francois Lenoir

Fewer monopolies, lower prices, less inequality—it’s all so simple, right? Economist Dean Baker specifically cites the telecom industry and its push toward consolidation, but there are good arguments that sectors from beer to tech to agriculture have consolidated in ways, sometimes subtle, that hamper economic growth and competition. Anti-trust rules, aggressively enforced, could improve life for customers, and by forcing companies to compete rather than just sit on their monopolistic laurels, would also lower profit margins for shareholders—tough luck, but good for equality. +

8) Punish the financial sector.
JPMorgan Chase Chairman and CEO Jamie Dimon speaks during a discussion on "Closing the Workforce Skills Gap", at the Aspen Institute in Washington December 12, 2013. Don’t even try it.Reuters/Mike Theiler

A favorite among populists of all stripes. Pruning the banks isn’t easy, as the mixed experience of reformers after the worst financial crisis in most of our lifetimes showed. But the financial sector’s growing share of income in wealthy economies still has people on the left and right supporting policy ideas—from financial transaction taxes, to higher capital requirements, to limits on bank sizes—that would make the sector less profitable. That means less money going to annual trading bonuses, and presumably more money invested in the real economy.

9) Create more sovereign-wealth funds.
Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area where Tidelands Oil Production Company, which is owned by Occidental Petroleum Corporation (Oxy), operates near Long Beach, California July 30, 2013. Occidental Petroleum posted a smaller-than-expected quarterly profit on Tuesday, hurt by lower oil prices in the Middle East and North Africa, where the fourth-largest U.S. oil company is considering an exit. Out of the ground and into the national investment account.Reuters/David McNew

The key reason inequality tends to increase, Piketty says, is that investment returns (which go to the rich) will always exceed economic growth. But what if we give the public a share of those investment returns? One proposal from economist Tyler Cowen is the creation of government-run investment funds. These are already a common tool in countries with massive natural-resource wealth; they serve to diversify the national income stream and make it more sustainable. The US—which is no slouch on the natural resources front itself—could conceivably create a sovereign-wealth fund and share the dividends.

10) Massive social upheaval and bloody conflict.
In this April 20, 1936 file photo, armed troops march past German Chancellor Adolf Hitler during a parade in Berlin to celebrate his birthday. As the Nazis increasingly targeted Jews and others they considered enemies, they moved in 1938 to loosen gun statutes for the loyal majority, said Bernard Harcourt, a University of Chicago professor of law and political science who has studied gun regulations under Hitler. The 1938 law is best known for barring Jews from owning weapons, after which the Nazis confiscated guns from Jewish homes. But Harcourt points out that Hitler's gun law otherwise completely deregulated acquisition of rifles, long guns and ammunition. It exempted many groups from requiring permits. The law lowered the age for legal gun ownership from 20 to 18. And it extended the validity of gun permits from one year to three years. Bad news.AP Photo

Not exactly ideal, but one of the most convincing empirical findings from Piketty’s research is that World War I, the Russian revolution and World War II were the great levelers of the 20th century, wiping out more than a century of capital accumulation and creating the conditions for more equitable growth in their wake. Continent-wide warfare may not be a pleasant prospect, but it’s probably a good deal easier to bring about than most of the solutions listed above. Why, there’s a handy little annexation going on in central Europe right about now.

Jensen Comment
Not mentioned is seriously curtailing the underground economy that wealthy employers as well as struggling employers use to reduce wages and encourage tax avoidance of workers. USA Today estimated this to be a $2 trillion underground economy in the USA.

"Spain’s underground economy employs a million people and is worth 20% of its GDP," by Roberto A. Ferdman, Quartz, July 16, 2013 ---

Spain’s illicit economy—all that is unaccounted for because it’s illegal or unreported—is worth an unseemly 20% of the country’s GDP, according to a new report by Spain’s Foundation for Financial Studies (FEF). That’s higher than every other country in the European Union except Italy, with 21%.

Illicit activity, while technically illegal, doesn’t necessarily mean drug-related or violent. Much of Spain’s unreported business is due to labor law and tax circumvention, which varies widely from industry to industry. Some sectors are relatively clean, like Spain’s financial industry, where the rate of illegal activity is believed to hover below 10%; others are ridden with messy, unreported business, like the country’s construction industry—Spain’s most flagrant offender—whose rate clocks in at 35%.

The effects of such a massive, underground economy are substantial—for example, more than a million Spaniards are believed to be employed by the country’s unreported economy, and thus, unemployed by the country’s official economy. Spain’s unemployment has ballooned since the onset of the euro zone crisis, but many of those reportedly unemployed may simply be earning their money informally. As much as $26 billion dollars in taxes are also being withheld from tax authorities—money that the government especially needs now amidst an acute financial squeeze. But what’s perhaps most detrimental about the country’s enormous illicit economy is its ability to skew Spain’s economic data, president of FEF Juan Carlos Ureta explained.

Spain’s unemployment rate, which hovers just below 30%, is an eyesore, no doubt. And the country’s inability to forecast and control its deficits has forced it to create an independent fiscal authority to monitor the government’s finances. But the upside is the country can improve its economic outlook by merely coercing some of its illicit economy back into the public sphere.

Among the report’s many suggestions for chipping away at the country’s informal economy is lowering Spain’s high personal and company tax rates, which discourage official activity. It also advocates the creation of “mini-jobs,” which employ workers for up to 40 hours a week for up to $520 a month and are meant to incentivize those working in Spain’s underground economy to gradually shift into its official one.

While neither of the measures will fix Spain’s wounded economy entirely, one thing is certain: an illicit economy worth 20% of the country’s GDP isn’t just unhealthy—it’s unsustainable.

Bob Jensen's threads on the underground economy in the USA ---

Hi Paul,

The whole key is how much the higher earning people pay toward the Federal and State governmental budgets most of which are now social welfare programs of one type or another, including Social Security, Medicare, and other social programs that now comprise 70%-80% of the federal budget and nearly all of the state budgets.

Nearly half (48%) of the taxpayers below the median level of income pay zero in federal and state income taxes. Technically only 90% of the that 48% are below the median according to Bloomberg. A small percentage of poor people end up paying a small amount of income tax such as students who are claimed ad dependents on the tax returns of their parents --- http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
The poor do pay other taxes such as sales taxes, payroll taxes, and lower levels of property taxes on homes they own or rent, although the really poor have Title 8 and other housing subsidies.

You, Paul Williams, stated the following:

"And by what logic is it punishing the rich toexpect them to contribute something to the welfare of the society that made them rich."

Have you seen the proportion of the federal and state income taxes paid by the "rich? It's nearly 40% give or take depending upon how closely state income taxes are pegged to federal taxes paid.

What you despise is that the top 1% of the the annual income taxpayers in the USA receive about 24% of the reported income ---
Actually it's considerably less than the 24% if you factor in the $2 trillion dollars of unreported income in the underground economy, although estimates of the unreported incomes are subject to a wide margin of error. My very rough estimate reduces the top 1% of the share of the total USA income to less than 10% down from the reported 24% by that ignores the huge underground economy.

Be that as it may, what are the top 1% high income people contributing to government in the way of taxes.

Here's a quotation from the tax foundation:

“Incomes have stagnated for low-income households in recent years, but this is true for high-income households as well,” said Tax Foundation chief economist William McBride. “In inflation-adjusted terms, the income thresholds for all groups – including the top 50 percent, the top 1 percent, and the top 0.1 percent – are lower than they were in 2001.”

In 2010, the top 1 percent of tax returns included 18.87 percent of all adjusted gross income and 37.38 percent of all federal individual income taxes paid. The top 5 percent earned 33.78 percent of income and paid 59.07 percent of taxes, and the top 10 percent earned 45.17 percent of income and paid 70.62 percent of taxes.

The Tax Foundation’s analysis is based on new individual income tax data from the Internal Revenue Service, reporting on calendar year 2010.  This year the IRS changed its methodology to exclude dependent filers and include returns with negative adjusted gross income. For comparison’s sake, the new data is presented as far back as the IRS provides, to 2001, with the discontinuity noted for prior years.

Tax Foundation Fiscal Fact No. 343, “Summary of Latest Federal Individual Income Tax Data,” by chief economist William McBride is available here.


Jensen Comment
In my personal opinion tax reforms are needed, the most important reform being that the Alternative Minimum Tax should kick in for virtually all taxpayers paying little or nothing and especially for high income people paying little or nothing. Personally my own income tax in retirement is too low. I pay about 10% of my income to to the federal government, and this is too low for what I get living in this fantastic nation.

I repeat that I would like an AMT for virtually all levels of taxpayers.

And yes I would like to see marginal tax rates increased for taxpayers having an AGI of more than $350,000 with even higher rates for taxpayers earning more than $500,000. I hesitate to say what those rates should be until the joint interactions of tax avoidance loopholes are balanced with increased rates. Eliminating some loopholes would be a disaster to the economy. For example, eliminating tax exemptions for bonds of school districts, cities, towns, and villages may be disastrous in terms of their cost of capital (because these are usually risky bonds). Eliminating the home mortgage deduction would be a disaster to a sick real estate market. Charities claim they will die without tax preferences.

Since I do not favor elimination of some of the tax preferences, I vote for a significant increase in tax rates at all levels of income. Perhaps the marginal rate should be close to 50% for high income tax payers who get the most benefit from the tax preferences.

I think executive compensation is an outrageous rip off of business firms ---
This is not so much stealing from the government as it is stealing from investors in business firms.

The main problem is that Boards of Directors who approve the outrageous executive compensations are appointed by the those very executives. How dumb can it get?

It can get dumber. Not only are those executives overpaid for most of their successes they are overwhelmingly overpaid for their failures.

I would make golden parachutes illegal and cap executive pay on the basis of key measures of performance. Personally I don't think any executive should earn more than $5 million per year, and most executives should be earning less than $1 million per year.

Bob Jensen

"Partners in Ethanol Crime The corn-fuel mandate has been an invitation to mass fraud," The Wall Street Journal, April 25, 2014 ---

Ethanol is losing political steam on the left and right, but the fuel retains a powerful patron in the Environmental Protection Agency. On Wednesday the EPA retroactively reduced the 2013 gasoline-blending mandate for cellulosic ethanol to 810,185 gallons from six million. If that sounds like a big cut, 810,185 gallons is precisely every last drop the industry managed to produce. The 2014 mandate is nonetheless pegged at a preposterous 17 million gallons.

An even better measure of the EPA's tie-up with the ethanol lobby is the protracted delay of rules meant to keep criminals out of the alternative fuels markets. Ethanol has always been a scam on taxpayers but the mandate has proved to be an invitation for mass fraud.

Every gallon of ethanol is assigned a 38-digit "renewable identification number," or RIN, which oil refiners, blenders and importers can buy or trade to comply with the quotas. Because the EPA registers RIN generators but conducts no due diligence about their legitimacy, crooks have discovered that they can sell fake RINs that are unconnected to an underlying batch of ethanol.

In January two Las Vegas men were indicted by federal prosecutors on 57 wire fraud, conspiracy, money laundering and other counts in a $37 million scheme. They claimed to be importing Canadian biodiesel made from vegetable oil that never existed. Last September the feds broke up an Indiana ring that stole $100 million and that the U.S. attorney called "the largest tax and securities fraud scheme in Indiana history." The list of accused is long.

In January 2013, the EPA moved to create a quality control program, but not out of concern for the refiners that must pass the costs of these thefts on to consumers at the pump. The EPA maintains a "buyer beware" rule that punishes the victims of RIN fraud with fines even if they acted in good faith.

Rather, the EPA wants to prop up the larger multibillion-dollar RINs industry. As the agency explained in the Federal Register, fraud was undermining the ethanol mandate—some gallons were going unsold—and to defend their business refiners "limit their RIN-related business relationships to those parties that they are confident are generating valid RINs." The EPA is worried this harms smaller producers.

Under the quality program, ethanol makers could voluntarily submit to an audit that would verify the existence of a physical plant, check receipts for feedstocks and utilities, and so on. Refiners who bought audited RINs would gain a legal defense against EPA fines.

The quality program was supposed to be in force by the end of last year but has been held up for months as the ethanol makers lobby to kill it. They claim the minimums are too onerous and want the refiners who are forced to buy their products to retain liability for getting ripped off.

In a memo to the White House, the National Biodiesel Board (the companion of the corn ethanol lobby) writes that the quality program will lead to "an overall reduction in mandated volumes" and "impose substantial burdens on not-at-fault producers." In other words, Big Ethanol thinks criminal scammers are a price worth paying so the government-backed industry can continue to profit.

This surprised me. It must be that I think that damage from twisters is on the increase because there is increased media attention of fewer instances of damage. The same can be said of hurricanes which is why knowledgeable scientists do not assert that increasing hurricane damages are due to climate change.

"The Decline of Tornado Devastation:  Despite what you might have heard about 'extreme weather events,' damage and loss of life from twisters is in retreat," by Roger A. Pielke, The Wall Street Journal, April 24, 2014 ---

From http://en.wikipedia.org/wiki/Tropical_cyclone

. . .
However, there is no universal agreement about the magnitude of the effects anthropogenic global warming has on tropical cyclone formation, track, and intensity. For example, critics such as Chris Landsea assert that man-made effects would be "quite tiny compared to the observed large natural hurricane variability".[184] A statement by the American Meteorological Society on February 1, 2007 stated that trends in tropical cyclone records offer "evidence both for and against the existence of a detectable anthropogenic signal" in tropical cyclogenesis.[185] Although many aspects of a link between tropical cyclones and global warming are still being "hotly debated",[186] a point of agreement is that the strength of destructiveness no individual tropical cyclone or season can be attributed entirely to global warming.[182][186] Research reported in the September 3, 2008 issue of Nature found that the strongest tropical cyclones are getting stronger, in particular over the North Atlantic and Indian oceans. Wind speeds for the strongest tropical storms increased from an average of 230 kilometres per hour (140 mph) in 1981 to 251 kilometres per hour (156 mph) in 2006, while the ocean temperature, averaged globally over all the regions where tropical cyclones form, increased from 28.2 °C (82.8 °F) to 28.5 °C (83.3 °F) during this period.

Disgrace: Phoenix VA Dumps Sick Veterans Into 'Secret Waiting Lists,' Some Die of Negligence ---

Prepare to be enraged by this exclusive investigative report from CNN. As Allahpundit notes, the media has been documenting the VA's egregiously poor treatment of our veterans for some time, blowing the whistle on horrific conditions and scandalously long wait times for care. But the new revelations introduce an additional, more sinister, element into the equation: Lethal, ass-covering corruption. An absolute disgrace:

Continued in article

Thomas J. Sargent's NYT Profile ---

"The Greatest Graduation Speech Ever Given Is This Bullet-Point List Of 12 Economic Concepts" ---

Students from the class of 2014 have begun graduating.

To mark the occasion, economist and blogger Craig Newmark and AEI's Mark Perry dug up a speech given by Nobel economist Thomas Sargent to graduates of Cal-Berkeley in 2007. 

It's only 335 words long, but it's really great. It breaks down the 12 economic concepts that every graduate should know.

Check it out:

Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts, and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.

7. In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. No one will believe those promises because they know that later it will not be in your interest to deliver. The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is what national government debts and the U.S. social security system do (but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

Read more: http://www.businessinsider.com/thomas-sargent-shortest-graduation-speech-2014-4#ixzz2zFCEQMNF

Jensen Comments
Some outstanding commencement speeches may have been more inspirational and motivational However, this one appeals to me in terms of separating economic realism from hopeless and sometimes costly dreams such as the dream that if we ignore entitlements our grandchildren will still be better off even if we don't make sacrifices ourselves today for those entitlements. Translated into Jenseneconomics this means that we cannot and should not allow half the taxpayers in the USA to pay no taxes. The rich just do not have enough money to sustain the poor and most of the middle class who pay little or no income tax toward Federal and state budgets even if they do pay some other taxes.

Case Studies in Gaming the Income Tax Laws ---

Teaching Case from The Wall Street Journal Weekly Review on April 18, 2014

Tax Day! Now comes the Great Refund Rip-off
by: Justin Gelfand
Apr 15, 2014
Click here to view the full article on WSJ.com

TOPICS: Fraud, Fraud Detection, Internal Controls, IRS, Tax Return Filing

SUMMARY: This Opinion page piece describes how simple it has been for people to steal tax refunds: "A person steals a name and Social Security number, files a tax return making a claim for a fraudulent tax refund, and directs the IRS to wire-transfer the stolen proceeds onto a prepaid debit card." The author is a former federal prosecutor who "was one of a few ...who spearheaded the Justice Department's efforts..." to fight these crimes. He argues that solving the problem, however, cannot be done by law enforcement alone. "Citizens must ask the IRS why it is so easy to steal money I this way, and why the IRS is losing so much money to this crime alone," Mr. Gelfand concludes.

CLASSROOM APPLICATION: The article may be used in a tax class or when covering internal controls in auditing or accounting systems courses.

1. (Introductory) According to the article, how easy is it for fraudsters to steal tax refunds by filing fraudulent tax returns with the Internal Revenue Service?

2. (Advanced) Who is the author of this opinion page piece, and what is his main conclusion about the approach needed to stop these fraud crimes?

3. (Advanced) Consider the steps to reduce these identity theft crimes that Mr. Gelfand recommends. Explain how these steps are basic internal controls, including a definition of internal control in your answer.

Reviewed By: Judy Beckman, University of Rhode Island

"Tax Day! Now comes the Great Refund Rip-off," by Justin Gelfand, The Wall Street Journal, April 15, 2014 ---

The crime is simple and profitable: A person steals a name and Social Security number, files a tax return making a claim for a fraudulent tax refund, and directs the IRS to wire-transfer the stolen proceeds onto a prepaid debit card.

The Justice Department's Tax Division, where I was a federal prosecutor until earlier this year, calls the crime "stolen identity refund fraud." It costs the federal government billions in lost revenue each year, and its individual victims the nightmare of scrutiny and red tape that comes with a federal investigation. If the problem continues unabated, Treasury estimates the IRS will lose $21 billion in fraudulent tax refunds over the next five years. That's more than twice the Environmental Protection Agency's annual budget.

n 2013, Justice charged more than 880 defendants for their involvement in such crimes, and federal prosecutors have successfully advocated for sentences substantially more severe than the routine criminal tax case. The IRS says it is a top priority, and that every year it investigates more and more cases involving identity theft and fraudulent tax returns.

But as the government ramps up investigations and prosecutions in this area, the thieves stay one step ahead through the use of cutting-edge technology to mask IP addresses from which tax returns are filed, by directing stolen proceeds onto prepaid debit cards and stealing those cards from the mailboxes of strangers, and by stealing names and Social Security numbers from businesses that lack adequate security controls and firewalls.

As one of a few federal prosecutors who spearheaded the Justice Department's efforts in this area, I saw firsthand that these schemes can be as sophisticated as they are costly. For instance, federal agents and prosecutors may look to IP addresses for evidence that a particular suspect filed a particular tax return, but modern technology makes it all too easy for a fraudster to make it look like the return was filed from one IP address when it was in fact filed from another (by using a proxy server known as an anonymizer), or to make it look like a victim is the perpetrator (by hijacking or "spoofing" an IP address).

Similarly, while tracing the money may reveal that stolen funds are being deposited into a particular bank account that may lead to the actual thief, someone willing to steal another person's identity may perpetrate fraud in the name of yet another identity theft victim. Therefore, with the increased pressure to prosecute more of these cases and to do so quickly, the risk of putting an innocent person behind bars becomes greater.

If we as a society are interested in actually stopping this problem, the solution cannot only be through law enforcement. Citizens must ask the IRS why it is so easy to steal money in this way, and why the IRS is losing so much money to this crime alone.

In some ways, the IRS is like a bank that is robbed after leaving the doors unlocked for the night with a large sign that says, "Money Inside!"—a victim, yes, but the victim of a crime that can easily be avoided.

While the IRS claims otherwise, the solution isn't particularly complex: stop wire-transferring multiple tax refunds onto the same prepaid debit card; stop mailing hundreds of tax-refund checks to the same mailbox; stop accepting thousands of tax returns from the same IP address without looking into it; and stop paying tax refunds without actually verifying the accuracy of the information with existing IRS records.

Ultimately, the law should be enforced. But this isn't a problem the government can prosecute its way out of. Instead of just demanding more prosecutions, the public should demand that the IRS increase its efforts to detect fraud before paying billions of dollars in fraudulent tax refunds. That way, victims won't have to wait months for the IRS to pay their legitimate tax refunds, Treasury won't lose billions of dollars to criminals, and the government can tackle this problem without the risk of sending innocent people to prison.

Mr. Gelfand is a former federal prosecutor who is now a criminal-defense attorney in St. Louis.

Bob Jensen's Fraud Updates


"The Cost of Limiting Climate Change Could Double without Carbon Capture Technology: The economics of combating climate change may depend on an underfunded technology," by Kevin Bullis, MIT's Technology Review,April 18, 2014 ---

Jensen Comment
For example, the environmental advantages of electric cars are greatly reduced if the carbon emissions in the power plants necessary for recharging the batteries are not reduced. This is one of the reasons electric cars in China may have a negligible impact on the environment if all those coal-fired power plants are not altered for carbon emissions.

April 21, 2014 reply from Richard Sansing


This is also a problem in the U.S. in areas in which there are heterogeneous sources of electricity. Coal-fired plants provide a disproportionate amount of electricity at night, which is also when electric cars tend to be recharged. See


Richard Sansing

Tax Day Charts: Federal Revenues and Spending ---

Jensen Comment
The mixing of Social Security, Unemployment, and Government Labor expenditures appears to me to be a misleading aggregation. Possibly the reason is to hide the fact that Medicare is the largest single expense item in the Federal Government. President Obama claims that Social Security is a manageable entitlement whereas Medicare and Medicaid are out-of-control entitlements..

Medicare is the real killer. According to Eugene Steuerle of the Urban Institute, an average couple retiring last year can look forward to consuming Medicare benefits with a present value of $343,000, having paid Medicare taxes with a present value of $109,000.
Holman W. Jenkins, Jr.  
"Let's Begin Obama's 'Conversation' on Entitlements:  A couple retiring last year paid $109,000 into Medicare but can expect $343,000 back from the system," by Holman W. Jenkins, Jr., The Wall Street Journal, February 26, 2011 ---

Medicaid is America’s single biggest health programme. This year roughly one in five Americans will be covered by Medicaid for a month or more. It gobbles more federal and local money than any state programme, other than education. Costs will rise even more when Barack Obama’s health-care reform expands the programme by easing eligibility rules in 2014. Congress’s “supercommittee” is already considering cuts. However, there are more immediate pressures behind the present drive for change.
The Economist, October 8-14, 2011 ---

And the biggest cost item within the Medicare budget is the cost of keeping dying people alive artificially in the USA when in other nations such patients are allowed to die naturally and much sooner when there is no hope of extending life significantly without the machines. Both Medicare and Medicaid are swamped in frauds that exacerbate the problems.

CBO on Obama Budget: Higher Deficits than Claimed ---

A report released Thursday by the nonpartisan Congressional Budget Office says President Barack Obama's budget request would mean significantly larger budget deficits than the White House claims.

CBO says the budget plan proposed last month by Obama would produce deficits of $6.6 trillion over the next 10 years — $1.6 trillion more than the White House estimates.

The main reason is that the White House has a rosier estimate of the economy's performance over the decade than CBO. That means the administration predicts higher tax revenues.

The president's budget is just a proposal; it has gained little traction on Capitol Hill since its release last month. The GOP-controlled House and Democratic-led Senate have already settled on a spending "cap" for this year's round of annual spending bills. A budget debate last week in the House was about political messaging and left intact last year's small-bore congressional budget deal.

CBO also says Obama's budget contains $1.4 trillion in tax increase over a decade, much more than claimed by the White House. A $456 billion chunk of that comes from higher revenues because of an influx of workers through immigration reform. CBO also notes that Obama's budget contains $193 billion over a decade in new tax credits for the working poor that officially are counted as spending because they're issued as refunds.

Obama also proposes steeper estate taxes, curbing tax deductions claimed by the wealthy and a 94-cent-per-pack increase in cigarette taxes. It proposes more money for infrastructure projects, education, job training and the Pentagon than permitted under automatic budget cuts known as sequestration. Those cuts are required because Congress failed to follow up on a 2011 budget and debt deal with significant further spending cuts that could undo the automatic cuts.

Obama's budget claims to reduce cumulative deficits by $2.2 trillion over 10 years, predicting they would drop from $7.1 to $4.9 trillion.

CBO's estimate says Obama's budget, if enacted in its entirety, would only cut deficits by about $1 trillion over that period when compared with current law.

CBO produces independent studies and cost estimates of legislation for Congress.

How to Mislead With Statistics
Each state ranked by how their employment compares with its pre-crisis peak
Nate Silver's 5:38 Blog, April 18, 2014

The table below shows each state ranked by how their employment compares with its pre-crisis peak.


Jensen Comment
Last night while watching the Vermont PBS station that weekly airs political and economic happenings in Vermont, it struck me as ludicrous when commentators bragged about Vermont's relatively low unemployment rate. The main reason for its low unemployment rate is that Vermont is the most generous welfare state in the USA such that it would have an extremely high rate of unemployment if welfare did not pay much better than low-wage employment. Arizona, Michigan, and Nevada could also have unemployment rates below 4% if they adopted Vermont's welfare generosity.

This week Vermont decided to raise the minimum wage to $10.50 per hour (timing is a bit uncertain yet) largely due to the Governor's promotion of getting more people off of welfare with higher wage incentives.

It's also misleading to brag about Vermont's low unemployment rate without also pointing out the degree to which the new and old jobs since 2007 are now part-time jobs rather than full-time jobs. In general the USA unemployment statistics are misleading because they count part-time jobs as being equivalent to full-time jobs.

Buy the way the above statistics are also a bit misleading because there's a difference between broad-based employment increases versus single-sector increases. North Dakota and Texas look a little less spectacular when you realize that most of the success is due to the oil and gas producing sector. In comparison, the increase in employment in Taxachusetts is much more broad-based and took place in spite of high taxation. I think the reason is the pool of highly educated workers that emerge from the many universities led by MIT, Harvard, and so on down the line. This is also a factor in the recent success in raising employment in California, especially along the Pacific coastline. Universities leading the way in California include Stanford, UC Berkeley, UCLA, USC, and many others. In comparison, Nevada falls way behind in terms of university graduates and tech companies.

From the CFO Journal's Morning Ledger on April 23, 2014

Sales taxes depress Amazon sales
In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced,
Bloomberg reports. In states that have the tax, households reduced their spending on Amazon by about 10%  compared with those in states that don’t have the taxes, and for online purchases of more than $300, sales fell by 24%, Bloomberg said.

Jensen Comment
Sales taxes are not collected from most online and onsite vendors in New Hampshire except for hotels and restaurants. This saves a lot when it comes to big ticket items like vehicles. But there is a troublesome sales tax of 15% on sales of real estate that really depresses the real estate market. I don't think Amazon sells real estate (yet).

Some Sectors of the Economy are Going Down Instead of Up
"Retail Store Closures Soar In 2014: At Highest Pace Since Lehman Collapse," by Tyler Durden, Zero Hedge, April 21, 2014 ---

What a better way to celebrate the rigged markets that are telegraphing a "durable" recovery, than with a Credit Suisse report showing, beyond a reasonable doubt, that when it comes to traditional bricks and mortar retailers, who have now closed more stores, or over 2,400 units, so far in 2014 and well double the total amount of storefront closures in 2013, this year has been the worst year for conventional discretionary spending since the start of the great financial crisis!

Continued in article

Jensen Comment
Reasons for store closings are complicated. Erika and I shop at retail stores less and less --- especially Wal-Mart and grocery stores. It's just too easy to search on Amazon, instantly find what we want for about the same price as at Wal-Mart, and get it to our cottage in the boondocks in two days or less for free shipping via Amazon Prime. In the past four days I've received my Amazon shipments for three terrific Wrangler work shirts (that could pass for casual dress shirts), new thermal underwear for next winter, new buckskin mittens, a new pair of tennis shoes, a case of Kraft macaroni and cheese, a case of rice bran (showing my age), a pack of DVD discs, a new Cannon camera ($96 on sale), new dress slacks, a pair of work coveralls, three new stretch belts, a case of oatmeal, case of barley, some mole-tunnel smoke bombs, two dozen flex base driveway poles for snow season, and some other items I can't think of at the moment. We also download one movie a day from Amazon or NetFlix.

Who needs retail stores?
Actually I do shop quite often at an old fashioned hardware store (Franconia Hardware) down the road where I can still by two screws and one bolt in just the sizes I need. We get our proscription drugs from the Wal-Mart pharmacy along with milk and some other food items. I don't shop online for toilet paper and paper towels. I will soon be spending quite a lot at Wal-Mart for about 30 huge bags of potting soil and 20 bags of mulch. I will soon be buy about 200 seedlings from a green house complex in Lancaster. We buy Salmon and quite a few grocery items from what would not be called a supermarket in the big cities.

I just bought a new $3,000 chipping machine from a New Holland dealer that connects on the back of my tractor. I would rather buy major equipment, cars, tractors, and attachments from from nearby dealers who provide warranty service locally or have in-home service warranties.

I did buy a new $400 ceiling fan (Tiffany style made in China) from Lowes. I could have purchased the same fan from Lowes online, but if I buy it for the same price in the store I can take it back to the store if it does not work correctly. That beats having to box it up for shipping, although I learned that both Lowes and Home Depot will now take your online purchase back at nearby stores even if you did not buy the items at those stores. That's nice for big and heavy items that I don't want to repack for shipment.

Erika window shops online for clothing. By this I mean she looks it over, tries it on, and returns about half of her purchases. For that I often have to pay  for return shipping, but it's not a whole lot more expensive than having to drive from town to town in these mountains to take her shopping. And I don't have to waste a lot of days waiting for her to find and try on clothing. It's hard for her to walk, and she likes to let her fingers do the walking.

The bottom line is that local retail stores are handy for some things. But like a lot of folks these days Erika and I find shopping in stores a waste of time and gasoline. My guess is that 70% of our shopping purchases this year will be online mostly because of the convenience of online shopping. Our local stores, for example, seldom have what we want or do not have the correct sizes on hand.

It's no wonder so many retail stores are closing down and so many glitzy malls have mostly empty stores.

"The Gender Wage Gap, by State," Freakonomics, April 15, 2014 ---

We have blogged and written extensively about the gender pay gap, much of which is not attributable to discrimination, as is commonly invoked. President Obama has taken up the cause; he recently signed two executive orders aimed at closing the gap.  Business Insider recently posted a state-by-state breakdown of the gender wage gap. It is interesting to look at but keep in mind the non-discriminatory factors that contribute to the gap, and therefore consider these numbers with some skepticism:

Wyoming has the biggest pay gap — the median male full-time worker made $51,932, and the median female full-time worker made $33,152. The male worker thus made 56.6% more than the female worker.

Washington, D.C. had the smallest gap — there, men make 11.0% more than women. Among the states, Maryland and Nevada had the smallest gaps, both at 17.2%.

"Where the Jobs Are," Inside Higher Ed, April 23, 2014 ---

A new analysis of available jobs finds that the highest demand (among openings for college graduates) is for white-collar professional occupations (33 percent) and science and technology occupations (28 percent). The analysis -- by the Georgetown University Center on Education and the Workforce -- is consistent with that center's past research, in finding many more opportunities for those with a bachelor's degree than for those without a college degree.

The new study is based on online job advertisements. The most in-demand professional jobs are accountants/auditors and medical/health service managers. In STEM, the most in-demand jobs are for applications software developers and computer systems analysts.

Jensen Comment
There's a bit of mixing of apples and oranges here. The study says it looks at bachelor's degrees. But in in order to take the CPA exam accountants and auditors mush have 150 credits which for most graduates translates to a masters degree. Also many medical/health service programs are graduates of masters of health care administration programs such as the graduate health care administration program at Trinity University.

In some cases like chemistry and biology the job prospects with a bachelor's degree are mostly lousy McJobs. But those majors have an edge for being admitted to graduate programs, especially medical schools, where opportunities abound upon graduation.

For those rejected for graduate schools or who cannot afford graduate schools, career opportunities are probably better in the skilled trades such as those $150,000 - $200,000 welding jobs.

Bob Jensen's career helpers ---

"Welders Make $150,000? Bring Back Shop Class Taking pride in learning to make and build things can begin in high school. Plenty of jobs await," by John Mandel, The Wall Street Journal, April 21, 2014 ---

In American high schools, it is becoming increasingly hard to defend the vanishing of shop class from the curriculum. The trend began in the 1970s, when it became conventional wisdom that a four-year college degree was essential. As Forbes magazine reported in 2012, 90% of shop classes have been eliminated for the Los Angeles unified school district's 660,000 students. Yet a 2012 Bureau of Labor Statistics study shows that 48% of all college graduates are working in jobs that don't require a four-year degree.

Too many young people have four-year liberal-arts degrees, are thousands of dollars in debt and find themselves serving coffee at Starbucks SBUX +1.10% or working part-time at the mall. Many of them would have been better off with a two-year skilled-trade or technical education that provides the skills to secure a well-paying job.

A good trade to consider: welding. I recently visited Pioneer Pipe in the Utica and Marcellus shale area of Ohio and learned that last year the company paid 60 of its welders more than $150,000 and two of its welders over $200,000. The owner, Dave Archer, said he has had to turn down orders because he can't find enough skilled welders.

According to the 2011 Skills Gap Survey by the Manufacturing Institute, about 600,000 manufacturing jobs are unfilled nationally because employers can't find qualified workers. To help produce a new generation of welders, pipe-fitters, electricians, carpenters, machinists and other skilled tradesmen, high schools should introduce students to the pleasure and pride they can take in making and building things in shop class.

American employers are so yearning to motivate young people to work in manufacturing and the skilled trades that many are willing to pay to train and recruit future laborers. CEO Karen Wright of Ariel Corp. in Mount Vernon, Ohio, recently announced that the manufacturer of gas compressors is donating $1 million to the Knox County Career Center to update the center's computer-integrated manufacturing equipment, so students can train on the same machines used in Ariel's operations.

In rural Minster, Ohio, near the Indiana border, electrician and entrepreneur Jack Buschur is creating the Auglaize & Mercer County Business Education Alliance, which will use private-sector dollars to fund a skilled-trade ambassador to walk the halls of local high schools with the mission of recruiting teenagers into these fields. This ambassador will also work to persuade school guidance counselors and administrators to change their tune that college is the only route to prosperity, and to encourage them to inform their students about the many opportunities in skilled trades.

At Humtown Products in Columbiana, Ohio, near the Pennsylvania border, CEO Mark Lamoncha is coordinating tours for local high-school guidance counselors to visit his company so that they can learn about job opportunities in advanced manufacturing and 3-D printing. Rather than having students seeing posters only for Ohio State, Pitt, Harvard and Yale in their high-school hallways, he wants to convince the schools' guidance counselors to also post signs for the Choffin Career & Technical Center in Youngstown and the New Castle School of Trades in Pulaski, Pa.

The Ohio School Board Association recently heard a similar message—from the actor John Ratzenberger, whom you might remember as Cliff Clavin, the mailman from the 1980s sitcom "Cheers." Mr. Ratzenberger these days is devoting considerable charitable time and dollars toward raising the profile of America's skilled laborers as role models for young people.

He began this effort in 2004 with a TV show called "Made in America," focusing attention on the rewarding labor of blue-collar workers making everything from Steinway pianos and Wonder Bread to Caterpillar CAT +1.37% equipment and Chris Craft yachts. Now he's crisscrossing the country urging schools to invest in vocational education. On "Cheers," Cliff Clavin never appeared to be overly industrious, but in promoting the restoration of shop class in U.S. high schools, Mr. Ratzenberger is working hard to put young Americans in good jobs. Educators could learn a thing or two from him.

Mr. Mandel is the treasurer of Ohio.

Jensen Comment
Welding wages vary by geographic region. A welder in Sugar Hill where I live makes about $30 per hour. But a welder in the Utica and Marcellus shale area of Ohio makes $150,000 - $200,000 according to the Treasurer of Ohio.

My plumber gets $65 per hour and is billed out at $85 per hour by his boss plus a $60 charge for each visit to our house.

We are really short of plumbers relative to welders.

Seems pretty easy to verify whether or not welders get $72 per hour at this Ohio fracking site. I don't think the Treasurer of Ohio is being accused for lying on this assertion.

I am absolutely certain that my plumber gets $65 per hour and is billed out at $85 per hour. Actually he makes a lot more than that since he also has night and week end call outs quite often up here in the mountains where people need their furnaces fixed immediately when it's below zero.

There's such a shortage that my plumber gets more overtime pay than he really wants at $98 per hour. What the guy really needs is more sleep.

Car dealer labor rates vary depending upon the skills required. The billings can go over $100 per hour up here. It's sometimes hard to tell because dealers often charge by the job rather than by the hour. This is also true of welders. They may well be getting far more than $35 an hour but when they charge by the job there may be some excess hours where they do not get paid at all or get overpaid for the job.


"Bonus Season at the IRS:  Even suspensions for misconduct don't prevent agency employees from receiving rewards," by James Freeman, The Wall Street Journal, April 23, 2014 ---

"More than 2,800 Internal Revenue Service employees who recently had been disciplined received performance bonuses totaling more than $2.8 million between Oct. 1, 2010 and Dec. 31, 2012," reports the Journal.

No, the group that targeted conservatives didn't receive bonuses after the scandal broke last year. But the IRS sets a pretty low bar for employees to receive awards. About two-thirds of the agency's 98,000 workers received bonuses for fiscal 2012.

As for those who broke IRS rules and still got paid, the Journal reports: "The misconduct ranged from failure to pay taxes to misuse of government travel cards, violation of official-conduct standards and fraud, according to the report by the Treasury Inspector General for Tax Administration. The discipline included written reprimands, suspensions and even removal. The oversight agency said some of the conduct issues might have occurred after an employee earned a bonus."

The internal auditor's report notes with wry understatement that "providing awards to employees with conduct issues, especially the failure to pay taxes owed to the federal government, appears to be in conflict with the IRS's charge of ensuring the integrity of the system of tax administration."

Adds the Journal: "The report identified nearly 1,200 employees with tax issues or official-conduct violations during the period who received a total of $1.1 million in monetary bonuses, and about 11,000 hours of time off. One employee who was suspended for 10 days in September 2011 received a $1,300 performance award in August 2012, the report said."

Speaking of violations, Chris Edwards of the Cato Institute reminds us in a recent post that even IRS employees who follow all the agency's rules can end up violating taxpayers' basic liberties. Mr. Edwards writes: "For non-criminal tax cases — the vast majority of cases — the tax code reverses the age-old common law principle that the burden of proof rests with the accuser. Except in some narrow circumstances, the IRS does not have to prove the correctness of its determinations. When the IRS makes erroneous assessments — as it often does — citizens carry the burden to prove that they are wrong."

And there's this: "Despite Sixth and Seventh Amendment guarantees of trial by jury, the federal tax system sidesteps such protections. To contest an IRS tax calculation prior to assessment, one must file a petition in the U.S. Tax Court. But since this is an administrative court, not an Article III court, no jury trial is required. To obtain a jury trial and related rights for civil tax cases, one must file suit in a U.S. District Court. But before that can happen, the alleged tax, penalties, and interest must be paid in full."

And Mr. Edwards also notes: "In most situations, the Fourth Amendment guarantees that, before the government can search private property and seize records, it must demonstrate to a court that there is probable cause to believe that lawless conduct exists. However, the IRS's summons authority under tax code section 7602 allows it to obtain records of every description from any person without showing probable cause and without a court order."

Many taxpayers may be left wondering why any IRS employees receive bonuses.

From the CFO Journal's Morning Ledger on April 23, 2014

Sales taxes depress Amazon sales
In one of the first efforts to quantify the impact of states accruing more tax revenue from Web purchases, researchers at Ohio State University published a paper this month that found sales dropped for Amazon when the online charge was introduced,
Bloomberg reports. In states that have the tax, households reduced their spending on Amazon by about 10%  compared with those in states that don’t have the taxes, and for online purchases of more than $300, sales fell by 24%, Bloomberg said.

Jensen Comment
Sales taxes are not collected from most online and onsite vendors in New Hampshire except for hotels and restaurants. This saves a lot when it comes to big ticket items like vehicles. But there is a troublesome sales tax of 15% on sales of real estate that really depresses the real estate market. I don't think Amazon sells real estate (yet).

How to Provide Gang Rapists With Monetary Incentives
"What You Won't Read in the Papers About the 'Central Park Five',"  Ann Coulter, Townhall, April 23, 2014 ---

New York Mayor Bill de Blasio is demanding a quick settlement of the lawsuit brought by the five men convicted of one of the most sickening crimes in the city's history: the attack on the Central Park jogger in 1989.

The plaintiffs are demanding $50 million apiece -- for going to prison for a rape that they committed, as detailed in Chapter 13 of "Demonic: How the Liberal Mob Is Destroying America." Abner Louima got $5.8 million for a shockingly brutal police assault on him, and he was just an innocent bystander.

The "Central Park Five," as PBS documentarian Ken Burns has dubbed them, aren't exactly Emmett Till (as Burns would have you believe). Even if they were innocent of the Central Park rape, which they aren't, the reason they were originally arrested was that they were rampaging through the park, assaulting people.

Even after they began denying the rape, the defendants continued to admit committing these other attacks. How'd you like to be one of the people badly beaten in the park that night watching your tax dollars go to pay your assailants millions of dollars?

All those convictions -- on the rape as well as the assaults -- have been vacated because an aging district attorney wanted a glowing obituary in The New York Times.

In 2002, the ancient Robert Morgenthau, Manhattan district attorney, issued a report recommending that the convictions in the Central Park rape case be vacated. Justice Charles Tejada (Fordham Law 2009 Hispanic Heritage Award winner!) granted his request.

Liberals are opposed to rape in the abstract, but when it comes to actual rapists, they're all for them.

The D.A.'s report was based solely on the confession of Matias Reyes, career criminal, serial rapist and murderer. Reyes had absolutely nothing to lose by confessing to the rape -- the statute of limitations had run -- and much to gain by claiming he acted alone: He got a favorable prison transfer and the admiration of his fellow inmates for smearing the police.

Continued in article

Why is there a statute of limitations on rape?

When self interests undermine political party solidarity.
"Fracking foes cringe as unions back drilling boom:   Environmental groups cringe as some trade unions support oil and gas drilling, pipelines," by Kevin Begos, Yahoo Finance, April 19, 2014 ---

Sometimes outliers on the right and the left are blind to sensible research
Biofuels made from the leftovers of harvested corn plants are worse than gasoline for global warming in the short term, a study shows, challenging the Obama administration's conclusions that they are a much cleaner oil alternative and will help combat climate change

"Schoolteacher Cheating," Walter E. Williams, Townhall, February 5, 2014 ---

Philadelphia's public school system has joined several other big-city school systems, such as those in Atlanta, Detroit and Washington, D.C., in widespread teacher-led cheating on standardized academic achievement tests. So far, the city has fired three school principals, and The Wall Street Journal reports, "Nearly 140 teachers and administrators in Philadelphia public schools have been implicated in one of the nation's largest cheating scandals." (1/23/14) (http://tinyurl.com/q5makm3). Investigators found that teachers got together after tests to erase the students' incorrect answers and replace them with correct answers. In some cases, they went as far as to give or show students answers during the test.

Jerry Jordan, president of the Philadelphia Federation of Teachers, identifies the problem as district officials focusing too heavily on test scores to judge teacher performance, and they've converted low-performing schools to charters run by independent groups that typically hire nonunion teachers. But William Hite, superintendent of the School District of Philadelphia, said cheating by adults harms students because schools use test scores to determine which students need remedial help, saying, "There is no circumstance, no matter how pressured the cooker, that adults should be cheating students."

While there's widespread teacher test cheating to conceal education failure, most notably among black children, it's just the tip of the iceberg. The National Assessment of Educational Progress, published by the U.S. Department of Education's National Center for Education Statistics and sometimes referred to as the Nation's Report Card, measures student performance in the fourth and eighth grades. In 2013, 46 percent of Philadelphia eighth-graders scored below basic, and 35 percent scored basic. Below basic is a score meaning that a student is unable to demonstrate even partial mastery of knowledge and skills fundamental for proficient work at his grade level. Basic indicates only partial mastery. It's a similar story in reading, with 42 percent below basic and 41 percent basic. With this kind of performance, no one should be surprised that of the state of Pennsylvania's 27 most poorly performing schools on the SAT, 25 are in Philadelphia.

Continued in article

"California Kids Go to Court to Demand a Good Education The state has 275,000 teachers. On average, two are fired annually for poor performance," by Theodore J. Boutrous Jr., The Wall Street Journal, January 28, 2014 ---


New Hampshire Wind Watch ---

Help us protect our NH communities from over 96 industrial wind turbines set for construction in the Newfound Lake Region and towns including Alexandria, Bristol, Bridgewater, Danbury, Grafton, Groton, Hebron, New Hampton, Plymouth, Rumney, Ashland, Canaan, and Orange.

New Hampshire's aggressive renewable energy target legislation and the availability of federal tax credits has created a rush of proposals for industrial-sized wind farms along ridgelines in rural New Hampshire. Approval of wind project applications is subject to the RSA 162-H law, is difficult for the public to represent their views, and appears to have been fast-tracked by the NH Site Evaluation Committee. There is growing controversy surrounding these proposals.



From the CFO Journal's Morning Ledger on April 16, 2014

Shale boom leaves radioactive waste in its wake
The discovery of large quantities of improperly stored and abandoned “oil socks,” filters used to remove silt from waste water from hydraulic fracturing, has triggered a public outcry, the
WSJ’s Chester Dawson reports. In one instance, trailers found in Watford City loaded with oil socks belonged to RP Services LLC, state officials said. RP Services didn’t respond to requests for comment, but one of its clients, Continental Resources Inc., has already cut ties with the company as a result of the discovery. North Dakota doesn’t have a single storage facility capable of handling radioactive waste, though it has between 500 and 600 injection wells producing the socks.

Jensen Comment
Some of my friends who subscribe to the NYT refuse to subscribe to or follow regularly the WSJ because they do not think the WSJ publishes articles like this. Actually the WSJ is a great source of good news and bad news regarding the environment, Quantitative Easing, health care, etc., including running of regular editorials from liberals like Princeton's (100% liberal) Alan Blinder. Professor Blinder publishes more often in the WSJ than in the NYT. I can't recall if he ever published in the NYT where his close friend Paul Krugman has a liberal blog. Krugman is now moving from Princeton to CUNY but will, I assume, continue running his NYT blog.


"Because China relies so heavily on coal for power, electric vehicles aren’t necessarily an improvement over gasoline-powered cars," Mike Orcutt, MIT's Technology Review," April 17, 2014 ---

"Does Musk’s Gigafactory Make Sense?
Tesla’s audacious plan to build a giant battery factory may mostly be a clever negotiating tactic
by Kevin Bullis, MIT's Technology Review, April 14, 2014 ---

Lithium-ion batteries are just about everywhere—they power almost all smartphones, tablets, and laptops. Yet Elon Musk, CEO of Tesla Motors, says he intends to build a factory in the United States three years from now that will more than double the world’s total lithium-ion battery production. The plan is still in its early stages, but already four states are negotiating with Tesla in the hope of becoming the factory’s home.

People have come to expect bold plans from Musk. In addition to founding Tesla, he started his own rocket company, SpaceX, which now delivers supplies to the International Space Station. But even for him, the “gigafactory,” as he calls it, seems audacious.

First of all, Tesla sold 23,000 cars last year. The gigafactory, which would start production in 2017, would by 2020 make enough batteries for 500,000 electric cars. Second, battery companies normally announce factories only after they’re funded and a site is selected. And they typically scale up gradually. Why announce plans to build such an enormous factory —especially when electric car sales so far come nowhere close to justifying it?

The project seems even more puzzling in light of the hard times at other electric car battery factories in the United States. In 2009, President Obama announced an ambitious $2.4 billion grant program intended to launch an electric car battery industry in the United States. That effort, so far, has failed—factories were built, but sales have been poor because electric car sales have been slow. All of the battery makers involved have struggled (see “Too Many Battery Factories, Too Few Electric Cars”), and one, A123 Systems, went bankrupt.

Musk is betting that Tesla can generate a much bigger market for electric cars. To keep the factory humming, he will have to sell more than 10 times as many electric vehicles in a year as Nissan managed last year (and Nissan has sold more electric cars than any other automaker). Musk has some reason for confidence—last year Tesla sold as many electric cars as Nissan in the United States, even though Tesla’s Model S costs two to three times as much as Nissan’s electric car, the Leaf. He seems to be betting that a huge factory will significantly reduce the cost of making batteries, which remain the most expensive part of electric cars. In the ideal scenario, that cost reduction would help Tesla produce a mass-market car similar in cost to the Nissan Leaf or Chevrolet Volt but that, crucially, will be able to go more than twice as far on a charge (the car would also be able to accelerate faster than the Leaf).

Yet it’s not clear that a huge factory would deliver the needed cost reductions. According to a presentation to investors, it would lower costs by 30 percent. Tesla has a good track record for reducing battery costs (see “Driving Innovation”), and even incremental improvements at conventional factories could reduce costs by 15 percent by 2020, says Menahem Anderman, president of Advanced Automotive Batteries. But it’s unclear where the remaining 15 percent might come from.

Economies of scale could help lower production costs to some degree, but Tesla says the unusual design of the gigafactory, with batteries built from raw materials rather than assembled, will also help.

Usually, the components of batteries are made in many different places. Electrolytes are often made at a large chemical plant and graphite electrodes at a plant that also makes graphite for tires and other applications. The electrolytes and electrodes are then packaged into cells at a plant dedicated to cell making, and the cells are assembled into complete battery packs—with cooling systems and electronic controls—in yet another factory.

Musk plans to bring almost all of this under one roof. Raw materials, processed into electrodes, electrolytes, containers and other parts, go in one end; complete battery packs come out the other. The factory will also be able to take old batteries apart to recycle the materials, and Musk even plans to use solar and wind to help power the factory.

Brett Smith, codirector for manufacturing, engineering, and technology at the Center for Automotive Research, says having control over every part of the process could indeed help reduce costs.

Tesla would need to bring in a great deal of expertise to make this work. What’s more, there are benefits to making different parts in different places. For example, it can be cheaper to make electrolytes in a large chemical plant that makes other chemicals, too. Panasonic, Tesla’s current battery cell supplier, benefits from the know-how of workers in Japan, many of whom have decades of manufacturing experience.

“Manufacturers have tried both approaches. Either approach can work,” says Jack Hu, a professor of industrial operations and engineering at the University of Michigan.

But Hu says such a plant would need to be flexible. “It is possible to build a gigafactory,” he says. “The key lies in the how. Battery manufacturing is a complex process involving many steps. If these steps are all dependent on each other, then the gigafactory would be a bad idea: difficult to run, a lot of down times; difficult to identify quality problems.”

Beyond the technical challenges, Tesla may struggle to convince partners to go along with the scheme. The factory would cost $5 billion, with $2 billion coming from Tesla. If Tesla can’t sell as many cars as it hopes, there would be no alternative market for those batteries, making it a risky investment.

Whether the gigafactory is actually built, and whatever the final factory looks like, the way Musk has been promoting it may prove to be a savvy business move. Announcing the factory at an early stage, and with an ambitious size, could be good for negotiations with states, especially given the proposed size of the factory. Some states are even reconsidering laws that restrict how Tesla can sell cars in their state, which could help open new markets for the automaker.

Proposing such a huge undertaking might also make it more likely that Panasonic or some other partner will later go along with a less ambitious plan—say, a factory to supply 100,000 cars. “Panasonic can’t afford to lose the business,” says Anderman.

Continued in article


"Who Are the Real Saboteurs of Immigration Reform?" by Victor Davis Hanson, Townhall, April 17, 2014 ---











Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

How to Mislead With Statistics Illegally
"The Shocking Secret Behind Obamacare Enrollment Numbers," by Michael F. Cannon, Townhall, April 21, 2014 ---

Barack Obama wants you to know he enrolled 7.5 million Americans through Obamacare’s health insurance Exchanges. What he doesn’t want you to know is how.

Federal courts may soon rule that President Obama induced the majority of those enrollees to enroll by offering them taxpayer dollars he has no legal authority to spend.

If the courts put a stop to that unauthorized spending, a majority of Exchange enrollees would suddenly face the full cost of Obamacare coverage, and enrollments would plummet.

Under the Patient Protection and Affordable Care Act, states have the option of establishing an Exchange themselves, or letting the federal government do it. The Act also authorizes subsidies that can require taxpayers to cover nearly the entire premium for Exchange plans. Among the eligibility criteria for those subsidies is a requirement that recipients enroll “through an Exchange established by the State.”

Such requirements are routine, and this one is and unequivocal. Countless federal programs offer subsidies only in states that agree to implement them. The PPACA’s legislative history is littered with Republican and Democratic proposals to offer various subsidies — including tax credits and Exchange subsidies — exclusively in states that establish Exchanges.

The eligibility rules for the PPACA’s Exchange subsidies specify nine times, without deviation, that recipients must enroll “through an Exchange established by the State.” House Democrats even complained about this part of the Senate-passed PPACA before they themselves approved it, so they knew exactly what they were sending to the president’s desk.

Confounding supporters’ expectations, 34 states declined to establish Exchanges. Under the plain terms of federal law, subsidies are therefore available in the 16 Exchanges established by states, and not available in the 34 Exchanges established by the federal government.

Continued in article

How to Mislead With Statistics
"Cooking the ObamaCare Stats:  Suddenly, the Census Bureau changes how it counts insurance," The Wall Street Journal, April 15, 2014 ---

You can't manage what you don't measure, as the great Peter Drucker used to say, and for the White House that seems to be the goal. Out of the blue, the Census Bureau has changed how it counts health insurance—at the precise moment when ObamaCare is roiling the insurance markets.

Since 1987, the Current Population Survey, or CPS, has collected information on the health-insurance coverage status of Americans. The annual reports are widely cited because their large sample sizes improve accuracy, the data are gathered constantly, and they tease out state-by-state details. But this year the Census revamped the CPS household insurance questions, muddying comparisons between the pre- and post-ObamaCare numbers. The results of the new method will be disclosed this fall.

The FDA would never approve a new drug whose maker completely changed the clinical trial protocol in the middle of the experiment, yet that is what the White House has done. How many people gained or lost insurance under ObamaCare? Did government crowd out individual insurance? What about employer-sponsored insurance? It will be much harder and in some cases impossible to know.

Robert Pear of the New York Times NYT +2.21% obtained internal Census documents that note that the new CPS system produces lower estimates of the uninsured as an artifact of how the questionnaire is structured. One memo refers to the "coincidental and unfortunate timing" and that, "Ideally, the redesign would have had at least a few years to gather base line and trend data."

Ideally, the White House would have provided those years. For changes this substantial, standard procedure would be to ask the new and old questions concurrently. With an overlap, researchers could study changes over time using the long-term historical information without introducing bias, as well as interpret emerging developments with new tools.

The Census says the new CPS is more accurate, and demographers and statisticians of all persuasions have argued for years that the old version overreports the number of uninsured relative to other surveys. But the inflated figures served the politicians who were plugging national health care, and Democrats in 2009 and 2010 used them to exaggerate the problem amid the push to put more of American health care under government direction.

As with the IRS targeting of conservative political groups, this sudden change will undermine public trust in the supposedly nonpartisan institutions of government. Muddying a useful source of information about ObamaCare's results is definitely unfortunate, but our guess is that it wasn't coincidental.

"Businesses Say They're Having Trouble Finding People Who Will Show Up For Work," by Matthew Boesler. Business Insider, April 16, 2014 ---

Every month, the New York Fed conducts two surveys: the Empire State Manufacturing Survey and its services-sector counterpart, the Business Leaders Survey. And each April it asks respondents of both surveys questions related to the difficulty of finding potential hires with certain skills.

This year's pair of April surveys confirmed that, as in previous years, employers are having trouble finding people with advanced computer and interpersonal skills, punctuality, and reliability.

Further, businesses in both the manufacturing and services sectors report that it is becoming increasingly difficult to retain skilled workers.

Below are the two key tables from the survey. The first shows that 36% of businesses in the manufacturing sector that responded to the survey are having moderate difficulty finding workers who are punctual and reliable, while 11% report great difficulty in finding workers with those traits. In the services sector, it's not as bad — 22% of respondents report moderate difficulty finding punctual, reliable workers, whereas only 3% report great difficulty.

Continued in article

Jensen Comment
Some of the problems are the rising incidences of mental illness. Those diseases that cause failure to show up for work include bipolar disease and depression in general.

I know of one instance where a teacher commenced to show up for work less and less over several years (she had tenure). Then one day she simply stopped going to work without telling the school system she never intended to work again.

However, she received over a year of full pay without ever returning to work --- union rules since she was diagnosed with bipolar disease. She now has lifetime Social Security disability compensation and Medicare.

There are tens of millions who would rather have checks or no checks instead of a job according the the U.S. Census
U.S. Census Report:  Only a small percentage of impoverished adults actually say it's because they can't find employment.
"Why The Poor Don't Work, According To The Poor," by Jordan Weissmann, The Atlantic, September 23, 2013 ---

Wal-Mart Anecdote:  Only 1 in 20 job applicants can pass a drug test. Yes, the is 19 in 20 failing.
James Peters james.peters@villanova.edu

12:36 PM (1 hour ago)

Small anecdote to build on this. I live in Las Vegas, NM (15,000 people in Northeast NM, not in Nevada). The local Wal-Mart no longer even bothers to take applications from local residents. Not only do they not show up for work, only 1 in 20 can pass a drug test. Yes, the is 19 in 20 failing. The biggest cause of failure is alcohol, which clears your system in hours. These people show up for a drug test drunk. They can't even make Wal-Mart's cut.

Jim Peters

"The Musings Of Elizabeth Warren Leave A Big Question Unanswered," The Economist, April 27, 2014 ---
Also at http://www.businessinsider.com/musings-of-elizabeth-warren-leave-a-big-question-unanswered-2014-4#ixzz307GHfgSg

. . .

Are two incomes worse than one?

There are problems with Mrs Warren's thinking.

She takes her first preoccupation--with unclear lending practices--and suggests that it is responsible for her second--the stretched finances of America's middle classes.

She has suggested that this problem is worse when both parents work--a notion that will sound strange to families whose eggs are all in one basket.

"The way I saw it," she writes, "hardworking people were scrambling just to survive and a giant credit industry had drawn a bullseye on the back of every struggling family."

Most accounts of the consumer debt binge before the crisis put this the other way round: as the price of college tuition, health care and housing increased faster than wages rose, people took on debt to make up the difference.

It is not clear what Mrs Warren thinks would revive those struggling families, other than tightening lending standards, which has already been done, and a vague aspiration to "level the playing field".

For someone who has spent her life writing and teaching, that seems an odd thing to leave out.

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"Book Review: 'A Fighting Chance' by Elizabeth Warren The story of how a middle-class girl rose to the Senate—and came to see the market economy that gave her the chance as 'rigged'," by Mary Kissel, The Wall Street Journal, April 24, 2014 ---

As Americans reeled from the housing bust and recession in early 2009, some 75 like-minded activists from "civil-rights organizations, consumer groups, labor unions, and religious groups" had a powwow at AFL-CIO headquarters in Washington to coordinate their political agendas—a vast left-wing conspiracy of sorts. Democrats had control of both houses of Congress and the White House, and everyone sensed that this was the chance for historic financial reform. Elizabeth Warren, a Harvard law professor and bankruptcy expert, was the guest of honor, seated next to labor chief John Sweeney. She pitched the idea of a new "consumer agency" that would "rein in the financial institutions that were taking advantage of families across the country." Though the banks "would almost certainly hate it," the agency would "streamline government and make it more efficient," she writes in "A Fighting Chance," her memoir.

Fast forward five years. The Consumer Financial Protection Bureau sits in the heart of the capital in a rented building that it is paying $114 million to renovate. The agency has more than 1,300 employees, yet so far its chief accomplishments are a rule that lets taxpayer-backed Fannie Mae FNMA +0.76% and Freddie Mac FMCC +0.76% stay in the subprime mortgage business; research that attacks arbitration (which pleases the trial bar); and a ginned-up campaign to label bankers unintentionally racist for not lending enough to minorities. It is a thoroughly politicized bureaucracy with a distinctly antibusiness bent.

Yet you'd never know any of this from "A Fighting Chance," which uses the CFPB to showcase the Massachusetts senator as a dogged fighter for the middle class. She seems to genuinely believe that government can tax, spend and regulate the country to prosperity.

Ironically, her life experience might have taught her the opposite lesson. Elizabeth Ann Herring was born in 1949 to an Oklahoma family that struggled to make ends meet. But young Betsy was a striver, and thanks to her success on the debate team, she won a full scholarship to George Washington University, though she dropped out to marry her high-school boyfriend. She finished college in Houston and landed on the idea of law school "somewhere between diapers and breast-feeding" her baby daughter. By 1976, she had a law degree and a son and, two years later, a job teaching at the University of Houston Law School. Her marriage failed, but Ms. Warren's parents and aunt moved nearby to help with child care, and she soon remarried.

When she moved to the University of Texas at Austin, Ms. Warren volunteered to teach bankruptcy law because the subject felt personal. "I knew what it was like to be afraid, to fear that whatever you had built could be taken away," she writes, seemingly unwilling to credit her own prudence and hard work. "I wanted to know that the work-hard-and-play-by-the-rules people might not get rich, but they didn't need to be afraid." Bankruptcies started to rise dramatically in the 1980s, and through her books and speechifying Ms. Warren became a key advocate for debtor-friendly laws. Along the way, she cultivated powerful political allies, such as Sen. Ted Kennedy and Rep. Barney Frank.

Her politicking scored her a spot on the Clinton-era National Bankruptcy Review Commission, which was supposed to give Congress recommendations on how to reform the bankruptcy code but devolved into partisan rancor. "The whole process made me gag," Ms. Warren writes. She boycotted the report's ceremonial release and says that she had "had enough of Washington." Sort of: The professor returned to Harvard and co-wrote "The Two-Income Trap" with her daughter, a "quant jock" at McKinsey. The popular book, which argued that two-income couples with children are especially vulnerable to unmanageable debt and bankruptcy, landed her on TV and gave her a new public profile. She continued fighting for more lenient bankruptcy laws—
a battle she lost. In 2005 President
George W. Bush signed into law a bipartisan reform that tightened requirements and led to a sharp fall in bankruptcy filings

For Ms. Warren, the "industry-backed" bill was "death by a thousand cuts" for struggling families. "David really did get the slingshot shoved down his throat sideways. It hurt then, and it still hurts now," she writes. "Even before this grinding battle, I had begun to understand the terrible squeeze on the middle class. But it was this fight that . . . taught me the squeeze wasn't accidental." Thus in 2008, when Senate Majority Leader Harry Reid asked Mr. Warren to oversee the Bush-era Troubled Asset Relief Program, which used taxpayer money to bail out banks, she was quick to blame deregulation of the banking industry for encouraging the explosion of subprime lending that led to the financial crisis. She wondered why there were "no mass indictments" of bankers, and her reports paid little attention to the role that housing policies played in encouraging banks to lend to people who couldn't afford to buy homes. Her populism resonated: "The system is rigged" was the unofficial slogan of her successful 2012 Senate campaign.

Continued in article

Jensen Comment
Sen. Warren is often mentioned as a possible contender for the U.S. Presidency in 2014 or 2022. I don't think so because she painted herself in the corner as being a liberal outlier during her campaign for the Senate in 2012. Much depends, however, on her future record as a Senator. If she's less liberal than she once preached it may be that she's aiming to become President of the USA.

Among the law blogs in the USA our University of Wisconsin law professor Ann Althouse has the most popular blog (in terms of daily readership). In terms of politics in a left leaning law school she's a bit unpredictable. Perhaps that is one of the reasons for her popularity. She seems to be respected for her unbiased integrity.

Obama says the Republican Party, on Obamacare, "has gone through the stages of grief — anger and denial and all that stuff."  ---

I transcribed that from the press conference that's going on right now. He's answering a question about whether there could be some legislative amendments to the Affordable Care Act, to deal with some flaws, and he's saying that nothing can be done until Republicans change their attitude. They need to get through their "stages of grief" "stuff." Why the Kübler-Ross model? It's that meme that the Republicans are dying! They need to deal with their death, eh?!

Well, the first stage, which Obama put second of the 2 stages he bothered to enumerate before resorting to "all that stuff," is denial, and of course, the Republicans are going to deny that they are dying. As for anger, that's stage 2, and why shouldn't a political party get angry over its setbacks and want to fight for what it believes? Obviously, in life, when we are actually dying, getting angry is a stage, because anger isn't going to conquer death. But this is politics, not dying, and plainly the fire will rage on.

The stages Obama failed to enumerate are: 3. bargaining, 4. depression, and 5. acceptance. Maybe he didn't want to say bargaining, because he doesn't want his party to have to bargain with the other side. He just wants the GOP to get over it. The analogy to dying is, once again, terrible. Because in the stages of death scenario, the dying person seeks to avert death by somehow finding a way to make a deal, perhaps with God. Obama doesn't want to talk about deal-making. He wants the Republicans to give up and die already.

As for depression, I guess he's hoping the GOP will reach that point, but that's unlikely in this election year, and clearly he knows it. Ditto acceptance. But let's not talk about "all that stuff."

By the way, the Kübler-Ross model isn't too scientific. And to tell someone who's angry and unaccepting of a political situation that they should go away until they've accepted what is being done to them sounds to me like taunting and bullying. There's absolutely no reason why they should back down because some of their emotions correspond to Kübler-Ross's (bogus) stages. You're saying if someone doesn't believe that a political cause is dying or feels angry at the idea that it's dying, all you need to do is wait out the process, because bargaining and depression need to occur and then you win because finally there will be acceptance. Infuriating nonsense! It only intensifies and justifies the anger. Your opponents aren't just going through a "stage," and you sound inert and supercilious talking about them that way.

Jensen Comment
I'm just not willing to accept the ACA as a success no matter how many people sign up for the only show in town right now. It has become a political "show" where politicians are avoiding the main failures of the ACA.

A huge problem is that millions of employer-subsidized plans are being dropped in favor of inferior high-deductible plans having much more limited access to doctors and hospitals. Here in New Hampshire nearly half the hospitals and far too many physicians are refusing to accept ACA covered patients.

Rationing of health care in one form or another is probably inevitable given that it is so costly and virtually every nation has a shortage of physicians and other health care workers and facilities. In the USA we've unfairly rationed and still do ration health care on the basis of income. For example, the somewhat poor people not eligible for Medicaid often can now only afford the high deductable Silver or Bronz ACA plans that have 30% or 40% deductibles that highly discourage seeking medical treatment --- a type of rationing based on income.

With such high deductibles people who cannot afford their share of the doctor and hospital bills will put off medical diagnosis and treatment until their ailments become critical. The is ACA rationing on the basis of income and economic choice such as getting a new car or a new knee.

Having said this, the USA will probably have to live with the ACA as written until it is significantly improved by Congress or the courtsw. Here are a few of my major concerns where improvements are drastically needed.

There are no easy answers here. I hope President Hillary Clinton reignites her preferred option of taking the private sector insurance companies out of universal health coverage in a government administered plan that takes us closer and closer to the German system for health care insurance.

"What Sweden Can Teach Us About ObamaCare:  Universal public health care means the average Swede with 'high risk' prostate cancer waits 220 days for treatment," by Per Bylund, The Wall Street Journal, April 17, 2014 ---

President Obama has declared the Affordable Care Act a success—a reform that is "here to stay." The question remains, however: What should we expect to come out of it, and do we want the effects to stay? If the experiences of Sweden and other countries with universal health care are any indication, patients will soon start to see very long wait times and difficulty getting access to care.

Sweden is praised as a rare example of a socialist country that works. A closer look at its health-care system tells a different story.

The overall quality of medical services delivered by Sweden's universal public health care consistently ranks among the world's very best. That quality can be achieved by regulating treatments to follow specific diagnoses as well as by standardizing procedures. If ObamaCare regulations do this, the quality of American health care may not go down either.

Sweden's problem is access to care. According to the Euro Health Consumer Index 2013, Swedish patients suffer from inordinately long wait times to get an appointment with a doctor, specialist treatment or even emergency care. Wait times are Europe's longest, and Swedes dependent on the public-health system have to wait months or even years for certain procedures, or are denied treatment.

For example, Sweden's National Board of Health and Welfare reports that as of 2013, the average wait time (from referral to start of treatment) for "intermediary and high risk" prostate cancer is 220 days. In the case of lung cancer, the wait between an appointment with a specialist and a treatment decision is 37 days.

This waiting is what economists call rationing—the delay or even failure to provide care due to government budgetary decisions. So the number of people seeking care far outweighs the capabilities of providers, translating into insurance in name but not in practice. This is likely to be a result of ObamaCare as well.

Continued in article

Jensen Comment

Rationing of health care in one form or another is probably inevitable given that it is so costly and virtually every nation has a shortage of physicians and other health care workers and facilities. In the USA we've unfairly rationed and still do ration health care on the basis of income. For example, the somewhat poor people not eligible for Medicaid often can now only afford the high deductable Silver or Bronz ACA plans that have 20% or 40% deductibles that highly discourage seeking medical treatment --- a type of rationing based on income.

I'm in favor of nationalized health care. Between 2008 and 2010 the Democrats had substantial majorities in the House and Senate and an enormously popular President Obama could've legislated nationalized health care without any help from a single Republican. Instead the Democrats  blew it and gave birth to an abomination that is yet another unfunded entitlement nail in the coffin of the United States.

But every system has rationing in some form or another. Rich Canadians unwilling to wait many months for treatments pay cash in the USA for immediate health care. Rich Swedes go elsewhere as well, often to Switzerland or the USA.

I also like Germany's combination of public and private health insurance system for a number of reasons, including the fact that it like the health plans of most other nations is a pay-as-you go plan.
Health Insurance in Germany --- http://www.toytowngermany.com/wiki/Health_insurance

Don't confuse wanting a government-managed health care system like the one in Germany with the private insurance company rip off in the ACA in the USA where insurance companies have guaranteed profits while shifting the bad debts to the doctors and hospitals.

To add pain to misery these ACA insurance companies are offering over-priced policies with enormous deductibles that discourage patients from having medial treatments except in emergencies.

Hopefully, President Hillary Clinton will have the courage to reduce for-profit insurance companies to offer only supplemental elective plans like they do in Germany and for Medicare in the USA.

I vote for the German system that operates a lot like Medicare for all ages of citizens but with better fraud controls. I used to lean toward the Canadian system, but it's elective medical procedure delays for new hips, knees, and shoulders forces too many Canadians to pay cash for such procedures in the USA. when they grow weary of waiting out Canadian health plan approval.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

What Sweden can also teach us about youth unemployment

"Sweden: Highest ratio of youth unemployment," United Nations Regional Information Centre for Western Europe, March 12, 2012 ---

Unemployment among the under 24’s in Sweden is 24.2%, or four times the average unemployment rate of 8%. The average for those aged 25-54 is 6.1%.

Germany, Switzerland and Japan are the only three OECD countries where youth unemployment is less than twice the average rate of unemployment.

The high ratio of unemployed youth in Sweden is not necessarily linked to the world economic crisis according to the Union of Swedish Employers which means that the reasons are structural.

Blame it on education
Both employers and the Federation of Swedish Trade Unions (LO) agree that the education system, is partly to blame. Too many young people graduate without the necessary skills for the job market, partly due to their own choices.

“About 20-25% do not get adequate school results. Of those who do, many choose an education where there are more graduates than are needed. We often cite education in such sectors as tourism, media and professions such as hairdressers as examples,” Christer Aagren, Deputy-Director of the Swedish Employer’s Union told the newspaper Aftonbladet recently.

The young do not have a chance to get any experience in the job market. “Many young people do not have any experience of working; which can be obtained by internships or working part time with school. If, in addition, your junior high school studies are not successful then you are in a bad place, “says Thomas Carlén, economist at the Federation of Swedish Trade Unions.

There is disagreement on how to fight youth unemployment. The Employer’s Union demand more flexibility and lower mininum wages. The trade unions, on the other hand, want more subsidies to create jobs for the young and long time unemployed.

“There is a growing group of youngsters who are not attractive for the job market. This is expensive for society, but most importantly it is terrible for those individuals, “ says Mr. Carlén.

The German model
In Germany the youth unemployment ratio is only one and a half times as big as unemployment in general. According to a recent article in the British weekly the Economist, one of the reasons is an apprentice-style approach which is also practised in the Netherlands and Austria with similar results.
•    In Germany a quarter of employers provide formal apprenticeship schemes and nearly two-thirds of schoolchildren undertake apprenticeships.
•    Students in vocational schools spend around three days a week as part-time salaried apprentices of companies for two to four years. The cost is shared by the company and the government, and it is common for apprenticeships to turn into jobs at the end of the training.
However, the German export driven economy based on manufacturing may be better suited to this approach than more service-oriented economies.

Ever heard of the new phenomenon Precariat?
According to Eurostat, 20.9% of young people are unemployed in Europe.

When young people finally find a job, it may be an unstable one, being part-time, flexi, or temporary. Often they are trapped in countless internships or endless probationary periods. Also, they may be over-qualified for the positions they obtain. And, in some countries, being young means earning less, because of pre-established payment rates based on age categories.  

A new word has been created to explain a new phenomenon that many young people are facing. ‘Precariat’ results from the combination of two words: ‘precarious’ and ‘proletariat’.

The British economist, Guy Standing, divides the Precariat into three groups; workers from the former proletariat; young people with too many qualifications who are unemployed or precarious employees and finally, migrants.  

According to the Economist, “in tough times young people are often the first to lose out. They are relatively inexperienced and low-skilled, and in many countries they are easier to fire than their elders. This all goes to make them obvious targets for employers seeking savings, though their low pay can redress things a little.”

Continued in article

Swedish crime, often violent crime like sexual assaults, increased with the ghettoization of these immigrants ---
Unemployment is higher in these ghettos.
Norway had a similar experience where in 2012 all the rape convictions in Oslo were violent sexual assault crimes of recent immigrants.

Disgrace: Phoenix VA Dumps Sick Veterans Into 'Secret Waiting Lists,' Some Die of Negligence ---

Prepare to be enraged by this exclusive investigative report from CNN. As Allahpundit notes, the media has been documenting the VA's egregiously poor treatment of our veterans for some time, blowing the whistle on horrific conditions and scandalously long wait times for care. But the new revelations introduce an additional, more sinister, element into the equation: Lethal, ass-covering corruption. An absolute disgrace:

Continued in article

Q: If you die does that deny you funding for installed new body parts sometime in the future?

Medicaid paid $12M for Illinois dead, audit finds

The motto in Illinois is that when the dead vote they're entitled to more Medicaid funding.

Bob Jensen's Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/