The Ari Fleischer tax plan

I'm not in line with his whole rationale, but agree 100 percent with his proposal:

"...we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays."

There will certainly be disagreement about how progressive, but I'll take a system like that any day as opposed to the current mess we have. A system with no credits or deductions would not only be more fair, it would save billions in tax preparation expenses.

Favorite quotes

Everybody and their mother are talking about Joaquin Phoenix's interview at David Letterman. One of my favorite movie quotes is from his character Max California in the movie 8MM:

"When you dance with the Devil, you don't change the Devil. The Devil changes you,"

Great movie, by the way.

Personally I don't care much whether he's acting or not just as long as the man's happy, which by the looks of it he's not:

Remorseless people

Another saddening and bewildering thought on Bernie Madoff and Stewart Parnell, president of Peanut Corporation of America, the man who knowingly sold the tainted peanut butter that killed nine people and sickened many more.

It's not just that they got people thinking how could they do this. It's that they show no signs of remorse. (I guess that answers the question of how could they.) Lives ruined, people killed, it's just part of business.

Don't publicize the address of your opponents

The openness and dynamism of American democracy is incredible. Some of the discussions that go on in this country would not happen anywhere else. Gay marriage, when it was approved in European countries, was passed by the parliament with not nearly as much debate as in the U.S. Here there such a vibrant discussion.

Yesterday, Brad Stone weights in on the eightmaps.com controversy at the New York Times. Eightmaps publicizes the name and location of people who contributed $100 or more to Proposition 8 in California, the one that banned gay marriage in the state in the 2008 election.

It's obviously a form of intimidation. As Brad Stone reports, many people were harassed and threatened because of it. But even if no one were, it is still a "we know who you are and where you live" warning. Or so it feels to the people who see their names on the web site.

I was surprised to learn that the creators of the web site remain anonymous. Talk about cowardice. They think everyone should be subjected to explain their political donations but are afraid of defending their own stance in public. Of course I understand their reluctance, there's a lot of crazy people out there. Which is exactly why the maps they created are so awful.

If only the SEC did their job...

The more we learn about the facts surfacing from the Madoff fraud the more depressing it gets. Yesterday we learned about everyone, especially the celebrities, who lost money in the scheme. The consequences are heartbreaking, such as the news about the investor who committed suicide or the foundations that had to shed jobs and close doors.

The fact that anyone could so be cold as to ruin people's lives like Mr. Madoff is revolting, but the thing that angers me the most is that those who are hired by taxpayers to avoid this very type of fraud had plenty of warning and chose to ignore it. From CNN:

Markopolos began contacting the SEC at the beginning of the decade to warn that Madoff was a fraud. He sent detailed memos, listing dozens of red flags, laying out a road map of instructions for SEC investigators to follow, even listing contacts and phone numbers of Wall Street experts whom he said would confirm his findings. But, Markopolos' whistle-blowing effort got nowhere.

"I gift wrapped and delivered the largest Ponzi scheme in history to them and some how they couldn't be bothered to conduct a thorough and proper investigation [...]"

It's not that nobody saw it coming. Is that the regulators just chose to ignore it. While I don't discount sheer stupidity and incompetence, I wouldn't be surprised if the warnings were ignored deliberately. I hope investigators get to the bottom of this.

PS: The people who put all their money into Madoff's funds were obviously stupid to ignore the cardinal rule about diversifying your investments. They're not to blame for what happened to them, but we all should know better. Just a few years before, workers at Enron lost everything because all their investments were tied to the company. It seems many didn't learn that lesson. Many more will ignore this latest one too.

Shadow photography

Top 10 photos of shadows submitted and chosen by Wired magazine readers. Beautiful.

Keeping it in perspective

For those depressed about the corruption scandal in Illinois, where governor Rod Blagojevich was accused of trying to sell Obama's vacant senate seat, putting things in perspective may be helpful.

Blagojevich will be prosecuted and is likely to end up in jail, while the former governor is already doing time for unrelated corruption charges.

The U.S. is no Denmark or New Zealand, but its levels of corruption pale in comparison to neighbors Brazil and Argentina. In Brazil, the ruling party run a scheme paying most congressmen a $12,000 monthly stipend to ensure they voted with the government. No one was arrested and the president's popularity remained unchanged. The Argentinian president was mostly undisturbed by the fact a "businessman" was arrested in Miami carrying a suitcase with $800,000 in illegal donations from the government of Venezuela. The only conviction occurred in U.S. courts.

At least here the bad guys have to worry about going to jail.

Bailout suppliers, not the big three

Most people seem to agree that none of the U.S.-based automakers deserves to be saved. But many argue that letting them fail would deepen the recession and cause a chain reaction that would bankrupt their suppliers and the entire car-related industry. The bulk of the jobs estimated to be lost from the failure of the big three (up to three million) would come from these suppliers, who also happen to make parts for other carmakers with plants in the United States (Toyota, Honda, Nissan, BMW, and many others).

So why not bailout just the suppliers? It would be cheaper, it would limit the fallout and the job losses and would not reward the lack of vision and poor management we have seen from GM, Ford and Chrysler. And I bet not all three would fail, leaving the remaining one or two in a stronger position.

Oh, to bailout or not to bailout

Matthew Slaughter at the Wall Street Journal reminds us that the big three are not the only car manufacturers in the U.S. Foreign-based companies employ 402,800 Americans at an average salary of $63,358, not counting the supply chain. He’s also makes the good point that a bailout could reduce the amount of foreign direct investment in the country if the federal government is willing to bail out investor's domestic competitors.

On the other hand, The New Republic makes the case for the bailout. While the author, Jonathan Cohn, acknowledges that much of the scorn is deserved, he argues that bankruptcy will make it difficult for the companies to get car parts. He says GM, Ford and Chrysler have actually shown great improvement, taking the steps everybody says are necessary “until an unexpected trifecta of high gas prices, vanishing credit, and a deep recession hit.” From the article:

“According to the most recent Harbour Report, the benchmark guide for manufacturing prowess, Chrysler's factories now match Toyota's for the most productive, while both Ford's and GM's are improving. (A Toledo Jeep factory was actually named the nation's most efficient.) Consumer Reports now says Ford's reliability is approaching that of perennial leaders Honda and Toyota, whose ratings actually slipped last year. In late 2010, GM will introduce the Chevrolet Volt, a plug-in hybrid that can go 40 miles without gas, and the Chevrolet Cruze, a compact that relies solely on gas but that gets 45 miles to the gallon.”

One discussion I haven’t seen yet is how the failure of one of the big three would affect the other two. Would it drag them down with it? Would it further compromise the economy like the Lehman Brothers’ collapse? Or would it benefit the survivors?

None of the companies seems to be able raise cash anyway, so in practice it may not make much of a difference if one of their domestic competitors fails. But it could potentially improve the sales of the remaining two just by reducing competition. Of course, consumer confidence in the domestic manufacturers could crumble, leading to a further reduction of sales. What really worries me about letting one (or all) of the U.S.-based carmakers fail is the economic fallout like the one following the decision not to save Lehman Brothers.

Since there’s no easy answer for this, it’s not such a bad thing that the government is taking its sweet time to decide what to do.

The Daily Show and the new administration

The New York Magazine wonders how Jon Stewart and the Daily Show will stay relevant during the Obama administration.

No question that much of the appeal of the show is the outrage and sarcasm towards the Bush administration's absurdities. But the greatest strength of the show, I think, is not political sarcasm, but making fun of the press' political coverage. And in that regard there will be plenty of material.

Fox News and other right-wing outlets will no doubt display a lot of fake outrage. I expect we will see a lot of comparisons about what they said under Bush ("how dare you criticize the president in a time of war!") and what they will say now. The Daily show mastered the art of funnily pointing out hypocrisy, double standards and silliness in the media.

And silly the media will be. You can bet that they will be made fun of any time they talk about Obama too adoringly or too negatively. Particularly when we see the pieces comparing the way they talk about the new president with the portrayal of George W. Bush.

If history is any guide, Stewart won't let his sympathy of the president-elect's policies be in the way of a good joke when he sees one. By the time of the election John McCain was the most frequent guest in the Daily Show (and the host was clearly fond of him) but that did prevent McCain from being poked fun at. Stewart is a professional comedian to whom comedy comes before politics, as he made clear in his 2006 Rolling Stone interview.

But most importantly, don't underestimate Barack Obama's ability to provide his fair share of ready-made jokes. He is a politician after all.