Global Warming Solved for $250MM
January 13, 2010
What happens when you take entrepreneurs and give them a global problem like ‘global warming’ to solve? They build a business. Tens of thousands of them have started companies focused on making money around global warming, but a few have actually tried to solve the problem. Microsoft’s ex-CTO, Nathan Myhrvold is one the few who has developed a very simple solution to global warming at a cost of $250MM. Literally, he has a fix for global warming, but what is the real cost?
Nathan’s idea as described by Mark Whittington is to, “run a hose up to the stratosphere with balloons and using that hose to pump out enough sulfur particles to dim the sun’s heat just enough to counteract the effects of global warming.” Al Gore can rest easy, Nathan can solve the global warming problem, but I am getting a little worried. If the climate is so easy to manipulate what is going to stop nation states from manipulating the weather for their own purposes?
For example, Putin suggested that ‘global cooling’ effects need to be addressed promptly. Russia has significant resources and could unilaterally decide to increase global temperatures by a few degrees. What would we do about it? Would we pay Nathan to reduce global temperatures to offset those increases? What if Hugo Chavez decided to reduce global temperatures even more? Would we increase them? Maybe we would create a global market for temperature. Each country could buy a temperature - the ultimate temperature would dictated by market forces. I guess this wouldn’t be fair to poor countries and we would need some of offset to protect them from industrialized countries in cooler climates who sought to warm their shores.
I don’t have an answer, but I thought I would try to spark a conversation…
Step One: Fix our immigration policy. . .
August 23, 2009
Is anyone else completely confused by our immigration policy here in the United States? Tara Hunt is having to head back to Canada because she can’t stay here unless someone else employees her. Elisa, a school Dallas public school teacher who I go to church with, had to go back to Mexico to wait for a new visa so she could continue to teach. Michael, the help desk manager at Architel has to head back to New Zealand each quarter for a new visa while we wait for his permanent visa. Why don’t we let highly educated immigrants with resources (i.e. money, connections and ideas) come to this country freely? Why limit their access?
Sarah Lacy is reporting that “foreigners attending US grad schools is ‘way’ down.“ Interesting stats:
- this was the first decline in five years (3% overall)
- one in four tech companies are started by immigrants
Why can’t we use some common sense when it comes to immigration? If you are smart, successful and want to stay - why not let you stay? Some of you may suggest, “well it isn’t fair just to let the ‘rich’ come to America”. As my mother explained to me growing up, “life isn’t fair and Mickey Mouse is a rat”. We need to figure out ways to attract educated and motivated people to our shores - immigrants built this country.
In 2006 I decided to put my own immigration proposal in writing. The comments were less than supportive. Specifically, my critics cite economic pressures such as the trade imbalance as reasons we need to retrench and prevent immigrants from taking jobs from Americans. What they fail to realize is that these new immigrants represent the best and the brightest from every corner of the world. We should be welcoming immigrants because they are our greatest asset.
When my ancestors left Europe they were joined by the smartest and most ambitious Europeans. This was good for America. Just take a look at Europes population (double that of the U.S.) and their GDP (approximately the same as the U.S.). Two hundred years ago we started out with very few people and less GDP than Portugal. Today we live in the most prosperous civilization in the history of the planet.
Our biggest risk is the possibility of the United States turning into Europe, e.g. declining population and declining percapita GDP. We need to rethink our policy of limiting immigration. Lets start by allowing the most intelligent and well-educated people from the world become citizens. For every engineer, doctor or programmer that leaves China, India or Russia, the more competitive we become in medicine, technology and science. We should be recruiting the these people, not figuring out how to keep them out.
Taking a little break. . .
August 13, 2009
The economy has put a damper on my startup posts. You may have noticed a serious decline in posts over the summer. This are actually going pretty well for my businesses, but it is hard to offer advice to others when I don’t have the answers. I have been increasingly negative so I decided to muzzle myself. More recently I have started blogging about political issues (long time readers will note I used to do both on this blog). Check out my latest writing on Conservative Muse, here are a few of my latests posts/rants:
- How much does it cost to buy a health care reform volunteer?
- Americans Not Representative of Americans?
- Obama Delegate Pretends to be a Doctor
- Climate Bill Killing Jobs
- Is sleeping through your town hall meeting better than taking phone calls?
- 61% of Americans Approve of Health Care Protests
- Democrats Caught Red Handed Carrying ‘Obama as Hitler’ Posters!
- Democrat Dirty Tricks? You Decide.
- Photo IDs Required at Town Hall Meetings!
- Dvorak: US CIO Kundra is a Phony?
David and I have big changes in store for SpringStage so don’t give up on me/us. We will be back in the game very soon - hopefully with a brand new direction that will add even more value to the local and national startup scene. In the meantime I hope you enjoy my political posts (FYI - if you are a Democrat I recommend ignoring my posts - sorry I am fairly conservative in my politics).
Does the U.S. need a new CIO?
August 12, 2009
I wrote a piece on my new ‘political blog’ titled, “Dvorak: US CIO Kundra is a Phoney?“ Basically a repost of Dvorak’s own post about our CIO found here.
Our founding document
July 2, 2009
Over this fourth of July weekend it is important to remember how a simple declaration started a revolution and allowed us to create our great republic. If you haven’t read the Declaration of Independence in a while, take a minute and read the words one more time.
When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.
He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil Power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For quartering large bodies of armed troops among us:
For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefit of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies
For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.
Iranian Freedom Rally Details
June 19, 2009
Our friend Vahid Bahzadi is organizing a Democracy Rally in support of the Iranian people. The event will be next Tuesday between 1-3PM at Dallas City Hall. If you want to volunteer to help just ping Vahid at Vahid.Behzadi@CyberCoders.com or Shawn Amoei at rxa2929@gmail.com.
We are planning to attend. If you can join us, wear a green t-shirt in solidarity with the Iranian people. If you can’t attend think about wearing a green shirt anyway. Millions of Iranians have risked their lives over the past week attending rallies in support of democracy - while our lives aren’t at risk it is our obligation as a free people to support people who are not free. As Thomas Paine said, “Those who expect to reap the blessings of freedom, must, like men, undergo the fatigue of supporting it.”
Venture Capital to be Regulated?
June 17, 2009
Earlier today, Obama’s team rolled out an 85-page document that lays out his plan to regulate the private equity and venture capital businesses. The plan creates three new agencies to oversee hedge funds, private equity funds and venture capital firms. Of course this drives me nuts. The reasons for our current situation are largely related to HEAVILY regulated businesses including insurance companies, banks, investment banks and mortgage companies. The systemic problems we are facing are NOT a result of venture capital firms. VCs have no leverage, don’t trade public securities or hold deposits for ordinary Americans. The Venture Capital business is one of the reasons our economy is so successful.
Why don’t we focus on what is broken instead? Why not reform the way investment banks can use leverage. Why not limit the percentage of the market a single insurance company can have? Our government’s existing regulators failed to recognize systemic risks that seem patently obvious today. Why hire a bunch more to regulate an industry with very little potential systemic impact? Is this Obama’s jobs program? Newly minted Ivy League grads who can’t find work on Wall Street will now be able to head to Washington to oversee the demise of American’s innovation engine - Venture Capital.
I don’t care if you are a Republican or Democrat - hopefully you are an entrepreneur (or love one) - if so call your Senator and Congressman and ask him NOT to pass Obama’s plan.
Memorial Day
May 22, 2009
Most Americans will be taking Monday off to celebrate Memorial Day. The official function of Memorial Day is to honor the men and women of the United States who have died while serving our nation’s military service. It is an American holiday, with obscure origins even though it is less than 150 years old, and claimed by many as their own patriotic invention. Officially proclaimed in 1868, Memorial Day became widespread by 1902, and was named a federal holiday in 1971. This Memorial Day you might consider decorating a grave and taking a moment of silence to reflect on the sacrifices made by our fellow Americans.
Entrepreneurs from the start . . .
April 15, 2009
When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.
He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil Power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For quartering large bodies of armed troops among us:
For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefit of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies
For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.
Join us.
How NOT to build an advisory board. . .
February 23, 2009
Thinking about building an advisory board for your startup? I think there are a couple of important lessons on ‘what NOT to do‘ to be learned from Obama’s Presidential Task Force on the Auto Industry.
Rule No. 1: Ensure that your advisory board has experience in the area where you need advice. Obama named 18 members to his Auto Task Force - the sole purpose of the group is to save the domestic auto industry. The problems with the team?
- Not a single member of the advisory board has ever been in the auto business. Even the transportation secretary, Ray LaHood, has no automobile, transportation or business experience (he was a school teacher before entering politics). The closest any member of advisory board has come to the auto industry is Ron Bloom, the Senior advisor on the Auto Industry for Treasury, who started out as an investment banker at Lazard Freres and ended up as a labor negotiator focused on corporate bankruptcies in an array of industries from steel to airlines. When you are looking for members of your advisory board, my advice is to pick a few with some real world experience in your space.
- Out of 18 members of the advisory board, only two drive American cars. Ron Bloom drives an aging Taurus, but I suspect that is because his largest client the UAW. (Geithner - Acura TSX, Summers - Mazda Protege, Orszag - Honda Odyssey, Jackson - Toyota Prius, Goolsbee - Toyota Highlander, DeBoer - Lexus RX350, Zichal - Volvo, Heinzerling - Subaru Legacy Outback, Utech - Mini Cooper S, and Bernstein - Honda Odyseey.) You might be surprised to learn that a few members like Carol Browner, Diana Farrell and Steven Chu don’t even own cars (Browner is the climate czar so we will give her a pass). So I am not sure whether or not owning an American car is an important factor, but to be sure you need to question the judgment of Rick Wade, senior advisor at Commerce, who drives a 1998 Chevrolet Cavalier - I thought rental car companies were the only owners of Cavaliers - a Cavalier? Can we trust someone who actually picked a Cavalier?
Rule No. 2: Ensure that your advisory board has experience in the area where you need advice. Really, I am not kidding. It is a VERY good idea to ask people with experience before tapping people who work for you. You want outside opinions and advice. Obama would have been better off picking 18 people from the Reagan International Airport lobby than he did. Don’t make the same mistake.
Ironically we are launching the Vietnam Startup Blog!
December 24, 2008
Word from Vietnam is that the government is tightening the rules on blogs. Our latest startup blog is from Vietnam (we should be launching in the next couple of days) and I am now a little reluctant to reveal our latest member of the SpringStage crew.
Maybe we need a slowdown?
November 28, 2008
One day after American’s sat down to give thanks, Wal-Mart customers in Long Island trampled employees and pregnant women as the rushed into the store killing one. Hundreds of shoppers knocked the employee down and stepped on him as they fought to get into the store. Even after emergency workers got to the scene and began trying to save the man’s life, shoppers eagerly streamed past the dying man to get into the store. The man was pronounced dead at 6:03AM and the woman was hospitalized for observation.
One employee was quoted, “They took the doors off the hinges. He was trampled and killed him in front of me. They took me down too…I literally had to fight people off my back.” And another, “They’re savages,” said shopper Kimberly Cribbs, 27. “It’s sad. It’s terrible” Is any deal so good that it is worth killing someone? And after you DO kill someone could you at least stop shopping to render aid? Here are pictures of the tragedy. It makes me sick…
The election is finally over, thank God.
November 5, 2008
Ethan, my seven year old son, and I talked about the election incecently over the past several months. He had scores of questions and some very interesting insights. Yesterday I took him to our polling place and he watched as I voted for John McCain. Ethan, hoping for my approval, voiced his support of John McCain frequently and loudly, sometimes remarking to our friends, “Yo momma can’t afford Obama…” Last night, as we watched the results come in I decided it was time to ’soften the blow’ suggesting that, despite all of our prognostications of gloom and doom if Obama was elected, everything would be fine if in fact he won.
This morning as Ethan and prepared for school I made a point to talk about how important this election was to our country. I tried to explain that Obama’s election was further proof that the American system works. In America, anything is possible. The truth of the matter is that I really believed what I told Ethan. I DO think America is the greatest country in the history of man. What an amazing experiment - an experiment that works. At the end of the day I am proud of our country, I believe in our system and our citizens. God bless America! Now it is time to get back to work. . .
Are you Joe the Plumber?
October 20, 2008
I would argue that most entrepreneurs are just like Joe the Plumber. Perhaps you aren’t as folliclely challenged as Joe, but your dreams are very similar. You dream of having your own business and that it would be successful. You believe in the American Dream, the idea that in America we strive for equality of opportunity and those who have the drive, energy and stamina can succeed.
Americans are not bound by the caste systems of the old world, instead America is where ANYONE can succeed. Joe Wurzelbacher is a simple plumber. He has a dream, perhaps a foolhearty dream, to own his own plumbing company one day. Your dream might be to build the next Google or 37Signals. Joe has seen the American dream work for scores of people from Bill Gates to Warren Buffett to P. Diddy and he hopes someday to have it work for him. His biggest fear is that by the time it is his turn to achieve his dream, the fruits of that dream will be taken from him and given to someone else instead.
As individuals and entrepreneurs the idea that someone would take our hard work and give it to someone else who hasn’t worked as hard or hasn’t yet achieved his own ‘American Dream’ is an anathema to us. As a country it should deeply trouble us if government sought to remove the ‘profit motive’ from our daily lives. If additional productivity and hard work isn’t honored and rewarded it simply won’t occur. Why bother taking risks if those risks have no upside.
To buy his boss’s company, Joe the Plumber would need to raise capital in the form of a loan or equity - this ‘at risk’ capital would then be used to buy the business whereby Joe would either succeed and repay the loan or the equity. If Joe believes the incentive (i.e. the opportunity to make more money) was gone or diminished do you think Joe would be willing to borrow the money necessary to buy the business in the first place? If we continue to demonize capital formation (i.e. getting rich), power and money will tend to consolidate in the hands of a smaller and smaller minority. Joe the Plumber will NEVER get the change to become rich - instead rich people like George Soros and his heirs will grow richer and richer.
On a side note, Joe the Plumber has been demonized and pillaried in the press. Why? He simply admitted that he would like the opportunity to become rich. It turns out he has issues with licenses and taxes. Show me an entrepreneur who doesn’t and I will show you ten who have even bigger issues.
You can’t increase tax revenues by taxing the rich more
October 14, 2008
I first wrote about Hauser’s Law in a post titled, “How to raise taxes on the rich“. Ironically, it is a proven fact that you cannot increase revenues by increasing taxes. No I am not talking about the Laffer Curve (the theory that by lowering taxes you increase revenues), instead I am talking about Kurt Hauser and what is now called Hauser’s Law. Unlike a theory that considers what might happen given a set of future events or circumstances, a law looks backward and relies exclusively on verifiable evidence. David Ranson from the Wall Street Journal wrote about Hauser and coined the term ‘Hauser’s Law’ in an article titled, “You Can’t Soak the Rich.”
Hauser’s Law suggests, “No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.” See chart below:
This is an amazing discovery that should help policy makers understand what their goal should be. The act of raising taxes has ZERO effect on revenues, while GDP has everything to do with revenues. If you want to raise money you simply need to figure out how to raise GDP. If you can accept the historical fact that no matter what the tax rate is, our government can ONLY collect 19.5% of GDP, you can focus on the real game - raising GDP. So just to be clear, regardless of whether the top tax rate has been 91% or 35% (the current rate) we only collect 19.5% of GDP. Get it?
While Hauser’s Law is relatively new information (most policy makers have never heard of it), almost all economists agree that that higher tax rates reduce GDP and given Hauser’s Law, this will result in lower tax revenues. The ONLY way to raise more money from the rich is to grow GDP. Hauser explains, “Raising taxes encourages taxpayers to shift, hide and under report income. . . . Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation.”
My advice to Obama, as John F. Kennedy explained in 1963, “As they say on my own Cape Cod, a rising tide lifts all boats.” Figure out how to increase GDP instead of figuring out how to raise taxes and all of our boats will be lifted.
