August 22, 2011

An Exercise in Pragmatism — A 5 Step Plan to Overhaul the United States Tax Code

Posted in Fiscal Policy, Spending at 6:12 pm by novamerica

The tax system is quickly becoming a subject of discussion as the federal deficit cutting panel has finally been set. While Republicans keep promising there won’t be any revenue (read: tax) increases, the Democrats keep insisting that a cuts only package won’t fly either. Bottom line: the tax code will, in all likelihood, be going under the knife in the next 5-10 years for a major overhaul, presenting a juncture for major overhaul.

To be plain: I am not an advocate of the current tax system. However, it seems to be the will of the majority that taxes be at least continually administered if not increased. Thus, since the continued administration of a marginal, “progressive”, income tax seems inevitable, it is logical that we at least administer it in the most efficient and beneficial (read: least painful) manner possible.

How to fix the United States Tax Code in 5 Easy Steps (Easy compared to the alternative of not fixing it)

1)      Make all income taxable and treat all income the same way – Okay, the first question most people ask about their incomes is “what do I have to pay taxes on?” Currently, income is classified as either “earned” or “unearned”, and this affects how, or even if, it’s taxed. Then, even after the “earned/unearned” question is answered, you have to determine your taxable income. This, contrary to popular belief, isn’t just the number on your pay stubs.

Now, I won’t go into just what constitutes taxable income because my argument is very simple: all income should be taxed. If money comes in the door, Uncle Sam gets a cut. It really can, and in my opinion should, be that simple.

As far as that’s concerned, I believe we should also do away with most other taxes and instead incorporate them into the income tax. Capital gains tax? Nope. Just count money earned on investments as income at tax it as such. Inheritance? Surprise! You got bumped up an income bracket this year, but you don’t have to pay the estate tax. The entire argument for this is a pretty simple one: the different taxes we have are all ways for the government to get its hands on various portions of peoples incomes. So, what if instead of doing this, and driving up administrative costs while doing it, you just call a spade a spade, and count everything people earn as income. Then, you just tax the income. It’s simple, it’s easy to administer, and it doesn’t leave as much grey area for people to hide their money in. Income is income, no matter how someone makes it. So why don’t we just tax it as such?

 

2)      Forget deductions, use credits – A lot people hate this one, but it goes hand in hand with forgetting the whole “taxable income” thing in my first point. The truth is, allowing people to adjust their incomes by writing off certain expenses flies in the face of a bracketed tax system. If you want someone to pay taxes in a certain bracket, don’t give them the means to drop below it. In a marginal tax system, progressive or regressive, you need to make sure that everyone is in the bracket they’re supposed to be in. Deductions allow people to move down the scale taxing income at lower rates than it would be without them. Basically, income deductions allow the Government to leave tax revenue on the table.

Now, I know people are going to start saying “tax deductions help change consumers habits…” and so on. But, you know what’s A) a lot better at doing that, B) more helpful to people, and C) doesn’t have any of the problems a deduction system has? A system of tax credits. Granted, we’d have to curtail the list a great deal to keep people from paying negative taxes (getting a check from the treasury every year), but a tax credit is a much more potent force than a deduction, so it doesn’t have to be as big. Because a credit comes off the amount actually owed (AFTER income and taxation calculation) it has a real, definable benefit and is therefore extremely effective at incentivizing a certain behavior. In addition, a credit makes a tax behave even more progressively. Take the following example:

Two families each file taxes, one with a total income of $40,000 and another at $120,000. For purposes of this exercise we can assume a 20% flat tax rate (more on rates later, but a flat rate makes this example easier) let’s also say that each family has 2 children ($2500 tax credit each), and a hybrid car ($500 tax credit).

Each family will pay 20% of their income minus $5500 in tax credits. So:

 

Family 1: (.2*40,000) – 5,500 = $2,500 in taxes

Family 2: (.2*120,000) – 5,500 = $18,500 in taxes

 

Now, let’s look at the effective tax rate.

 

Family 1: 2500/40,000 = .0625 or an effective tax rate of 6.25%

Family 2: 18500/120000 = .1541 or an effective tax rate of 15.41%

 

The example clearly illustrates the progressive nature of tax credits. Simply put: credits help lower income earners more than upper income earners even though the amount is the same for both families. This model can also be used to provide work incentives, as well as financial support to the poor, through programs like the Earned Income Tax Credit, which gives a large tax credit to those who work but have extremely small incomes. The credit is so large that extremely low wage earners actually get money back from the government, but only if they’re employed and filing taxes, thus creating an incentive for people to work.

The bottom line here is that tax credits are an extremely effective tool. By doing away with tax deductions and moving to a more modest, credit-only system the tax code can be greatly simplified while still remaining effective in its goals.

 

3)      Shift the tax burden up the income scale – Wage and income demographics in the United States have shifted much faster than our  tax brackets. This one really is that simple. The majority of income brackets (the rates at which varying levels of income are taxed) still fall on those making under $175,000 per year. This means that the people who need to keep their money the most are facing increasing taxes on additional income. According to the IRS, marginal tax rates increase by 18 percentage points (from 10% to 28% in various increments) between incomes of $8,500 and $174,400, but only by a total of 7% for all income over $174,401 up to the maximum rate of 35%.

The effect of this rate structure is that it becomes very burdensome to increases ones standard of living within the middle class, because gained income is taxed at a higher rate. In order to solve this problem of class mobility, we need to rethink how the brackets are structured, with the steepest rate increases coming at the high end of the income scale instead of the lower-middle. This would transition the burden up the scale onto those trying to move between the upper income levels rather than the middle or lower echelons. As an added bonus, reducing the number of brackets would simplify the system and give more people reason to earn additional income. The more brackets there are, the higher the chance of hopping between brackets is, which makes people less willing to earn more income (examples of earning more income vary. Some include: working harder, getting more education or experience to command better pay, or inventing a technology to make their work more efficient). As a rule, people earning more income is good, so it’s logical that the government make this as easy and painless to do as possible, especially at lower and middle income levels. Here’s an example bracket system that’s designed to both shift the burden of a tax up the income scale and to incentivize earning.

 

Income level (annual) Tax Rate
$0-$49,999 5%
$50,000 – $199,999 12% (+7%)
$200,000 – $749,999 20% (+8%)
$750,000 – &1,499,999 32% (+12%)
$1,500,000+ 40% (+8%)

 

Notice how the biggest jump in this sample scale is when one moves from a moderately high income to a very high income, as opposed to among varying levels of middle income. In addition, this sample uses one fewer bracket than the current system and makes marginal taxes on much higher income levels than the current system (currently, rate increases stop at an income just short of $380,000 a year for families and $190,000 a year for individuals, leaving large amounts of marginal revenue uncollected, especially as compared with the above bracket structure). Disclaimer: the sample bracket system is not intended to be implemented as policy. But, the trend in its layout: placing major increases later in the scale as well as using fewer brackets, is a solid framework for any overhaul of the current bracket system.

 

Note: The current maximum marginal tax rate is 35%, but has historically been as high as 92%, so 40% represents a reasonable tax rate ceiling.

 

4)      Make it easy to file and audit taxes – If you’ve ever tried to file your taxes yourself, and I mean actually yourself. No TurboTax, no H&R Block it’s like being a rat in a maze. Legal mumbo jumbo, tedious calculations, and pages of paper create a perfect storm that leads to most people either requiring assistance to file or running the risk of being audited, and audits are only necessary because the system is so complex and convoluted in the first place. The IRS has stated on many occasions that, if not a majority, then a substantial minority of its audit cases are caused by people who simply didn’t properly understand the tax code or how to file correctly. By implementing the steps already outlined, as well as taking other steps to streamline the tax system, these needless and expensive audits could be eliminated. This would also free up IRS resources to combat actual tax fraud, leading to stronger deterrence, increased federal income, and an overall decrease of abuse within the tax system. Remember: if it’s easy to file, it’s even easier to audit.

Ideally, people would be able to print out a single page form, fill it out themselves, send it in with a check and a W-2, and call it a day. While this kind of simplicity may be pie in the sky, the truth is much more down to earth. The simpler our tax system is, the cheaper it will be to run, fewer people will abuse it, and more people will file their taxes properly and on time.

 

5)      Keep the system progressive, but shift the paradigm – This is the part where I get up on my ideological soapbox, so feel free to skip this if you want. I don’t like taxes. There. I said it. A tax is inherently coercive. It’s nothing more than the government using its monopoly on force to take money away from its citizens. Just because it’s been done from the dawn of time doesn’t mean its right.

That all said, I acknowledge the necessity of taxes. We all want and need government services, which is why I don’t gripe about filling out a 1040 like everyone else. We need things like roads, tanks, and bridges. We need funding for our schools, our emergency responders, and our communities. But, we must remember to take sparingly. The point of a tax isn’t to redistribute income, alter behavior, or fund a senators pet project and we must bear that in mind whenever the subject is raised. Taxation should not be an issue of morality. It’s an issue of fiscal policy.

The point of a progressive tax system is to extract the marginal value of government services from all citizens who use them. To get the same value from higher income earners, a higher amount must be taxed to overcome the diminishing value of money at higher incomes.

This is not a justification for using the tax system as a tool of extortion as it has been in the past, with upper bracket income taxes, historically speaking, approaching 90% for substantial periods of recent history.  A citizen having something should never be an excuse for the government to take it. That is why, to this day, there is an amendment to the US constitution banning the quartering of soldiers in people’s houses. Why? Because the citizenry doesn’t believe the government should be able to use their house because it’s in the right place.

This logic must be applied across the board. Just because someone has money is not a rationale for taking it. “They should be taxed more heavily because they can afford it” is perhaps the most flawed, insipid, and tyrannical rationalizations in the history of government.

The wealthy must bear their share of the tax burden just as the rest of the populace does. However, I truly believe it is wrong to excessively tax high earners. Are we taxing them excessively now? Absolutely not. Is there a risk of that changing? Probably. There’s nothing wrong with making high earners pay for services, even at a higher rate. But, they cannot be used as a ‘cash cow’ who pays high taxes and receives very few services, if any. The bottom line: If you want to tax the wealthy, fine. But, they need to be fully included in the envelope of government services.

I’ll close with a final argument about the role of taxes. There is a fallacy that a tax must be fair. Taxes should not be fair because fairness is based on ends instead of means. If a tax system is based on the ends it generates, rather than the means it generates them by, the government has failed to protect the liberties of its citizens, which is its central and sacred duty beyond any other obligation. To preserve the liberty of the citizenry, a tax must be just. Justice is derived from the methodical application of a process, ensuring that all subject to it are treated in an equal manner. This is how a tax must be administered. A uniform process that is easily understandable must be implemented for every citizen regardless of income or class. That is what I’ve tried to outline in my above steps. We can no longer afford to center our revenue and spending policies around what is “fair”, or what is “ideal”. Rather, we must ensure that whatever ends are desired by the public are carried out by a means that is just. This is the only true way to stop building one success on the backs of a thousand failures.

The time has come to stop designing a tax system with a goal in mind. If one must levy a tax, the goal of any tax system should to be extracting that tax. Nothing more, and nothing less.

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August 3, 2011

Elephant: 1 – Ass: Backwards — The Score From the Debt Debacle

Posted in Fiscal Policy, Spending tagged , , , , , , , , at 7:19 pm by novamerica

I usually don’t do political analysis pieces, but in light of the deficit negotiations I feel compelled to offer my two cents on what is easily the most important piece of legislation passed under president Obama’s administration. That’s right. I said the most important. Forget the stimulus bill, to hell with the affordable care act, and even the ending of don’t ask don’t tell falls by the wayside when compared to the potential implications of this deficit reduction law. And yes, it’s a law now. Thank god.

To begin, I will be plain with my thesis: the republicans won. They won in ways that the democrats will be feeling for years. The red House of Representatives took the blue president and senate to the mat with the threat, which they made good on several times, to block any bill involving tax increases of any kind. Sure, the democrat controlled senate tried to do the same thing, but they drew a lot more flack because the house sent them so many more bills. During the height of the crisis, it seemed as if the house rolled out a bill to tackle the debt limit problem almost every day, and the senate voted each one of them down.

That marked difference between the house and the senate is the first facet of the republican victory. In the eye of the American public, the republican house made countless attempts to resolve the debt crisis. I’ll be the first to concede, most of the plans were farfetched, impractical, or even crazy. But, the fact remains, house republicans put out a large volume of legislation to resolve the problem, several times far enough out to avoid the crisis that the debt negotiations became. What did the senate do while this was happening? Vote these bills down.

Never mind offer an alternative. In the minds of many analysts, the only real debt/deficit proposal that came out of the senate prior to Reid’s compromise was the bill written by the vaunted “gang of six”, and even that faced massive hurdles of implementation; never mind the fact that the senators hadn’t bothered to spell out exactly which cuts came from where. The bottom line in all of this is that people saw the republicans at least trying to solve the deficit problem, and all democrats did, again in this perception, was stand there and shut down every plan the republicans had. They offered comparatively few alternatives relatively late in the process, and that hurt the democrats badly. The lasting legacy of the democratic side to these negotiations will be one of bickering and foot dragging as the nation flirted with financial Armageddon. Can’t speak for the democrats, but that’s not something I want over my head as an election year approaches.

However, things go even farther than a stigma for the democrats. The House, and by extension the Republican Party, has finally showed its teeth. It may not be nice for democrats to hear, but the democrats got taken to the mat over spending and taxation. And I mean to the freaking mat here. For weeks, senate democrats and the president both said that no bill without revenue increases would be approved. A few weeks later, guess what? The bill Obama signed is 100% spending cuts. Senator Reid quickly changed the subject when asked about this by reporters, touting the importance of having any debt ceiling increase rather than the ideal one for democrats.

What does this say about the Democratic Party? The senate? The President? Nothing good. In fact, it says, in effect , “if you press us hard enough, we’ll fold.” With the president facing sharp criticism over past reforms such as the Affordable Care Act, as well as growing momentum from the political right, this isn’t a message he can afford to send.

I could go on, but I’d probably run out of readers long before I run out of words. So, I’ll move quickly to the other major impact of this law: a profound shift in fiscal policy.

By fighting so vehemently against any kind of tax increase, while at the same time pushing an aggressive schedule of cost cutting, Republicans have managed to change Washington’s fiscal mindset to one of restraint over spending. The provisions contained in the act call for a bipartisan committee to scour the federal budget for another $1.2-1.5 trillion in additional cuts by Thanksgiving lest steep automatic cuts come into play and a balanced budget amendment be sent to the states.

Putting congress under this kind of gun shows that the bills writers truly intend to shrink federal spending to a sustainable level. This is evident when we look at just where these automatic cuts would be targeted: defense and federal entitlements. These two spending categories are near and dear to Republicans and Democrats respectively and provide a strong incentive to not only come up with additional cuts, but to enact them in a relatively timely manner, compared to how Congress normally acts that is.

So there it is. Every democrat who read this far probably wants to kill me and every republican wants to hug me…which is certainly an odd feeling for a left leaning independent. Either way, this is the state of things. Love it or hate it, the federal deficit needs to shrink lest the national debt grow to the point where it’s toxic to economic growth. How this can be done is a subject for a later post, and rest assured you’ll be hearing from me as the deficit and debt debate continue. For now, this is one guys take on the current political maelstrom.

 

November 22, 2010

Undoing Benefits to Undercut Unemployment — Alliteration and a solution to persistent high unemployment

Posted in Uncategorized at 10:37 pm by novamerica

America is famous for having one of the most powerful and productive workforces on the planet, yet getting them back to work seems to be one of the most difficult tasks faced by the Obama administration. The president is under tremendous pressure from all sides to lower the national unemployment rate, which has stubbornly hovered right around ten percent despite the administrations best efforts. This due partly due to the fact that unemployment is a trailing economic indicator, in the regard that it doesn’t drop until well after a recovery is underway. But, technically the American economy has been out of recession for months. Could it be because the federal government can only do so much to stimulate the economy? Sure, but again only to a small degree. And even if this argument were causative, it too is undermined by the fact that a recovery is indeed underway.

So if these two ideas don’t explain why so many Americans can’t find a job, what does? Simply, it’s too expensive for companies to hire workers. There’s no way around it. Every other explanation falls short of explaining why nearly ten percent of workers can’t find jobs that should be easy to come by. The vast majority of these individuals are even educated and experienced. Retraining isn’t the answer here and neither is extending unemployment benefits so the unemployed have more time to search. Rather, we have to make workers cheaper to hire so companies have more reason to do so. How? By suspending or terminating mandatory benefits legislation.

The nuts and bolts of this proposition are founded in the economic forces that drive labor markets. Firms hire a worker based on Marginal Value Product, or MVP. This is determined by subtracting the costs of hiring a worker from the expected value of their output. When governments, federal and state governments both mandate benefits, place restrictions on hiring a worker, such as mandatory health insurance, this MVP is sharply reduced. Instead of being able to reap the full benefits of a workers’ productivity, the company is now forced to pay into the employee’s insurance plan. This cuts into the value of the worker as well as the firm’s profits.

Benefits are good, don’t get me wrong. But, when a firm is forced to provide heaps of benefits to relatively unskilled workers, it’s no longer worth the companies while to hire that person. When you have to give executive caliber benefits, such as comprehensive health, vision, and dental insurance, subsidized maternity leave, paid vacation, stock options, profit sharing, and a slew of travel benefits, to middle management employees it’s just a losing proposition. I’m going to call a spade a spade here and say that a middle manager isn’t as productive as a high level executive, at least in terms of adding value to a company. So, logically, the company can’t afford to pay them the same benefits. The above example is admittedly extreme, but it serves to illustrate the problem of states mandating benefits above an employees pay grade. When this happens, firms either don’t hire people or outsource to a state or country where these benefits aren’t mandated and it’s cheaper to hire the labor they need to stay afloat.

As the economy continues to stumble, and make no mistake major industries aren’t out of the woods yet, companies are under heavier pressure than ever to cut costs and remain profitable. So, the demand for American labor has dropped sharply due in no small part to the fact that American labor is expensive. Let’s face it, when all you need is for some guy to weld a car frame or a person to supervise a call center, you don’t need the most qualified and experienced worker out there. You need one who will give you the most bang for your buck, and right now that isn’t an American.

This problem threatens to get worse as the government is mulling reducing the tax credit it gives to employers to provide health insurance to workers. As these benefits become mandatory in more states, it will become even more expensive to hire and more Americans will find it even more difficult to secure the work they need. If the requirement for benefits were lifted, this problem would be more or less solved because firms would be able to hire workers at their true value instead of having this value tampered with by mandatory benefits.

Now, I know what you’re thinking right now: “if we don’t mandate that companies provide benefits to workers, they won’t.” Simply: wrong. I  can’t deny that the ranks of the uninsured and unbeneiftted will increase, but benefits will still be awarded to workers either willing to take the pay cut or productive enough that the company can afford to pay them the benefits they want. If benefits aren’t a given, we will see more qualified and experienced workers moving through job markets as they now have another variable to consider in their hiring process. In addition to the traditional salary, workers will now be able to negotiate based on benefits. The unemployed can drastically increase their likelihood of being hired by taking cuts to benefits that their contemporaries demand. However, the reverse is also true. If a worker is especially qualified or experienced, they will likely be able to secure above average benefits for themselves and family. I’m not professing that this market allocation of employee benefits will be perfect, but it will ensure that more people are employed. With that in mind, I ask you: what’s better, one person out of five being employed and insured, three of five being employed at lower insurance, or full employment and workers being left to negotiate their benefits themselves?

By lowering the threshold of mandatory benefits for workers, or even outright eliminating the legislation, the federal government can make a major dent in the continual problem of unemployment. American labor is incredibly productive, but it’s becoming prohibitively expensive to hire, especially in blue collar and mid level fields. If the US is to remain competitive in these labor markets, we need to trust the workers to negotiate their own benefits packages. If each worker is allowed to sell their labor for what they think it’s worth, instead of what the government thinks its worth, it will lead to higher levels of employment as workers who are willing to sell labor below the mandated price/benefit level are able to do so and those who aren’t are more free to negotiate.

This solution isn’t perfect, nor do I profess it to be. But, it’s grounded and proven in economics that it will work. It’s a drastic step to be sure, but in order to finally end the deepest and most damaging recession since the Great Depression, desperate times call for drastic measures.

 

November 16, 2010

The Trillion Dollar Gorilla in the Economy – Looming issues with the Fed and Inflation

Posted in Monetary Policy at 4:59 am by novamerica

In the early days of the American financial crisis, when floor was just beginning to fall out from under the subprime mortgage market, there were calls from lenders to reduce the federal funds rate in order to allow banks to more cheaply lend to each other and keep their balance sheets fall in line with government regulations. This rate is used as a barometer of the money supply. The lower the rate, the faster the money supply can grow because the low cost of inter-bank borrowing increases what is called the velocity of money, or the rate at which it changes hands. Higher velocity essentially multiplies the amount of money in the economy, effectively growing the supply and increasing the rate of inflation.

The idea behind cutting rates is simple: lower rates = bigger money supply = more money in peoples/banks pockets = more spending/lending = happy economy. But, cutting rates makes the economy more susceptible to the problem of inflation. The federal funds rate is a tool that can be used to decrease the money supply to lower the rate of inflation, working in more or less the inverse of the procedure outlined above. Higher rates = higher cost of short term lending = smaller money supply = lower inflation. This also has the nasty side effect of torpedoing aggregate demand, lowering both spending and lending and essentially kicking the tepid American economic recovery right where it would hurt the most: in consumer spending. This leaves the fed in a nasty predicament because inflation can also severely damage the recovery. If people’s dollars lose value, people will spend them quickly due to fear of their dollars farther losing value. Then, whoever gets those dollars wants to get rid of them, and the cycle continues. The velocity of money increases exponentially and inflation moves in lock step with it. Essentially, the dollar could be turned into a toxic asset. Don’t believe me? Look at Germany after world war one, where hyperinflation created a situation where children played with bricks of deutschmarks like Legos, or in present day Zimbabwe, where a wheelbarrow full of currency won’t even buy a loaf of bread.

If the Federal Reserve were the only actor in this problem, it might be manageable because the fed would be well capable of cleaning up its own mess. If it lets rates drop too low, it can simply raise them to undo any damaging swelling in the money supply and vice versa. However, there is one other actor in this situation who makes the problem utterly dismal: the federal government. The federal government, through both the Troubled Asset Relief Program as well as the American Recovery and Reinvestment Act, have increased the money supply by over a trillion dollars through deficit spending and other bailout measures. This action wrests control over the money supply away from the Federal Reserve and instead into the hands of an entity that can only spend. The federal government has shown a remarkable talent for running deficits. And even if it were to run a surplus, it’s incapable of reducing the money supply because this surplus is simply reinvested and spent back out. This creates a situation where the money supply can only grow and control of the money supply is taken away from the organization that is supposed to control it.Continuing inflation threatens to devalue the dollar to the point even the homeless won't want it.

The entire premise behind the federal reserve is to safeguard the value of the dollar; with the national government growing the money supply and the fed unable to counter the inevitable inflation by raising rates for fear of damaging the economic recovery. The Fed has been bastardized into a tool of economic and fiscal policy and has lost its true purpose of safeguarding the dollar. Without the fed to protect the continued value of the dollar, the US risks seeing the dollar fall out of favor as a currency of global trade. Furthermore, the threat of rampant inflation is actually causing organizations to withhold loans because inflation makes lending a losing proposition. If dollars are losing value at a higher rate than the rate of interest on a loan, the money being paid back is worth less than the money being lent out. Firms are afraid of this coming to pass, so they’re holding out on borrowers. So, the tool that was intended to stimulate lending instead has cooled the sector to the point that it’s dragging down the recovery it was intended to benefit.

The Federal Reserve has lost its way through politics and has become a tool of policy instead of economic health and sustainability. Only by giving the fed back its metaphorical cahones by distancing it from the federal government, perhaps by altering the appointment process so the federal reserve is no longer directly accountable to the government. Many opponents will argue that this is a dangerous precedent, but the entire idea behind the Federal Reserve is that it must be free to operate as it sees fit. That way, it can act in the best interest of the national economy instead of pandering to political pressures. A strong dollar is always in Americas best interest, keeping the dollar on top when it comes to global trade and ensuring that any recovery is built on solid ground instead of empty promises and the continual threat of rampant inflation.

November 15, 2010

Tomorrows Tomahawk

Posted in Technology tagged , , , , , at 5:09 am by novamerica

An artists rendition of what a Prompt Global Strike missile would look like in flight.When Thomas Edison first created the incandescent light bulb, he used vegetable fiber as a filament to actually create light. Today’s bulbs light up our lives with tightly wound tungsten wire. Who knew that the same element that lights our homes could also be used to light up America’s enemies? By retrofitting currently useless ballistic missiles, meter long tungsten rods could be doing just that. The idea is elegantly simple. Replace the warheads of a missile with these tungsten rods, boost them to a suborbital ballistic trajectory, and let physics do the rest. By the power of gravity, the tungsten rods fall to earth with pinpoint accuracy and the force of a small nuclear weapon. Furthermore, the system could be reconfigured to deliver sub munitions like cluster bombs, or even unmanned aerial vehicles. All of this, anywhere on Earth, in an hour or less.

The advantages of this system are incredible, especially with the types of conflicts the United States will be fighting. Currently, the fastest response time the US can muster, without exercising the nuclear option, is 48 hours by way of an Air Expeditionary  Force, and heavy hitting can be accomplished in a 96 hour timeframe with a Navy Carrier Battle Group. Prompt Global Strike would reduce one way strike time to just under an hour for anywhere on earth without utilizing a nuclear warhead. Even a low yield device has the inevitable problems of fallout and collateral damage, both of which make even low yield warheads simply unacceptable as a first strike weapon. Prompt Global Strike offers this rapid response time without the astronomically high costs of nuclear weapons. PGS also has the power to punch meters into the ground and through concrete, making it effective against hardened targets like bunkers or missile silos without risking the life of a pilot.

This response time will be absolutely critical as the US continues to fight decentralized threats. Already, US drone strikes in Pakistan underscore the nature of conflict to spread beyond a specific theatre. When a conflict tends to spread, rapid strike capability is necessary to cut off violence before it spills over. PGS also has an incredible advantage in precision. Currently, cruise missiles are the chosen option for a precision strike, but they suffer from the handicap of being subsonic weapons, drastically increasing their response time compared to a PGS weapon. To illustrate the gravity of this shortcoming, shortly after the 9/11 attacks, the location of Osama bin Laden had been pinned down to a base in the Tora Bora mountains. Cruise missiles were launched by American naval forces in the Persian Gulf took over four hours to arrive, giving Al-Qaeda forces ample time to evacuate the area, costing the US a crucial opportunity in the war on terror.  Prompt global strike would have overcome this waiting problem and permitted the US to capitalize on this opportunity, potentially ending the war on terror years ago.

Furthermore, precise, powerful, and timely strikes would be invaluable when it comes to dealing with potential future nuclear threats in Iran and North Korea. The ability to promptly deal with these emerging threats, especially the ability to destroy missile silos and hardened structures dedicated to weapons production, gives the US an incredible edge in the fight against nuclear proliferation. If properly timed, PGS could even be used to destroy enemy missiles before they are launched without utilizing nuclear weapons, making it an ironic tool of peace.

Granted, no system is perfect. PGS has one major problem: a nasty tendency to set off Russian early warning systems and make Ivan think we’re about to flip one at him. A missile that is, not the bird. The only way to solve this problem would be to broadcast a warning over the hotline, an unbreakable communications link between Washington and the Kremlin created during the cold war to stave off Armageddon. Now, it can be used as a tool to inform the Russian government of a PGS launch. This step could be implemented immediately; the infrastructure is already in place. All that is needed is a change in rhetoric before a tool created to stop a nuclear war becomes a weapon against nuclear proliferation.

Prompt Global Strike is an incredibly powerful tool, and if properly implemented it could give unused strategic missiles new life and purpose in combatting terrorism and weapons proliferation. Doubtless there are hurdles, but the ability to deliver a precise, powerful, and nearly immediate non-nuclear strike is incredibly valuable to the US as well as the entire global community. Clearly, the benefits of this technology far outweigh the easily solvable costs. The US is currently at the forefront of developing this technology, and it is paramount that this development move forward. President Bush shelved the project. As wars become increasingly decentralized and full scale invasions impractical, it is imperative that Prompt Global Strike at least be reexamined.

May 30, 2010

Closed Development Architecture, not just for Apple anymore.

Posted in Technology tagged , , , , , , , , , , , , at 10:32 pm by novamerica

Well its official, the new tablet computer in the works from computing giant HP will now be running Palm’s web OS software, ditching windows 7 in favor of a more touch-friendly, intuitive operating system. Recently, HP bought out Palm in order to acquire rights to the software, and now Web OS is in the process of being tweaked to do exactly what HP wants it to do. HP has been working on their counter to Apples incredibly successful iPad, dubbed Slate, since around January and it’s set for release before the end of the current fiscal year. So, think around mid to late October. Just in time for people to buy them and then give them to other people. Completely counterproductive if you ask me, but I digress.

The reason any of this is worth looking at, writing about, or most importantly, caring about is because of the impact this move by HP will have on software giant Microsoft. I’ll be brief: Microsoft doesn’t make hardware aside from a few keyboards and that cool looking arc mouse that breaks after 3 months. They make windows, office, and a few other useless applications like Internet Explorer. They are nearly entirely dependent of software revenues, mostly from the aforementioned Windows OS and Office productivity suite, to stay in business. That’s where the problem arises.

HP’s move to build its own tablet PC operating system off of Palms Web OS is showing a growing trend of what has been dubbed vertical production in the market for tablet PC’s. When something is vertically developed, everything is done in house by the tablet PC’s manufacturer. So, instead of slapping Windows on a set of hardware specifications, each tablets OS is proprietary. Given that tablets, once they sufficiently advance in size, interface, and performance, are generally being hailed as the future of personal computing, the impacts of this could be huge, and there are two of them.

One, this will serve to break Microsoft’s stranglehold on the computer OS market. Some version of Windows is installed on just under 90% of the world’s computers and I’m writing this on a machine running windows 7. If tablets really are the wave of things to come and tablet manufacturers each write their own operating systems, Microsoft could find itself in a heap of trouble stemming from a severely reduced market share on its Windows operating system.

Even if the company manages to put out its own tablet PC, it will be facing real market competition for the first time in over a decade. Already Apple has the first to market advantage with what amounts to an overweight iPod touch. Soon, Google and HP will be releasing tablets, each running a different operating system. Google intents to run a beefed up version of their Android Smartphone software and HP will run WebOS. As tablets gain market share, and they will, evidenced by the success of the iPad, Microsoft will find itself not only losing OS revenues but also revenues from other softwares that either don’t run on these proprietary operating systems or lose out to lower cost alternatives produced by third parties, like apples writer application for iPad that essentially takes on the role of Microsoft word.

Second, standardization could go out the window. As evil as some people think Windows is and as much butthurt as it can elicit, the fact that it holds such a huge portion of the global OS market gives software developers a standard worth adhering to. If Windows market share drops siginficantly, this set of standards goes away and now developers are being forced to code for Web OS, Android, and whatever else tablet manufacturers cook up. This will lead to specialized software developers and potentially higher prices for applications as developers are forced to specialize. In addition, this lack of standards could lead to the same nightmare that occurred in the early days of word processing: various, incompatible formats. Think about it. Writer for WebOS saves your work in a .word format, an application that does the same thing for Googles Android OS saves it as a .carrot or whatever, and before long nobody can look at each other’s work and we’re all stuck in different, Apple-like closed development cycles. Scary…

Now, I could be wrong about all this and the switch to WebOS by HP will have no real effect and Microsoft, along with Starbucks and Wal-Mart, will continue to rule the world (that’s a joke). However, this is one scenario that could reasonably come to pass. Just saying.

Tl;dr: HP is no longer using Windows 7 on its tablet PC. This could signify a move towards proprietary tablet PC operating systems that would have major implications on both Microsoft and the computing world as a whole.

May 26, 2010

Destroying the Destroyer

Posted in Military Spending tagged , , , , , , , at 12:32 am by novamerica

The destroyer has always been a central part of naval warfare ever since its inception. A fast vessel with a respectable amount of firepower and extensive ground support/anti-submarine capability.  In today’s world, the destroyer is even more critical. Larger guided missile ships just don’t work anymore. If you don’t believe me see the Soviet missile cruiser Kirov. The ship was phenomenal. Nuclear powered, carried plenty of missiles. Overall, great design. Problem: cost. The Kirov and her sister ships simply cost too much to operate and thus there only 4 of them in existence. To put this into perspective, the United States currently operates 10 Nimitz class aircraft carriers. The destroyer can fulfill the role Kirov was designed to at a much lower cost and with greater ship versatility. The Kirov couldn’t hunt submarines, a destroyer can. The Kirov couldn’t move close to land and support troops, a destroyer can. The list goes on. The point is very simple: destroyers are the vanguards of modern naval combat. They serve as the base of the fleet that actually does battle. Aircraft carriers cede power to their strike wings and missile cruisers such as the Kirov or the US Ticonderoga class are too big to deploy in large numbers. On top of this, the United States stopped manufacturing Ticonderoga class missile cruisers for the same reasons the USSR stopped making Kirovs, they are simply too expensive to build and maintain, and thy’re also nearly impossible to upgrade. Simply, the destroyer is king.

Currently, the United States is operating just over 50 Arleigh Burke class destroyers, with a few more slated for production. Here’s the itch: these ships are getting old. The first flight of these vessels is already going in for modernization, a long and expensive process, and the last flight won’t be going in until around 2016. By that time, the first flight will need modernization, or they might be ready for retirement. Already, the Arleigh Burke class has the longest production run of any ship in the navy, and with the retirement of the USS Kearsage, it’s also the only class of destroyer the US is currently fielding. As the ships age, the Navy as already come up with a destroyer to pick up the slack: the Zumwalt Class. Now, these things are sleek, fast, heavily armed, and excel at shore fire support, something badly needed in the current war on terror. However, in keeping with the flow of this article, there is a problem here too. We’re ordering three of them. Three. Down from twelve.

I understand that the Zumwalt class isn’t exactly a cheap date, costing just over 3 billion bucks a pop, but we have to look at the implications this could have on national defense. Modernizing the Arleigh Burkes just isn’t a long term solutions, and it’s a losing battle no matter how you cut it. The Zumwalt has many features, several of them in the fundamental design of the ship, that make every other destroyer on Earth obsolete. It’s only a matter of time before other nations, such as Russia, China, and India develop their own counter to the Zumwalt destroyer, also more advanced than the Arleigh Burkes. And I guarantee they’ll have more than three.

Even with a valiant moderinization effort directed at the Arleigh Burke class of destroyer, the hulls will eventually wear out and the boats will have to be retired. This leaves, at current budget constraints, three Zumwalt destroyers to cover the entire navy. I see a problem here. 12 are enough to stagger by on for a year…maybe. Split them up Atlantic and Pacific, use them to keep our precious carriers safe, but even that’s an enormous stretch and huge risk to the safety of our navy and by extension, our country.

The Zumwalt destroyer is a leap forward in naval technology and it’s foolish of the budget office to turn this leap into more of a tiptoe with penny pinching budget worries. The cost of a single Zumwalt is less than two percent of what’s been thrown into the economy in the forms of TARP and stimulus funding. The United States has a proud history of storming into new technological frontiers, and that is going to become more expensive as technology advances, there’s no way around it. However, if the US is to maintain its position as a naval superpower, it cannot afford to fall behind in either numbers or technology. Even a new class, commissioned after the Zumwalt, with some of the improvements and a lower price tag, similar to the new Virginia class submarines derived from the USS Seawolf, would help the US stay ahead technologically while allowing it to maintain a sizable fleet at a reasonable costNaval power will become more critical as China and India move forward and Russia tries to reassert itself as a global player. The US must be ready to play ball on these new, competitive seas. Simply, three destroyers aren’t going to cut it. Naval power will become more critical as China and India move forward and Russia tries to reassert itself as a global player. The US must be ready to play ball on these new, competitive seas. Simply, three destroyers aren’t going to cut it, no matter how good they are.

Tl;dr: Destroyers are critical to naval warfare. US destroyers are getting old, replacements are inadequate. The US must move forward and accept the cost of the Zumwalt class, or create a strong alternative, as naval power becomes important in global power brokering once more.