Good money after bad

Yesterday, only two days after the final $17 billion of the first Greek bailout was approved for release, S&P announced that it would declare Greece in default if the French and German national banks carried through on their plan to roll over maturing Greek bonds by using the proceeds from those maturing bonds to purchase new 30-year Greek bonds. That deal was to be carefully structured, including tightly restricted trading of those bonds to prevent them from immediately losing all of their nominal value, which of course in a free market would occur immediately after they were issued.

The simple fact is that Greece is bankrupt. Everyone knows that, but the EU is striving mightily to conceal it because when the Greek domino topples the rest of the Euro economy quickly follows. French and particularly German taxpayers have had enough, watching their wealth being pillaged to subsidize Greece. Everyone knows that once Greece collapses it will soon be followed by Portugal, Ireland, Italy, and Spain, with Belgium and then France itself not far behind.

So the EU pretends desperately that none of this is happening. Hiding their heads in the sand is obviously not an effective solution. Unfortunately, there is no effective solution.

If Germany and the UK have any sense, they’ll withdraw from the EU and return to their national currencies.

4 July ????

A new Marist poll provides some stunning figures. Presumably, every American knows that 4 July is Independence Day, but only 58% of Americans know which year America declared its Independence. Among American adults younger than 30 years old, that figure drops to 31%. Overall, about a quarter of Americans don’t know from which country America declared its Independence.

What have public schools been doing for the last 40 or 50 years? In 1971, the year I graduated from high school, nearly any high school graduate could associate events for numerous years. Just naming the year was sufficient: 323 BCE, 44 BCE, 476, 1066, 1492, 1588, 1776, 1812, 1815, 1854, 1860, 1876, 1914, 1929, 1939, 1941, just to name a few.

In 1971, an average high school student would have been able to associate significant historical events with at least a dozen of those years, if not all of them. In 2011, I doubt that public high school graduates from the last ten years could, on average, associate significant events with a quarter of those years, if that many.

It would be interesting to do a simple comparison using such a metric between public high school students and homeschooled students. I’d predict that the homeschool students would kick ass.

Independence Day

Happy Birthday USA!

As you celebrate Independence Day today, please take a moment to think about the men and women of our armed forces, past and present, who have willingly risked, and all too often lost, everything to defend our freedom. I worry about America, but there can be nothing very wrong with a country that continues to produce men and women like them.


Seven years without Windows

The last time I ran Windows was seven years ago today. On 4 July 2004, I removed Windows from my systems, declaring Independence Day in more ways than one.

Since then, I’ve run Linux exclusively. For the first year or so, I ran Xandros, which was a training-wheels version of Linux that became moribund soon after the company signed a deal with Microsoft. At that point, I immediately removed Xandros from my systems and installed Ubuntu/Kubuntu, which I’ve been running ever since.

I’d actually had Linux installed on some of my systems since the late 1990’s, but only servers. By 2004, desktop Linux had made sufficient progress that I decided I was ready to take the plunge.

It was never about price. As someone who wrote computer books for O’Reilly, I could simply call Wagg-Ed and they’d send me free copies of whatever Microsoft products I asked for. I abandoned Windows because it was–and reportedly still is–insecure, buggy, and unstable. Serious bugs went unfixed for literally years, and an entire anti-malware industry had grown around protecting Windows from its own inherent security holes.

Linux, on the other hand, was and is rock-solid stable and inherently secure. (In seven years of using Linux, I’ve yet to install any kind of AV software or malware scanner; it’s simply not needed.) Linux bugs were and are fixed very quickly, usually within literally hours of being discovered or reported.

Of course, abandoning Windows also meant abandoning MS Office, Outlook, Internet Explorer, and other Windows-only applications. No great loss, as it turned out. In fact, it was a major gain. OOo Writer did everything I needed to do, and it’s never once eaten one of my documents, which happened regularly with Word. Kompozer was an adequate replacement for FrontPage, and Kmail/Kontact was noticeably superior to Outlook, which corrupted its database more than once and frequently forgot to notify when I’d set reminders. Firefox was worlds ahead of Internet Explorer. In terms of core productivity apps, Linux had everything I needed and those apps were generally at least as good as and often better than the Windows apps they replaced.

The same was true of other apps such as video and audio players, disc-burning software, backup software, and so on. Each time I needed to do something new with Linux, I found there was at least one good app and often several to choose from.

When I started shooting DV video to post on YouTube, I was a bit concerned. Prevailing wisdom was that Windows apps for video production were decent, Apple apps were superb and Linux apps were primitive and lacked function. That turned out not to be the case.

While I was playing around with video editing, my editor was kind enough to lend me a Mac Mini with iMovie installed. My first impression was that it was easy to use mainly because it didn’t do much, and that was confirmed as I used it more. It simply wouldn’t do several things that I wanted to do.

There were one or two Linux apps that resembled iMovie, both in ease-of-use and lack of functionality, but I eventually settled on an industrial-strength video editor called Cinelerra. Industrial-strength as in powerful enough to be used by commercial video production companies, including major film studios. But Cinelerra is also simple enough to use for basic functions that I never felt the need to look any further.

So, here I am after seven Windows-free years. I’ve never looked back.


Doing things the hard way

I really must take the time to get set up with the USPS Click-N-Ship program. It’s a hassle to load 5 or 8 cubic feet of kit boxes into the truck, haul them out to the post office, carry them in to the counter, wait for them to be scanned and logged, pay the postage, and get them on their way.

With Click-N-Ship, I can log on to the USPS web site, enter the addressee, and print a bar-coded label. The postage is charged to my account, and the USPS delivery person gets a notice that there’s a package waiting to be picked up at my home. That means I can ship six days a week instead of batching up shipments for a weekly trip to the post office. Buyers get their kits faster, the postage is cheaper, and I get a free delivery notification.

The fact that I am just getting around to getting this set up is more evidence that my to-do list is too long. If it’s a hassle now to do things the hard way, I can just imagine what it’ll be like as we start shipping kits in higher volume.

Speaking of sales taxes …

North Carolina’s sales tax just dropped 1% because the legislature allowed a 1% temporary surcharge to expire as of this morning. The tax rate in Forsyth County, where we live, and most of North Carolina’s other 99 counties dropped from 7.75% to 6.75%. I just updated my PayPal profile to reflect that change. People who order our chemistry kits for delivery to North Carolina addresses now pay about $1.50 less in sales tax.

I got to wondering why we have a sales tax at all, and, if we must, why that sales tax is considered to be due from the buyer rather than the seller. (As a business, we’re responsible for collecting the sales tax and forwarding it to the state, but it’s the buyer who’s considered to be paying the tax.)

As things stand, if someone from North Carolina orders one of our kits for $150, we have to collect that $150 plus 6.75% sales tax, for a total of $160.13. Of that total, we send North Carolina the $10.13 sales tax. Nor are we paid for collecting and forwarding that sales tax, which seems inequitable.

I have a brilliantly simple revenue-neutral proposal that would address the problem states have with collecting sales tax from out-of-state vendors on sales to state residents, and would not fall afoul of Constitutional interstate commerce provisions. Abolish the sales tax and the use tax entirely. Replace them with a simple tax on gross revenue on any business within the state.

As things stand now, if someone orders one of our chemistry kits for delivery to an address outside North Carolina, we collect $150, North Carolina collects nothing, and the state where the kit is delivered (probably) collects nothing. If someone orders a kit for delivery to a North Carolina address, we collect $160.13, and North Carolina collects $10.13.

Under my proposal, anyone who ordered one of our kits would pay $160.13 and the state of North Carolina would collect a revenue tax at about 6.32% of $10.13 on every kit we sold, regardless of delivery address. Conversely, when a North Carolina resident ordered something from an out-of-state vendor, North Carolina would collect nothing, nor would they be entitled to do so.

If every state implemented such a tax, which they soon would, it would be each state’s businesses that were paying rather than each state’s consumers. When anyone from any state ordered product from us, they’d be supporting North Carolina government services, just as when I ordered anything from any of the other 49 states, I’d be supporting that state’s government services. Everyone would pay the same regardless of where they lived or where the company they ordered from happened to be.

Tax collection would be dramatically simplified, both for retailers and the government. And there would be no Constitutional complications, because each state would simply be taxing the gross revenues of businesses that operated within that state. States would be motivated to keep that revenue tax rate as low as possible, to keep businesses in their states competitive with those in other states, and would also be motivated to make their states as business-friendly as possible to encourage the growth of businesses that would get them “free money” from customers in other states.


The Amazon Tax

The US Constitution clearly prohibits states from taxing interstate commerce, as SCOTUS confirmed in the Quill decision. Unless a business has a physical presence in a state, that state cannot tax transactions between that business and a resident of the state.

Cash-strapped state governments and brick-and-mortar retailers wish desperately that were not true, the states because they want more money and the retailers because they want to force sales to their local stores. Several states, North Carolina among them and most recently California, have passed laws on the dubious theory that affiliates constitute a legal nexus for taxation.

But, no matter how dubious that theory, at least it’s used to enforce sales tax collection, which is Constitutional. What seems to skate beneath notice are use taxes, which are not. All states that have a sales tax also have a use tax. A resident from one of those states who purchases something from a vendor in another state is legally obligated to pay the use tax, which is invariably calculated at the same rate as the sales tax, and is simply a transparent attempt to violate the Constitutional prohibition on taxing interstate commerce.

North Carolina goes further than most states. Every year, when I do our state income tax return, I have to fill out a section on use tax. North Carolina offers residents a choice. Other than for major purchases, which always require paying use tax on the actual purchase price, we can either pay use tax on actual purchases or on estimated purchases as a percentage of adjusted gross income. That percentage is small enough and we buy enough on-line that it always makes sense for us to use the estimated method. In effect, we usually end up paying something like 1% or 2% use tax rather than the nominal 7.75%. Still, it’s perfectly legal for us to choose the estimate method.

It’s also perfectly unconstitutional for North Carolina to impose that tax, intended as it is to get around the Constitutional prohibition on taxing interstate commerce. The problem, you see, is that North Carolina charges use tax only for purchases that did not incur sales tax.

For example, if I buy a $100 widget in a local store, I’m charged $7.75 sales tax. If I buy that $100 widget on-line from an out-of-state vendor, I am (at least in theory) required to pay a $7.75 use tax. So far, so good. The problem is, when I buy that widget at the local store, I’m charged only the $7.75 sales tax, rather than the $7.75 sales tax PLUS the $7.75 use tax. Because the use tax is not charged on in-state sales, it is discriminatory and a violation of our Constitutional right not to be taxed on interstate commerce.

I keep hoping that someone will pursue a case against a state government and take it all the way to SCOTUS, because use taxes as currently implemented are prima facie not Constitutional.

Writers despair

Kristine Kathryn Rusch has an excellent post up about the despair prevalent among traditionally-published novelists. Even recently bestselling authors are being dropped by their publishers and those who are “lucky” enough to continue being published are being paid peanuts. Publishers are unilaterally changing contracts terms, grabbing e-publishing rights they aren’t entitled to and haven’t paid for, grossly underreporting sales numbers, and otherwise ripping off their authors. Nor are agents any friends of writers, if they ever were. Most literary agents are no better than publishers, and many are worse.

All of this was predictable and predicted, a result of the ebook tsunami that has destroyed traditional publishers’ and agents’ business models. Traditional fiction publishers and agents are at panic stations, and the authors are the first ones to be tossed out of the lifeboats. Print fiction publishing is in a death spiral, and it’s every man for himself.

If you think I’m exaggerating the death-spiral thing, see the sales numbers for mass-market paperbacks. From April 2010 to April 2011, MMP sales fell 50%. If anything, I’m being generous. A 50% decline in one year isn’t a death spiral; it’s a crash-and-burn. And, if anything, we’re likely to see a greater decline over the coming year. MMP is toast, and hardback is already on life support. Traditional fiction publishing is dead. Unfortunately, most traditionally-published authors haven’t heard the wake-up call.

Barbara came across a new-to-her author yesterday, and asked me to check availability of her titles for Kindle. The good news is that most or all of them are available for Kindle; the bad news is that all of them are more expensive than the MMP versions, and most are priced at hardback levels. NFW will we buy those books at those prices. Nor will many others, which leaves that author and others like her hung out to dry.

When one of the parties to a contract substantially violates the terms of that contract, as traditional publishers have done and continue to do, that contract is void and the injured party is entitled to damages. It’s unlikely that many authors have the resources to sue their publishers successfully, but that doesn’t mean those authors have no recourse.

If I were Kate Atkinson or another traditionally-published author, I’d treat my publisher to some of its own medicine. I would immediately send my publisher a legal notice that they are in violation of the terms of our contracts, that those contracts are now void, and that I was hereby demanding full and immediate reversion of rights on all of my titles with them. I would then self-publish all of my own titles on Amazon and B&N, pricing them at $0.99 for backlist titles and $2.99 for frontlist titles. Let the publisher try to sell ebooks of those same titles at $15.99 when I’m selling them for $2.99.