Ulterior motives?

So after visually seeing how taxes are allocated on the federal and state levels on xkcd yesterday, something that should have been rather obvious occurred to me.

The political right has been pushing hard for smaller federal government lately, and letting the states individually run everything from healthcare, to education, to infrastructure and to environmental protection. The argument has always been that more local government would better understand and more efficiently serve their constituents needs and wants. It doesn't make that much sense to me since I actually have experience in how economies of scale work, but I can at least understand their argument of states' rights to an extent.

The trick is though, daddy is gonna have to be paid, some way, some how. The roads aren't going to build themselves, the water isn't gonna treat itself, the kids aren't gonna educate themselves. While they would have you believe that 90% of the money that goes to the IRS disappears into a black hole never to be heard from again, the truth is the vast majority of that money goes to things that are extremely worthwhile and would be sorely missed if they were gone. The truth is that the people would still demand these services, just the state would have to start picking up the tab. As federal income tax goes down, state taxes will have to go up. So essentially they are trying to shift the burden of taxation from the federal level to the state level.

Here's the real rub though: while federal taxes are progressive, state taxes are regressive. They will shift the burden of taxation further down the food chain in a more covert manner than what they have been trying to accomplish in the US Congress. It's just one more way to reduce the taxes for top 1%, especially since it is so much easier to loophole your way out of state taxes than federal ones.

Odd.


Why Is China Building These Gigantic Structures In the Middle of the Desert?

The Panasonic DMC-GX1

I wrote a little bit on the Panasonic GF1 almost exactly 2 years ago and have been enthralled by it since.  I never did buy one, but really only because I've made a decision to not invest in any camera equipment.

Since the release of the GF1, the GF2 and GF3 have been released, but really did nothing for my cameralust since they were obviously moving the line from an enthusiast focus to more of a consumer one.  Probably a smart move on their part, albeit a little disappointing to me.

Yet behold, the true successor to the GF1 has been born: The GX1.  That camera with the 20mm f/1.7 pancake would be an awesome daily shooter for me.  It is what I was hoping Nikon's V1 would be.

But Why?

It still befuddles me why any reputable news source would allow public commenting on their articles.  It's a breeding ground for crazy.

Missing the point.

Congress, in their infinite wisdom, decided to limit the swipe fees that merchants pay when someone uses a debit card.  Okay, sounds good, right?  Banks were making a metric shitton of cash off the operation because they did it in such a way that made the customer never even realize it was there.  They assess the fee to the merchant, then under the merchant agreement, prohibit the merchant from assessing those fees to the customer.  I.e. the merchant can't say, "oh, you're using a debit card, let me add $0.45 to your bill".

So the merchant is forced basically to raise his prices across the board, for everyone.  The price goes up no matter how you pay.  He's got to recoup that money somehow.

By all accounts, those fees were pretty exorbitant, and were in fact one of the biggest money making mechanisms for the big banks.  There's really little cost to them in operating the system, so all those little fees add up to big profits that essentially subsidized the not-so-profitable traditional banking services they provide.  This allows them to attract more customers with free checking, better savings rates, etc.  Those customers will then use their new debit card to give them more fees and the cycles continues to grow.

So yes, some "solution" needed to be put in place to keep banks from gouging customers, and more importantly help keep "non-customers" (i.e. the cash and check toting folks) paying for their profits.  However, the solution that Congress enacted was completely the wrong one.  By abruptly ending a large source of profits for the banks, the banks are scrambling to make that money up.  We saw the $5 debit card fees pop up, which in reality is an okay solution... charge the people that use the service.  However, all the customers balked at that (whaddaya mean we got to pay for a service we use???) and the banks have retreated.  Any minute now though, the banks are going to come up with some other method of making up that cash, and chances are it isn't going to be transparent.

So what should Congress have done?  They should have let capitalism do what capitalism does best.  Despite its flaws, there are some things it does really well.  They should let customers decide what transaction fees they are comfortable with, on both credit and debit cards.  They should simply make it compulsory for the merchants to pass all those fees directly on to the customer.  Let the customer see exactly what every swipe is costing them.  This opens the market to competition by directly pitting the banks against each other.  Oh this bank charges me $0.45 + 1% for each transaction?  That's okay, I only use the card for big purchases.  This one charges me a flat 3% with no minimum?  Cool, that'll save me money because I'm always buying packs of gum...

So, I urge Congress to rethink how they attempted to fix the issue with swipe fees, and to do so in a way that takes advantage of the perks in the capitalist system.

Not to mention, it would get rid of all those "Minimum credit card purchase: $5.00" signs.