A rational proposal for resolving the fiscal cliff debate.

Lets start with some assumptions:

1. The Democrats and Republicans both want Americans in general to have more wealth and for the US Government to have deep pockets full of valuable purchasing power.

2. Pro-growth policies such as low tax rates, light and tight regulation, improved access to infrastructure (including an appropriately educated work force and research and development programs in addition to the bricks and mortar projects) have the most potential to create wealth for individuals and revenue for the government.

3. Large amounts of debt relative to GDP are a drag on the potential to grow the economy because money that would otherwise be spent to promote bullet 2 is spent financing the debt.

4. Job creation (stimulating business activity) is the number one thing that everyone can agree is good and should be promoted immediately to address the sluggish recovery.

Now some food for thought (facts, not assumptions):

100 million Americans are receiving Medicare or Medicaid at a cost of almost 1 trillion dollars a year.

Defense spending (EXCLUDING the wars) has increased 77% in ten years. Including all defense spending, the defense department also spends about 1 trillion dollars a year.

The people earning over $250,000 account for 25%, or 2 trillion dollars of the roughly 8 trillion dollars in total US household income.

All the corporations in the country (including small business) earn income of about 1 trillion.

Taxing the “rich” and corporations at 100% would fund the government budget completely but most would agree that it would also lead to the greatest economic depression since the fall of Rome.

It would fund only 3/4 of the budget if you include social security.

If you are employed, your employer subsidizes your future medicare and social security benefits through the payroll tax.

A “payroll tax holiday” means that medicare and social security are not being properly funded in order to provide a “stimulus” to the economy.

The top 2% of earners claim a disproportionate amount of money from “tax expenditures” – exemptions and deductions – than the rest of the population, while government benefits – medicare and social security dollars – are roughly distributed according to the distribution of the population.

**Therefore - reducing or eliminating deductions will have a disproportionate effect on the very wealthy while cutting benefits will have a disproportionate effect on the middle class.**

Goldman Sachs pays 35% in federal income taxes but Lloyd Blankfein pays just over 15% in federal income taxes.

Because wealthy people make twice as much money as corporations, for every 1% more that people like Lloyd pay on income (primarily capital gains and dividends), the corporate tax rate on Lloyd’s company can come down by 2%.

Therefore, here is my proposal for a politically expedient yet meaningful solution to the fiscal cliff, the debt, and the economy all in one:

Reduce ordinary (excludes the wars) defense spending by 50% over 10 years.

Do nothing to Medicare now – amend the Obamacare law as needed after the effectiveness of cost savings measures are known.

Eliminate capital gains and dividend income reporting for individuals except those held in retirement accounts. -Income is Income unless you save it for later so we don’t have to bail your ass out when you retire.

Eliminate all “tax expenditures” (i.e. credits, deductions, exemptions, etc.).

-Yes. I understand this one will be difficult to argue given political realities, but it would have the added benefit of removing distortions from the marketplace.

Assuming that 90% of top-earner income comes from gains and dividends, and that they will pay the CURRENT top rate of 35% as opposed to 15%, then taxes on wealthy PEOPLE will increase by 18% (9/10 of 20%) and therefore, the corporate income tax rate can fall from 35% to ZERO! without costing the government anything.

In a nutshell,

Tax rates on all income brackets remain the same.

With the elimination of all “tax expenditures”,

A. Many middle income households will have reduced take home income because they will no longer receive breaks for having kids, buying a house, and paying for college. However, there would be fewer Honey Boo Boo’s in the world and welfare recipients if we stop paying people to reproduce.

B. Many of the rich (and dishonest) people would see a much larger reduction in their take home income as compared to the middle class. In some cases, they may see their marginal tax rate go from near zero to 35%. They would finally pay their fair share.

C. If the public really demands it, then they can institute new programs to help people buy a home, pay for college, etc., etc. but I suspect starting from a clean slate will have enormous benefit to the political process and actually simplifying the code.

Defense spending will return to levels similar to those before 9/11.

Entitlement programs will function much the same way they do today from a structural standpoint, but there will be continued efforts to find cost savings in medicare and medicaid, and ensure social security is properly funded through the payroll tax.

Individual income will be treated as ordinary income no matter where it comes from.

America will have the lowest corporate (i.e. both big business and small business) tax rate in the developed world.

Effect:

Shows the government can cut spending.

Placates those who are angry that wealthy people don’t pay their fair share.

Makes America the most tax friendly place in the world to do business.

Grows the economy at a much faster rate than anyone is currently anticipating.

Achieves budget neutrality through increased growth prospects, reduced spending, and closing loopholes.

Assuring that it works:

Pin the tax rates on individual income to the deficit over a 3-5 year rolling period.

If the plan outlined above cannot generate enough revenue to be deficit neutral after several years, then the tax rates on everyone will go up unless spending is reduced.

Such a rule would provide accountability, predictability, and fairness.

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Why Mars is a (Mostly) Dead Rock: It’s Too Small.

Here are two claims:

Mars has living organisms on it.

The Martians were created using computer-gener...

The Martians were created using computer-generated imagery from ILM. (Photo credit: Wikipedia)

Mars has Earth-like plate tectonics.

Shows how ocean ridges are formed, lithosphere...

Shows how ocean ridges are formed, lithosphere subducted at trenches; good for understanding plate tectonics. (Photo credit: Wikipedia)

The first claim is supported by good evidence. The second is completely bogus.

In this post I explain why Mars is probably alive with some primitive life, but is not a very exciting or hospitable place for it when compared to Earth. I also make the argument that learning about Mars is useful because it will help us to avoid visiting such places in the future.

One might say that the main difference between Earth and Mars is that the former has life and the latter doesn’t. This is incorrect (more on Martians below).

Mars and Earth occupy different orbits, but Mars is only about 50% farther from the Sun than Earth. By contrast, the next planet out, Jupiter, is 550% farther from the Sun than Earth. So in this respect they are quite similar and both occupy the so-called “habitable zone” of our solar system where liquid water is possible.

Comparison of the habitable zone of 40 Eridani...

Comparison of the habitable zone of 40 Eridani with the habitable zone in our solar system. See also: 40 Eridani in fiction (Vulcan homeworld of Spock in Star Trek) (Photo credit: Wikipedia)

When searching for “Earth-like” planets in other solar systems, the distance from the star is the primary criteria. However, should a spaceship of humans flee Earth to an unknown planet in another solar system that happened to be at the right distance from its star, I am sure they would be very disappointed to find something resembling Mars. We would be wise to determine what makes a planet in the habitable zone full of life like ours as opposed to a (mostly) dead, dry rock like Mars.

With the exception of its atmosphere, which on both planets represent less than .0001% of the total mass, both planets have the same composition inside and out (iron core, aluminum-silicon-oxygen mantle and crust). The main difference between Earth and Mars is their size! The radius of Mars is only half that of Earth. As a result, Earth is 10 times more massive than Mars. This has enormous consequences for the evolution of the planet.

Size comparison of terrestrial planets (left t...

Size comparison of terrestrial planets (left to right): Mercury, Venus, Earth, and Mars (Photo credit: Wikipedia)

The most important consequence of the size difference is that the interior of Earth is relatively hot compared to Mars. Earth has much more heat energy still trapped inside because, speaking simply, big bodies cool down slower than small bodies. Specifically, the time it takes for a solid body to cool down to a given temperature is proportional to the radius squared.  The radius of Earth is twice that of Mars. Therefore, in terms of pure conduction, Mars cooled down four times faster than Earth, and lost most of its heat energy long ago.

The internal heat of Earth has two effects which are very important for maintaining conditions favorable to life. The existence of a molten iron outer core surrounding a solid inner core in Earth’s interior produces a magnetic field that shields our atmosphere from the barrage of high energy particles streaming from the sun (the solar wind).

Artist's rendition of Earth's magnetosphere.

Artist’s rendition of Earth’s magnetosphere. (Photo credit: Wikipedia)

The solar wind excites molecules in the atmosphere and the lighter ones (such as hydrogen) tend to escape. The lower gravity of Mars also means that the energy required for a hydrogen atom to reach escape velocity is significantly lower than on Earth. Mars has a very weak magnetic field, because the dynamics of the molten and solid core are different than on Earth, also because of size. The exact nature of the Martian core is unknown, but in any case, the result of not having a magnetic field was that, over time, any hydrogen in the surface environment of Mars (including water) was lost to space. Any oxygen in the atmosphere oxidized the iron rich minerals of the surface, resulting in its signature red color. All that’s left is a very thin atmosphere composed mainly of carbon dioxide. On Earth, the massive quantities of photosynthetic organisms living in the oceans keep the oxygen levels high.

The loss of hydrogen to space occurs on Earth, so why does Earth still have oceans? The answer is plate tectonics.

Plate tectonics is the consequence of a global convection process, whereby the interior of the planet is slowly overturning, carrying heat to the surface like a (very) slowly boiling pot. On Earth, the hot material mainly comes up at the mid-ocean ridges, where it forms the ocean plates. As the ocean plate cools, it becomes denser, and begins to sink, which happens at subduction zones. At mid-ocean ridges, as well as all other volcanoes on Earth, in addition to the solid rocks that solidify from the magma, great quantities of gas are released. The most important of these gases (about 70-90% of the volatile content) is  water vapor.

Eruption in Eyjafjallajökull

Eruption in Eyjafjallajökull (Photo credit: finnur.malmquist)

The oceans of Earth were formed from and still are forming from volcanic gases. By looking at the water content of lavas at mid-ocean ridges, we estimate that the interior of Earth contains as much as 500 ppm of water. While this is a very small concentration, when rocks melt, most of the volatiles, including water, escape to the surface. The mantle is so much more massive than the oceans themselves, that despite the low concentrations, a back-of-the-envelope calculation shows that there is enough water in Earth’s mantle to fill the oceans 30 times over. It is possible that the volume of water in the oceans has been growing steadily since the formation of Earth, released from volcanoes tapping the deep reserves locked in minerals. Volcanism is driven by convection. Convection of a planet’s interior results in the phenomenon we call “plate tectonics”.

On Friday, a UCLA scientist, adding to the current hubbub over Mars, made the misleading claim that the Red Planet has plate tectonics as well. The claim is based on observations that classic, normal-fault scarps exist on Mars. Normal (sense of motion is extensional) faults can occur on any body which is experiencing differential contraction. The most familiar example of this are the cracks that form in clay when it drys, or for that matter, a leather belt as it dries out. In the case of Mars, small differences in the cooling of the planet resulted in tensional stresses that opened cracks. These faults are probably no longer active, and haven’t been for billions of years. The fact that we can still see them is that, without running water, erosion and sedimentation has not erased their expression at the surface.

teXture - Dry Clay

teXture – Dry Clay (Photo credit: photonate.com)

It is distressing to hear someone claim that Mars has “plate tectonics”. It couldn’t be further from the truth. Mars has a few, very old, extinct volcanoes. There hasn’t been any volcanism on Mars for billions of years. Tectonically, it is a dead planet. Let me say that again. Tectonically, Mars is a dead planet. That, combined with the loss of its original hydrogen means that the surface of Mars is completely dry save for trace amounts of water still locked in minerals and tiny ice caps at the poles.

There is really only one reason why Mars does not have the replenishing internal convection that Earth does. Once again, it’s the size of the planet. The mantle of Mars is similar in composition to Earth’s and likely has a strong temperature difference with the surface. However, Mars’ mantle is not as thick as Earth’s. For thermal convection to occur, the non-dimensional “Rayleigh number” must be greater than ~1000. As Rayleigh number is proportional to temperature but proportional to the depth of the convecting layer cubed, it is once again Earth’s large size that gives it a higher Rayleigh number than Mars, and allows for a convecting mantle, plate tectonics, and all the wonderful benefits of that process.

The Earth seen from Apollo 17.

The Earth seen from Apollo 17. (Photo credit: Wikipedia)

Besides providing life sustaining water, and helping to regulate the temperature of Earth’s atmosphere by supplying greenhouse gases (Earth would be an ice cube without at least some greenhouse gases, including water vapor), plate tectonics is also implicated in providing the changing environmental conditions that drive rapid biological evolution, leading to more complex and fit organisms and eventually us!

Downtown New York

Downtown New York (Photo credit: sreevishnu)

Now for the real eye popping non-news: Mars is alive!

Despite the massive disadvantage that life on Mars has, there is strong evidence that it is still there! In fact, we’ve known this for several decades, though the original result, which was denied by NASA and largely hidden from the public, was recently confirmed using new statistical techniques. In 1976, the Viking rover collected soil samples from the martian surface and put an aqueous solution of organic nutrients in it that had been produced using a high concentration of carbon 14 (which typically is in very small proportion to the stable isotopes). They then detected carbon 14 – rich CO2 coming off the soil.  The only reasonable explanation for the data, again confirmed by scientists in the past year, is that viable, living microogranisms in the Martian soil metabolized the nutrients and released CO2!

It is to be expected that if Mars or Earth ever had life, that some micro-organisms survived the journey across space on pieces of ejecta from impact events and seeded the other planet. Whether life originated on Mars or Earth is inconsequential. What is important is that only Earth was able to fill the oceans through plate tectonic driven volcanic gassing and retain them with its strong gravitational and magnetic fields. This is because of its relatively larger size! So while climbing a flight of stairs is easier on a smaller planet, it is less likely that a small planet can sustain complex life.

If we were serious about finding an Earth-like planet, not only would we be concerned with the orbital radius, which determines the temperature at the surface, we would also consider its planetary radius, which determines whether it can sustain a magnetic field, a water-rich surface environment, and plate tectonics, without which we may never have existed.

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I Want to Be Grass-Fed.

For the 27th year since year 0 of my life, I am spending a week at “The Farm”. In 1815, a Swiss Mennonite pioneer named Abraham Buchwalter bought several hundred acres of farmland in Ross County Ohio and settled there. He was my great * 5 -grandfather. Eight generations later, it remains an important cornerstone of the family, though no one in the family has been a serious farmer since my great-grandfather. Nowadays, it is a place to vacation, connect with family, and contemplate the universe while watching the corn grow without a single distraction. As a kid, visiting the farm was pure bliss. The possibilities seemed endless amidst the open terrain, creeks, ponds and wildlife; fishing, hunting for arrowheads, bringing milk to newborn kittens in the haystacks. It is a truly beautiful place that appears “unspoiled” by modernity.  However, looks can be deceiving.

Applethorpe Farm

View to north from farmhouse of soybeans fields. Early 19th century water pump in foreground.

In the old days (turn of the century until WWII), the farm grew some corn, but also vegetables, and raised pigs, chickens, and Hereford cows on grass prairieland. My great-grandfather seasonally employed over 20 “farm hands” from the surrounding towns. Since that time, industrialized meat production (concentrated populations of a single species living indoors and eating mainly corn and soybean) made pasture farming cost-ineffective. Essentially, people wouldn’t pay more for the grass-fed beef. Furthermore, vertical integration between the livestock producers and the meat packers resulted in the virtual exclusion of alternative products from the mass market. As a result, the family farmer was forced to abandon raising livestock.

This year there is a new development on the farm. The government is paying to have land set aside and planted with prairie grass to provide habitat for bird populations. The prairie-land on the farm is composed of dozens of species of grass and wildflower. Besides the appealing looks, the grassland has revived the health of fish and amphibian populations in the pond it surrounds, pheasants are nesting in it, and the field requires neither fertilizer, nor pesticide, nor tilling.

Portion of the pasture field with pond in background.

I recently watched the documentary film “Fresh”.

Joel Salatin holds a hen during a tour of Poly...

Joel Salatin holds a hen during a tour of Polyface Farm. (Photo credit: Wikipedia)

Joel Salatin, a Virginia farmer, whose farm is on relatively poor land, with one-third as many arable acres as ours, is grossing anywhere from 1500 – 3000 dollars per acre. A typical corn or soybean field will generate 400 – 500 gross dollars per acre. Granted, Salatin has to hire people, and works daily on the farm himself, but from an economic standpoint, earning 3 – 10 times more revenue per acre than conventional farming on relatively poor land should raise anyone’s eyebrows. The way I see it, America is facing two huge problems. One is a public health crisis that is mostly dietary. The other is an unemployment crisis that is largely structural – the loss of manufacturing jobs means that unskilled labor opportunities are lacking.

There are 25.4 kg/bushel of corn (this is weighed after removing the kernels from the cob). One kg of corn kernels contains ~4000 Calories (kcal). One person needs about 730,000 Calories (kcal) per year. Therefore, one person needs roughly 7 bushels of corn per year. One acre produces 180 bushels of corn a year, so an acre of corn can supply food for 25 people annually. With 150 million acres of land in production of corn and soybean, the United States could easily feed over 4 billion people. I make this point because the argument is frequently made that pasture farming cannot “feed the world”. Well, as it turns out, natural grassland is at least as productive in terms of Net Primary Production (grams of carbon / square meter) as fertilized corn, if not more.

Source: http://www.eas.purdue.edu/ebdl/pdfs/2011-pub-6.pdf.

Furthermore, when you consider that the vast majority of the corn goes into livestock feed and ethanol production, switching row crops in the USA to pasture-grazed livestock should not reduce the overall amount of grain-foodstuffs available to the world.

In addition, there are the following added benefits: Added fertilizer is unnecessary because the animals do that work with their droppings. When factoring in below-ground-primary-production, grasses are an order of magnitude more productive than corn (see source above) due to their extensive root systems. In essence, grasses and herbivores build-up the soil matter over time rather than reduce it as tilled row crops do. Essentially, the reason corn is so productive is because it is depleting the soil. Pesticide is unnecessary because the diverse prairie ecosystem is resistant to pest and disease.

Besides the soil, the animals are benefited too. The concentration of many of the same species in confined spaces results in sick animals and these operations are simply inhumane in general.

Some of the diseases are new – such as H1N1. Others are becoming resistant to antibiotics, because, as a result of having sick animals all the time, they just feed them antibiotics as a matter of “good” practice. With grass-fed livestock, the animals are healthier (cows aren’t even supposed to eat corn) and require less health maintenance. Last, and certainly not the least, the consumer gets a more nutritious product.

Once again, this requires more labor costs than the industrialized operations, but fewer material inputs. So, even if a pound of ground beef (or for that matter a BigMac) costs more, is that really such a bad thing? The argument that by doing so you take food off of the plates of lower-income Americans is…hogwash. Americans will be able to afford and eat just as many calories, albeit less meat. In any case, the subsidizing of corn is largely to reduce the cost of feed for livestock, but has also resulted in corn syrup – too much of which is a leading cause of type II diabetes –  being added to just about everything. Why not subsidize vegetable production instead? Furthermore, assuming that pasture farming employs many more people than industrial farming, the benefit of having this employment boost would be a great boon for the general economy.

Farm Workers

Farm Workers (Photo credit: State Records NSW)

Several factors stand in the way of large-scale implementation of the grass-fed economy. One is that there isn’t anyone left who actually knows how to care for livestock. However, if we spent even one-tenth of what we do on incarcerating people to train people to farm, I think that the labor problem would be largely solved. Another is that the big agribusinesses that do the industrial farming are vertically integrated with the food distribution system and restrict access of alternative products to the mass market. This can be solved with one act of anti-trust legislation, or just enforcing the laws on the books which guarantee individual farmers equal access to markets. Last but not least, those of us who are in the know, and have access to alternative products, particularly those that are locally produced should buy them! One of the best ways to give local farmers a customer base is to join a CSA. I hope you will try to find one in your area today.

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