​I have a weakness for ice cream.  Years ago regional favorite Blue Bell put out the most divine flavor to grace my palette; Caramel Sundae Crunch; vanilla ice cream swirled with caramel and chocolate-covered crushed-up bits of ice cream cones … it was the BOMB!

And then it was gone.  The little creamery in Brenham just ... stopped ... making it.  I considered special ordering it, but I drew the line at paying something like 10X what I did in the store.  I didn’t value it THAT much.

Fast-forward to this year.  I decided to give Blue Bell’s Sea Salt Caramel a try.  I love caramel, but marrying sugars and salts doesn’t do it for me.  I’m glad I took the dive though, because that’s some good stuff. 

And now IT has disappeared.  I haven’t been able to find it at any nearby grocery store for the last few weeks.  You'd think I'd have learned my lesson and stocked up like Elaine Benes hoarding sponges on “Seinfeld.”  But no, I didn't. 

Alas, if I had, you can bet there would have been a premium put on every bite, for both my daughters AND me.  Who knows when, or IF Blue Bell would ever make it again??  It would have been my version of a fine wine that you break open only on a special occasion.  Its scarcity has increased its value.

Now imagine it’s YOUR favorite food, and you did have the foresight to stock up in anticipation of such a possible shortage.  But instead of consuming it, you rely on selling it to make a living.  That's the dilemma vendors of water, gasoline, batteries and the like face when a hurricane like Harvey is heading their way.  They don't know when their next supply shipments are coming, or IF they’re coming.  They don't even know if their place of business will still be standing post-landfall.
 
Keep this in mind when demagogues start screaming about price gouging. These vendors are humans just like us, humans with strong enough nerve to risk a LOT to supply us with everything we want AND need.  And now, just like the rest of us, they’re facing what is hopefully just a temporary disruption of an important part of their life.  They don’t raise prices to screw consumers, but rather to defend their livelihood.
 
Or take for instance the guy who was filmed selling bottles of water out of the back of his truck in the parking lot of a WalMart in Houston as Harvey was bearing down.  The man filming the video berates him, presuming to know what he and his family needs, telling him he “should be ashamed of himself.” 
 
But why?  No one is forced to buy from him.  If someone values the water enough, they’ll pay for it, no coercion involved.  So what if he marks it up more than usual??  The whole episode invariably ends up being pro-consumer: either no one will buy the water and he’ll be forced to drop his price, or people will scoop all of it up, thereby luring in other suppliers who’ll offer a lower price in order to gain the business.  Some of my students seemed to know this on the first night of class last night.
 
Buyers and sellers, acting independently, will always bring about a result that is satisfactory to all parties.  We shouldn’t allow our emotions, our sense of envy or insecurity, or presumptuousness of others’ business, to demonize someone making a profit, especially when it’s fleeting and short-term.  The only individuals who profit from such intellectual and emotional gullibility are politicians, from BOTH major parties, wanting to look heroic.  The worst of them are only too happy to hook up some more dependents to the State.
 
In the meantime, HEB does more to endear itself to Texans by sending caravans of food, supplies, etc. to my hometown of Victoria, and other communities in the area hardest hit by Harvey.  As the mosque burning earlier in the year demonstrated, the free market of charity is as effective as any government action at helping people truly in need.
 
Especially here in the great Lone Star State. 

​I was pleasantly surprised earlier this year when I learned that my oldest daughter would have a choice of magnet schools here in San Antonio: health careers near the medical center, business at Holmes, science & engineering at Jay, communications at Taft and construction at Warren.   
 
Also around this time, Betsy DeVos was girding for a contentious confirmation battle over her appointment as Secretary of Education.  She faced hostile opposition both from senate democrats still sore about the presidential election, and from teachers unions and ‘public school’ advocates who oppose what Mrs. DeVos has pushed for years; more freedom of choice & parental control in K-12 education.
 
The Department of Education arguably shouldn’t even exist in the first place.  It is a prime example of those “powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people” as per the 10th amendment.  If the only thing Secretary DeVos ever did was fold that department, she would be a success.  Short of that, promoting more school choice is a close second.
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From t-ball to cheerleading, music lessons to gymnastics, my girls have run the gamut of extracurricular activities.  They’ve been as far away as the Y.M.C.A. downtown, or as nearby as baseball fields in Westover Hills.  Distance has never mattered as much as the organization with whom we signed up.    
 
Why can’t we have the same choice with their schools?  Because at least here in Texas, where you pay property tax for your primary residence determines the public schools for your children. 
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This issue didn’t appear on my radar until I took Dr. John Merrifield’s urban & regional economics course at UTSA.  He has spilled a lot of ink on this topic, including a few books, most notably perhaps 2001’s “The School Choice Wars”.  Having just become a father at the time only heightened my interest. 
 
We do have some semblance of choice here.  In addition to the magnet schools, children can literally be ‘grandfathered’ in to the NISD if their grandparents live here and provide "significant after-school care".  One of my daughter’s friends was able to go to the same elementary school because that’s where her mother taught.  Transfers are possible for a handful of other reasons, but “are generally denied due to lack of space”.  
 
If parents were allowed however, to use a proportionate amount of public revenue earmarked for education, they could send their kids to any school they choose, assuming it meets a minimum level of state-approved criteria (mastering certain levels of basic subjects by a certain grades).  Beyond that, the schools would be free to specialize however they see fit: art schools for musicians, painters & actors; schools that cater to kids who like to build things; culinary schools when Easy-Bake Ovens will no longer do; technology schools for computer geeks.  The possibilities are limitless. 
 
These schools would be free to set their own tuition: more than, less than or equal to the amount allotted to each child by the state.  But those prices would be unlikely to stay put.  For example, if a particular metro area turned out to have a higher concentration of young would-be engineers than schools to serve them, the price of tuition would in all likelihood rise … in the short term.  Parents might have to decide whether or not they value those schools enough to make up the difference.  As Dr. Merrifield reiterated to me recently, that’s one reason the current system is flawed; it lacks such price signals. 
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One point I stress in my classes is that suppliers react differently to prices than demanders do.  We’re all demanders, and thus familiar with that angle: price goes up, we buy less.  However, only a handful of us are suppliers (excluding the labor we supply when we go to work), and thus not wholly in-tune with how they react.
 
Those higher prices would emit a signal of opportunity for enterprising entrepreneurs.  To enter the market competitively, they’d have to charge lower tuition, offer more for the same price, or some combination of both.   To stay competitive, the existing schools might expand.  They also might extend financial assistance to those excelling students of lesser means.  What could be better for a school’s reputation than educating the best & brightest?
 
More choices, lower prices, better quality … what’s not for a consumer to like?? 
 
All this assumes of course, a light, basic regulatory touch.  Otherwise, innovation would be dulled, disincentives would arise, current market participants would become entrenched, etc.  In other words, a wet blanket thrown on progress. 
 
Alas, as it stands now the only price signal that exists in grammar school education is … real estate??
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We’re all familiar with good sides of town, and not-so-good sides of town.  The latter tend to be run-down, more susceptible to crime, gangs, etc.  Perhaps not surprisingly, that negatively impacts property values, and in turn minimizes property tax collections.
 
According to the Texas Education Agency, about 50% of public school funding derives from property taxes (roughly 10% comes from Uncle Sam, while around 40% comes from the Lone Star).  It hardly seems fair that a child’s education, the ultimate example of equality of opportunity, should be restricted  by a socioeconomic situation not of his/her making. 
 
The state legislature tried to remedy this a generation ago by passing what is commonly known as ‘Robin Hood’, whereby a school district that has “wealth per student that exceeds” a certain level subsequently has that excess “recaptured” and redirected to property-poor districts.


And a generation later, public school funding in Texas is still an issue.
 
Perhaps an alternative to property taxes could be a county or metro-area sales tax, a rate that would apply to ALL areas of town & the local economy uniformly.  This would be a most efficient way to pull the funds.  No more artificial inflation of property values.  One less inefficiency in the rental market.  A lesser tendency to build arguably exorbitant facilities tied as much to property wealth as student outcomes. 
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The Texas constitution states that the legislature “shall … make suitable provision for the support and maintenance of an efficient system of public free schools,”  so some traditional ‘public’ schools would remain.  Some parents may prefer the convenience of the nearby school.  Some may simply not be able to get a bead on what it is their child has a particular knack for.
 
It also states that “a general diffusion of knowledge” is “essential to the preservation of the liberties and rights of the people.”  Education has spillover benefits.  The knowledge & skills a student attains benefit the general public when employed on the push toward greater progress & prosperity. 
 
No one is more vested, or has a greater interest in this venture than we the parents.  My daughters are my best opportunity to make a positive impact on society.  Their mother & I are as integral to their education as anyone or anything.  It should be an option for us to fund their education with some portion of the taxes we pay, at whichever school we see fit.    
 
A market of millions of parents can’t be wrong.

I was pleasantly surprised earlier this year when I learned that, upon entering high school, my oldest daughter would have a choice of magnet schools here in San Antonio: Northside Health Careers near the medical center, Business Careers at Oliver Wendell Holmes HS, Science & Engineering at John Jay HS, Communication Arts at William Howard Taft HS and Construction Careers at Earl Warren HS.  Ever since she & her sisters were born, their mother & I have always kept our eyes open for any & all options available to us regarding their education. 
 
Also around this time, philanthropist & activist Betsy DeVos was girding for a contentious confirmation battle over her appointment as President Donald Trump’s education secretary.  She faced hostile opposition both from senate democrats still quite sore about the president’s electoral defeat of their nominee, Hillary Clinton, and from teachers unions and ‘public school’ advocates who oppose what Mrs. DeVos has pushed for years; more freedom of choice & parental control in K-12 education.
 
Let’s dispense with something first & foremost; the federal department of education arguably should not exist in the first place.  Nowhere in the U.S. Constitution is “education” or “school” mentioned.  It is one of the best examples of those “powers … reserved to the States respectively, or to the people” as per the 10th amendment.  If the only thing Secretary DeVos ever achieved while in office was to carry out Kentucky congressman Thomas Massie’s bill to abolish the DoE, she would rightly be hailed as a most successful public servant.  Short of that, promoting more school choice is a close second.
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From swim lessons, to t-ball, to cheerleading, to music lessons, to gymnastics … you name it, my girls have done it, with multiple organizations, some as far as 10-15 miles away from home.  We even chose as our pediatrician a doctor whose office was further away than that.  Not only has her replacement upon retirement been just as pleasant, but now she’s just a couple miles from the house. 
 
We personally would be lucky if doctors were ‘assigned’ to us the same way public schools are; place of residence.  But why should it be that way?  Why can’t we pick from a variety of schools like we do extracurricular activities?  Because at least here in Texas, where you pay property tax for your primary residence determines the public schools for your children.  That might be the only thing I like less about my great home state than the climate.
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This mystery didn’t occur to me until I took Dr. John Merrifield’s urban & regional economics course at UTSA.  He has spilled a lot of ink on the topic of school choice, including a few books, most notably perhaps 2001’s “The School Choice Wars”.  The fact that my first daughter was a toddler and her first sister was on the way at the same time only served to heighten my interest. 
 
We do have some semblance of choice here, exemplified in part by the aforementioned magnet schools.  Children can also literally be ‘grandfathered’ in to our district if their grandparents live within its borders and provide "significant after-school care".  One of my oldest daughter’s friends back in elementary school went there because that’s where her mother taught.  Transfers are possible for a handful of other reasons, but “are generally denied due to lack of space”.  
 
If parents were allowed however, to use as their initial round of funding, a proportionate amount of public revenue earmarked for that specific purpose, they could send their kids to any school they chose, assuming it meets a minimum level of state-approved criteria (children should be able to master a certain level of math by a certain grade, reading comprehension by a certain grade, knowledge of history, etc.)  Beyond that, the schools would be free to specialize however they AND the market sees fit.
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At an early age her mother & I noticed that our second-born liked putting things together.  Nowadays she has taken an interest in cooking & baking.  Our third daughter is somewhat athletically-inclined, while our fourth is kinda artsy.  Our oldest daughter is musically inclined, playing the baritone in high school band while taking piano lessons on the side. 

Those are just a few specialties around which schools could focus.  Maybe some of the places we patronize(d) would expand or merge their operations to include general schooling.  Some already provide after-school care.  The possibilities are limited only by our imagination, and that of enterprising entrepreneurs. 
 
Such schools would be free to set tuition at whatever level they deem appropriate: more than, less than or equal to the amount of the vouchers (NOT the dirty word demagogues make it out to be) allotted to each child.  But those prices would be unlikely to stay put.  For example, if a particular metro area turned out to have a higher concentration of young would-be engineers than schools to serve them, the price of tuition would in all likelihood rise to find a new market equilibrium.  Parents would have to decide whether or not they value those schools enough to make up the difference.  As Dr. Merrifield reiterated to me recently, that’s one reason the current system is flawed; a lack of price signals.  The subsequent shift in the balance of the market would be temporary, setting off an adjustment.
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As I’ve alluded to before regarding recent changes in the bee population, prices are not just the cost it takes for us to buy something.  There is a plethora of information wrapped up in the price of a good: the supply & demand of/for a good, cost of inputs, the availability of substitutes, preference for a particular good, etc.
 
One point I stress in my classes, THROUGHOUT the semester, is that suppliers react differently to prices than demanders do.  Since the entire population plays the part of a demander almost daily, we’re all familiar with that angle.  However, only a handful of us are suppliers (excluding the labor we supply when we go to work), and thus not wholly in-tune with how they react. 
 
Those aforementioned higher tuition prices would emit a signal; an opportunity for profit (another word soiled by irresponsible linguistic manipulators).  That would likely lure others to open up such schools.  In order to be competitive, the new market entrants would charge lower tuition, offer more for the same price, or some combination of both. 
 
To stay competitive, the existing schools might expand.  They also might extend financial assistance in the form of grants or scholarships to those excelling students of lesser means.  What could be better for a school’s reputation than educating the best & brightest?
 
In any event, what used to be a producer surplus would turn into a consumer surplus, as the market would be cleansed of inefficient/ineffective operators, all the while benefitting parents & children. 
 
All this assumes of course, a light regulatory touch.  As in nearly all markets, the more a public bureaucracy grows, the more innovation is dulled.  Disincentives arise.  The more standards are augmented, or altered, the more likely current market participants become entrenched at the expense of prospective new entrants (see the current debate over licensing).  All these would constitute a wet blanket that suppresses the price signals that fuel progress. 
 
Alas, as it stands now the only price signal that exists in grammar school education is … real estate??
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Even growing up in modestly-sized Victoria, TX (population 50,000), I learned there are good sides of town, and not-so-good sides of town.  The latter tend to be run-down, more susceptible to crime, illicit drug-related activity, gangs, etc.  Perhaps not surprisingly, that negatively impacts property values, and in turn suppresses property tax collections.
 
According to the Texas Education Agency, about 50% of public school funding derives from property taxes (roughly 10% comes from Uncle Sam, while around 40% comes from the Lone Star).  That hardly seems fair to those children born & raised in such property-poor settings.  Children’s education is the ultimate example of equality of opportunity, and it shouldn’t be restricted by a socioeconomic situation that was not of their making. 
 
A generation ago, after a couple of efforts by the legislature to remedy the situation were rejected by the state Supreme Court, the court eventually blessed what is commonly known as ‘Robin Hood’ (technically referred to as Chapter 41 Wealth Equalization).  A school district that has “wealth per student that exceeds” a certain level subsequently has that excess “recaptured” and redirected to property-poor districts.


And a generation later, public school funding in Texas is still an issue.
 
To make up the local component of funding for public education, perhaps an alternative to property taxes could be a county or metro-area sales tax that would be inclusive of ALL areas of town & the local economy.  This would be the most efficient, direct way to pull the funds.  No more artificial inflation of property values & taxes for childless homeowners and seniors on fixed incomes.  It would remove an inefficiency from the rental market.  It might also curtail the construction of arguably exorbitant facilities that are as tied to property wealth as they are to student outcomes.
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The Texas constitution states that “a general diffusion of knowledge” is “essential to the preservation of the liberties and rights of the people,” a point few would dispute.  Education is a prime example of a positive externality; the knowledge, skills & general human capital a student attains benefits society as a whole when employed on the push toward greater prosperity. 
 
The constitution also states that the state legislature “shall … make suitable provision for the support and maintenance of an efficient system of public free schools.”  Some number of traditional ‘public’ schools would remain where an education could be attained for the face value of the individual vouchers.  Moreover, some parents may prefer the convenience of the nearby school.  Some may simply not be able to get a bead on what it is their child has a particular knack for.
 
At the end of the day, no one is more vested, or has a greater interest in a child’s well-being & enlightenment than his/her parents.  My daughters are my best opportunity to have a positive impact on society.  Their mother & I are as integral to their upbringing & education as anyone or anything else.  Still, it should be an option for us to fund their education with some portion of the taxes we pay, at whichever school we see fit.  Every parent should have that option.   
 
A market of millions of parents can’t be wrong.

The good, the bad & the ugly from the show last night.

​The good: they sounded good.  It is, after all, Metallica.  You don’t do stadium tours unless you’re doing something right.  The stage production was pretty cool: the lasers, the flames, the videos they played with the songs, especially recreating the album cover of “Master Of Puppets”.  They also kept solos to a minimum, and made them count, especially what might have been my favorite moment; Robert Trujillo’s bass solo.  That solo just happened to be “(Anesthesia) Pulling Teeth”, a Cliff Burton track of their first album “Kill ‘Em All”.  I won’t lie; my eyes watered & my heart swelled when they showed Cliff playing the Day On The Green concert back in 1985.  Good stuff.
 
The bad: the venue.  This was only the third concert I’ve seen in a stadium, and it could be my last.  If not for Metallica, I’m not likely to pay more than we did last night to get down on the floor.  Regardless of the ginormity of the video screens, the stage still seemed so far away.  I’ve been spoiled the last few years in that most of the shows we’ve seen have been in theaters.  We’ll be able to make an immediate comparison when we see Iron Maiden at the AT&T Center next Saturday.
 
The ugly: the setlist.  I talk about this all the time with my coworker Mark, who happened to be there last night, also.  This is another thing that’ll be on our minds at the Maiden show.  First off let me say that I’m glad these bands make new music if they have it in them.  Invariably however, some other older songs get dropped from shows in favor of songs from the album they’re promoting.  That said, thank goodness a few of these bands (Slayer included) do occasional ‘classics’ tours, where all they play is older stuff.  Fortunately, I like all the new ones Metallica played last night (though they could drop the mega-bongo part from “Now That We’re Dead”), the roving flame shoring up the weakest one, “Moth Into A Flame”.  I know the black album is where Metallica made it big, but at least “Wherever I May Roam” and “Unforgiven” could have been replaced with any number of better tunes.  Maybe “Nothing Else Matters”, too.  Alas, I’m realistic about it.

It’s fascinating how much of an effect people allow a ‘big boogeyman’ to have on their psyche, especially those we can ignore if we choose to: whether it’s the ‘big, bad rich guy’, or the ‘big, evil corporation’, or the ‘big foreign strongman leader’, etc.  Throw OPEC into this mix.  Some feared they would totally crush the reborn U.S. energy industry when they declined to cut production a couple years ago.  The price duel was indeed costly for all parties, but we’re still here, and we’re not likely going anywhere.
 
Our continual improvements kept domestic production on the upswing for more than a year after the price of oil started tumbling in June 2014.  Over that time, the active rig count was dropping by almost two-thirds, assets were being sold off and the first waves of layoffs were occurring.  Yet our oil kept flowing.  It wasn’t until July 2015, eight months after OPEC made the fateful decision not to support prices, that U.S. output started experiencing a downward trend. 
 
U.S. Crude Oil Production (thousand barrels per day)

​(Source: U.S. Energy Information Administration)
 
By that time, the gutting of prices had been done.  The increased productivity that resulted from the hydraulic fracturing (fracking) innovation converged with OPEC’s defense of market share to totally overwhelm demand to the point of pushing the price all the way down to $26 in February 2016.  Adjusted for inflation, oil & gas were at historic lows.  More asset sales, layoffs (by now numbering in the hundreds of thousands) and even bankruptcies ensued.  Within OPEC, dissension started to stir.
 
As 2015 gave way to 2016, the non-Arab contingent of OPEC, who didn’t have near the savings to draw on during this market correction as Arab members, started to push for organized output cuts.  Everyone had lost a piece of the pie to the shale producers, and were now possibly set to lose more as the U.S. government lifted the oil export ban in December 2015. 
 
At last, in late 2016, as a slight recovery had already taken hold, OPEC & Russia agreed to remove more than a million barrels of oil per day from the market.  Since then, the price has fluctuated around $50.  

​Perhaps as a result of this massive market adjustment, a prospect unimaginable just a decade ago has started rising above a whisper; the ‘end of OPEC’.  Whether or not that happens remains to be seen.  It might be more likely that we’re witnessing a taming of the boom-bust nature of the industry.
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The Organization of Petroleum Exporting Countries was formed in 1960 “to coordinate and unify … policies … and ensure the stabilization of oil markets in order to secure a … regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”  It’s a cartel, something we don’t see in the U.S. because it’s illegal for firms to collude in price/supply fixing. 
 
Oil is a perfectly competitive good.  It’s a homogenous product in that it differs very little from one producer to another.  ‘Your oil is like my oil is like his oil.’  A producer in such an industry is a price taker, and in a perfectly competitive market free of collusion, all profit is eventually drilled away.  Moreover, as are many other commodities (agricultural products), oil is an inelastic good.  Demand is less sensitive to price because food & energy are more valuable to consumers than say, another pair of sneakers or earrings or T.V. 
 
Combine those two characteristics, and one motivation for OPEC’s formation becomes apparent.  Add a flexible & nimble independent wild card like shale producers, and the result is the 2-year battle for market share from which we’ve only recently begun to emerge.
 
Perhaps the catalyst to OPEC’s current predicament was the growth of the developing world, the various international skirmishes & conflicts and dollar weakness during the dawn of this century.  These forces came together to push the price of oil up to almost $150 in 2008.  Compounding matters was the particularly low level of spare capacity it had, precluding its ability to bring the price down with more supply.  This turned out to be the price signal that was needed to make fracking viable.  And once that genie was out of the bottle, there was no putting it back. 
 
OPEC Spare Production Capacity (million barrels per day)

​(Source: U.S. Energy Information Administration)
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From the current juncture, there are multiple directions price could go.
 
According to OPEC’s website, the oil industry makes up an average of almost half of the gross domestic product of member countries, and accounts for 90% of export revenues.  Some plan, or have attempted to put their economic eggs into other baskets. 
 
Under the direction of King Salman’s son, Crown Prince Mohammed bin Salman, Saudi Arabia last year announced a plan with the goal of diversifying its economy so that it relies less on oil.  It appears as much social advances (more women in the workplace and defanging religious police) as financial ones, the latter of which includes expanding their sovereign wealth fund into the world’s biggest, and selling almost 5% of the state-owned oil company, Saudi Arabian Oil company (Saudi Aramco). 
 
If other countries succeeded in such efforts, as Nigeria has tried for a number of years in developing their digital economy industry & mining of other natural resources, the supply of oil could theoretically decline, as inputs such as capital & labor would be pulled in other, possibly more lucrative directions.  That’s what shale producers are facing as they attempt to respond to a firming market; laid-off workers have moved on, in some cases picking up stakes & moving to other states altogether.  This raises expenses beyond which some companies can afford.  Hence, supply dries up, and upward pressure on oil prices is felt. 
 
On the other hand, some non-OPEC countries have opened the door to foreign participation in their respective industries. 
 
In 2014, Mexico did so for a small portion of its proven reserves, and a large chunk of exploration for new resources.  There also may be opportunities for these firms to work with the state company, Petroleos Mexicanos (PEMEX).  While down on the other side of the equator in Latin America, Petróleo Brasileiro SA (Petrobras), Brazil’s scandal-plagued, mostly-state-owned petroleum company, has fielded interest from Shell et al regarding the so-called pre-salt oil fields in the deep waters off its coast. 
 
Even Russia’s state-controlled company Rosneft is selling off chunks of itself.  And while Russia does have significant shale resources, international partnerships to exploit them ground to a halt as a result of diplomatic sanctions put in place after its annexation of the Ukranian territory of Crimea.  As it is, the most prominent case of diffusion of fracking technology looks set to take off in the Vaca Muerta region of a more business-friendly post-Kirchner Argentina.
 
If such foreign direct investment bears fruit, it would likely introduce efficiencies into the sectors of the respective countries.  Consequentially, they would realize the dropping breakeven points experienced here.  Hence, more product would flow into the international market thereby pushing the price down.  
 
Conversely, if they suffered the same fate of asset seizure that many companies of varying industries have experienced in Venezuela (most recently GM), this would tend to restrict supply, sending prices in the other direction. 
 
Venezuela is an extreme case in that it has been poorly governed under the late Hugo Chavez and his successor, Nicolas Maduro.  They have so mismanaged the largest reserves in the world that they can barely afford to bring any to market.  Theirs is a classic case of the distortions introduced into an economy by government meddling; their production should have been on an upward trend until prices tanked.  As it is, they serve to put a floor under prices.  And if Venezuelans continue to ramp up their dissent in the face of increased government efforts to ineffectively assuage (six hikes of the minimum wage in the last year!) and/or suppress it, the result could be something that causes further drops in production; armed conflict.  

Nigeria & Libya were exempted from the recent OPEC cuts for just such reasons.  The former has suffered attacks mainly from the terrorist group Boko Harem, while the latter endures civil strife in the battle to control production since Muammar Gaddafi was deposed in 2011.  Closer to home, Mexico has experienced a surge of pipeline thefts recently, partially at the hands of the notorious drug cartels that operate within its borders.  All these countries have experienced drop-offs in production, which pushes the price up.
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All the while, the U.S. shale producers have emerged as a new type of ‘swing producer’. 
 
We have a comparatively stable society where the risk of armed conflict is low, and the chance to strike it rich with technological innovation is encouraged by the presence of intellectual property protection.  And now, not only do we have the opportunity to export that know-how, but for the first time in a couple generations we can export some of our resultant abundance to the rest of the world (not to mention possibly a little more security to our allies, subsequently fostering more peace). 
 
The lifting of the export ban enhanced efficiency by reintroducing the U.S. as a major international player, comprised itself of hundreds of autonomous participants.  It provoked what was, for all intents & purposes, a free market response from OPEC in the fight for market share. 
 
The evolving nature of our industry could actually serve to stabilize prices from here forward.  As the Wall Street Journal reported a month ago, a recent 4-month trading range of oil was the tightest such stretch in 14 years.
 
Moreover, our industry isn’t directly burdened with the responsibility of funding the state; it makes up only 5-10% of our diverse economy.  We have been able to produce more & more at less & less cost, while redeploying resources that got us here to the other 90+%.  OPEC countries et al can no longer afford the higher breakeven prices necessary to support their relatively more bloated bureaucracies. 
 
OPEC’s next official meeting is May 25th.  It’s looking to be somewhat anti-climactic however, given the signs they have been sending lately pointing to continuing the cuts instituted last November.  While we are certainly witnessing the end of the old OPEC, the organization itself probably isn’t going anywhere.  Given its recent outreach to Egypt & Turkmenistan, not to mention its closer cooperation with Russia, its ranks might actually swell a bit.
 
U.S. shale producers aren’t going anywhere either.  In fact, we’re likely going to keep on improving.  Just the other day, I toured a 2-year old rig that’s even more nimble than our 4- & 5-year old rigs.  Technology does not recede; it only advances.
 
In the past, some of the U.S.’ competitors blamed ‘the Great Satan’ for theirs & the world’s ills.  Ironically enough, they would be correct this time, but for all the right reasons.

“Aggrandize”
Years ago, I saw that word in a George Will column and was intrigued; “what does THAT mean??”  I found the answer using a fairly simple exercise; I consulted a dictionary: “to widen in scope, increase in size or intensity”.   These days, I have my Dictionary app handy whenever a word stumps me.  When that doesn’t work, I simply go to the website itself.
In a sign that our stagnating educational outcomes of recent decades might start at the top, those who shape & influence our public policy in government and the media seem too often to be grammatically-challenged.  In few places does this manifest itself more than in discussing & debating tax policy.
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“The rich are now paying their fair share in taxes.”
“Across-the-board income tax cuts would benefit the wealthy disproportionately.”
The U.S. has a progressive income tax structure, with seven rates ranging from 10% to 39.6%; the more you earn in wages & salary, the greater the percentage you pay in taxes.  As a result, one-fifth of American households pay roughly two-thirds of federal income taxes.  We’re already in ‘disproportionate’ territory.  Logic dictates therefore, that those who pay more would experience a greater absolute ‘benefit’ from an ‘across-the-board’ cut in income taxes.  Although one might say that ‘benefitting’ from Uncle Sam taking less of our earnings is akin to ‘benefitting’ from him spying on us less.
Moreover, the concept of ‘across-the-board’ income tax cuts is itself erroneous when almost half of all Americans pay no net income tax (either they have no taxable income, or it’s cancelled out by all the deductions, exemptions, credits & other loopholes).  It’d be more accurate to say ‘halfway-across-the-board’, though that admittedly doesn’t roll off the tongue as smoothly.
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“The border adjustment tax … is needed to help pay for a steep cut in corporate and income taxes.”
“… costs a great deal of revenue …”
“I just don’t see how we can afford these tax cuts.”
Taxpayers ‘can afford’ to fund the National Institute of Health’s study of tobacco use in Russia, the National Park Services research into how bugs respond to lights, and the National Science Foundation’s $1.6 million project programming robots to dress senior citizens and see how well it works in their dating life (all info courtesy of Oklahoma Senator James Lankford’s “Federal Fumbles” report) … but we have to find a way to ‘pay’ for the ‘revenue’ forgone when we forcibly extract (by threat of imprisonment) less from productive citizens?? 
The poor essentially subsidize the rich via the National Endowment Of The Arts, but it ‘costs’ Uncle Sam to withhold less from our paychecks?  In a world of seemingly infinite television channels, tax dollars support PBS, but we have to find a way to ‘pay’ to be taxed less?  The federal government spends $70 billion yearly on the department of education (constitutionally a state responsibility), but our elected representatives don’t think we ‘can afford’ to allow graduates to realize the full rewards of the skills/intellectual capital they gained??
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“Tax cuts pay for themselves.”
Indulging the notion for argument’s sake, it’s hard to tell for sure whether or not tax cuts ‘pay for themselves’.  The Congressional Budget Office doesn’t even try, preferring the use of static scoring to predict the effects; a tax cut of $1 necessarily means a loss of revenue for Uncle Sam of $1. 
However, it’s probably safe to say that the vast majority of us do not take any increased disposable income and simply stuff it under the proverbial mattress.  And by virtue of that fact alone, it contributes to increased economic activity no matter what we do with it.  Many of us may go shopping (we are Americans after all; we buy so much ‘stuff’ we have to rent storage in which to put said ‘stuff’).  My uncle stuffed most all his lifetime raises into savings, which banks typically turn around & lend to those who have a more immediate use for it.  And then there are folks like a couple friends of mine.
In the last couple years, they have branched out, either expanding an existing business to another location, or opening another different business altogether.  That requires buying capital equipment, wiring a new building for electricity, water & the like, and hiring new staff.  That new staff will pay some income taxes (not to mention payroll & sales taxes).  If they left another job, it’s possible they were lured away by higher pay.  And the jobs they left vacant maybe had to be filled. 
It’s activities like those that have historically produced greater revenues in the wake of income tax cuts than the CBO originally predicted.
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“Tax cuts cause deficits”
When a person’s income declines (as has happened to many in my industry in the last few years), his credit card balance doesn’t automatically increase as a result.  It increases only if he doesn’t reduce his level of credit expenditures. 
It’s spending that ‘causes deficits’; not lower tax rates.
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“Tax cuts” vs. “tax reform”.
These are not the same thing.
The former now seems to require the use of budget reconciliation in the Senate to get around the sixty-votes necessary to invoke cloture (i.e. breaking a filibuster), and pass with a simple majority.  The problem is that the tax rates must revert to their former levels in ten years should deficits increase (see ‘tax cuts cause deficits’ above) over that time, thereby introducing impediments to peoples’ & entities’ long-term planning. 
The latter on the other hand, would require all sides to marshal up a filibuster-proof majority who could resist the urge of social engineering via the tax code and agree on one rate that would apply equally to all citizens (something that might even be a challenge in the House, where few hurdles to a majority vote exist). 
The former can be used to bestow favoritism on this demographic or that, while the latter takes political courage to eliminate such benefits that arguably shouldn’t have been conferred in the first place.
The former has therefore turned into political red-meat, something on which to campaign nearly every congressional cycle, while a comprehensive, ideal version of the latter would strip busy-bodies of something ‘to do’, allowing us to shift our collective attention to real issues.
On one side opposing true ‘tax reform’ you have folks like ‘conservative’ talk show host Hugh Hewitt, who recently wrote in The Wall Street Journal that “Generations of Americans have relied on (mortgage interest, charitable contribution and state taxes) deductions in making enormously consequential decisions(.)”  In an unscientific poll of my friends, I found that little (though not totally zero) attention is paid to the charitable deduction in that vein.  Same goes for the mortgage deduction.  As my wife & I near closing on a house, that consideration never came up.
On another side of opposition you have the likes of former presidential candidate Bernie Sanders, who doesn’t think ‘the rich’ pay enough in taxes.  One of the first & most regular things I tell all my classes is to see things from the supply side.  ‘The rich’ that are invariably in these crosshairs aren’t always the mansion-dwelling, sports-car-driving, private-jet-owning people we see on T.V.  They are just as likely to be my students’ employers.  “We’re all demanders” I tell them; we already know how prices & incentives work on us.  For every extra dollar their managers have to pay in taxes or tax-preparation however, they’re that much closer to hiring one less employee.
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“Taxes are the price we pay to live in a civilized society.” 
This quote is attributed to an opinion rendered by Supreme Court Justice Oliver Wendell Holmes, Jr. in a 1927 court case about business insurance premiums in the Philippines, which was a U.S. territory at the time.  Before it was bandied about as a rationalization for the size of our government (by some who don’t even pay net income taxes; see above), ‘civilized society’ had a simpler meaning: to protect the private property that fosters widespread prosperity; to provide a police force & court system to take the place of duels in settling disputes; to carry out a democracy & setting up a government.
Is it really ‘civilized’ for someone to commandeer the earnings of her neighbor to pay for her pet project, when what the coerced is really paying for is her requisitioner’s haughtiness & lack of initiative?
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Part of effective communication is ensuring the message gets across.  It’s a fine line between being understood, and using the most accurate, appropriate word possible.  I feel it’s my duty as an educator  to talk UP to people.  Even though our (elected) leaders are primarily an extension of us, they should rise above the heated fray & carry out the best, fairest public policy.  A good start in conveying what that might be is using accurate, objective terminology.
Last year one of my friends posted on Facebook “I fear there is too much eleutherophobia in our society today.”  When I looked up ‘eleutherophobia’, I discovered that it’s an ancient Greek term for a “fear of freedom”.  I countered with “you could add epistemophobia & hypengiaphobia to the mix.” 
Don’t know what those words mean??  Prove me wrong & look ‘em up.

​It’s a good time to be a fan of thrash metal!
 
Not since 1990 have so many thrash albums been released by the very same bands that were doing it when I was a kid.  It’s nothing short of thrilling, and kind of amazing in the music industry of today, that they’re finding the requisite receptiveness to keep recording new material.  For me, the ones that provide my earliest memories are Metallica, Slayer (my personal favorite) & Anthrax.
 
My first favorite band was Ratt.  Then a friend popped in something different.  I heard one acoustic guitar, then another, yet another, etc. until BOOM!  Metallica ripped into “Battery” and I was hooked.
 
On a trip back from a football game, our fullback let me listen to what he was playing.  The lyrics were aggressive & uncompromising.  The drums were crisp, the vocals as clear as they ever would be, and the guitar solos were just flying all over the place on Slayer’s 4th album “South Of Heaven” (SOH). 
 
One day I turned on MTV and saw 5 guys in jams shorts exuding a generally goofy vibe while playing “Indians”.  Anthrax made thrash seem kinda fun. 
 
It wouldn’t be long before I dove into Megadeth & Testament as well, and discovered the breathtaking speed of Sepultura (who was recently sandwiched between Testament & Prong at a show here in San Antonio). 
 
I’m sure I’m not the only one who had doubts as to whether or not these bands would be able to keep up such aggressive artistry so many decades later.  It hasn’t come without a cost though.  Both Slayer vocalist/bassist Tom Araya & Megadeth vocalist/guitarist Dave Mustaine have neck ailments from years of headbanging.  Araya’s late bandmate, guitarist  Jeff Hanneman, died of alcohol-related cirrhosis of the liver 2013.  Anthrax drummer Charlie Benante has struggled with carpal tunnel syndrome (he was not behind the kit when I saw them last October).  Overkill frontman Bobby “Blitz” Ellsworth survived cancer.  And that’s not to mention the predictable hearing loss that afflicts numerous thrashers.   
 
But here they are.  Led in by late 2015’s “Repentless” by Slayer, and bookended by Overkill’s “The Grinding Wheel” and Sepultura’s “Machine Messiah” released this year, six of these bands put out albums last year, capped off by Metallica’s “Hardwired … To Self-Destruct” (HTSD).
 
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Slayer credits producer Rick Rubin with convincing them to junk the reverb when making their seminal masterpiece “Reign In Blood”.  That’s ironic, since HTSD sounds clearer with Greg Fidelman (Slipknot’s “.5: The Gray Chapter” & Adele’s “21”) producing than 2008’s “Death Magnetic” (DM) did with Rubin at the controls.  James Hetfield alluded to as much recently, saying “I wanted HTSD to be more palatable to the ear. I think DM is very, very powerful, and I love it, but it abuses the ear quite a bit.”
 
The album starts out with three songs as good as any starting trio on any of their records. 

Summoning the spirit of “Whiplash”, from their first album, “Kill ‘Em All” (KEA), the title track is as thrashy as any song released in recent years.  And it serves to plug them directly into the renaissance of the last decade or so.  “Atlas Rise!” brings “… And Justice For All” (AFJA) to mind regarding its complexity.  In addition to having some of James Hetfield’s best vocals, it’s one that brings to the fore how well they (primarily drummer Lars Ulrich) incorporate & arrange the multitude of riffs they come up with. 
 
And the third of that threesome, “Now That We’re Dead”, has earned one of the highest marks a song can in my household; “DaaaAAAD; how many times are you going to listen to that?!?”  The drumbeat is infectious enough to include in my regular routine (either behind the steering wheel OR my own kit).  When I first heard it, it felt feels like a quasi-companion piece to “Hell And Back” from the “Beyond Magnetic” EP of 2011.  In the ensuing months however, it has reminded me of the groovier rock songs found on the “Load” albums of the 1996 & 1997, but with a definite, metallic-sounding edge.
 
I found a lot of that on HTSD, a melding of different parts of their catalogue.  Ulrich’s drums on “Spit Out The Bone” are the energetically best I’ve heard since AJFA.  Kudos to them for including “Lords Of Summer” in the deluxe issue.  When I heard it a couple years ago, I imagined it as what an AJFA-crafted number would have sounded like if it had been included on (KEA). 
 
Many of the middle tracks are reminiscent of stuff they recorded in 1990s.  Say what you will about those “Load” records, but taken for what they were, there was much good stuff there. 
 
“Here Comes Revenge” hearkens back to “Thorn Within”, while “Halo On Fire” strikes me as a beefier “Until It Sleeps” initially, before lifting off & soaring in its latter half.  On the flipside, “Am I Savage” and “Dream No More” bring back to mind tunes I thought managed to forget, like “Poor Twisted Me” or “Ronnie”. 
 
As it is, HTSD represents further progression from 2003’s “St. Anger” (SA) & DM.  Releasing the blistering title track as a first single was a sure way to grab everyone’s attention.  One can’t help but wonder if not for a lost iPhone, riff contributions from lead guitarist Kirk Hammett might have made this album even better.  After all, “Enter: Sandman” was his creation, as was the crowd sing-along bridge to “Creeping Death”.
 
Consider it added motivation for the next record.
 
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After Metallica & Slayer turbocharged the genre in 1986 with “Master Of Puppets” (MOP) and “Reign In Blood”, respectively, the floodgates opened with 25 releases from these bands between 1987-1990, and I lapped it up. 
 
The music appealed to me.  It felt like a release.  It was something aggressive that I could pump my fist & bang my head to.  It was something to provide me extra fuel at the gym, or on the track. 
 
And the lyrics fascinated me.  I was a good kid with a good upbringing.  I wasn’t particularly rebellious.  I didn’t dabble in devil worship.  I wasn’t cruel to animals.  But here came these pissed-off sounding words about issues that I was as yet unfamiliar.  Anthrax shining a light on homelessness in “Who Cares Wins” off 1988’s “State Of Euphoria” (SOE).  Flotsam & Jetsam raging against censorship in “Hard On You”, from their first effort without bassist Jason Newsted (who had jumped ship to fill Cliff Burton’s big shoes in Metallica), 1988’s “No Place For Disgrace”.  My mom even understood a paper I wrote in junior college about Slayer’s take on abortion, “Silent Scream”, from 1988’s SOH. 
 
Nowadays, metal is something more intense than my incredulousness regarding all the stupidity that surrounds us as adults.  It soothes me.  And the lyrics are still as pointed as ever, from Slayer’s anthemic “Take Control” from their most recent record, to Exodus’ echoing what many of us think in “Burn, Hollywood Burn” off 2010’s “Exhibit B: The Human Condition”, to Megadeth’s self-explanatory “United Abominations” from the 2007 album of the same name.
 
After that late ‘80s wave of albums though, the bottom fell out. 
 
Grunge took over the airwaves.  Some of these bands made good hard rock.  Some experimented further in other directions.  Nevertheless, most of it was decidedly less thrashy. 
 
Some dropped off the radar altogether.  Exodus & Death Angel suffered crippling record label friction, while both Death Angel & Testament saw key members sidelined for health reasons.  During this time, Slayer & Testament were the only ones in my catalogue that kept the pedal to the metal. 
 
Thrash seemed to go so far underground as to be buried, reaching a nadir or sorts in 2002, when nary a thrash band issued an album.  That was the only such year since the genre’s inception. 
 
Some of the seeds of its resurrection nonetheless, were planted the year before. 
 
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‘Thrash Of The Titans’ was a concert organized in early 2001 to benefit Testament vocalist Chuck Billy and Death’s Chuck Schuldiner, both of whom were battling cancer.  Anthrax and Flotsam & Jetsam were there, and after more than a decade of being inactive, the event saw the reunions of both Exodus & Death Angel, each of which would release new albums a couple years later.
 
While Testament and Anthrax were hamstrung at the vocalist spot (2003’s “We’ve Come For You All” would be the last John Bush would record with the latter), Metallica dipped their toes in speed again on SA.  Exodus overcame a sudden change in vocalists and released crushing albums with Rob Dukes out front.  Slayer welcomed drummer Dave Lombardo back into the fold, culminating in 2009’s “World Painted Blood”, their best since 1994’s underrated “Divine Intervention”.  And just before bassist David Ellefson returned to the band he cofounded with Dave Mustaine, Megadeth recorded one of their best albums that year in the form of “Endgame”. 
 
Homages that had heretofore almost exclusively been in tribute to the big boys started to filter out to the rest of the players.  Alongside the likes of Pro-Pain’s take on Slayer’s “South Of Heaven” and Hatebreed shining a light on Metallica’s underexposed “Escape”, Arch Enemy covered Megadeth’s “Symphony Of  Destruction” while Ultimatum took on Overkill’s “Powersurge”.  As Fury turned the century with Testament’s “Dog Faced Gods”, Ignitor put their spin on Exodus’ “Lesson In Violence” just a few years ago.  Imitation is after all, the purest form of flattery.
 
The seeds of resurrection were emerging above the surface into a bloom of revival … and then the ‘Big 4’ got together.
 
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With Metallica starting to round back into form with DM (and performing fewer & fewer songs from the previous 10-15 years), and Slayer & Megadeth having recently issued top-notch albums, December 2009 seemed like a primo time to announce that they would all join an Anthrax just reunited with singer Joey Belladonna to play a number of Sonisphere festivals in Europe the following summer.  The thrash universe subsequently soiled its collective breeches!  These four pioneers of the movement had never played the same stage before, much less toured together.  The closest thing that had ever happened was when Slayer, Megadeth & Anthrax toured as the “Clash Of The Titans” in 1990 & -91, and two decades later on the second leg of the American Carnage Tour.
 
The Bulgaria stop was simulcast in almost 1000 movie theaters worldwide, and was later released in a deluxe boxset with CDs & DVDs.  Included was a behind-the-scenes chronology of the day’s events, from the bands respective rides to the venue, to Ellefson playing tour guide of the grounds, to the bands’ mingling & prepping, to the group rehearsal of Diamondhead’s “Am I Evil”, which they would all play toward the end of Metallica’s set.  (Not included unfortunately, was an impromptu jam of AC/DC’s “Whole Lotta Rosie”, with Lombardo on drums, and Anthrax drummer Charlie Benante showing off the lead guitar chops heard on their best record with Bush, 1995’s “Stomp 442”.)
 
Since then, the bloom of revival has grown into a full-fledged tree of thrash metal.
 
Just two days before a ‘Big 4’ show hit their backyard in Yankee Stadium the following year, Anthrax released the well-received “Worship Music” (WM), their first with Belladonna since 1990’s “Persistence Of Time”.  In Belladonna they have what very few other metal bands have; a full-throated, yet smooth-sounding vocalist.  No one has pipes like him.  Bassist Frank Bello said recently, “(Joey’s) better now than he has ever been.  I stand on stage with him every night and the dude is just a phenomenon.  I'm a fan of his voice.  He has a gift from God, and it's a beautiful gift.  I'm thankful to be in a band with him.” 


WM was followed up last year with their best ever effort, and what could very well be the best album by a thrash band in decades, “For All Kings” (FAK).  Just as Metallica did with HTSD, FAK sounds like a reflection of multiple Anthrax records, concluding in the best thrashy tradition of late 1980s records … TIMES 3!  The record is nearly devoid of a weak spot.  The powerful vocals make the well-written music soar, and new lead guitarist Jon Donais’ solos fit in nearly perfectly.  FAK is in the same flawless league as MOP.  That’s no misprint. 


Perhaps no thrash band has improved as much however, as Death Angel. 
 
What Nick Menza did for Megadeth, when he joined before they recorded their thrash-terpiece “Rust In Piece” in 1990, is what Will Carroll has done for Death Angel; embody a drummer that simply blasts doors down.  Their last 3 albums have been awesome!    
 
Still, that’s secondary in their ascendancy to the beast that frontman Mark Osegueda has become.  He didn’t have the most metal of vocals when they were starting out.  They had some cool tunes on “Frolic Through The Park” and “Act III”, but he didn’t add to it.  Fast forward 20 years and no one belts it out like he does, on record OR in concert.  It’s as if someone removed the reins from his larynx & kicked him in the ass!  He’s right up there with Billy. 
 
But that’s not to say Testament hasn’t contributed to this resurgence.  Lead guitarist Alex Skolnick & bassist Greg Christian rejoined to record 2008’s “Formation Of Damnation” and 2012’s step-up “Dark Roots Of Earth” (DROE) (Christian has since left and been replaced by one-time bassist Steve DiGiorgio). 
 
Perhaps the most pleasant surprise for me has been Kirk Hammett’s first band Exodus.  Growing up in Victoria, TX (population 65K), the only exposure I had to them was the video for “Toxic Waltz”.  And if I’m being honest, I took a buying interest in them only after Gary Holt stepped in to fill the big void that Hanneman’s death left in Slayer (you can hear his leads on “Repentless”).  Holt has a chainsaw-sounding rhythm guitar to rival anyone, which might explain why Slayer guitarist Kerry King likens him to Glenn Tipton of Judas Priest.  Throw him & drumming machine Tom Hunting around Rob Dukes or (now) Steve “Zetro” Souza vocals and Exodus has sounded monstrous! 
 
It seems only fitting that 2016 was brought to a close by Metallica’s HWSD.  The speed & aggression therein makes undisputed their place at the top of what would be an awesome traveling thrash festival.
 
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I don’t know what the future holds for thrash, at least beyond my years.  Just like anything, music evolves over time.  New subgenres are created, and those are influenced by the evolution of non-metal music.  These things can’t be predicted.   
 
But at least with these guys continuing to chug along in the ‘rock-til-you-drop’ spirit of the late Lemmy Kilmister, thrash metal like the kind that I grew up with has a chance to make a longer-lasting impression than merely the hearing & neck flexibility that’s been lost along the way.

Imagine a day when Uncle Sam does not tax your income, and takes nothing from your paycheck: no withholding for income taxes, none for social security taxes, none for medicare taxes …. NOTHING!   April 15th would be just another day on the calendar.  That could happen if Libertarian presidential candidate Gary Johnson & almost a hundred congressional co-sponsors have their way and enact a national consumption/sales tax.

The so-called Fair Tax has bounced around congress for almost 20 years, gathering presidential-level support when Mike Huckabee ran on it in the 2008 campaign.  Then, as now, it suffers from a couple misconceptions. 

The first is that consumer prices would rise by the amount of the tax.  On the contrary, a $100 pair of shoes becoming a $128 pair of shoes (after the application of the 28% rate proposed by Governor Johnson) is NOT how it would work.  In fact, after a period of adjustment, prices on average wouldn’t rise at all.  That $100 pair of shoes would still cost you $100.  Of all the costs the average company incurs to produce a final good, 28% is estimated to be the cost of paying taxes.  That gets passed along to us, the consumer.  It’s embedded in that $100 price tag.  With the Fair Tax, all other taxes would be gone, replaced by one simple 28% rate paid at the register. 

The second knock is that it’s regressive.  Our current income tax code is progressive; the more you make, the higher marginal rate you pay.  A sales tax applies to a product no matter who buys it.  If Mary, who makes $10,000/year, pays the same $100 for a T.V. as Jane, who makes $100,000/year, the tax Mary pays would be higher proportional to her income.  The mitigating factor however, is that it’s a voluntary tax; you don’t buy anything, you don’t pay taxes.

Another qualifying feature is a prebate.  This would be a disbursement by the Social Security Administration to “lawful U.S. residents … based upon criteria related to family size and poverty guidelines”; almost $12,000/year for adults & $4,000 for children.  This is similar to another idea making the rounds lately; a universal basic income.  Expenditures for either would be in the trillions of dollars.

Would such prebates even be necessary?

For one, most Americans subject to state and/or local sales tax don’t pay it on the food they buy to eat at home.  Why not make single-ingredient, non-processed food exempt from a national sales tax?  How about having a national sales-tax-holiday every year for clothes, or maybe two to accommodate shopping for seasonal wardrobes?  That’s something I imagine I would have taken advantage of when I was in college, living solely on less than $1000/month from two jobs. 

Furthermore, some prices would likely settle lower than they were before, like the food & clothes where neither producer NOR buyer would now face taxes.   Plus, the rate Governor Johnson is proposing is arguably too high.  The same might even be said of the 23% rate in the congressional bill.

He claims it would be “revenue-neutral”.  When you factor in the portion of our $18T GDP that is consumer expenditures (~68%, ~93% of which is non-food), plus that he says his first budget will be 20% smaller than the previous budget ($3.8T in 2015), in a static sense he’s probably in the ballpark.  However, when you consider all that now will NOT be taxed, and the fact that we live in a dynamic society/economy, it’s hard to see how the economy doesn’t surge, increasing potential GDP.  No more taxes on income.  No more payroll taxes.  No more taxes on investments.  No more taxes at death.   Billions of hours & dollars saved that would otherwise have gone to filing taxes.  All that money will not merely be stuffed under the proverbial mattress.  It will be spent.  It will be invested.  It will be converted from a deadweight loss to productive endeavors. 

The only real obstacles would be rent seekers and the constitution.

A ‘rent seeker’ is roughly the technical, economic term for lobbyist.  It’s someone who seeks to convert what is referred to as consumer surplus into their own economic profit (the aforementioned resources expended to do & pay taxes).  Any sector that benefits from this feature or that in our current tax code is a rent seeker.  These industries are populated by decent people.  The tax professionals I know all realize that tax simplification could very well put them “out of a job”.  But most of them also know the pros far outweigh the cons of doing so.  One of them was quick to mention that he’d just redirect his attention to state & local tax issues.

Perhaps the biggest hurdle is the need for constitutional action.  Unless we want both our purchases AND income taxed, the 16th amendment would have to be repealed.  After previous efforts to tax income were rejected by the Supreme Court, a sufficient majority in congress and of state legislatures enshrined the ability in the constitution in 1913.  This is probably one reason we hear more politicians propose a one-rate, no-deductions flat tax on income when talking of reform.  That, and the fact that it’s more consistent with Adam Smith’s recommendation that citizens “ought to contribute … in proportion to the revenue which they respectively enjoy under the protection of the state.”
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Either route of simplification would be far superior to the system we have today.  Regardless, it’s imperative that all options are seen clearly, without the fog of misinformation, demagoguery or envy.  Most people understand the need for some level of taxation.  After all, who’ll build the roads??