Thursday, February 11, 2016

There are good and bad, or at least better and worse, distortions.

Place a universal 100 percent tax on all petrol/gas sold in the world, and then share all resulting revenues equally among all citizens of the world, and then let all that income be ploughed back into the economy without any distortion.

That would allow us to help the environment, fight inequality and promote the growth of the economy. 

Not bad eh?

But place a higher capital requirement on banks when they finance someone safe than when the finance someone risky, as is done now, and that does nothing for the environment, increases inequality and distorts the allocation of credit to the real economy, with serious consequences.

Bad eh?

Monday, January 25, 2016

“The wealth of 62 richest equals that of 3.6 billion poorest” That‘s a deviously false odiously divisive statement.

I come from Venezuela where I have seen a discourse full of hatred, carried out by those who want to profit financially or politically from promoting redistribution, destroy a country. I cannot sit back and see the Venezuelan tragedy reenacted on a global scale.

As always in all useful lies there are traces of truth. Of course the market value of the possessions of the 62 richest, especially after being inflated by means of fiscal deficits bailouts and QEs, could be similar to that of the market value of the possessions of the world’s 3.6 billion poorest. 

But, what does that mean when there is no way to liquidate the possessions of the rich in the market, so as to be able to transfer a similar amount of wealth to the poor. What on earth does a $25 million dollar penthouse in New York, which only some equally wealthy can buy, signify to the poor in terms of access to a better life? And what's to be gained from the wealthy selling all their Picasso's and the Picasso's losing a lot of value?

And I swear that, in years of life lived, air breathed, water drunk, land trampled, food eaten, laughs and tears shed, those 3.6 billion poor posses at least a billion more times than those 62 most wealthy.

And this does not mean I do not commiserate with the poor of the world, and would not like them to have much more resources available in order to diminish their hardships. I do so very much, and that is precisely why I insist that what we must do, is to analyze what type of interventions help to generate the existing inequalities, and what blocks the opportunities for the poor to reach up. And on that route, one of the most important steps is keeping the redistribution profiteers at distance.

And this does not mean I am against redistribution. In fact before we are able to enable the opportunities that can lead to a sustainable betterment for the poor, I accept the need of redistribution, even if that is clearly less sustainable. But, that redistribution should take place in the most direct and cost effective way among citizens… again with the least interference possible by redistribution profiteers.

In my Venezuela that starts by sharing out its oil revenues directly to the citizens so as to avoid these falling into the hands of redistribution profiteers like Hugo Chávez.

And again, much more important for the poor than having wealth redistributed, is the generation of more wealth for them, which can only happen by enabling their access to opportunities. 

And for the health of our planet's sake...keep all those non-productive climate change profiteers out of the way. As I have often said, if the fight against climate change fall into the hands of something like our bank regulators...we're toast! 

Did poverty in the world decrease over the last decades because the world redistributed wealth, or embraced the MDGs (Millennium Development Goals), or because many (like China) allowed their citizens more opportunities to generate wealth?

Wednesday, January 20, 2016

I fight against inequality, on the side of the opportunity enablers, not on that of the wealth redistribution profiteers

Around the world, government market interferences and many other inequitable arrangements, is  generating a dangerous inequality that will come back to bite us all... innocent or not.

But I come from a country, Venezuela, where a Minister of Education belonging to Hugo Chavez 21st Century Socialism stated: “The campaign against poverty should not help to move up the most needy to the middle class, since that could cause these to become ‘escuálidos’”, meaning opposition. 

In my homeland I now fight for the sharing out of all net oil revenues in equal parts among the citizens. That so that the government who currently  receives 97 percent of Venezuela´s exports, don't use those revenues to enrich itself and torment the citizens.

Thinking back, what got me started on that, was an experience as the first diversification manager at the Venezuela Investment Fund that was supposed to manage oil revenues, 1974,  a post to which I resigned after only two weeks, having convenced myself it was all just a cover up for politicians and technocrats to do what they wanted with our oil revenues.

So, as you can understand, I have experiences which lead me to believe that the worst part with taxes, is quite often not the tax evader, nor the taxman, but the tax revenue abusers. And so, when thinking about the need of fighting inequality, the last thing I want is for that fight to fall into the hands of any wealth redistribution profiteers... be those profits financial or political.

So what could we do? Perhaps all of us citizens could deposit annually 10% of our income and 1% of wealth in a Big Pro-Equality Pot, and thereafter just share it all out in equal parts among all of us citizens. There should be no or absolutely minimum government intervention, and the operations could be contracted out to the debit card company that charges the lowest fees. Any citizen paying into the pot more than what he receives, should of course be able to deduct that difference from his ordinary taxes.

The beauty of that wold be that since the Pot would be strictly a citizen to citizen responsibility, which did not involve any Sheriff of Nottingham taxman, it would be so much easier to apply social sanctions for its avoidance.

But, much much more important than any ex-post wealth redistribution, is the ex ante enabling of opportunities, since only that could  help us all to move forward.

For instance I have been fighting for soon two decades, against the credit-risk-weighted capital requirements imposed by bank regulators that favors the access to bank credit of The Safe, like the “infallible sovereigns”, the AAArisktocracy and housing. And that thereby odiously discriminates against the access to bank credit of "The Risky", like SMEs and entrepreneurs.

What got me started on that was when in the mid 90s I began to suspect that a dangerous credit-risk aversion was being imposed on our banks by the Basel Committee for Banking Supervision. And then reading the following passages from John Kenneth Galbraith’s “Money: Whence it came where it went”.

“The function of credit in a simple society is, in fact, remarkably egalitarian. It allows the man with energy and no money to participate in the economy more or less on a par with the man who has capital of his own. And the more casual the conditions under which credit is granted and hence the more impecunious those accommodated, the more egalitarian credit is… Bad banks, unlike good, loaned to the poor risk, which is another name for the poor man.”

“For the new parts of the country [USA’s West]… there was the right to create banks at will and therewith the notes and deposits that resulted from their loans…[if] the bank failed…someone was left holding the worthless notes… but some borrowers from this bank were now in business...[jobs created… It was an arrangement which reputable bankers and merchants in the East viewed with extreme distaste… Men of economic wisdom, then as later expressing the views of the reputable business community, spoke of the anarchy of unstable banking… The men of wisdom missed the point. The anarchy served the frontier far better than a more orderly system that kept a tight hand on credit would have done…. what is called sound economics is very often what mirrors the needs of the respectfully affluent.”

What could we do about that? Obviously getting rid of those credit risk weighted capital requirements for banks, and just have one single capital requirement, perhaps 10 percent, on all assets.

But unfortunately, when I hear about “we have to fight against inequality”, I hear much too often the voices of inequality profiteers, not at all interested in either enabling opportunities or redistributing efficiently.

PS. There's a world of difference between a redistribution of wealth cost of let us say 2 percent and one of 80 percent.

PS. #WEF #Oxfam #Davos What is the wealth of 62, $1.76 trillion, divided by 3.6 billion? What happens the day after if that inequality is gone? The problem is not that some are wealthy but if how they became wealthy blocks the opportunities of other.

PS. My Tax Paradise

PS. In fact “The wealth of 62 richest equals that of 3.6 billion poorest” is a deviously false and odiously divisive statement 

PS. Universal Basic Income is being studied and the redistribution profiteers will do all they can to have it fail. 

Tuesday, November 03, 2015

Who’s to save me from an incestuous intellectual degeneration, when being fed info based on my own preferences?

I have some preferences and Google, Facebook, Twitter and other social media feed me based on these. And so the more Goggle, Facebook, Twitter and other social media gets to know my preferences the more I will be entering into an incestuous relation with myself… in other words the more I run the risk that my intellect might incestuously degenerate.

Who is to supply me the diversity I need in order to find out any new preferences in life?

So, for a starter, it looks that, as a minimum minimorum, I need a copyright of my own preferences.

Sunday, November 01, 2015

Who wants to be my agent, marketing my attention span of 64 30-second ad spots daily, so as to maximize my returns?

For 8 hours I am willing to look at adds 1 minute an hour, and for other 8 hours 3 minutes per hour.

That adds up to attention span availability for ads per day, equal to 64 30-second spots.

Who is willing to be my agent marketing my attention span of 64 30-second spots per day so as to maximize my returns?

The agent would have to guarantee I am not bothered over this attention span allotment of 64 30-second spots per day.

I would accept payment in cash or products, like being able to see a movie that interests me. 

I would accept paying my agent, either in cash or by ceding to him, some of my 64 30-second spots per day.

Ad-blockers might be especially interested in representing my attention span.

Monday, September 28, 2015

UN’s Sustainable Development Goals, SDGs, against the backdrop of the Credit Risk Weighted Capital Requirements for Banks

The fact is that current bank regulations, by allowing for lower capital requirements, allow banks to earn higher risk adjusted returns on equity when lending to what is perceived as safe than when lending to what is perceived as risky. 

That’s it! Just avoid taking credit risks and you earn more. Not a word about a purpose for banks; like helping to generate jobs for the young or making the planet more sustainable. So we have a banking system that no longer finances the future, it now only refinances the past.

And to top it up, the regulators assigned a risk weight of zero percent to the sovereigns (governments) and of 100 percent to the citizens and private sectors on which that sovereign depends. Which means they believe government bureaucrats can use bank credit more efficiently than SMEs and entrepreneurs.

And of course those regulations completely distort the allocation of bank credit to the real economy and, by diminishing the opportunities of the risky to gain access to bank credit, increases existing inequalities. 

And of course those purposeless bank regulations are also dangerously useless. We know that major bank crisis never occur because of excessive financing of what is perceived as risky; they always result from excessive financing of something erroneously believed to be very safe 

And not one iota about this is being discussed in the UN, IMF or elsewhere

Can you imagine if by allowing banks to hold less somewhat less equity when lending to what finances SDGs, we made banks earn higher returns on equity when financing SDGs?  

And so I am sorry, against this backdrop, the announcement of the Sustainable Development Goals, the SDGs, might suggest the term Pollyannaish should henceforth be spelled as PollyUNnaish.

PS. Volkswagen should have rudely reminded UN bureaucrats that there is a real world waiting out there to game their SDGs.

Tuesday, September 22, 2015

Taxes should be collected, paid and used, only as a result of a harmonious relation between citizens and governments.

If we are to develop for systems that “Protect and increase tax revenues by implementing multilateral automatic information exchange”, these should go hand in hand with equally automatic systems that make certain that the way government spends such tax revenues, is in agreement with what was promised to the tax-payers. Otherwise we might run into deadly efficient Sheriffs of Nottingham collecting taxes for obnoxious King Johns, without even having a Sherwood Forest where to hide.

I repeat nothing works better against tax havens than tax heavens. And if we do not get those heavens we better keep some havens.

Tax evasion is often described in terms of countries losing money. That is not entirely correct. It is the government of a country that loses the right to administer the evaded tax funds… and sometimes that is not all bad.

There are cases in which it would seem it should be a civic duty to escape the payment of taxes, so that those resources are not dilapidated and can be better used defending the country.

In Venezuela its government gives away in free gas more than all its health, education and social spending put together. Has not a government that does that forfeited its right to tax the citizens?

Irresponsible governments should not have guaranteed access to any type of information about their subjects.

Let us be careful with any Tax Collector's Unite call... they might all belong to a small mutual admiration club, with mutual interests and an overpowering group solidarity.

Tuesday, August 11, 2015

Greece: Cash revenue maximizing privatization of public services, creates very onerous mortgages

The saddest part with the oncoming privatizations of public services in Greece, is that these will most certainly be awarded on the basis of who pays the most, usually a function of governments agreeing on very high tariffs; and not on the basis of who can best help Greece build up its competitiveness… like for instance based on who offer the lowest tariffs.

As one from South-America (Venezuela) I have seen this tragic mistake being done over and over again, only in order to please the short-term interests of governments and creditors.

I guarantee you that all cash-revenue-maximizing-privatizations of public services, create very onerous mortgages, which when these are impossible to serve by the citizens, create all kind of dangers and problems.

Here is an extract from an Op-Ed I wrote in 1997, titled “Hidden taxation through privatization” and that can help t explain my point.

“In 1991, when Israel awarded concessions to cellular telephone companies, the criteria for these tender awards was the selection of the operator that offered the best and most inexpensive service to the consumer. In Venezuela, however, the sale of public service companies or the letting of concessions for public service operations are based on the maximization of income for the State by means of a kind of tax, payable in advance, and which will be repaid by the consumer year after year through increased tariffs. The results are there for all to see. In Venezuela, the cost per minute of the cellular telephone service is over ten times that in Israel.

Nobody can or should oppose the theory that the State, through privatization, must transfer to the private sector the relative responsibility for its public services. However, when this transfer is made by maximizing the sales price with the principal intention of filling the State’s coffers, we are effectively confronted by a new and strange version of tropical neoliberalism, invented not to serve the needs of the population, but merely to satisfy the insatiable appetite of the state public sector for income” … (or in this case, the case of Greece, the short-sighted appetite of creditors)

The creditors should know that what the buyers of those privatized services expect, are financial returns way higher than what they as creditors will obtain on their refinanced loans.

You are a bank creditor of someone delinquent on a mortgage against a house that earns you very low interests... and you allow that mortgage to be increased, for instance by a credit-card company charging much higher interest rates? It does not sound very smart!

Sunday, August 09, 2015

If we are going to squeeze the rich, let us do it at the lowest cost... government bureaucrats are too expensive

I refer to The Economist's "If the world introduces a 'Piketty tax': Squeezing the rich"

Let us be careful since too many rich-squeezers are just out to maximize their commissions from the squeezing.

As Sheriff of Nottingham said, “Squeezing the rich is always good business for some… especially for us"

We need to privatize the squeezing of the rich, to those who will charge the lowest commissions for the service.

Can you imagine a privatization bid to see who offers to redistribute 1% of the wealth of the richest 1% to the poorest 10% every year at the lowest cost… delivering an insurance of adequate compliance for a couple of billions of US$?

Or better yet that offers to redistribute 1% of the wealth of all to all, so that there is no political benefits derived from the distribution, since those are what probably costs us all the most.

That said we must also be careful that redistributing wealth does not concentrate wealth even more... as that could happen if we do not remove some of the distortions.

But of course, in an oil cursed country like my Venezuela, where government coffers receive 97 percent of all exports, the wealth that needs to be redistributed is 100% of the net oil revenues, since governments should work only with resources provided to them by the citizens... so that they have to care a lot about how it goes for the citizens

Wednesday, August 05, 2015

Nothing wrong with Congress being a cheerleader, but it real mission is only fulfilled when it is not!

When a Congress approves of what is proposed by the Executive Branch that is perfectly okey but let us not forget that it is only when a Congress disapproves of what is proposed by the Executive, that it is fulfilling its real mission.

Sunday, July 26, 2015

Hunger and votes

In August 2012 I wrote in El Universal: "Assuming 600,000 Venezuelans were hungry for ten years, that is 2.190 million nights of hungry Venezuelans... If only the gasoline that is given away for nothing in Venezuela had been sold to international prices, that would have sufficed for much more than 2.190 million succulent and hearty dinners "

And recently I came across an excellent English translation of a fascinating novel published in Norway in 1890, "Hunger", written by Knut Hamsun, Nobel Prize for Literature 1920.

The book is about an unsuccessful writer who suffers from prolonged periods of intense hunger and during which, between consciousness and unconsciousness, he navigates between extreme feelings and emotions.

At one point he is capable of doing anything to eat, and the other would rather die of hunger before doing something unworthy. At one point he fails to see anything that happens around them, and on the other the smallest details overwhelm him with absolute clarity. One moment he is full of the deepest despair and depression, only to soon after be filled with an overflowing and senseless euphoric optimism.

I quote: " The poor individual looks around him at every step, listens suspiciously to every word he hears from the people he meets; thus, every step he takes presents a problem, a task, for his thoughts and feelings. He is alert and sensitive, he is experienced, his soul has been burned…"

Finishing the book my head was full of questions in reference to what happens in my country (Venezuela)…foremost… What does hunger mean for democracy?

One who suffers real hunger, is he capable of exerting any significant political activity? Who that to feed his children might have no choice but to spend all day exploring garbage cans (or in Venezuela spend the whole day in a queues for an opportunity to do some bachaqueo), can be interested in a unpaid political act?

In democracy, how can unscrupulous politicians use the hunger of voters? Looking for votes, will they offer a hearty meal hungry before the voting takes place – running the risk that the so strengthened will not vote for those they can hold responsible for their recent hunger... or not vote for those who injure their pride trying to buy their votes? Or would they offer abundant food once the hungry voters have voted “correctly” – risking that weak and confused, or furious, voters vote for someone else? 

Should the Election Supervision Authority install some equipment to monitor that voters have been sufficiently fed? And what if these computers can be programmed to exclude those who have other symptoms? Should the votes of hungry be worth more, given that for them is should be even more important that governments function well?

Talking with one of my daughters about this, she suggested that all candidates for public office should have experienced some prolonged period of intense hunger, so as to really understand the real extent of their compromise. And who can say she is wrong about that?

Anyhow… cursed be those who purposely, or because of vulgar sheer incompetence, cultivate and harvest their people's hunger, in order to satisfy their own appetites.

Thursday, July 02, 2015

Can Cubans get back what was stolen from them by suing Cuba in the USA using the Foreign Sovereign Immunities Act?

I went to see "Woman in Gold". It is an excellent film about how a Jewish woman, Maria Altmann manages to get back the "Portrait of Adele Bloch-Baauer” that depicts her aunt and that was painted by Gustaf Klimt. Sixty years ago that portrait and other painting in her family’s possession were seized by the Nazis.

Altmann is able to sue Austria after achieving that the Supreme Court in the USA 2004 decides that the "Foreign Sovereign Immunities Act" enacted in 1976, could be applied retroactively.

Leaving the film, I asked myself... could Cubans (and other brethren) recover what was expropriated / stolen from them by accessing this law?

Might Cubans want to contact E. Randol Schoenberg

Monday, June 29, 2015

For 1US$, I will look for 30 seconds, with reasonable interest, at any unsolicited ad, directed to me on the web.

I need legal advice of how to register a copyright of my own preferences as a consumer and as a human being. Why should that not be possible? Does that not include even more intimate and I would hold creative content than what most copyrighted books have? 

Now if I get that copyright then I would make the following public offer: 

For 1US$ (revisable), I will look for 30 seconds, with reasonable interest, at any unsolicited ad directed to me through any social media or any other site I visit while travelling the web. 

I hereby declare that I am a great consumer and I have a good history of easily falling for offers on the web. That said, nothing here should be interpreted as a commitment to purchase anything or to otherwise follow or do what is suggested in any ad for which I have been paid a royalty.

I will then contract an ad-blocker so as only those advertising sufficiently interested in me so as to be willing to pay me to see their ad have access to me. Depending on the efficiency by which I am served, and the little I would get bothered by unauthorized access to me, I will offer the ad-blocker up to 30% of any income derived by me in royalties on my copyright on my own preferences.

Friday, June 12, 2015

Is Political Correctness a Neo-Victorianism, Neo-Inquisition, or just some good old gossiping by windbags with nothing better to do?

The Nobel laureate Tim Hunt said:

“Let me tell you about my trouble with girls. Three things happen when they are in the lab: You fall in love with them, they fall in love with you, and when you criticize them they cry.” 

That could be taken as a joke extracted from many films and TV series that cross our daily path… and worse is often said in award winning rap or hip-hop music. 

But no, the forces of political correctness decided to came down hard on him. So hard he even resigned from his position as Honorary Professor University College London, UCL, Faculty of Life Sciences.

Is it obnoxious moralistic Neo-Victorianism?

Is it Neo-Inquisition which punishment of choice, for the time being, is destroying the heretics through media?

Or is it just some good old gossiping by good old male and female windbags with nothing better to do?

It behooves us to try to find out?

Friday, June 05, 2015

Our feeble democracies need to be re-launched on the web

The real effective distance between congressmen and senators to their constituency is way too long. If each one of these has to answer to more than a couple of hundred of citizens they are really not answering to anyone.

Every couple of hundred citizens should have the right to appoint a citizen delegate, and these delegates should be the one to vote on what congressmen and senators propose.

Every single citizen should receive real time information on how his delegate has voted. That would help to hold them accountable.

That would inject a lot of dynamism and real separation of powers into our feeble democracies.

If we want a promised a “representative democracy” “dependent on the people alone,” this has to be the modern way to get it.

Thursday, May 28, 2015

There’s nothing like family support and trust

I have for more than a decade now been questioning, for a couple of hours most days, the bank regulators… telling them they are 180 degree wrong and should go home… in shame… 
And none of the regulators has even given me one answer and yet… not for one second, have I doubted that my wife and my daughters do not think I am absolutely right in what I am saying and doing… and that my friends, is the bliss of family support and trust.

I really doubt current bank regulators in the Basel Committee have even a fraction of what I have of it... and that is why I know I am going to prevail.

Thanks my dear girls! I do love you all so much.

Tuesday, May 26, 2015

My father was freed 70 years ago by courageous American boots on the ground… not by drones.

Yesterday… on Memorial Day 2015, as I try to do every year as often I can, I went down to the Washington Mall to express my gratitude to those courageous American soldiers that, 70 years ago, April 1945, helped to free my Polish father from Buchenwald.

This year I was only able to speak to one single veteran of those days in Europe. Sadly most of them are gone by now… and I never got a chance to thank them all.

And while walking around the World War II Memorial, a question that has been haunting me lately came back over and over again... My father was freed by boots on the ground… not by drones… will America still have it in it to free other future fathers if need be?