Money Management Mishaps – Page 7

Basic Income Only Strengthens The Ruling Class

There appears to be a worldwide competition to see which country can implement the stupidest idea. Possibly heading the United States’ competition are the basic income advocates:

Basic Income Action is, according to co-founder Dan O’Sullivan, “the first national organization educating and organizing the public to support a basic income.” In an email, he tells me that “Our goal is to educate and organize people to take action to win a basic income here in the US.”

Interest in a basic income, also called a guaranteed or universal income, an annual unearned salary, or just “getting handed a giant lump sum of free cash every year,” is percolating. Of late, it’s been the subject of magazine features, it’s been championed by economists from major financial institutions, and it’s even been touted on the presidential campaign trail.

Basic income is an appeal idea to many for the simple fact that it promises everybody a salary for doing nothing. It’s an idea so appealing even some libertarians have been suckered into it (and then had their arguments ruthlessly decimated). And according to its advocates it will help topple the power of the ruling class (or the “one percent” as they call it):

Perhaps the biggest thrust of the basic income movement’s argument is that technology is eliminating jobs, and they’re not coming back. (Hence we see more wealth accumulating at the top 1 percent, the class that happens to own the bulk of the automated labor; and an infamous economic recovery that has largely benefitted the rich, not the middle class.)

I’ve already addressed the fallacy of technology eliminating jobs so I won’t go into that more here. What I want to address is the ludicrous claim that basic income will somehow loosen the grip of the ruling class.

Where, exactly, does the money to fund basic income come from? Basic income advocates will tell you it comes from taxes. Somehow they miss the fact that taxes are monies collected by the State, which is yet another name for the ruling class. In other words basic income gives the top one percent yet another justification to steal money from the people. More insidious though is that it makes receivers of basic income even more dependent on the top one percent.

It’s a trick the federal government has used for decades. After collecting taxes from each state the federal government then redistributes them under the friendly title of “aid”. Some states end up getting more than they paid in while others receive less but none of the money is given without strings attached. Each state is then told to either do what they’re told or their money will be cut off. For states that receive more than they pay this is especially bad because they’re receiving the sweet end of the deal. But even the states that receive less than they pay don’t want to piss off the federal government because they would then lose more money. So you end up with a system that allows the federal government to dictate any number of terms to the states.

Basic income would allow for the exact same thing on an individual level. After collecting taxes the State could, and certainly would, attach a number of strings to basic income. If you didn’t comply you wouldn’t get a basic income. For people entirely reliant on basic income this would effectively mean they would be entirely without money. Those who had an additional revenue source would still stand to lose a sizable chunk of cash and would therefore also be motivated to comply. Anybody who pays any attention to politics in this country can already tell where this would lead: the further empowerment of the ruling class.

Basic income is just another statist wet dream. It sounds benevolent on the surface but would only serve to further entrench the oligarchy. Toppling the ruling class requires decentralization. Their tools of control must be rendered impotent. Granting them even more power over the populace’s livelihood accomplished the exact opposite.

Apparently Selling the Same Thing for More isn’t a Viable Business Strategy

I have a fairly sizable firearm collection. In addition to a plethora of other firearm models my collection includes a few AR-15s and 1911s. None of those AR-15s or 1911s are Colts though. With so many manufacturers building AR-15s and 1911s I never understood paying such a premium for a Colt. As it turns out I wasn’t the only one. Apparently charging twice as much for the same thing isn’t a viable business strategy:

Gun maker Colt Defense LLC plans to file for chapter 11 bankruptcy-court protection by Monday, according to people familiar with the matter, amid business-execution issues and a heavy debt burden.

The company has secured financing from its existing senior lenders to continue operating while in bankruptcy and expects to remain in business after the restructuring, the people said.

Colt fell into the same rut as many other well-known manufacturers. Instead of continuing to innovate Colt tried to skate by on its name. The last new firearm Colt announced, the 901, was still little more than an AR-15 that could be converted from 5.56x45mm to 7.62x51mm. Colt’s strategy wouldn’t have been so bad if it hadn’t felt that its name justified such a hefty price tag.

It’ll be interesting to see whether or not it came claw its way out of this mess.

DRM, Not Even Once

Keurig, the manufacturer of a machine that makes a single cup of coffee, recently implemented Digital Rights Management (DRM) (and oxymoron of a term, I know) on its latest model to prevent users from using cheaper third-party coffee grounds in the machine. This did not sit well. In its lust for money by forcing people to buy its overpriced coffee in addition to its coffee maker Keurig managed to pummel its stock price:

Sales of Keurig brewing machines and accessories tumbled 23% in the first quarter compared to the prior year.

The company had a lot of excuses, but the basic problem is there are too many Keurig machines in stores and people aren’t buying them, especially the newest Keurig 2.0 model.

“We do have some headwinds,” said Chief Financial Officer Fran Rathke on a call with analysts.

Investors are fleeing the stock. Keurig (GMCR) dropped 10% Thursday when the market opened for trading. Shares are now down more than 25% this year.

It’s a big change for the company which had been one of the hottest stocks in 2013 and 2014 and does over $1 billion in sales.

CEO Brian Kelley says he’s listening to consumers and is ready to make changes. The biggest frustration for customers is that the 2.0 model only brews Keurig branded coffee cups.

Let this be a lesson to other companies. If you try to control how your customers use your product you’re going to have a bad time. Companies like to use the combination of DRM and selling a device that relies on consumables at a loss. The most famous market that has built an industry around this combination are printers. Most printers are solder either at a loss or for no profit with the expectation customers will buy overpriced printer ink from the manufacturer. DRM is usually used to prevent third-party ink cartridges from functioning although the schemes are almost always bypassed.

Keurig thought it could get away with such a scheme for its coffee maker. But I think Keurig made a fatal mistake. If you’re going to use DRM you really should use it from the start. When consumers are used to using your product in a certain way they probably won’t be happy if your change the rules on them. And when entire companies exist from selling a product that’s used in you’re device you’re going to have some major players investing resources into bypassing your DRM scheme.

Keurig really fucked up and their stock price shows it. This should be a lesson to every company that DRM is something you shouldn’t even try once.

Your Government at Work

When people discuss government waste the topics of extravagant dinners, vacations, lifetime healthcare for politicians, etc. usually come up. However the topic of law enforcement doesn’t come up nearly enough. Truth be told federal law enforcement agents are some of the biggest wasters of tax victim money out there. Consider the Federal Bureau of Investigations (FBI). One minute it’s creating terrorists for it to stop and the next minute it’s investing years into studying the lyrics of a song with several other alphabet soup agencies:

You know the song. You also know the lyrics are completely indecipherable. However, with Ely’s death, there’s been renewed attention to the fact that the FBI spent nearly two years investigating the damn song. It is just as ridiculous as it sounds, but the FBI has released the file on its investigation and it’s a rather hilarious read. It turns out it wasn’t just the FBI, but involved the FCC and the Post Office:

Apparently people reported that the song Louis Louis was obscene so the federal government decided it need to investigate just in case it had to stop down some free speech. But it gets better. Wasting money of fruitless investigations isn’t the only way the FBI has to waste money. Failing to call up other government agencies that could actually solve the investigation immediately is another way it likes to waste money:

Also, as Marc Randazza notes, it took nearly two years for someone in the FBI to think, hey, isn’t the song registered at the Copyright Office down the street? Maybe we should send someone over there to find out what it says? This was after the FBI had reached out to the record label (who gave them the accurate lyrics) along with the original author of the song, Richard Berry, who told them the lyrics.

Government waste comes in many forms and a lot of those forms have to do with enforcing victimless “crimes”. Even if the lyrics of Louie Louie were obscene no crime was committed because offensive lyrics don’t harm anybody.

Why the Government Sucks at Building Roads

A common phrase you’ll hear amongst libertarian circles is “But without government who will build the roads?!” This phrase is a sarcastic remark meant to poke fun at statists who cannot conceive of an alternative to government transportation infrastructure. While statists continue to claim that government is necessary to build and maintain roads, us libertarians are asking why government roads suck so much.

As I mentioned yesterday, Minnesota has a lot of dilapidated bridges. Anybody who drives the roads around here knows that bridges aren’t the only part of our automobile infrastructure that sucks. Some roads are so full of potholes that I feel as though the off-road package on my Ranger is necessary when traveling on the roads. No tax increases or surpluses seem to change anything. What’s the problem?

The problem is incentives. Statists scoff at the idea of private roads but the fact of the matter is private entities that derive profits from roads have an incentive to maintain those roads. Businessed, for example, want to make it as easy as possible for customers to get to them. Organizations that own highways want to provide motorists the best experience possible so they’ll keep coming back. Governments have no such incentives.

The two biggest problem with government roads are monopolization and mandatory payments. In many states the government maintains a near monopoly on road infrastructure. This is done through regulations that make building roads illegal or prohibitively expensive. Regulations usually take the form of outright bans, building permits, property taxes, arbitrary environmental restrictions, etc. Effectively the state declares a monopoly for itself on any notable infrastructure. If people living in a state need access to roads and don’t like what the state has provided they have no alternatives so there is no concern that users will go elsewhere. Even if users stopped using the roads they’re still required to pay for them. Taxes, after all, aren’t voluntary. Using private roads to get around wouldn’t exempt you from paying the state gas tax when you filled up your tank. Property and sales taxes, which are sometimes used in addition to gas taxes to build infrastructure, are also not optional.

When an alternative can’t exist and you have to pay for something regardless there is no incentive for the provider to make you happy. Motorists weren’t able to go to a different provider when the 35W bridge in Minneapolis collapsed due to government negligence because there were no alternatives. Minnesotans also didn’t receive a discount on their taxes as compensation for being unable to utilize the bridge. In fact Minnesotans were expected to pay more. How’s that for an incentive? If the state government neglected more bridges to the point of collapse it could then demand even more tax money.

There are no shortages of entrepreneurs who want to build roads so the idea that nobody will build them if the government doesn’t is preposterous. The real question is what incentive does the state have to provide motorists with quality infrastructure?

Minnesota’s Bridge Problem

The politicians here in Minnesota have been pushing to raise gas taxes. Thanks to a recently release report on the condition of Minnesota’s bridges [PDF] the politicians have the justification they need to sucker people into accepting the increase. Without the increase in gas taxes, according to the politicians and the people who are stupid enough to believe them, dilapidated bridges won’t receive the repairs they need. But within the report a critical piece of information exists that seems to be getting ignored by the alarmists:

And a staggering 90 percent (750 total) of Minnesota’s 830 deficient bridges are maintained by local entities.

Herein lies the biggest problem. A vast majority of the bridges in need of repair are locally owned and maintained. That means local governments are responsible for raising the funding necessary to repair or replace those bridges. As the report notes the only other option these local entities have is to get down on their knees and beg federal and state governments for consideration in budgets they are unlikely to get:

In MAP-21, the current federal transportation law, Congress reduced access to dedicated funding for the repair of most locally-owned bridges. Although these bridges account for nearly 90 percent of all deficient bridges nationally, all dedicated federal bridge repair money now goes toward the ten percent of deficient bridges on the National Highway System (which do, admittedly, carry far more traffic each day.)

These locally-owned bridges provide essential links, and those who use them also deserve to be safe. Given the budget woes of so many local governments, there is little prospect of reducing the repair backlog absent federal or state assistance. As it stands now, however, these bridges are forced to compete with all other local priorities such as health care and public safety. At the state level, these bridges are often at the mercy of the budgeting process, and unless the state’s overall transportation budget grows through an increase in the gas tax or other funding sources, the condition of these bridges is unlikely to markedly improve in the coming years.

So the federal government only gives money for the maintenance of state-owned bridges and the state seldom provides local entities with assistance to repair or replace bridges. Supposedly increasing gas taxes will net more funding for local entities but I fail to see the logic in that conclusion. Especially when you consider how the state divvies up transportation funding:

In Minnesota, out of the $627 million on average spent annually on road expansion and repair from 2009-2011, only 40 percent ($250 million) went toward repair and maintenance.

The state appears to be more concerned with building new infrastructure than it is with maintaining what already exists. Unless somebody knows of some change in heart that exists at the state level I don’t know why anybody would believe additional gas taxes wouldn’t be used to increase expansion instead of maintenance.

What incentive does the state have to priorities local infrastructure over its own? Given the option of improving your home or your neighbor’s home what would you choose? Most people would choose to improve their own. For some reason people believe that the state is an exception to the self-interest inherent in humanity. It’s not. There is no reason to believe raising gas taxes would provide local governments with funding to improve their decaying bridges. And even if there was an assurance given by the state it could go unfulfilled or the conditions could be changed a year later. The biggest problem with political solutions is that they only last as long as the currently rulers. If the next set of rulers decide the last set’s policies were undesirable they will change them.

Without Government Who Would Raise the Gas Tax to Build the Shitty Roads

It’s no secret that the roads here in Minnesota are shit. This state will forever be known as the one that let a major bridge deteriorate to the point of collapse. In addition to shitty bridges the potholes here are so numerous that you practically need an off-road vehicle to go to the grocery store. Fortunately the state has been bleeding tax victims pretty hard so it now has a $1 billion surplus that can be used to fix the roads. Just kidding. The Senate just passed a bill that would raise Minnesota’s gas tax. To justify this even greater theft the Senate is bullshitting us about using the money to fix the roads:

The Minnesota Senate has passed a bill that funds road and bridge repairs by raising the state’s gasoline tax.

The plan would raise more than $6 billion for infrastructure repairs by adding a 6 1/2-percent wholesale tax on gas sales and hiking license tab fees. It also funds mass transit projects with a sales tax hike in the seven-county metropolitan area.

I guess that surplus is needed for better things such as a fancy new building for our rulers to rule from. With $1 billion of extra cash on hand they could make the entire facility out of marble and have a solid oak desk for each member of the ruling class!

It’s only a short hop for me to cross the river into Wisconsin and that sounds more appealing every day. That’s not to say Wisconsin is some kind of paradise but at least the rulers there will allow me to own a suppressor and seem less determined to bleed me completely dry immediately.

Defrauding Advertisers

Since I have a lot of libertarian friends it’s no surprise that I see a lot of articles posted on a websites called the Libertarian Republic on my news feed. Personally I have avoided linking to the site with one exception. This is because the site has the atrocious practice of creating top 10 (or whatever arbitrary number they choose) lists where each item is on a separate page. That means you have to click 10 fucking buttons to get through the entire list. I always knew this tactic was to artificially raise the number of page clicks to game advertisers but I never though I’d see one of the administrators of the site so brazenly admit to it. The site recently posted a bullshit top 10 list of reasons why Rand Paul should be elected president (when the site says libertarian it means statist libertarian, which is why I don’t read it). On the site’s Facebook page somebody asked why these top 10 lists always require 10 goddamn clicks to get through and one of the admins chimed in:

So the site is planning on charging readers to see top 10 lists on a single page. I don’t fault the admins of the site for wanting money and see nothing wrong with charging for a service. However the admin’s followup lead me to ask another question:

Aren’t the Libertarian Republic’s advertisers customers? Isn’t artificially raising the number of page clicks by requiring readers to click 10 times to read a single article defrauding those customers? When you think about it the Libertarian Republic is selling its customers a lot of clicks without providing as many potential readers. Since a site admin claims they care so deeply about customers wouldn’t you think the site would not try to artificially increase the number of clicks by shamefully cutting up top 10 lists into 10 separate pages?

If I were an advertiser on that site I would be a bit miffed that clicks were being inflated through this practice. I might even consider it an act of fraud if sale units of ads were purchased on a per click basis.

Again, I don’t fault the site administrators for trying to make a buck. I do find their claim of being interested in customers a bit dubious when they split top 10 lists up like this specifically to sell more ads though. And if they treat their advertiser customers like this then what incentive do I have to buy a subscription (not that I would since I’m not interested in paying for another statist rag)?

Colt on the Verge of Bankruptcy, Again

It appears, once again, Colt is on the verge of bankruptcy. Nobody appears to be shocked by this. Colt has a long history of making decisions that could be generously called questionable. In fact BusinessWeek has put together a nice summarized history of Colt. The article is focused mostly on Colt’s bad decisions because, frankly, there aren’t a lot of good decisions to look at. For me the dumbest decision the company made was all but abandoning the civilian market in favor of focusing on the military market after it had lost the contract to produce the sidearm and rifle for the United States military:

In the 1970s, Colt and other American gunmakers, following the bad example of Detroit’s Big Three automakers, grew smug and lazy. Like Japanese and German car companies, more nimble foreign gunmakers grabbed market share. By the 1980s, Smith & Wesson had lost the U.S. police to Austria’s Glock, while Colt saw Italy’s Beretta snatch its main U.S. Army sidearm contract. In 1985, Colt plant employees who belonged to the United Auto Workers launched a protracted strike for higher pay. Replacement employees weren’t up to the task, and “quality suffered badly,” says Feldman, then an organizer for the National Rifle Association. In 1988 the Pentagon gave Colt’s M16 contract to FN Herstal of Belgium. Four years later, Colt filed for bankruptcy court protection from its creditors. “With the end of the Cold War,” says Hopkins, the firearms marketer, “it seemed like the company might never recover.”

[…]

In 1999, Zilkha named a new CEO, William Keys, a retired three-star Marine Corps general. The company announced it would end production of all but a handful of civilian handguns and focus on military production. As a reporter at the Wall Street Journal during this period, I interviewed a memorably glum Zilkha. He complained that on top of his other problems, he felt unfairly targeted by gun rights activists who criticized his past contributions to Democratic New York Senator Charles Schumer, a vocal proponent of stricter gun control. When I suggested to Zilkha that he seemed to regret ever having entered the gun business, he didn’t argue.

Admittedly Colt has backed away from the decision over time. Now if you want an authentic Colt firearm you can get one but it will cost you your first born child. I know a few people who still herald the Colt 1911 as the end all be all in 1911s but I could never figured out what Colt 1911s do that other 1911s manufactured by reputable manufacturers for less don’t. Maybe the stamped on mustang makes the slide move faster, I don’t know.

That’s the other thing. Releasing 1911s is fine and all but there are approximately eleventy bajillion 1911 manufacturers out there. Name alone is seldom enough to keep one relevant in a market for very long. Smart manufacturers try to provide some kind of innovation be in new models of firearms or firearms designed to service niche markets. As far as I can tell Colt does neither.

I wouldn’t be surprised if the Colt name is bought up by a foreign manufacturer at a fire sale price. While the name alone isn’t enough to keep one in the market it certainly would offer quick credibility to a new manufacturer looking to enter the market (since a lot of people will mistake the new Colt for the old Colt just as many people mistake Springfield Armory, Inc. for the Springfield Armory of lore).

New Social Media Site for the Rest of Us

Are you sick of seeing people on your social media sites buying cheap, tacky Rolex watches? Do you wonder why you have to suffer through posts of friends posting their shitty Ferrari (seriously, couldn’t they afford a real car)? Do you tire of Facebook and Twitter showing you pictures of puny yachts? Are you simply sick and tired of the problems of poor people appearing in your social media feeds? Well I’ve got good news for you, there’s a new social media site that will free you from all of this drudgery:

For a cool $9,000 first-year membership fee (and $3,000 a year every year after that), high-rollers can crowdsource names for their yachts or complain about having to fly commercial to a like-minded, sympathetic audience. Netropolitan is billing itself as “the world’s most exclusive online community,” one that will allow “affluent and accomplished individuals worldwide to socialize in a completely private and secure manner.” With the hefty subscription prices, Netropolitan can afford to be ad-free. And the posts will be moderated by the company’s own “professional moderators.”

$9,000 for the initial year and $3,000 for every year after that is a positive steal for getting away from Facebook and Twitter and their poor pauper users. Never again will you have to be burdened by the pathetic annoyances of serfs. So run along and join your diamond encrusted circlejerk today!