Creeping automation

Automation is everywhere, but most of us don’t notice it. Every product we buy, every service we use has been touched by automation, some more than others. Think about the products you buy about the grocery store? Come in a package? Packed by machine!

I’ve had some interesting emails from regular followers/readers about automation. I don’t think people quite understand how invasive and creeping automation is.

Here is a perfectly simple example. I live on a new development in Colorado. Some 70 single family homes, and now they are moving into the multi-family condo and town homes. They’ve built two condo buildings, and a 3rd 12-plex is going up now, literally right across the street.

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Pressed Siding, Floor and Ceiling Boards from Canada
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Crane lifts pre-constructed parts into place

First, let’s be clear, this isn’t a pre-fabricated building. It’s a unique design to this location, that most would consider “traditional construction”. Only it isn’t, it’s massively labor free, and largely “skilled-labor” free.

The construction is typical timber frame, in the old days, there would have been an army of craftsmen working on site, the continuous sound of saws and hammers. While there are some professional craftsmen on site, the bulk of the construction is being done by “nail gun jockeys” using pre-cut, assembled panels and components. They just nailed them into place.

Of course, walking pass this, you’d never normally take a second look. Since it’s directly opposite my home office, everytime I look out the window I see it. What do I see?

Creeping factory assembly and automation. All the major parts arrive pre-cut to size; the joists and all the boards for the side that need holes for windows and door arrive pre-cut. The original boards come from Canada and Mexico. Anyone who has seen the home improvement shows knows that the boards are not cut by craftsmen and craftswomen, but simply cut by operator assisted laser cutting machines. What do all these things have in common? Automation.

It would be easy to simple, let’s at least bring back the board creation, prep and the component assembly to the USA. Indeed easy to say. That assumes we have the raw material, and that the factories exist that can manage the increased workload. If they can’t then let’s assume they can be built.

What happens then? Well, the businesses that do the manufacturing either produce the same goods at the same price as they are available overseas, which will be hard. The US no longer has the same wealth of natural resources. Those that we do have are harder to extract, or come with environmental, planning or development restrictions. Even if these were lifted, they would still come with a price tag.

Those costs, plus any for plant construction, or increased raw material cost would be passed onto us. Effectively doing a “Carrier” and raising prices to cover their increased costs.

Automation is everywhere, but most of us don’t notice it. Every product we buy, every service we use has been touched by automation, some more than others. Think about the products you buy about the grocery store? Come in a package? Packed by machine! Ready made meals, the whole production line from animal slaughter to food prep and cooking are all now largely automated. It’s invisible, invasive and all encompassing.

American Tax Avoidance and Panama

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States.

Kudos to MSNBC for writing up the story of the (lack of) Americans discovered in the “Panama papers”.

The Wall Street Journal earlier pointed out that 617 intermediary companies that were listed in the papers that operate here in the USA, but no details will be available until sometime in May. So far the only American directly implicated is Marianna Olszewski a financial “pundit” from NY.

article-doc-9n7p3-3x3xJf8qEp7439795a58657c8166-790_636x382[1]As I remarked in my original post about the Panama Paper release, this is no reason for Americans to feel smug. The MSNBC spells out the reasons for that, importantly because for the most part:

  • Delaware, Nevada, along with the U.S. Virgin Islands, are known in particular for loose regulations and low taxes. You can park your money in America behind a dubious corporate facade, without going “offshore”. America rates third behind Switzerland and Hong Kong as a popular tax haven, and far higher than Panama, at 13th. When you here about those massive corporations with billions overseas, it’s not actually sitting in banks in 3rd world countries, it’s often in “tax avoidance” holding companies, who have their cash here in the USA. It’s all bookkeeping entries a rather than overseas.
  • US Tax rates are already super-low, contrary to what you hear from Presidential candidates. Super-rich Americans have less need to seek tax havens because they have less to lose.

Many small and large American and foreign companies help wealthy clients set up offshore shell corporations — that itself is not illegal, as long as the those they set them up for are not trying to hide criminal proceeds or dodge tax obligation.

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States. Remember, for each dollar a corporation or wealthy individual doesn’t pay, it has to get made up somewhere. That either means someone else pays it, or services get cut.

Fran Hendys offshore blog has good coverage of tax related issues, it’s her specialist subject, where as I just angry more people can’t see what is going on.

Panama Papers, don’t be smug

_89082388_cfoiqttwsaadnoj[1]I woke up early yesterday, after a few minutes decided to read my phone, and there was the blow-up over the “Panama papers”. I read the BBC’s excellent “live” page which in twitter-timeline style was posting news and highlights as they uncovered details.

And then I went back to sleep. There wasn’t anything really new here, it just confirmed what many people already knew, third world dictators, power junkies and desperate wanna-live-forever celebrities were cheating on a massive scale.

Later in the day many of my politically minded friends posted links, articles and critiques on facebook and twitter. Ultimately the leak is a big deal as it takes away on of the key value propositions of this type of activity, secrecy. Without secrecy, the sorts of deals, services and tax avoidance is sort-of-meaningless.

What most ordinary people have overlooked, or turned a blind eye to is that they more than likely benefit from similar schemes. If you’ve used the services of, or bought stuff from IKEA, Pepsi, Starbucks, Microsoft, been to Walt Disney theme park, then you too have benefited or contributed to tax avoidance. Indeed, almost everyone orders from Amazon, and in many cases, doesn’t pay tax that they would have paid had they bought the self same product from a local store.If you bank with Barclays, Citigroup, Deutsche Bank, HSBC, JP Morgan, then yep, same thing.

“The World’s Favorite New Tax Haven Is the United States.” Why? Because even American law firms dedicated to protecting the financial assets of the world’s elite say the US is a perfectly effective tax haven”

What make the Panama papers different, is it gives the tax authorities around the world the chance to go after individuals. Thats much easier and much more interesting than going after these big tax avoiding companies. As always, it’s divide and conquer.

Not doubt entirely coincidentally, when I collected my mail yesterday, I got a full FACTA request/disclosure from my bank, FirstDirect, a subsidiary of HSBC. So, they can make it very difficult for me to maintain a bank account back in the UK, and will directly report to the US Inland Revenue Service, I on the other hand can do nothing about their deliberate tax avoidance, that the UK and US Tax authorities know all about.IMG_20160405_073140

Greed, taxes and a lack of empathy

It’s tax time in Travis county and Austin, that means it’s the annual hand wringing and whining because the property values are up again, by huge amounts.

gop_greed_over_people_badge-r5803b6831b244f1ab8d9e1519c522292_x7j3i_8byvr_324[1]Taxes are all relative. The total of tax paid is still stunningly low compared to the quality of life and services you get for that. Yes, property taxes are high, but sales tax is relatively low, there is no state income tax, and while the Ledge and Republicans have you convinced that Federal Taxes are high, and money being wasted on drug taking, idle, work shy, “minorities”, it doesn’t matter that that is or is not true, taxes are not really high.

I have never had children in school in Austin, and will never have. I would guess I’ve paid over $60,000 for that choice alone. I’m guessing when most people complaigning were born or arrived in Austin, there were already schools? If thats true, someone paid for them. Probably a lot of people paid taxes for them and couldn’t use them as they were still being built. I’m guessing when they arrived the city had services, roads and other common amenities. How did they get there, someone paid taxes for them.

Those complaining are simply paying for the next generation and you are paying so that those families who can’t afford private education, have some expectation of having children who have a chance in life, and don’t become a burden on the same tax paying society.

I think the problem many of us have, is, those that complain about taxation seem out of touch or sheltered by comparison and lack empathy or sympathy for the real challenges. While I don’t know you, or anything about your quality of life, I’m guessing you don’t worry about water, food, and live in fear because you live in a dangerous environment? All the facilities, effort, and labor that goes into providing the conditions that allow you to live that way, were in general, provided by taxation. Usually that taxation was provided by someone else, your forefathers, others, the people that founded your city etc.

Too many people these days lack empathy, they are, in some respects selfish. They demanding they keep more of THEIR income, and not understanding that if they had to pay their fair share for the free facilities they get to use, in what is essentially a pretty dam good 1st world life, would be paying way over 50% of their total income in taxes. Even if taxes stayed the same, that would mean real cuts being made. Those cuts almost always are targeted at the people who will complain least, because they often are in real fear, too busy getting by.

Yep, I hate the way property taxes are done in Travis County, it’s a sham. Businesses are not assessed fairly, there are too many suspicious valuations. However, while my income has stayed relatively flat since I arrived in Austin from the UK via New York City, my total gross income is still way up and I do not participate in any tax avoidance schemes. So when the politicians promise homestead exemptions, reducing the tax bill etc. they are doing nothing but pandering to the lowest common denominator, and increasingly that represents a generation who don’t understand how good they have it.

insidious greed – HSBC

If you’ve not been following along today, it’s well worth reading back through the BBC Business Live News feed on the HSBC Tax Avoidance scandal. It is indeed the perfect example of the sort of insidious greed that is destroying society today.

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It’s not just the “me” culture that is all around us, but the industry and culture that is behind it. Rather than pay taxes now, there is a whole industry on tax-avoidance. It’s become an accepted practice, mostly illegal, certainly immoral and to deflect interest in their actions, just like with the bully at school, they deflect criticism and investigation away from their own failings, by making a big deal about those who can least defend themselves.

The amount of tax avoided, mostly illegally, by the HSBC 7,000 will have gone along way to dealing with many of challenges that the UK is currently facing, and the austerity measure they are taking.

Add to that the same offshore tax dodges being employed by large companies, and the industry of sleeze ball consultants, awarded for advising, aiding, and making this possibly, doing everything from advising, writing, and ultimately even joining governments to implement tax policy that facilitates this has got to stop.

It’s easier to blame welfare cheats, immigrants, in fact anyone than themselves. Here in Texas we have both past Governor Perry, and current Governor Abbott continually railing against the Federal Government. Under Governor Perry, we had the HHSC(Ed: no relation) contract scandal, with the State going with a no-bid contract, with little oversight and unclear results to again go after the “little people“. It’s much easier to make them the problem than deal with the problem of insidious greed of the wealthy and their legions of shills.

hsbc taxWatch this extract from the BBC Panorama show to get a quick summary, or read the summary here.

Wonky property taxes

The new Austin 10/1 council is pretty much settled after the run-offs. The new districts will be represented by 9 new Council members, two of whom are Realtors, a new Mayor with zero Council experience, all voted in by an appallingly low voter turnout especially in the runoff elections. In District-3,  Sabino “Pio” Renteria won with just 2,555 votes, a victory by 833 votes… I assume a mere $10,000 could have bought victory for  his opponent by paying locals $10 to go vote. I bet that TV and newspaper advertising looks lame now.

propertytax1One of the flagship, priority subjects will no doubt be property tax. Most candidates had a position on it, almost all want to discount or cut it. Hold on, not so fast. Anyone who actually thinks it through knows, property tax has almost nothing to do with affordability. I can certainly easily pay for my taxes now, but the question is, will I still be able to pay them in 20-years.

That’s certainly the problem most long term residents of the core/downtown neighborhoods face now. They generally live in modest homes, whose lot price and property tax evaluation has gone through the roof. The guy that lived opposite me, 73 when he died in April, couldn’t afford to retire. He was an (arthitic) plumber. He was paying, even with an age discount, more per year than he paid for a mortgage when he bought the property with a small deposit from his mothers estate after she died.

That effect can’t be allowed to continue for many reasons, not least because it is not acceptable. That people who have lived in their home, in what was often a modest property, in a less attractive neighborhood,are now, in their later years, being forced to move. A time when you often are less prepared for change, less able to make new friends, less willing to learn where to go and to get to pretty much everything.

Yes, they can make a ton from selling, and yes, many may chose to do that to move into assisted living, but they shouldn’t be forced to because thy cannot afford property taxes.

The whole issue has become conflated in the usual Tea party, “any tax” is to much rhetoric..  Rather than everyone jump on the bandwagon demanding a property tax cut, and the new 10/1 council lauding it around as having done something important, which the current proposal, clearly isn’t.

Julio Gonzalez has two great posts that show what the current proposal means on his Keep Austin Wonky blog. The Homestead Exemption debate in 2 minutes and 10 bucks or 10,000 homes