Lift and Drag

The US accounting and tax preparation industry includes about 90,000 firms with combined annual revenue of $65 billion.

These are people who have houses, cars, shoes, food, and so forth. But they do not produce any of those things. Their productive energy is diverted into a net non-productive line. This is the cost of transferring money from an individual/group to another individual/group.

I wonder where your tax money goes? Who benefits?

I went to my accountants' building the other day and they had remodeled. Marble floors and plush furniture.

At my little putt-putt business we spend about forty man-hours a year just keeping records on the off chance that we are audited. So, if one business in fifty is audited every year it means that perhaps at least sixty man-hours on average for the other forty-nine businesses is needed just in case the Inquisitors might stop by. This is non-productive effort. It didn't do anyone any good.

Roughly: 49 small businesses like mine X 60 man-hours of record-keeping every year X (say) $15 per hour = $44,100 down the drain just so that ONE business could be audited.

This is false economy.

So, when I hear the President talk about "waste, fraud and abuse" and how he's going to close down loopholes I just laugh my head off. You can hear it all the way down the hall.

Waste!? You want to talk about waste? A full working week of my life is wasted every year storing and tracking receipts; recording my every move just in case I have to prove my innocence. And that's just what it is.

This is not freedom.

Sometimes I wistfully dream of a world where my life is my own. I dream of writing (more) checks to relatives and neighbors to help them out. I want to touch their lives directly.

Wouldn't it be better just to trust people to take care of their own neighbors? Are we so wicked as a nation that we need a small army of bureaucrats and inquisitors to be sure we do the right thing?

No we are not! Americans are good-hearted people who will take care of their own. We don't need a monstrous central government to maintain the so-called social safety net. Friends, relatives, and neighbors are a surer support. We need to bond with each other, not to the Social Security Administration.

I'm back baby!

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Hey Shawn. Hope all’s well with you and yours.

Here’s a comment to your latest blog posting. I couldn’t leave it directly for some reason, so feel free to post it yourself, if you think it has merit:

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Shawn, it's actually worse than that. The accountants at least have competitors, which means that there are limits on how much they can charge you for their non-productive activity. In addition, some accounting services theoretically make you more efficient (tax preparation, financial statement prep, etc.)

But government workers are non-productive *and* provide nothing that will make the productive folks more efficient. Worse, they have no competitors, so the cost of their non-productive services is far higher than it would otherwise be.

That’s why sensible people want to keep the government as small as possible and to minimize its impact on the economy. The government is an economic parasite and should therefore be extremely limited in size.

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Also, a client asked me to review a book by Peter Schiff called “Crash 2.0”. You may have read it or seen it, but it’s a bestseller that posits that the US dollar is headed for a massive devaluation and that China will inevitably eclipse the US. My client asked me to evaluate his arguments because he’s making some important decisions that will be seriously influenced by our consensus on the likely trajectory of the economy.

In case you might be interested, I’ve attached my analysis, scrubbed of any client info. Even if you haven’t read the book, I suspect you’ve encountered these assertions..