Crusty Old Israeli Guy Totally, Powerfully, Unconditionally Schools The Department of Homeland Security

Hong Kong's Social Security Sanity

Sherman Oaks, California

Hong Kong does Social Security taxes right. The U.S. does not.

The Social Security taxes imposed by the U.S. government are highly regressive. Everyone has to pay the taxes from the first dollar of wages earned. The portion of the tax that funds old age and disability pensions must be paid starting at the first dollar of income. You can stop paying after you've earned $106,800 a year, but most taxpayers never see that kind of money. The tax used to fund Medicare is worse; there's no limit, so you start to pay it on the first dollar of wages earned, and you continue to pay and pay and pay.

The U.S. rates are confiscatory. The Social Security tax pretends to be 6.2%, but that's a lie. If you are a traditional employee, the employer has to match that 6.2% contribution with its own equal contribution. Since the employer considers both sides of the tax to be part of the cost of your employment, the entire 12.4% is coming out of your compensation.

Same with Medicare. Traditional employees pay 1.45%, employers pay another 1.45%, and wage earner are out a total of 2.90%.

Combined, that's 15.3% of your income that you are forced to hand over to the government. On $100,000 of income, you're paying $15,300 in Social Security and Medicare taxes. That's $15,300 you could otherwise invest in real estate, squirrel away in an index fund, use to fund a business, save in a CD, or simply enjoy. (And that 15.3% is on top of any state income tax, federal income tax, sales tax and other miscellaneous tax.)

Self-employed people feel the blade right in their gut. They are forced to pay the entire 15.3%, and they have to pay it every quarter. If they wait until the end of the year to pay, the IRS can hit them with interest or penalties. Had a bad month and need the business income to pay overhead? Too bad.

Hong Kong has a better system.

The city-state's Social Security system is called the Mandatory Provident Fund. The overall rate is low: 5%. The income ceiling is low: you only have to pay the tax on the first $31,170 a year. The math is easy: 5% of $31,170 is $1,560. (Yes, the employer has to match the 5%, but the ceiling is so low it's not much of a burden.)

Call me crazy, but I'd rather pay 5% than 15.3%, and I'd rather pay $1,560 than $15,300. On annual self-employment wages of $100,000, the U.S. payroll taxes are almost ten times that of Hong Kong.

Hong Kong's system has three quirks that are positively endearing.

First, if you are self-employed, your rate is still 5%. Hong Kong does not double the tax for self-employed people.

Second, if you're self-employed and have a bad month, you don't owe. If your self-employment income for the month is less than $650, you are exempt. In the U.S., the Treasury would be standing over your shoulder, demanding its cut.

Third, you can pay once a year. Heck, you can pay at the beginning of the year. Write a check for $1,560 and forget about it until next January 1st.

At this point, redistributionists are quoting Justice Holmes' famous remark, "I like to pay taxes. With them I buy civilization."

But Hong Kong is not uncivilized; it's one of the world's great cities. It has plentiful parks, and fantastic public transport, and several decent universities, and low crime, and a lively free press. It's also a center for the entertainment industries as well as food and fashion.

And Hong Kong purchases all that civilization with a payroll tax of $1,560 a year.

Sounds like Hong Kongers are better shoppers than Americans.


Pictured: A self-employed Hong Konger who does not overpay for government services. (Many street hawkers are exempt from the MPF.)

Review of Paradise Postponed By John Mortimer

Paradise Postponed by John Mortimer (U.K. 1985).

The book Midnight in the Garden of Good and Evil begins with the famous “WASP rot” speech, an explanation, by an arriviste, of why he collects the houses and ornaments of high society but is thankful he was not born into it.

“What I enjoy most,” he said, "is living like an aristocrat without the burden of having to be one. Blue bloods are so inbred and weak. All those generations of importance and grandeur to live up to. No wonder they lack ambition. I don’t envy them. It’s only the trappings of aristocracy that I find worthwhile – the fine furniture, the paintings, the silver – the very things they have to sell when the money runs out. And it always does. Then all they’re left with is their lovely manners.”

The story in Midnight starts well after the rot has set in, after the grand families of Savannah, Georgia, have sold their mansion blocks and tea services and decamped to the suburbs with the remains of their liquidity. The more interesting story is why the families declined and what they did and said as the family fortune was being dissipated and – most of all – who filled the vacuum.

Paradise Postponed attempts to tell that story in post-war Britain. The book opens with the death, in the mid-1980s, of the Reverend Simeon Simcox, the radical Church of England vicar known to every newspaper editor in the country for his epistles against apartheid, nuclear weapons and myriad social injustices. Rev. Simcox and his wife were able to raise their two sons, Henry and Fred, in genteel comfort due to their family share in the old and successful Simcox Brewery.

The family lives in the village of Rapstone Fanner, two hours west of London. The town has its hierarchy. The Fanners are the aristocrats by virtue of their land and their name. The Stroves, slightly less grand, also have freeholds, and the patriarch was for many years the local Member of Parliament, a Conservative of course. The village has a solicitor and a doctor and a pub and a meadow. Down the road is a rougher counterpart where the working class live, many employed at the Brewery. Parents with money send their sons to the Knuckleberries boarding school; those without make do with the local grammar school. On the occasion of birth, marriage, death or religious holiday, everybody attends one of Rev. Simcox’s services and then immediately returns to their assigned space.

That’s how it seemed to have been since time immemorial, except that, at some hazy point in the late 1950s, things started to change. Ambitious boys from proletarian families began to take elocution lessons and invite themselves to meetings of the Young Conservatives. The great families rented their cottages to the cash-flush from the entertainment business, people who wanted to pretend at country squiredom but be within commuting distance of Broadcasting House. Elder son Henry began a literary career as an Angry Young Man, found success in Hollywood and became the type of fatuous author who writes essays on the virtues of English tweed. Younger son Fred attended medical school and joined the local practice, rooting himself.

And then Rev. Simcox did a strange thing. He died, which was upsetting enough, and he willed the family fortune to one Leslie Titmuss, the grasping, social-climbing, graceless young man – son of a Brewery accountant – who had, through application and cunning, married into the Fanners, succeeded in business and maneuvered his way into the Stroves’ old parliamentary seat. As a Cabinet minister in Mrs. Thatcher's government, he implements policies that the late Reverend found abhorrent, but not abhorrent enough to prevent a bequest of all dividend-paying Class A Brewery shares.

The novel intercuts between the present – where son Henry contests the will, but Fred takes a more measured approach to unraveling the mystery – and the past 50 years of Rapstone Valley history. They are, in large part, a history of the English upper classes failing to notice the plebian strivers, realizing too late that the upstarts challenged their position and wealth, and then sulkily protecting their remaining turf with their last weapon, a quiet contempt expressed through ornate manners and a feigned indifference to the new reality. “It might just be that Leslie Titmuss is the future,” one character says. “If he is I’m not waiting for it,” another responds.

Some of the derision is returned. At one point, Leslie Titmuss explodes at Fred, “You’re the one for arrogance, aren’t you? You don’t do anything, don’t commit yourself to anything. It’s all far beneath you, isn’t it? Politics! Business! Property! Writing books! Even getting married and giving birth to another human being. All that’s beneath your dignity!”

The television series which was written in tandem with the book was broadcast in the United States in 1986, and I watched every episode, soaking up the atmosphere. The sets and locations gave English life a solidity, a seeming permanence, which made the changing times that much more puzzling. In the series, these qualities were communicated in long shots of English fields, and the coziness of the Rectory, and the familiarity of the local pub, and in dozens of other visual touches.

None of that is in the novel. The book contains almost no description, and I was consistently disappointed when the author, John Mortimer (who also wrote the teleplays), avoided the many opportunities to provide a sense of place – a heart-shaped void in a book that is fundamentally about a small village buffeted by change.

At times, the book felt more like a novelization than a novel, all meat and no sinew. Scenes would shift abruptly. That’s fine in a television program, because the eye would immediately adjust to the new location, but it doesn’t work in print.

The theme of the story – the self-inflicted irrelevance of the British rural nobility, dinosaurs unaware of the hungry mammals underfoot – is lost. In the series, it was front and center, maybe through camerawork, maybe through music, maybe because the mind processes film differently than mere words.

The book has lovely manners, but not enough substance. Just like some of its high-born characters.

Notes on The Queen's Christmas Message 2009

Sherman Oaks, California

1. The footage includes shots of coffins. There was a time when the U.S. media was interested in photographing the coffins of servicemen, but that was when someone else was president.

2. President Obama sold himself on eloquence, gravitas and oh-so-deep thought. Yet, in the first minute of this message, an unelected figurehead says more of substance about world affairs than our leader has in the last six months.

3. It's a pity the United States is not a member of the Commonwealth. Absence from the Commonwealth cuts the United States off from its British heritage, both cultural and legal. Membership in the Commonwealth might also -- one can dream -- prompt Americans to think with more international horizons.

Americans Are The Reason U.S. Airlines Suck

Sherman Oaks, California

I swore off blogging for the holidays, but an article in today's New York Times combines two of my favorite topics: air travel, and how Americans have only themselves to blame for their country's failings.

Bettina Wassener reports on how Asian airlines, hurt by the same problems as the rest of the travel industry, have responded by raising their game. The flagship Asian carriers are making their flights more comfortable, adding passenger luxuries and maintaining the highest levels of service -- and it's all included in the ticket price.

Meanwhile, US Airways is charging $7 for a pillow, and United wants $75 to change your flight by one hour, and no one would confuse the service on United with that of the Peninsula Hotel.

Wassener's dispatch places blame where it belongs:

“Asian airlines have been very reluctant to start going down the track that the Americans have gone,” said Peter Harbison, chairman of the Center for Asia Pacific Aviation, a consulting firm based in Sydney.

Alex McGowan, product manager at Cathay, said: “When the financial crisis overwhelmed the industry a year ago, we took a decision that maintaining that premium service was vital to our future. So whatever cutbacks we made, we did not make any to the areas our customers value.”

"The areas our customers value."

Sure, Americans complain about the extra fees to check baggage and the pathetic in-flight food, but Americans refuse to actually do anything about it. Americans won't stop flying on awful econo-carriers like Spirit, and they won't take any kind of collective political action against the protected domestic airline cartel, but the biggest reason U.S. carriers are mediocre is because Americans insist on buying cheap tickets online without regard to the quality of the service.

The vast majority of Americans will not pay $100 more per ticket for a higher quality experience. The American carriers know this, which is why you rarely see them competing on the quality of the service in the economy cabin. The carriers know most Americans will unthinkingly buy the cheapest fare that pops up on Expedia, so the airlines make sure they're at the top of the search results.

We refuse to pay for quality. That's why an hour-long flight on Vietnam Airlines is a far more pleasant experience than the Delta Shuttle. That's why twelve hours to Asia on Northwest is torture but, on ANA, it's rather pleasant.

We get what we're willing to pay for, on land and in the air.

Offline For Holidays

Sherman Oaks, California

I was going to post a Christmasy music video for the holiday blogging break. Then I changed my mind and decided to post some Sondheim. Then I changed my mind and tried to find something you haven't seen or heard before.

So here's a decent-quality homemade video of Raul Esparza and dancers rehearsing "The Arbiter" by Rice, Ulvaeus and Andersson. Shot in September 2003 at the New Amsterdam Theater in New York.

See you in January.

BBC: Christmas 2009

Six days! Six days!

The Doctor Who Christmas special will be one of several specials which will air on the BBC on Christmas Day. As you can see by this trailer, the Beeb goes out of its way to hire star talent, and the British flair for costume drama is always appreciated.

A Review of One of My Reviews

Sherman Oaks, California

Earlier this year, I wrote a review of Tone Deaf in Bangkok (And Other Places) by Janet Brown for Liberty magazine, a small-circulation libertarian periodical edited out of the University of California, San Diego. The review's not online, unfortunately.

Ms. Brown deputized a friend to track down a copy -- no small feat, since I haven't seen the finished product myself -- and has given a positive review to my positive review. Meta!

The Coolest Thing I Learned In Class All Quarter

Not one Indian source mentions Alexander the Great.

Planet of the Dead

Nine days until the BBC broadcasts the Doctor Who 2009 Christmas Special.

Here's the trailer for the Easter Special -- titled "Planet of the Dead" -- from earlier this year, with a co-star turn by former Bionic Woman Michelle Ryan.

Before The War: Teaser To "Army of Ghosts"

Twelve days until BBC1 broadcasts the 2009 Dr. Who Christmas special!

Every modern episode of Doctor Who begins with a teaser sequence, and this is the best one. If you're new to The Doctor, understand that he can "regenerate" -- i.e., change forms -- so, in this clip, you see the Ninth Doctor (played by Christopher Eccleston) and the Tenth Doctor (played by David Tennant).

When the show was revived in 2005, the producers made the wise decision that the limited effects budget would concentrate on creating alien worlds and atmosphere, rather than pyrotechnics.

Semi-Creepy Photo of Princess Elizabeth and Prince Charles

December 1948.

Trailer For the 2009 Dr. Who Christmas Special

Fourteen days!

New South Asian History Prize Announced

Sherman Oaks, California

The American Historical Association is announcing a funding drive for a new prize in South Asian history, according to the November 2009 issue of Perspectives In History.

The prize would be awarded for the best book about South Asian history and will be called the John F. Richards Prize, after the late Duke historian.

If you're looking for a worthy charity for year-end donations, the prize fund is soliciting donations and needs a minimum of $50,000 to launch the prize.

I Am Posting This Because It's Friday And These Guys Are Cool

But, seriously, if you've never listened to German electronic music, please give the whole video one listen. You will probably like it. (The song was meant to simulate a trip on the Autobahn. The original album cut is 22 minutes long; this is a more manageable nine minutes.)

A Knife Tricks Analysis: The Public Option Would Not Be Available To Expats

Q. Would the “public option” of government-offered health insurance be available to expats?

A. Although the issue is not squarely addressed in the House health care bill, the answer appears to be No.

Here’s the analysis:

The public option provisions of the House of Representative's health care bill would, if enacted, do three things. (The Senate bill does not feature a public option.)

First, the House bill would create an exchange – a marketplace – from which people could purchase health insurance. Second, the bill would allow the government to create and sell its own policy, the “public option,” on the exchange. Third, the government would offer lower-income people “affordability credits” with which to purchase insurance from the exchange.

None of these sections refers to expats. When a statute is silent on an issue, the courts use various methods to divine the legislature’s intent. One common method is to review the Act as a whole, answering the question based on a close reading of the law’s structure, stated goals and language. That’s the method of statutory construction this post will use.

The public option is contained principally within Sections 321 to 331 of H.R. 3962, the Affordable Health Care for America Act. Click on this sentence to view the text of the 1,990-page bill.

The first sentence about the public option isn’t encouraging. In Section 321(a), the Secretary of Health and Human Services is instructed to place on the exchange a public health insurance plan which “ensures choice, competition, and stability of affordable, high quality coverage throughout the United States.” Although this phrase may be a rhetorical flourish, a court could interpret it as evidence that Congress intended the public option to stop at the water’s edge.

The next section, No. 322, empowers the Secretary to establish “geographically adjusted premium rates” for the public option. In establishing these rates, the Secretary is allowed to take into consideration the price differences which arise because some areas have lower costs of living than others. But the section does not specify if the relevant geography is limited to the national or could include the global. So the language regarding rate-setting isn’t helpful for our purposes.

Section 323 is a silent killer. It states that doctors, hospitals and other health care providers which participate in Medicare – the U.S. public health system for retirees -- are automatically deemed participants in the public option unless they opt out.

On the surface, Section 323 doesn’t say much; providers in the current national health program are assumed to be part of the new program. Subdermally, the provision is freighted with implication, because one of the main characteristics of Medicare is that it is only available within the United States. Expats have to pay Medicare tax, but Medicare refuses to fund treatments which occur abroad. Consequently, this provision can be read to imply that treatments under the public option could only be obtained within the country.

Remember those “affordability credits”? In order to qualify for the credits, a person must be “lawfully present in a State in the United States,” according to Section 342. The language is intended to distinguish between legal and illegal immigrants, but it has the knock-on effect of limiting the credits to people who are residents of a state or territory. Expats are excluded.

Taking all of the textual evidence into consideration, it appears that the public option would operate like Medicare. Expats would be forced to fund the system through their U.S. taxes. An expat could choose the public option or a private insurance plan offered on the exchange. But, if an expat needed treatment under the public option, he or she would need to fly back to the U.S.A. -- whether or not the U.S.A. was still “home.”

Exactly The Wrong Idea: Senate Health Care Plan Would Forbid Medicaid Treatment Abroad

Sherman Oaks, California

The private sector is embracing medical tourism as a way to obtain quality health care at a steep discount.

Simultaneously, the U.S. Senate would forbid the treatment of Medicaid patients at hospitals or clinics abroad -- no matter how much money would be saved.

Medicaid is a federal program which provides health care to poor people. The U.S. government created the program, makes the rules and provides funding. The actual delivery of health care is handled by the states, and, in theory, the states can experiment with different procedures.

"But don't experiment too much" seems to be the Senate's line.

Section 6505 of the massive Senate health care bill would prohibit states from using Medicaid money to pay for treatment abroad.

The Senate bill would add a section reading:

A State plan for medical assistance must . . . (80) provide that the State shall not provide any payments for items or services provided under the State plan or under a waiver to any financial institution or entity located outside of the United States.

As written, Section 6505 is a broad protectionist measure which would insulate U.S. companies from international competition. Indian banks couldn't be used to settle accounts, a Canadian claims processing firm would be a forbidden foreign "entity," and putting non-critical patients on a plane for cheap surgeries in Thailand or the Philippines would be a loud no-no. (Plus, the fact that the feds have enacted almost 80 previous stipulations indicates a lack of flexibility from the Centre.)

This is the opposite of what a sane health care reform should be about. Protectionism would turn the American health care industry into a terrestrial version of the domestic air travel industry -- a bunch of inefficient and indifferent dinosaurs, safe in their cocoon, providing sub-standard services to a captive audience.

And, with garbage like this in the bill, I don't want to hear another sanctimonious word from Washington about how health care reform is necessary to "bend the cost curve" or "save money" or "reduce the percent of GDP spent on health care."

Section 6505 -- like the rest of this health care reform moment -- is about forcing people to buy something they don't want.


Pictured: Student nurses at the Christian University of Thailand.