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November 26, 2004
A National Sales Tax... Revisited One More Time
My second post on a national sales tax once again generated quite a response. Before I address the subject for a third time, I must say that a national sales tax, as proposed at FairTax.org, would not be my preferred form of funding the government. Ideally, I'd like the government to be funded through voluntary means such as contract insurance and national lotteries. However, these proposals are far fetched in today’s fiscal environment and as such a revenue neutral sales tax holds much more promise.
Many of the concerns over a national sales tax expressed by several of my readers I formerly shared myself. Specifically, two concerns were at the forefront of readers’ responses. First many were concerned that a consumption tax would shift the burden of taxation towards the poor and the middle class. Secondly, there was a concern that the U.S. is a consumption driven economy, and as such a tax on consumption would have detrimental effects on economic growth. As mentioned above, I originally shared both concerns when learning about a national sales tax. In fact, initially, they led me to believe such a tax should not be implemented. But upon further study I have changed my mind on both accounts.
In addition to the critiques above, another criticism was that under a sales tax those who "work for a living" would be responsible for the entire tax burden, while rich investors would be off the hook to live tax free. This analysis can easily be turned on its head by simply reviewing the nature of the tax.
Below I will address all these concerns.
But one thing to keep in mind during the discussion is that the purpose of taxes is to fund a functioning government that protects our rights and allows us to live peacefully amongst one another. I think we all can agree that the creation of a tax policy, that both fairly and efficiently raises this revenue, is a common goal we all can share.
Won’t a National Sales Tax Shift the Burden of Taxation to the Poor and Middle Class?
Looking at the most recent data from the IRS, this indeed could be a cause for concern.
As we can see the top 1% of income earners paid over a third of the total income taxes collected by the IRS. Conversely, the bottom half of the income scale pays a scant 3.5% of total income taxes. Any reforms to broaden the tax base would then seem to surely increase the burden on lower income individuals.[1]
One thing to remember though is that the income scale above does necessarily translate into a scale from rich to poor. To demonstrate this point, imagine a family where a husband and wife both work, earning $55,000 and $40,000 respectively. This would put their household in the top 10% of income earners, but it would not mean that they are wealthier than 90% of the country. In fact if they are putting a child through college, have a mortgage, a car payment, etc., finding dollars to spend at a country club would probably be impossible. Similarly, take a family where the head of the household is unemployed, but they sell their home for a one time capital gain of $150,000. While this would push them into the top 5% of income earners, the comfort of this cash windfall would most likely be short lived.
Conversely, consider a retired couple who owns their home outright, has very few expenses, and retires with a pension of $50,000 a year. While this would place them lower on the income scale than the families in the two examples above, who could seriously argue that they are poorer?
This is a key flaw in our current tax system that is partially addressed in the article authored by Baum. Each individual with a valid social security number would receive a check from the government, reimbursing them for their taxes paid on purchases up to the poverty level. Therefore the poor, as defined by the Census Bureau, would pay no taxes. For a family of four the poverty level is currently $18,810 a year. A family that made $100 over this level, and decided to spend that money on a new television would pay a total of $23 in taxes (an effective tax rate of 0.12%). A family that made $1,000,000 over the poverty level and decided to spend it all on a new yacht would need to pay $230,000 in taxes (an effective tax rate of 22.58%).
So while the truly poor would face a minimal tax rate, if any at all, what about the middle class? Here I must defer to calculations on the fairtax.org website. They compare various middle income families' tax returns under the proposed national sales tax and the current system. The results look very favorable and can be viewed here.
Now can I vouch for these calculations personally? While they look correct, there certainly could be something that I am missing. But taken at face value, at the bare minimum, they show promise. If we find there is a segment of the population that would be unjustly burdened under the plan, we could (and should) tweak the minimum refund level to address these concerns.
Of course, it would also take quite an effort to reform the current tax code but in my opinion the benefits would outweigh the costs. The question that follows is what are the benefits that make it worthwhile?
A flat national sales tax would have the enormous benefit of simplifying the tax code. It would eliminate both the wasteful spending of billions upon billions on tax compliance and a 45,622 page tax code that not even the most intelligent tax lawyers and accountants can understand. But what intrigues me most about such a tax it would shift taxation to consumption, rather than savings.
But if Consumption Drives the Economy, Won't a Sales Tax Kill Economic Growth?
It is an excellent question. For even if a national sales tax could be implemented without shifting the tax burden to the less fortunate, could it not have disastrous economic consequences? It’s said that consumption drives the economy, and thus taxing it would seem to surly hurt economic growth.
To take this viewpoint though is to ignore the important role that savings play in consumption. Let’s take the most obvious example: the housing market. Would it be possible for the average middle class family to buy a house if they had to do so out of their present income? Clearly the answer is no. Yet everyday people pay for expensive items such as houses, cars, large appliances, or college tuition that exceed their disposable income. How can this be? They can do so by relying on the savings of others to finance these purchases. Without savings, consumption of these expensive items would be severely limited, if not impossible.
Similarly, a majority of the country earns a living by selling their labor (i.e. they receive wages). The majority of these wages are then used to consume goods that are essential (such as food, shelter, medical, etc.) or for pleasure (i.e. entertainment, vacations, etc.). But wages would also be impossible without savings. Factories and businesses that employ so many of us could not be constructed without a source of funds. In addition, wages themselves could not be paid if the owners had not put money aside to pay them. Products take weeks, months, even years to produce before they are finally sold for a profit. But employees don’t need to wait until the product is sold to collect their wages, they are paid out of savings. Can you imagine how poorly the economy would function if everyone had to wait until the final product they helped to produce was sold in order to collect the money they had earned? Such an economy would fall apart.
This is not to demean those who earn wages compared to those who save in any way. Clearly, saving money wouldn’t do much good if there was nowhere to invest it. And more importantly, this classification ignores the fact that these groups are often one in the same. I’m simply pointing out that savings are key to any economy and to consumption, no matter the source of the funds.
For me it is always easiest to look at such a system in very simple terms. Imagine an economy that is represented by one farmer with one product: corn. The farmer can use the corn he possesses in one of two ways. He can eat the corn to feed himself or plant it to grow more corn for the future. Now obviously if the farmer were to eat his entire supply of corn he would have none to plant, and while content today, he would starve in the future. On the other hand, if the farmer were to plant his entire supply of corn, he would starve before he could reap the future benefits. Clearly, there is a trade-off. That which is planted (i.e. saved) needs to produce enough in the future to equal his current consumption. If the farmer plants enough so that the future yield is greater than his current consumption, not only will he be able to consume more in the future, he will be able to save more as well. By saving, his corn field will grow larger than it is today… and this is equivalent to economic growth.
Now our economy consists of much more than corn but the analogy is still valid. By saving instead of consuming we increase our capital stock. Our savings flow into the technologies, factories, and business of tomorrow and that allows us to both produce and consume more than we currently do. Wealth is created. Again, this is the definition of economic growth and savings is what spurs it.
To look at it another way it’s beneficial to everyone if someone who has earned a small fortune invests $500,000 in a new company that creates products and expands our economy. If instead they use this money to buy a new sports car they are spending their money not on something that will create wealth, but something that will be of use only to themselves and will be worth less and less as it is worn out. We're all better off if this rich individual saves his money, for it benefits us all.
And remember, if you want people to stop smoking, tax cigarettes and people will do less of it. On the flip side, if you want people to save, make savings tax-free and people will do more of it. That’s the essence of a national sales tax.
The Rich Will Live Tax Free
"...to me it is morally wrong to say that if you work for a living you should pay taxes, but if you are rich and live off of other peoples [sic] work you shouldn’t. "
This was the conclusion of a rant against my previous post on a national sales tax over at San Diego Politics by friend Patrick Finucane. I'm not sure that he realized it, but he actually makes a strong case for the sales tax he is trying to demonize.
Even ignoring the erroneous Marxian undertones, the statement is still absurd as proven by the discussion above. Missing from Pat’s analysis is the straightforward fact that the reason people save and invest their money now is so that they can spend and consume products in the future. If someone has saved $20,000 and they pull this money out of the bank to buy a new car, they will pay taxes, even if they are the richest person in the world.
If you’re worried about the wealthy not paying taxes you need look no further than our current system. A family with $10,000,000 in municipal securities (i.e. state and local bonds) pays absolutely no federal income taxes.[2] If these bonds yielded 5% this would mean an annual income of $500,000 without paying a dime in taxes. If you think this is an unrealistic assumption, think again. The Kerrys, who are worth hundreds of millions of dollars, had an effective tax rate of a little over 12% last year. This is lower than the average rate of a middle class family from the most recent IRS data. Their tax rate was so low largely because they were invested in tax free bonds. Even taking away municipal securities, wealthy individuals can afford tax attorneys that can help them redefine income, or stash it offshore. These are options not available to the poor and middle class.
Implying that the basis for a national sales tax is that the “rich” shouldn’t pay taxes is blatantly false. The basis is that when anyone invests and saves their money (something that helps the economy grow and thus helps us all) they should not be taxed. But everyone is taxed when they spend their money consuming what we could call luxury items.
In short, the rich in no way get off tax free.
In conclusion…
… I realize there needs to be a debate on this issue and I myself have many more questions. I do believe though that some of the initial fears are overblown. I’m looking forward to a vigorous discussion on this issue, as I think it’s clear that our current system of taxation is in dire need of repair. Undoubtedly, we could surely do better than our progressive income tax. Hopefully I’ve demonstrated that a national sales tax might be a viable replacement that would make us all better off.
[1] Keep in mind that while I am focusing on income taxes, the proposed Fair Tax would replace "the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes."
[2] I understand that the tax free status means a lower yield but the point is that no taxes are being paid to the federal government.
Additional note: I owe much to the teachings of George Reisman and his book Capitalism for the discussion on savings and consumption.
Posted by Peter Mork at 4:17 PM | Comments | TrackBack
November 25, 2004
Be Thankful For Private Property
Happy Thanksgiving to everyone. Today I thought I would link to another Caroline Baum article. As she does every Thanksgiving, Baum published her piece showing how incentives had much to do with creating the holiday that is being celebrated across the nation today.
Relying on the log of William Bradford, the second governor of the Plymouth Bay Colony, Baum shows how the transition from harsh winters accompanied by starvation on to bountiful harvests was not a matter of luck. A change from communal farming to a system of private property played vital role.
The land of the colony was at first communally farmed, a common tradition that the Pilgrims had brought with them from England. Bradford writes that such a system:
“was found to breed much confusion and discontent, and retard much imployment that would have been to [the Pilgrims'] benefite and comforte”
Knowing that something had to be done, it was decided that the land would be divided up, giving each family their own plot. This system, which allowed each individual to grow food for themselves and sell any excess for a personal profit, had an amazing effect. Again Bradford notes:
``This had very good success; for it made all hands very industrious, so as much more corne was planted than other ways would have been by any means the Govr or any other could use, and saved him a great deall of trouble, and gave far better content.''
After three horrifying winters, things had permanently changed. As Baum concludes:
Given appropriate incentives, the Pilgrims produced and enjoyed a bountiful harvest in the fall of 1623 and set aside ``a day of thanksgiving'' to thank God for their good fortune.
``Any generall wante or famine hath not been amongst them since to this day,'' Bradford writes in an entry from 1647, the last year covered by his History.
With the benefit of hindsight, we know that the Pilgrims' good fortune was not a matter of luck. In 1623, they were responding to the same incentives that men and women still respond to almost four centuries later.
This is a lesson that, at least I for one, had never learned about Thanksgiving until I read this piece a few years ago.
Posted by Peter Mork at 10:33 AM | Comments | TrackBack
November 24, 2004
More on Shrimp
Radley Balko links to a piece he wrote for A World Connected on the domestic shrimping industry. Not only does he review the recent tariffs placed on imported shrimp, but he ties in H2-B visas, soybeans, and other unintended consequences. It’s well worth the read.
While more detailed than my last critique, we’re definitely coming from the same line of thought... and even using the same pictures.
Posted by Peter Mork at 11:26 AM | Comments | TrackBack
November 22, 2004
Ban The Electoral College?
A letter to the editor of the WSJ today makes an interesting observation regarding federalism and the U.S. Senate:
I always find it remarkable that so many people call for ending the "unfairness" of the Electoral College but you almost never hear these same people calling for the abolition of the U.S. Senate. If the Electoral College is "unfair" when California gets 55 electoral votes and Delaware gets three, isn't the Senate far worse, where California gets two votes and so does Delaware? Is it "fair" that in the last election one candidate won a Senate seat by getting 121,000 votes, while another lost despite getting 3.5 million? But that's federalism for you.Thomas F. Harrison
Cambridge, Mass.
Posted by Peter Mork at 6:42 AM | Comments | TrackBack
November 19, 2004
More to Come...
Later on this weekend I'll be responding to some thoughtful responses I've received regarding my posts on a national sales tax. In the meantime, I thought I would put up a quote I pulled off of Trey Givens' site (unfortunately Givens is currently on a blogging break).
"When somebody persuades me that I am wrong, I change my mind. What do you do?"-- Economist John Maynard Keynes
Update: Instead of later on this weekend, make that the beginning of next week.
Posted by Peter Mork at 5:05 PM | Comments | TrackBack
November 18, 2004
Is a National Sales Tax Realistic?
A Stitch in Haste took me to task on my post on flat taxes from a few days ago. In his post, KipEsquire questions the logic behind the quotation I lifted from a Bloomberg article saying that the poor would be exempted from both a flat income tax and flat sales tax:
I found this statement utterly bewildering. How exactly do you give the poor, or anyone else, an exemption from a sales tax?
You exempt products from a sales tax, not people. Is the point that “basic necessities” (i.e., what poor people spend their money on) will be exempt? If so, then you can’t simultaneously argue fairness for the poor and simplicity, since a sales tax peppered with exemptions meant to ease the tax burden on the poor will not be simple, it will be very complicated.
Look at any state that has less than a ubiquitous, prophylactic sales tax, and you find a complex web of lists, exemptions, schedules, etc., often the result of politics and lobbying more than common sense... Not a road I’d like to see the federal government go down, given its track record with the Internal Revenue Code (currently at 2.8 million words and growing).
While I agree the wording sounds off, I just assumed that exempting the poor meant exempting products deemed as necessities (i.e. food, medical, housing). As for this leading to a complex list of exemptions, the sales tax out here in California seems to work fairly well without too much confusion. Why not use it as a blueprint.
Yesterday though, Caroline Baum wrote a follow up to her original article that I quoted. She reviews a sales tax proposal called the FairTax currently sitting in Congress and addresses several of the topics discussed above:
A bill to do just that -- and abolish the Internal Revenue Service to boot -- has been introduced in the House of Representatives (H.R. 25) by Congressman John Linder, Republican from Georgia, with an identical bill in the Senate (S. 1493).
Under the FairTax, workers would take home their entire paycheck; nothing is withheld.
Instead of paying taxes on income, Americans would pay a 30 percent mark-up at the cash register on new goods or services. (The sales tax would be 23 percent if expressed as an income-tax equivalent.) Used goods aren't taxed. Neither are business purchases.
That sounds like a big loophole. (``The Porsche is not a recreational vehicle. It transports key documents to and from the office every day.'')
And perhaps it is. Unfortunately, there is no tax system that's immune from non-compliance. It's only a matter of degree.
and:
No one pays tax on consumption up to the poverty level under the FairTax. Every U.S. resident with a valid Social Security card gets a monthly rebate to cover the tax on purchases of essential goods and services.
Read the entire article if you get a chance.
What ultimately attracts me about the idea of a national sales tax is that A) it seems fair and B) investments would not be taxed, which would be great for economic growth. I agree with KipEsquire that there are undesirable issues with the tax (i.e. 30% seems high to me) but I'm not willing to write this plan off yet. To the contrary, the more I read, the more appealing it sounds.
Posted by Peter Mork at 6:26 AM | Comments | TrackBack
November 17, 2004
Cowboy Capitalism
This weekend I finished Cowboy Capitalism: European Myths, American Realities by Olaf Gersemann. As the title suggests, Gersemann, a German financial reporter, takes on many misconceptions relating to comparisons between the U.S. and European economies.
The book was informative and well worth the read, but it's also the type of book that makes me wish I had a photographic memory. While it's impossible to remember all the statistics put forth, I'll definitely have it on the shelf and ready to go as a reference.
Here is an example which was one of many that was surprising when I first read it. On page 59 Gersemann writes:
An American entrepreneur setting up a new business faces a one-time regulatory cost that amounts to 1.7 percent of the annual U.S. per capita income. In Germany the corresponding number is 32.5 percent. In France and Italy it is even higher at 35.6 and 44.8 percent respectively. Those numbers represent significant barriers to establishing new business enterprises
The magnitude of those numbers is shocking and is clearly part of the reason for higher unemployment rates in these countries relative to the U.S.
One other note, while the inside flap of the dust jacket states that the book is a "devastating rebuttal to the stereotypes promoted by the likes of Paul Krugman and Michael Moore", it is not a partisan attack on the American Left. In fact, when economist like Krugman or Joseph Stiglitz are quoted it's done in a positive way, using their expertise to backup the books' assertions.
Posted by Peter Mork at 6:48 AM | Comments | TrackBack
November 15, 2004
Helprin and Art
Last week my brother met Mark Helprin, one of my favorite authors, at a book signing in the Bay Area. Apart from being an imaginative story writer, Helprin incorporates artwork into his novels in a way that makes me wish he was an art history professor back when I was in college.
With the current state of affairs in Iraq, I was reminded of the conclusion of this essay where he gives a special meaning to one of Winslow Homer's masterpieces:
When I was in the army, many years ago, I was an infantryman, and in the course of what I saw, and did, and came to understand, I was broken. Sometime after I had returned to the United States and my life had resumed, I rounded a corner in the Metropolitan Museum in New York and saw a painting I had known all my life but which I had not until that moment been able to understand. This was Winslow Homer’s masterfully restrained portrait of a veteran returning to his fields. The generation touched by fire in the Civil War understood the great import of this painting, they knew why the veteran had his back turned to the painter, why he was alone, why he worked in utter quiet, why the light was so clear, the scene so tranquil. After years of war and destruction, they understood, and after having passed this painting for the first time as a man, so did I.
As if there had never been a Gettysburg, an Antietam, or a Chancellorsville, the light struck the soil and the wheat grew. The world was the same. The essential rules had not changed. Devastation had not triumphed. The veteran could return to his fields, and the answer to his tentativeness was that, as if by a miracle, they were now even richer than he had remembered them.
Update: My brother just forwarded along another relevant quote from Helprin. It is from a speech called "Defend Civilization Itself" and is equally poetic and powerful:
If civilization can be attacked on many fronts, it can also be defended on many fronts, and to do so you need not necessarily drop into Afghanistan by parachute or found a political party. Last summer, in Venice, I was walking from room to room in the Accademia, which, unlike timid American museums, throws its windows wide open to the light and air of day. As if to bring even further alive the greatness and truth of the Bellinis and the Giorgiones on the walls, the galleries were flooded with music. As is most everything in Italy, it was unofficial. It came from a guitarist and a soprano on a side street. He played while she sang gloriously Bach, Handel, Mozart, and anonymous folk songs of the 18th Century. Because it was music, I cannot properly convey to you how beautiful it was, but it was accomplished, precise, and infused with the ineffable quality that lifts great art above that which merely aspires to or pretends to be great art. I could not see them from the windows, but when, several hours later, I went outside, they had neither ceased, nor skipped a beat, nor produced a single false note.
They were impoverished Poles, who appeared to be in their late twenties. She was thin, sharp-featured, and hauntingly beautiful. Most people simply passed them by, some dropped a few coins in a basket at her feet, and the visitors to the Accademia had no idea who they were, but she sang as if she were bathed in the footlights of La Scala, where she should have been, and where someday she may be. It did not matter that they were unrecognized, that they sang on the street, or that they were desperately poor, because that day in Venice they rose above everyone else, except perhaps the saints. In this they shared a brotherhood with the American soldier who made the first parachute jump, in the dark, into Afghanistan. For they and he were defending the civilization of the West, and they and he are inextricably linked. Without the soldier, they could not exist except in subjugation, and without them, he would not have enough to fight for.
Posted by Peter Mork at 7:02 AM | Comments | TrackBack
November 11, 2004
Flat and Fair?
Caroline Baum takes a look at the possibility of a flat tax on income or consumption. Could it be done fairly?
Any attempt to lower the tax rate, broaden the base (by eliminating deductions) and effectively tax consumption produces cries of ``unfair.''
And it's a legitimate criticism from a nation steeped in a progressive, graduated income tax system. The poor can't save; they spend everything they earn. A sales tax would be regressive.
Even in the pure flat tax envisioned by Hall and Rabushka, ``there are two brackets: zero for the poor and 19 percent for everyone else,'' Hall said.
Under either a flat tax or sales tax, the poor would be given an exemption ``that recognizes the right of a family to provide for itself before it provides for the government,'' said Pete Sepp, vice president for communication at the National Taxpayers Union, a non-partisan advocacy group in Washington.
Posted by Peter Mork at 10:48 PM | Comments | TrackBack
November 10, 2004
Inspiration
I've been busy of late and have not had time to get up some posts I've been meaning to write. In the meantime, to keep the posts coming I thought I'd put up this quote from Atlas Shrugged. The quote was used as inspiration by Lori Ann Muenzer who won a gold metal for Canada in track cycling this year. It was read on the air during the CBC coverage of her event.
"Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won. It exists, it is real, it is possible, it's yours." -- Ayn Rand, Atlas Shrugged
Hat Tip: TIA Daily
Posted by Peter Mork at 11:26 PM | Comments | TrackBack
November 9, 2004
The Coming Dollar Collapse?
Around the web several pundits are acting as if an eminent dollar collapse is all but a certainty. At Tilting at Windmills for example a post states:
- The U.S. dollar is overvalued and therefore likely to fall.
- This decline is estimated to be about 30% over the next year. This is more than enough to wipe out any gains my funds might make in the stock market over that time.
- The weakness of the dollar is becoming common knowledge.
- Europe and China seem unwilling to intervene. We'll know soon if the Japanese are willing to do so.
Now, I'm not going to try to pretend that I know where the dollar is going, but if this is true there is sure a lot of money to be made. Here are the Euro FX Futures trading on the Chicago Mercantile Exchange:
What this is saying is, right now, the markets look for a very slight decline but still have the dollar hovering around its current exchange rate of 1.29 $/Euro. If you click through to the site, the Japanese Yen futures are trading around 103 Yen/$ a year out. This is down from the current exchange rate of 106 Yen/$, but not a 30% drop.
Can the futures be wrong? Yep. In fact they are all the time. But if they are wrong, everyone so sure that the dollar will collapse can make money hand over fist if their beliefs are correct. If they think the collapse is going to happen over the next 6 months they can buy call options on the futures and make even more.
The point being that while the dollar collapse may be "common knowledge" in certain circles, it's far from crystal clear.
Posted by Peter Mork at 6:26 PM | Comments | TrackBack
Fifteen Years Ago Today
Tim over at Freespace has a good post on the fall of the Berlin Wall, relevant as today is the 15th anniversary of this event.
When I visited Berlin in early 1999 what amazed me was the complete absence of most signs that the wall even existed. They had preserved a few sections but they seemed to be few and far between. In most areas, the only tip off that you were near its previous location was a multitude of cranes and recently constructed buildings. A local told us that where the wall and the buffer zone had been was now the most active construction zone in the world.
While the progress was nice to see, it would have been beneficial to see a clearer reminder of the monstrosity that divided East and West Berlin.
Posted by Peter Mork at 11:34 AM | Comments | TrackBack
November 8, 2004
They Made America
I just watched the first episode of the PBS series They Made America. It's a series that is premiering this week focusing on great innovators that changed the direction of this country. The opening segment featured the stories of Ted Turner and Russell Simons. The documentary shows how both had the ability to see a niche ignored by the mainstream, persevere to make it a success, and then once they accomplished their goals both continued to innovate so that they could maintain their success. It looks like the rest of the program, which continues tomorrow, should be interesting.
Posted by Peter Mork at 11:09 PM | Comments | TrackBack
November 7, 2004
Wal-Mart: A Love/Hate Relationship
The opening of a Wal-Mart store near the Aztec pyramids of Teotihuacan has caused quite an uproar. Much attention has been given to the controversy as it is a symbol to many of the encrochment of corporate America upon the rest of the world.
But of course there are always two sides to every story. Quite a few people must be in favor of allowing the Wal-Mart to open or there would be no point in building it in the first place. Stores need shoppers in order to survive. This article from the AFP does a good job of showing why the store is desirable to some:
In San Juan Teotihuacan "there are few stores and everything they sell is very expensive," Maria Felix Nieves, a homemaker at the opening, told AFP.
"Bodega Aurrera" is only 2.5 kilometers (1.5 miles) from the famous pyramids of the Sun and the Moon and a nearby artifacts-rich archeological site.
"The truth is that the people who opposed (the opening) don't care that we're poor and in need of cheaper goods," said Estrella Torres who was checking out kitchen appliances at the store.
Despite a gruelling six hour wait in sunlight, the first people streaming into Bodega Aurrera were all smiles as they went about buying food, diapers, kitchenware and cleaning products.
The article also points out that many locals have dismissed the controversy as several of those protesting the opening of the shopping supercenter are in fact local merchants who will now be forced to compete. Judging by the expressions on the faces of those entering the store through a line of cheering Wal-Mart employees, I would say the local merchants' fears are valid. Click on the pictures to read some of the telling captions:
Posted by Peter Mork at 4:20 PM | Comments | TrackBack
November 5, 2004
The Republicans Take Control
While I was thrilled to have President Bush stressing privatizing social security and overhauling our tax code in yesterday's press conference, I couldn't get this quote by P.J. O'Rourke out of my head:
The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then they get elected and prove it.
Speaking of O'Rourke, he recently interviewed Secretary of State Colin Powell in the The Atlantic. Here's an excerpt:
SECRETARY POWELL: ...But our great strength is the image we still convey to the rest of the world. Notwithstanding all you read about anti-Americanism, people are still standing in line to come here, to get visas and come across our borders.
P. J. O'ROURKE: Voting with their feet?
SECRETARY POWELL: Voting with their feet. So there's something right there.
P. J. O'ROURKE: Back in Lebanon in 1984, I was held at gunpoint by this Hezbollah kid, just a maniac, you know, at one of those checkpoints, screaming at me about America, great Satan, et cetera.
SECRETARY POWELL: Then he wanted a green card?
P. J. O'ROURKE: At the end of this rant, that's exactly what he said: "As soon as I get my green card, I am going to Dearborn, Michigan to study dental school." And he saw no disconnect.
SECRETARY POWELL: He's there now. He's not going back to Beirut.
P. J. O'ROURKE: He hated America so much and wanted nothing more than to be an American.
SECRETARY POWELL: They respect us and they resent us. But they want what we have.
Posted by Peter Mork at 4:30 PM | Comments | TrackBack
November 4, 2004
From Picking to Profits
It is always good to see a reminder that the American Dream is alive and well. Here's a story from the area in which I grew up:
The California wine industry was built on the hard labor of a largely Mexican seasonal work force. But the rise of the fine-wine business created a growing demand for year-round workers with special skills in Napa and other regions. Many former migrant workers settled in wine country. They sent their children to school and taught them how to tend the vines. Some saved money and bought land, and soon they began growing their own grapes.
Ceja Vineyards' first wines came out in 2001. The year before, the Robledo Family Winery, owned by Reynaldo Robledo Sr., a former migrant worker, offered its first bottles for sale. Also in 2000 Salvador Renteria, who came to the Napa Valley as a field worker in 1962, and his son, Oscar, offered their first bottle of Renteria Wines cabernet sauvignon.
Alex Sotelo, who arrived in the Napa Valley as a field worker in 1991 and is now the winemaker at the Robert Pecota Winery, soon will sell his own wines under the label Alex Sotelo Cellars.
Their tales are new versions of a familiar story, in which the children of immigrants, by working hard and celebrating the virtues of family, achieve the American dream of ownership.
Posted by Peter Mork at 11:26 PM | Comments | TrackBack
November 3, 2004
Do Sanctions Really Work?
Despite decades of trade sanctions against the island