01/27/12 Buenos Aires, Argentina – Here’s a meaningless abstraction for you, Fellow Reckoner. You ready?
US GDP grew at an annualized rate of 1.7% for 2011.
Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement?
What, if anything, does it really say?
Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter.
Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:
“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”
But let us imagine for a moment that there was such thing as an economy independent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading…or the payroll numbers of Census employees that pumped up 2010’s read.
According to the first example, the more goods that get destroyed prematurely…the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks…the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?
Sure, nobody would have a roof…but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade!
But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories.
We’re in the mood for some good news today…something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week:
According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone.
To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young…and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days.
The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation.
As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct…but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week… If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.
“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.
“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”
Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under…‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”
Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to be among them if you don’t want your own pockets picked.
But then, what kind of horrible fate is that…where one becomes the very evil they despise in order to protect themselves from it?
Hmmm…we don’t know. Try writing your congressman. He surely will.
Joel Bowman
for The Daily Reckoning
Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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Half the GDP in the USA is just people shuffling paper down on Wall Street. There isn’t anything productive behind it.
As for repatriation and renunciation of US citizenship I hope it works out well for all of you. Good for you and I hope you don’t come back. Please don’t claim dual citizenship and keep coming back to the US to keep current and come back permanently when crap happens in your adopted countries.
I claim this land this US of A, I fought for it so did my father before me and now my children. I wouldn’t leave it and those of you who wants to can get…you have no investment in this land anyway.
Americans abroad are renouncing in numbers primarily due to the coming implementation of FATCA. The current US model is far out of step with the rest of the world and needs to be abolished.
“These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return.”
yeah well there’s capitalist infestor businessmen who do that too.
what, you think you’ll escape corruption if you take your money out of the u.s.? corruption follows money like white follows rice. running to escape corruption is like running when you’re on fire. it don’ work.
“As for repatriation and renunciation of US citizenship I hope it works out well for all of you. Good for you and I hope you don’t come back.”
I second that. but they’ll be back. they gotta live somewhere and they won’t build anything themselves. maybe we can charge ‘em rent or something.
From an article entitled the “GDP Deception” posted recently on financialsense, the author states that GDP is simply money supply times money velocity.
Ten years ago, the money velocity was 2.0. Now, it is 1.6. So, if we had the same momney supply as 10 years ago, the GDP would actually be quite a bit lower.
It seems to me that without the additionbal debt, the GDP would have fallen.
Don Levit
Might be very beneficial if Americans leave in droves.
They can set up “little Americas”, similar to what most of our ancestors did when they came to U.S.
This would create greater options for us Americans as it lowers the barrier to leaving here significantly. Living amongst hundreds of Americans abroad with similar values and a shared language…also provides some protection and some political clout…seems to work for everyone else!
My ancestors came here for freedom and the opportunity that it creates. Why shouldn’t we leave it then if America goes Soviet on us?
Downside is that our Overlords would make it so that we CAN’T leave.
But then again, ANY place you CAN’T leave is a place you SHOULD leave IMO.
“They can set up “little Americas”, similar to what most of our ancestors did when they came to U.S.”
sure, they can set up little americas for them to infest. but who will be the americans?
“My ancestors came here for freedom and the opportunity that it creates. Why shouldn’t we leave it then if America goes Soviet on us?”
why are you letting it go soviet on you?
Will california suceed from the union? The indebted state pays more taxes to Washington than they receive in payments. Suceed now!
The USA tax code has 71,684 pages for a reason. The wealthy 1% want it that way.
How did that old Russian joke go?
“If the regulations make sense, please bring the situation to the attention of the relative authorities at once. …. so that the regulations can be changed immediatly.”
[My ancestors came here for freedom and the opportunity that it creates. Why shouldn’t we leave it then if America goes Soviet on us?]
That’s what they said to the Jews trying to leave Germany. They stayed and…