Government and Taxes: Eric Jurado

Showing posts with label Eric Jurado. Show all posts

Wednesday, March 14, 2018

Pol Ideology 73, On BIG powerful government

I am reposting another good article by a friend, Eric Jurado. Enjoy.

Do you believe in a powerful government?

One of the most important differences between the Left and the Right is how each regards the role and the size of the government.

The Left believes that the state should be the most powerful force in society. Among many other things, the government should be in control of educating every child; should provide all health care; and should regulate often to the minutest detail how businesses conduct their business. In Germany, for instance, the government legislates the time of day stores have to close. In short, there should ideally be no power that competes with Government. Not parents, not businesses, not private schools, not religious institutions—not even the individual human conscience.

Conservatives, on the other hand, believe the government’s role in society should be limited to absolute necessities such as national defense and to being the resource of last resort to help citizens who cannot be helped by family, by community, or by religious and secular charities.

Conservatives understand that as governments grow in size and power, the following will inevitably happen:

1. There will be ever-increasing amounts of corruption. Power and money breed corruption. People in government will sell government influence for personal and political gain. And people outside government will seek to buy influence and favors. In Africa, Latin America, and the Philippines, government corruption has been the single biggest factor holding nations back from progressing.

2. Individual liberty will decline. With a few exceptions, such as an unrestricted right to abortion in America, individual liberty is less important to the Left than to the Right. This is neither an opinion nor a criticism. It is simple logic. The more control the government has over people’s lives, the less liberty people have.

3. Countries with ever expanding governments will either reduce the size of their government or eventually collapse economically. Every welfare state ultimately becomes a Ponzi Scheme, relying on new payers to pay previous payers; and when it runs out of the new payers, the scheme collapses. All the welfare states of the world, including wealthy European countries, are already experiencing this problem to varying degrees.

4. In order to pay for an ever-expanding government, taxes are constantly increased. But at a given level of taxation, the society’s wealth producers will either stop working, work less, hire fewer people, or move their business out of the country.

5. Big government produces big deficits and ever increasing—and ultimately unsustainable—debt. This, too, is only logical. The more money the state hands out, the more money people will demand from the state. No recipient of free money has ever said, “Thank you. I have enough.”

Unless big governments get smaller, they will all eventually collapse under their own weight—with terrible consequences socially as well as economically.

6. The bigger the government, the greater the opportunities for doing great evil. The twentieth century was the most murderous century in recorded history. And who did all this killing? Big governments. Evil individuals without power can do only so much harm. But when evil individuals take control of a big government, the amount of harm they can do is essentially unlimited. The Right fears Big Government. The Left fears Big Business. But Coca-Cola or SM can’t break into your house or confiscate your wealth—only Big Government can do that. As irresponsible as any Big Business has ever been at times, it is only Big Government that can build concentration camps and commit genocide.

7. Big government eats away at the moral character of a nation. People no longer take care of other people. After all, they know the government will do that. That’s why citizens of freer countries like America give far more of their money and volunteer far more of their time to charity than do Europeans at the same economic level.

Without the belief in an ever-expanding government, there is no left. Without a belief in limited government, there is no right.

Eric Jurado covers economic and political issues with liberty as his guiding star.

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Thursday, February 01, 2018

Inequality 34, Eric Jurado on the richest 1%

Another good article from a friend, Eric. Reposting this.

The idol ofequality

February 01, 2018 at 12:01 am

By Eric Jurado

Aren’t we all supposed to be equal? And yet the gap between rich and poor just keeps growing. We need to maintain equality among people. Isn’t vigorous government action necessary to keep the playing field level—to keep the wealthy and powerful from taking more than their fair share and oppressing everyone else?

There has been a lot said and a lot written about income inequality—about how unfair it is that a few people are very rich and the rest of us aren’t; that the income gap between the wealthy and even the middle-class, let alone the poor, is so large.

There’s only one problem with this complaint.

It’s wrong.

Income inequality is actually a good thing—when it is the product of a free market economy.

And your own life proves it!

An economy is made up of millions of individuals making decisions about their own lives—where and how much they want to work, what they want to buy, and so on.

You are one of those individuals.

In a free society, you are free to pursue a path in life that you believe best suits your talents. That talent might be teaching, or making music, or banking, or starting a small business, or raising a family. Whatever it is, this freedom helps to make life enjoyable, exciting, and meaningful.

But it’s also an expression of inequality. This is simply because we’re all different. We have different talents, different temperaments, and different ambitions.

That’s okay because—again in a free society—we can seek out opportunities that play to our personal strengths; that distinguish us from others.

If you find what you’re really good at and work hard, you might have great success and make a lot of money. If you’re an outstanding athlete, I’ll buy a ticket to see you play. If you’re a savvy investor, I’ll give you some of my money to invest.

As long as you have the freedom to guide your own destiny, you have a chance to reach your full potential—achieving success, however you define it. But if someone, say, a government bureaucrat, told you that your ambition had limits, that there was a ceiling above which you could not rise, I doubt you’d be happy about it. You’d feel like you were in a straightjacket.

Forced equality means less opportunity to pursue what makes you individually great.

But what about the growing gap between the rich, the 1 percent, and the rest of us, the 99 percent, that one hears so much about? Isn’t that a bad thing?

Again, the answer is no.

Here’s why:

In a free-market economy, people become wealthy making what the rich enjoy today into something almost everybody can enjoy tomorrow. The rich are the test buyers.

Consider the cellphone. Now we all have them, but when Motorola manufactured the first one in 1983, it was the size of a brick, had a half-hour of battery life, reception was terrible, and calls were very expensive. It cost $4000. But if no one had bought that $4000 brick, there wouldn’t be a $40 cellphone today.

In the 1960s, a computer cost over a million dollars. Nowadays, thanks to billionaires like Michael Dell, we have incredibly advanced computers that cost us a few hundred dollars.

Remember what out-of-reach luxury flat screen TVs once cost? Only the rich could afford them. Today, your living room is essentially your own private cinema.

The free market is about turning scarcity into abundance. What was once available to the few is now available to the many. Wealth inequality is an important corollary to that truth.

So, should I resent the people who became wealthy because they have more money than I do, or should I be grateful for the economic system that allows them to enrich my life and the lives of millions of other people?

This feature of the free market—income inequality—can appear terribly unfair. But with a little further investigation, the real picture becomes clear. Income inequality makes what once seemed like impossible luxuries available to almost everyone; it provides the incentive for creative people to gamble on new ideas; it promotes personal freedom, and rewards hard work, talent, and achievement.

In sum, income inequality signals that individual liberty, opportunity, and innovation are all present in a free economy. Pretty good for something that’s supposed to be so bad.

Two final points:

The 1% Club is always open to new members. And you don’t have to be in the top one percent to have a very good life. And that, not the existence of the very wealthy, is what matters most.

Eric Jurado is a hedge fund manager. He covers economic and political issues with liberty as his guiding star.

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Sunday, January 14, 2018

Pol Ideology 72, You love capitalism

I am reposting this good article in Manila Standard by a friend, Eric.
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You love capitalism

posted January 05, 2018 at 12:01 am

By Eric Jurado

You love capitalism. Really, you do.

And you can’t stand big government. Really, you can’t

Don’t believe me? Then I’ll just have to prove it to you.

Do you use an iPhone? Android? Macbook? PC?

Read on a Kindle?

Watch TV and movies on Netflix? Videos on YouTube?

Shop on Amazon? Zalora?

Listen to Spotify?

Search on Google?

Send money on GCash? Coins?

Grab a ride with Uber?

Drive with Waze?

Book a room with Airbnb?

Are you on Facebook? Or Instagram? Or Snapchat?

You probably use many, if not all, of these things, and, if you’re like me, you love them. In today’s world, they’re practically necessities.

Where do you think they came from?

From entrepreneurs with great ideas and the freedom to test them in the marketplace. That is what is known as . . . capitalism.

Now consider some other things you probably do:

Have you been to the LTO?

Gone through security at Naia?

Mailed a package at the Post Office?

Called the BIR customer service line?

Or called any government office, for that matter?

What’s the difference?

Why is going to Uniqlo so fun but going to the LTO so painful? Because one has nothing to do with government, and the other is the government. One needs to satisfy its customers to survive and grow. The other doesn’t.

The purpose of government is not to create products. And we don’t expect it to. But if you thought about it for a few moments, you’d realize you don’t want the government involved in just about anything private business can do. That’s because profit-motivated individuals have to work hard to please their customers—you. Government agencies don’t have to please anyone.

Call that BIR service line or any government service line, if you doubt me.

Can you imagine if Steve Jobs had to seek government approval for every new design of the iPhone? We’d have been lucky to get to iPhone 3G.

Look at Uber. Just a few years ago, summoning a private car and driver in a few minutes that would take you where you wanted to go was truly a service available only to the wealthiest people. But now, thanks to capitalism, private rides are an affordable option for ordinary people all over the world. Until Uber came around, if it started to rain in Manila and you wanted to grab a cab, good luck. Too many rain-drenched people and too few cabs available. Uber had a better idea. Rain falls. Demand for rides spikes. Raise prices to give more Uber drivers an incentive to hit the road. Ride-in-the-rain problem solved.

Airbnb is another example. Only a few years ago, if you were going on vacation with your friends or family, hotels were just about your only option. But hotels are expensive and often don’t provide all that much in terms of space, amenities or interesting neighborhoods.

If you wanted to find out if individual homeowners were making their homes or condos available for a few nights, you’d have to scour internet postings.

But then Airbnb came along, giving anyone with a computer or smartphone access to over two million homes in 190 countries. You can find places with hot tubs and pools; or, if you’re on a tighter budget, you can rent a room, or even just a couch.

Government never could have done this. What motivation would it have? How would it even know we wanted services like Uber or Airbnb? We didn’t know it, until risk-taking entrepreneurs made it possible. Thanks to capitalism. And no thanks to government which, more often than not, just gets in the way.

Why?

Because the government’s knee-jerk reaction is to regulate and control everything it can regulate and control. Otherwise, what would be the purpose of many government agencies and all those bureaucrats?

Cities across the globe are putting up barriers to slow down or shut down services like Uber and Airbnb. Making rules may be the only area where the government shows creativity. Economic growth has the best chance of happening in the absence of that rulemaking.

According to economist Adam Thierer, the internet, to use just one important example, was able to develop in a regulatory climate that embraced what he calls “permissionless innovation.” This approach to regulating allows entrepreneurs to meet their customers’ needs without first seeking government approval.

In sum, almost everything you enjoy using is a product of capitalism; almost everything you can’t stand is a product of big government.

So, do you love capitalism? Of course you do. You practice it every day. It’s time to preach it.

Eric Jurado is an independent investment banker and economist.