Gasoline On The Fire Of Inflation: The Problem With Tariffs and National Sales Tax

Trump is proposing tariffs and a national sales tax because he hates the poors.

Back in the Lincoln era, the main platform of the Republican Party (formed from the ashes of the Whigs) was "God, Country, and the Tariff!* The Republican Party back then was pro-business and tariffs on imported goods were thought to help foster domestic industry.  As a relatively "new" country, America was importing a lot of manufactured goods and even things like cloth early on.  Cotton would be grown in the South, shipped to England, and then returned as soft goods to the colonies.  One act of rebellion back during 1776 was to wear "homespun" cloth in place of imported goods.  Oddly enough, Gandhi had a similar tactic, spinning his own cotton thread on a spinning wheel, which the Brits had outlawed.  Today, that wheel is on the Indian national flag.

So, domestic industry has always been a thing.  However, starting in the 1960s and accelerating in the 1970s, more and more "dirty" industries packed up and shipped overseas.  I recounted before how the enormous forging machines at New Departure were being packed up on flat bed rail cars, sticking out several feet on each side, and taken down to the coast to be shipped to India.  It was a messy, labor intensive industry, and with UAW wages, we could not compete with other domestic industries, much less foreign ones.  You don't see "NDH" on railroad bearing hubs anymore, other than in railroad museums.  You still see Timkins, though.

I remember, as a kid, our family driving through Pittsburgh, and the entire city was engulfed with smoke.  Most cities were, to some extent back then, but Pittsburgh, with its steel industry, was particularly polluted.  Today, the sun shines on Pittsburgh and the steel industry has been reduced to the name of a football team.  Newer "clean" industries have sprung up in place of the old, with higher salary jobs requiring a higher level of education.  Most residents I have met do not pine for the "good old days" of intensive manual labor.

Donald Trump sees this as a problem and wants to bring back domestic industry with tariffs.  Problem is, they don't work the way they are intended and the net result is higher prices - more inflation - from the guy who criticizes inflation and blames it on the President at the time.  Interesting note, however, inflation has receded to pre-2021 levels.  Does Biden get credit for that, or if Trump wins, will he claim the glory?  I don't need to guess on that one.

The problem with tariffs are many:

1.  It just raises prices:  You may recall during the Obama era, they slapped an anti-dumping tariff on Chinese tires for a year or so. The net result was that imported tires skyrocketed in price. Domestic manufacturers followed suit by raising their own prices to reap windfall profits. Consumers, used to paying under $100 a tire for an ordinary car, were chagrined to see prices nearly double.  The net result was the consumer got screwed, the domestic tire manufacturers (what few were left) reaped huge profits for four quarters and then.... nothing changed.

If tariffs are imposed on imported goods, expect to see prices skyrocket.  Since the "domestic" industry in many cases no longer exists, there is no alternative but to pay the tariff and thus fuel inflation.  Even if domestic industry arises (at great capital cost) its overhead will be much higher and thus prices will remain high.  Even if a domestic producer can get their costs down, there is no incentive to lower prices, but rather to match competition overseas and pocket the difference.

UPDATE:  Trump claims that China will pay the tariffs and that prices will not rise.  But it is importers who pay the tariffs and the costs are passed on to consumers.  Manufacturers often operate at profit margins of 5% or so and cannot swallow the cost of 50% or even 20% tariffs.  They cannot cut their prices to compensate. So the cost is passed on to the consumer - in every case.  In some cases, importers simply leave the market if the tariffs are too high (as VW did with its cargo vans in the 1960s as we shall see below).

2.  There are work-arounds:  Some tariffs just won't go away.  Back in the 1960s, Germany imposed a tariff on imported chicken from the USA. In retaliation, America slapped a whopping 20% tariff on imported trucks.  That's why, after 1965 or so, you never saw VW vans imported to the States, except for the passenger versions.  Every foreign manufacturer set up an assembly plant in the USA to avoid the possibility of tariffs.   In fact, there are probably more "Foreign" assembly plants in the States than domestic.

Most of these assembly plants are non-union, too.  So instead of creating high-paying UAW jobs in Detroit, we have low-wage part-time jobs in places like Mississippi and Tennessee.  The good news is, we now export some American-made cars overseas (for the first time in decades) but most of these are foreign brands.  Sure, we send a few American SUVs to Arab countries, where rich young Saudis can drive them around at 30 cents a gallon.  But few European or Asian countries are pining for oversized American SUVs and pickups.

So what did these tariffs accomplish? Nothing. Since the "chicken tax" was enacted, GM's market share shrank from 60% to below 20%, on par with Ford these days.  The "Big-3" survive only because foreign manufacturers don't make big pickup trucks.  But they are slowly moving into that market as well.  The tariff on light duty trucks was little more than a temper tantrum - over chickens!

3. Tariff Engineering:  Ford has its "Transit" vans made in Turkey where labor costs are low.  They are fitted with cheap cardboard seats and flimsy thin glass windows.  When they reach the port in New Jersey, there is no "chicken tax" tariff as they are ostensibly passenger vehicles.   Once they are certified for sale, the seats are removed, the windows replaced with metal panels and the leftover parts are shredded and disposed of.

Wasteful?  Yes. But so are tariffs.  For Ford, it is cheaper to destroy these parts and install new ones than to pay a 20% tax.  Of course, the government is aware of this and is trying to put an end to "tariff engineering" - but how?  A passenger vehicle is tax-exempt, no matter how cheap the seats are.  It just illustrates how arbitrary and stupid the "chicken tax" was - and is.

But that is just one example.  When Harley-Davidson hit the skids in the 1980s - selling crappy, over-priced bikes during the 1970s AMF era - they petitioned the government for an anti-dumping tariff on motorcycles over 750cc in displacement.  The net result was that the Japanese started pushing smaller bikes, which still had a following.  Displacement and power are not necessarily related - as evidenced by the new era of car engines making 500 HP from as little as three liters.  It gave Harley some breathing room, and that, combined with aggressive licensing of their brand and logos, gave them the cash-flow they needed to rebuild.

But the work-around for importers was to simply make smaller bikes and expand that market with the younger buyers, who often are brand-loyal for life.  Harley is paying the price today for abandoning that segment of the market.

But of course, others saw opportunity.  The old Indian brand was resurrected and Polaris entered the big-bike fray - building big bikes in America and avoiding the tariff.  This cut into Harley's sales.   Eventually Indian and Polaris merged (from what I understand) but the big issue is the next generation doesn't seem interested in big "hog" motorcycles, which they identify as boomer-bikes.  Harley's venture into smaller bikes and e-bikes seems to have flopped as well.

So the tariff was only a short-term band-aid fix for a long-term problem.  The ultimate work-around for importers is to simply open up a factory in the USA, which many have done.

My 1988 Toyota 4x4 pickup was made in Japan - most of it, anyway.  To avoid the chicken tax, the cargo bed and bumpers were domestically produced and added to the chassis at the point of entry.  I guess they argued it was not a completed vehicle and had "domestic content" and thus avoided the tariff at least in part.  Today, Toyota simply builds cars and trucks here, avoiding import duties.

Yes, a tariff can help some industries, but the effects are only short-term.

4. Retaliation:  As the "Chicken Tax" debacle illustrates, if you enact a tariff, you might have to deal with blowback from your trading partners who enact retaliatory tariffs on produces you export.  As a result you end up hurting your own economy further and commerce grinds to a halt.  In 1828, Congress passed, almost by accident, an onerous tariff that ground commerce to a halt. A century later, a Republican Congress passed the Smoot-Hawley tariff act which had the same effect and made the depression even worse.   Time and time again, tariffs have been shown to be a bad idea that benefits perhaps only a few at the expense of the many.

When America puts large tariffs on imported goods, our trading partners hit us where it hurts - slapping tariffs on America's biggest export - agriculture.  As a result, farmers suffer as crop prices plummet to a point where the cost of harvesting exceeds the market value of the crop.

Tariffs are a two-way street!

But what about a national sales tax?

Again, another ill-conceived idea that will raise prices and ding the poor the most.  There are a plethora of problems with this idea as well:

1.  It will make inflation accelerate by another 22%:  We know this exact amount as that is the number Trump is throwing around - a 22% sales tax, or as they call it overseas, a "Value Added Tax" or VAT.  Except here, it would attach to everything you buy.  People were freaking out at 8% inflation in 2022.  Imagine nearly tripling that rate.  Goods would literally be unaffordable for a lot of lower income people.

2. It would drive wage demands up:  If your wages are dinged 22% in buying power, you would be more likely to strike for higher wages.  We saw this in the last few years as workers decried high inflation and stagnant wages.  Those who could hold out for more money, did.  Those who could strike, struck.  Expect to see more labor unrest if such a bill is passed.

3.  It is a huge tax increase for the middle and lower classes:  As a retiree, I pay very little in taxes as my income is low.  Even the middle class hardly rises above the marginal rate of 25% and even then, there are deductions and exemptions and a huge chunk of their income is taxed in the lower brackets.  For even the middle class, a 22% sales tax would mean a big tax increase.

The lower and middle class spend almost all of their money on items to survive - food, clothing, shelter, education, automobile costs, etc.  As a result, they would be paying a flat 22% on almost their entire income.  Maybe some middle-class folks who can afford to invest would not have to pay taxes on their entire income.   Then again, a 22% tax on "everything" should include stocks, right?

Of course not.  And that's why the very rich love this idea.  If you are a billionaire, you spend a small portion of your income on purchases and a huge portion on investments.  This is why the idea is so popular with the rich, as it would allow them to accumulate even more wealth at an exponential rate.

Sure, it would give the middle-class more incentive to invest, provided of course, they are smart enough to figure this out.  The number of Trump signs I see in middle-class neighborhoods seems to negate that idea.  Your average middle-class person wants a new monster truck, not a stock portfolio, and is ready to go into debt to get it.

But assuming it encourages more investment, what does that mean for sales?  Yup, they would drop.  When a new car costs 22% more to buy, you might be tempted to hang on to your old one for a lot longer.

I had a friend in Florida who bought old cabin cruisers and converted them to diesel power, using military surplus engines.  He worked for an SAS pilot who brokered these deals.  Once refurbished, they were shipped to Europe and sold as used boats - avoiding a lot of the steep VAT tax they have there.  But of course, this meant a dent in their domestic sales.  Good for my friend in Florida, not so good for Sven's New Boat Sales in Stockholm.

So if this is passed, you can expect prices to skyrocket and sales to go down, and people coveting older and used items because they are that much poorer.

4. The rich will simply use work-arounds:  The Swedish boat gambit illustrates how people find ways around taxes if they have to.  And the rich can afford to do this when millions are on the line.

For example, in California, they passed a populist "yacht tax" to stick it to those rich bastards - right?  But rich bastards didn't become rich by paying taxes or being stupid.  In Southern California, the very wealthy simply registered their yachts across the border in Mexico, and avoided the tax.  Docking fees were less and they could hire crew and maintenance people for far less money.  So long as the boat was docked in Baja for six months and one day of the year, they avoided the yacht tax.

And Baja is a short drive or even shorter helicopter or private jet ride from LA or San Diego, right?  Fishing is better there, anyway.

So, who paid the tax?  Middle-class people who couldn't afford to go through the rigmarole of registering a boat in Mexico - or Panama, or Liberia, or whatever.  If you were middle-class, you could afford a 30-foot cabin cruiser, which is hardly a "yacht" but was taxed as such.  It really put a damper on boat sales.

Now, imagine this 22% sales tax kicking in.  The rich would simply buy their yachts overseas in low-tax countries and avoid the tax.  The middle-class, buying their retirement dream boat would get socked - and likely not buy.

Sales taxes are taxes on the poor!

5.  It would make us all criminals: Of course, even the poor would try to work-around the taxes.  When you buy and sell a used car today, you have to pay sales tax.  And an old gag was to put down a ridiculously low sales price on the title to avoid paying the paltry 6% sales tax.  The tax authorities got wind of this and started charging sales tax based on book value - putting the onus on the purchaser to show the value was less than that.

Now imagine a 22% tax.  People would be tempted to do under-the-table transactions to avoid the tax, or under-report sales prices.  Policing this would be a nightmare - and involve sales tax agents knocking on people's doors and asking pointed questions.

In Virginia (and a lot of other Southern States) they used to have a "property tax" on everything you own, not  just your house and car (the latter also being problematic).  Every year, you had to pay tax on your couch, your television, and even the clothes on your back.  Everything.  Most people opted to pay a flat tax based on a percentage of the value of your home.  But, if you were willing to add up the value of all your possessions, you could, in theory, itemize.  Be sure to count the glasses in the cupboard!

It was a nightmare from an enforcement standard, as the "value" of used household possessions is, in real life, trivial (I have cleaned out enough houses of deceased relatives to know this).  Now imagine this with a national sales tax.  The cost of enforcement would skyrocket.

Already today, there are people who will sell "untaxed" cigarettes illegally.  Do you think people will just roll over and pay 22% sales tax on everything?  No, there will be lots of "I know a guy" kind of deals out there.  Organized crime will have a field day, at least for smaller, untraceable items. 

6. It would not simplify your taxes:  These sort of flat-tax or national sales tax arguments are popular with the ignorati of our country.  They have an irrational fear of the IRS, probably because they subscribed to one of those "tax avoidance" scams and got audited as a result.  The 1040EZ is so hard to figure out!  Make it a simple flat tax or sales tax and make it simple - for simple people!

But just as a flat-tax of 16% on income is a huge tax increase for the poor and middle class, a 22% national sales tax is similarly a tax increase.  And if this tax does not replace your Social Security and Medicare taxes (so-called payroll taxes) then you still may have to file a Federal return.  And since States will not be part of this (unless they want to raise State sales taxes to 10% or more), you will still have to file a State return.  It will not be easier - but harder.

* * *

So why do these ideas sound good to the very people they will hurt the most?  Well, as I noted in the last section, they appeal to the less-smart segment of the public.  These are people for whom the words "marginal rate" are a mystery.  These are the folks who don't know the difference between a tax deduction and a tax credit - and are not interested in learning (it is really simple, too!).  These are the kind of people who blather about their company "taking a write-off" on a money-losing project, as if somehow the company made money by losing money.

A national sales tax sounds appealing as they don't need to do math - or so they think.  Tariffs sound appealing as it will "force" consumers to buy the over-priced and shoddy products their company makes.  They think they will be on easy street making big bucks at the unionized factory.

That is, until they try to spend it - and find their higher wages aren't keeping up with 22% inflation.

I know this as I lived through an era like that.  From the 1960s to the 1990s, we saw inflation get out of control as unions went overboard with ridiculous wages and restrictive work rules.  Granted, today, the pendulum has swung far, far, in the other direction.  But back then, a slug on the assembly line could rake in as much as a doctor or lawyer.  A lucky few made out like bandits - and spent it all, too.

Nixon tried to control inflation with "wage and price controls" which today would be considered Communism.  Gerald Ford thought that if everyone wore a "WIN" button (Whip Inflation Now) then prices would come down.  Jimmy Carter tried to deregulate industries, such as the airline industry, to reduce prices (and create low-cost, non-union carriers).  Reagan went for union-busting as a means of controlling inflation. And of course, lower interest rates helped fuel the economy - something lost on economists who still believe today that increasing the cost of borrowing money will actually bring prices down - a theory even a child can poke holes in.

The 1970s were an era where higher prices lead to demands for higher wages, which in turn lead to higher prices.  Wash. Rinse. Repeat.  It was a cycle that went out of control and took decades to dampen down.  A 22% national sales tax, particularly combined with tariffs, would send inflation skyrocketing into territories that only some South American countries have ever seen.

It's just a really shitty idea from every angle.  And no surprise that Trump is supporting it and his idiotic cult followers think it is swell, too.

So, what's the alternative?  Well, if you want to keep wages low (which keeps prices low) then you need to expand or at least maintain the buying power of the workers.  We've already done this through means like food stamps (SNAP), which as I noted before is a subsidy to Walmart and other low-wage employers, not so much as to the recipients.  Guess what program Republicans also want to cut?

If we lower taxes on the working class, their buying power increases and their demands for increased wages subside, leading to lower costs for employers, which in turn allows them to lower prices in a competitive market.

While low-cost imports may have meant the death of some factory jobs, it also means the low-wage worker can afford to buy more with their dollar.  I noted before that my Dad - a upper-middle-class executive, couldn't "afford" a $99 Coleman Steel-Belted cooler or a $99 Weber kettle.  That was a lot of money in the early 70s, when a new car could be had for under two grand.  Today, until recently, those items were available at the same dollar amount as in 1970 because they are made more cheaply overseas.

My Dad finally broke down and bought his first color television in 1976 -  a decade after most Americans had one.  It was an RCA 25" Colortrak and cost a whopping $500.  I recently bought a larger 28"flat-screen television for our camper, for $89 at Walmart (it was the smallest one they had and is no longer available in that size!).  Deflation has affected a lot of our consumer goods, thanks to low-cost overseas production.

Maybe we make less money today, accounting for inflation, than years ago, but then again, our buying power is so much greater.  Would you rather make $50,000 and pay $1 for a loaf or bread, or make $100,000 and pay $5 for a loaf of bread.  If you said the latter, I suspect you flunked math.

There are other factors to consider, of course.  As the "supply chain" issues of the pandemic era illustrated, putting all your eggs in one (Chinese) basket is not a good idea, just from the perspective of national security.  Today, they are building chip factories and other electronics firms in the USA, simply to preserve supply chain security.  And with the lower turnaround time and lower shipping costs, well, the production costs are comparable.

And yea, Trump promised to do this with the Foxconn deal - but it ended up just as a warehouse.  Thanks, Donny!  Keep up the good work!

Automation comes into play as well.  I noted before how car factories had armies of employees doing everything by hand.  Today, they use less than 1/4 the number of people.  The paint booth once held a dozen wheezing men inhaling paint fumes.  Today there is one guy in a glass booth breathing fresh air, pressing a button labeled "select color" - robots do the rest.  So even if we enact tariffs, don't expect a flood of manufacturing jobs to materialize.  The old armstrong method of building things is gone.  The humans they do hire, are hired to maintain the robots.  Get a good education!

Sadly, we have to import educated (and non-educated) workers as well.  Republicans want to throttle this, too, which has lead to higher production costs and higher prices.

Of course, this all falls on deaf ears to the vast majority of people.  Those on the right are dumb enough to vote against their own self-interest. Those on the left, well, so long as you say the majick words of "tax the rich!" you will get elected.  Problem is, of course, the rich have millions to spend on attack ads, and the poor are dumb enough to believe them.

Oh, well.  Democracy was nice, while it lasted!

* It should be noted that the GOP largely abandoned tariff politics by the 1980s as they realized it was bad for business and cheap imports helped their union-busting efforts. Besides, there was more money to be made in "busting out" failed rust-belt companies and bankrupting their pension-plans.  Ask Mitt Romney about that!

Who is "Mr. Beast?" What are "Feastables?" Who Cares?

 

I saw these in the closeout bit at Walmart.  Still, at $11.97 not a big bargain.

I am not hip to what the kids are up to these days and that's OK.  Still, I know who Taylor Swift is, even if I could not tell you the name of one of her songs or know it if I heard it.  I know a few other "celebrities" by name only - I am not sure what they did to become famous.  When it comes to the Internet, there are a plethora of "influencers" each targeting a particular demographic.  And weirdly enough, people "follow" these influencers, even though their sole goal is to sell their followers some sort of product.

I had heard of "Mr. Beast" and supposedly he is one of the most popular YouTubers out there, if not the top one.  I guess he talks to the younger set about gaming - I don't really know or care to learn.  But I did recall hearing that he and some friends were launching a food line called "Feastables" I guess to compete with Kraft's Lunchables high-sodium kids snacks.  Original name he chose, eh?  I could write the cease-and-desist letter in my sleep.

Anyway, I forgot all about it until our trip to Walmart today.  Toilet paper and paper towels, as well as sugar and flour, were all sold out, because of a threatened dock worker's strike.  PEOPLE!  We make toilet paper right here in the USA, not China!  It comes by truck or train, not by ship!  Sometimes, I am embarrassed to be lumped in with this group called "humanity."  I don't know those people, nor am I affiliated with them.

But anyway, the "Neighborhood Market" (which we call, "Ghetto Gourmet") has a rack by the checkout with "marked down" items which aren't selling.  Usually, the markdowns are not very good, but it is worthwhile checking them out.  I almost fell over laughing when I saw a stack of a dozen or so "Mr. Beast Feastables" lunch boxes marked for closeout. So much for that grift.

I mean, come on.  A guy who makes YouTube videos for a living knows anything about the food business?  At best, he is branding a product made by some third party.  He hardly is cooking up this stuff in the kitchen or taste-testing recipes.  It makes as much sense as Trump selling watches and shoes and Bibles.  In this case, of course, he is selling just an empty plastic lunchbox, apparently for $17 to $25, marked down to $11.97 with no takers.

Want to get beaten up after school?  Sport one of these bad-boys.  It just screams, "NERD!"

But it tells me a story.  A lot of "content creators" are starving for cash. Some are dirt poor, others are making a lot of money but want to make more.  Lunchables from Kraft are aimed at the middle-school demographic, so you can sort of figure out who "Mr. Beast's" viewers are.  Well, maybe that and computer nerds.

Others are less fortunate.  I see comic strip artists (webcomics) always lamenting that they make no money at their job.  Charles Schulz made millions with Peanuts but a popular webcomic makes nothing, other than donations from Patreon.  So many are resorting to grifting - selling t-shirts with their characters on them, or "plushies" which sometimes even resemble the characters.

But even then, there is a huge turnover in the "influencer" business.  One popular cartoonist I was following (whose t-shirt I bought) stopped creating new content and moved on to something else. Even the best and most talented get tired of doing something that earns them no money and takes up all their time.  And as a bonus, they get hate-mail DMs from trolls asking "where's the punch line?" or saying mean things like "your art sucks!"

Sadly, we have become a nation of influencers.  I have watched a number of Matt's Off-Road Recovery" videos, and in recent months, well, they are not doing off-road recoveries so much anymore.  In a recent video, he promised a customer a free tow if she would hold the camera, as the payment for towing was apparently less than the value of YouTube monetization.

But channels like that are few and far between, and to keep up that level of monetization, you have to crank out "content" on a daily basis - and have thousands of dollars worth of professional equipment as well as a staff of editors and photographers and assistants.  And it can all come tumbling down when the public gets tired of your shtick.

For example, The History Guy used to fascinate me, despite his annoying voice.  But lately, I find his videos less interesting and more forced.  Like he has tasted success and wants to make it a gig.  But it smells like flop sweat.

AI is part of the problem.  Before AI there were always videos where a guy put up a slide-show of still photos and just read the corresponding Wikipedia entry.  "The life and sad ending of [insert celebrity name here]."  Today, I am seeing more and more of these videos, but AI-generated.  You can tell because the booming voice pronounces words comically wrong and the pictures in the slide-show are completely irrelevant to the topic.

There are, of course, some AI channels like Turbodong which are admittedly AI-generated content.  Interesting stuff, but sort of a buzz-kill when he "came out" as a Trump supporter.  Sadly, I wonder the same about Matt's Off-Road Recovery, although he hides it very well.

These "influencers" rise and fall over time.  And I am sure that "Mr. Beast" is nervously looking in his rear view mirror - seeing the likes of "Skibidi Toilet" gaining on him

The "off" channel is becoming more and more attractive!

Upscale Beggars

You don't have to be down-and-out to beg for money.

Begging exists worldwide, and in some places, it is even deemed a profession.  When I was a kid in the 1960's, there weren't many beggars, but that was about to change.  After the economic shocks of the 1970s, as well as the drug epidemic (particularly crack), begging exploded.  Other factors included the baby boomer generation coming of age and some of them having no real working skills or the desire to obtain them.  Then again, there is the mental health angle (related to drug abuse of course) when we decided to close mental health hospitals (which were a safe haven for mentally ill people who would otherwise be homeless) and treat the mentally ill with pharmaceuticals on an outpatient basis.  It worked our real swell, let me tellya!

So starting in the late 1970s, you started to see people with signs saying, "Homeless, please help!" and good-natured folks would give them "spare change."  Of course, some of these homeless were drug addicts and the money handed to them was spent on more drugs, not food for non-existent children or rent payments on non-existent apartments, despite what their cardboard signs said.

Homeless "shelters" started to spring up, replacing the mental hospitals of yore.  But instead of a controlled environment caring and treating the mentally ill, many became a bedlam (pardon the pun) of drug addicts and crazy folks. The people working at these shelters were often ill-equipped and under-funded to deal with the situation.  It was - and is - a real mess.

But as an ancillary effect, some folks realized you could make good money at begging.  I can give you several examples, from the media and personal experience.  In a 1970s edition of New York magazine, an article appeared written by a man who became an unintended beggar.  He lost his job in Manhatten and dispirited, he walked back to Grand Central Station to get a train home.  He realized  he was short on cash for the fare, and wondered what to do.  He gathered up his courage and asked a passer-by if they had a few dollars to spare, telling his story of woe.  "Yea, sure," the guy replied, cutting him off in mid-spiel and handing him five dollars.  It was a revelation.  He spent a couple more hours at the terminal, doing the same thing, and by the time he got on the train, he had a couple hundred bucks in his pocket.

Encouraged, he went back the next day, not telling his wife he was fired.  He made enough to pay the bills and his wife didn't figure it out for a few months.  It was only when she tried to call him at work, did the charade crumble.  But what was interesting was how much money he made, in a short period of time, begging.

And a lot of other people figured this out as well.  When my brother was spending a decade living in Manhattan working on his PhD in puppetry, I would go visit him.  It amazed me how, at every store and subway station, there was a young, able-bodied youth, shaking a paper cup, asking for spare change.  My brother, being a bit of a bleeding heart, tossed money at every beggar.  "He's wearing nicer clothes than we are!" I protested.  But my brother demurred, "He wouldn't be begging if he didn't need the money."

Since then, I have run into a number of what I call upscale beggars.  These are people who beg for a living - often a comfortable one - not because they are destitute.  At the corner of Wisconsin and M streets in Georgetown (DC), I was accosted by a young man wearing an izod shirt, nicely pressed chinos, and shiny loafers.  He had nicely coiffed hair and a fancy watch as well.  He asked me for five dollars and I said, "dude, you're wearing nicer clothes than I have!  I can't spare five bucks!" And then he aggressively cursed me out and made threatening motions.  I quickly crossed the street.

That was another trend - aggressive begging.  Like squirrels invading your bird feeder, beggars adapt to new conditions and try different tactics.  They find the best places to beg, the best angles to use, the best props as well - signs, dogs, babies, whatever.  The funniest one (until it started to get used so much it was passe) was the sign, "I won't lie, I just need beer money!"   Funny how you can cross the continent by plane and see the exact same sign being used by a beggar on the opposite coast.  They have a union, I guess.

( I have heard that some of these Beggars are part of a cult which sends them out to beg for money on the streets. This may explain why they use uniform tactics and techniques to extract money from tourists and the like.)

On that same intersection in Georgetown was a lady in a wheelchair who was there nearly every day, with a cardboard sign (written in sharpie) saying, "destitute, please help!"  Again, the signs - they all look alike as if they got sign tips from Beggars Weekly magazine or something.  One might have sympathy for her, but Mark (who was working across the street) reported that every morning, she would be dropped off by a private custom handicapped van (NOT a taxi or public transport) and picked up by said same every evening.  She also had an expensive electric wheelchair as well.  One wonders how destitute she really was.  And being in a wheelchair does not mean you cannot hold a job, either.  But begging can be more lucrative.

At Crystal City in Arlington, we had a lady who stood at the intersection holding a sign that read, "just evicted, please help! three kids!"  Problem was, she was "just evicted" for better part of a decade.  She also did Patent searches at the public search room - everyone knew her.  But as she admitted, the begging was a better gig, particularly at certain times of the day.   The busy intersection at Route 1 and 23rd street saw hundreds of cars per hour, perhaps over a thousand.  If one in 50 gives you a dollar, you are making a far better wage than working an ordinary job. The Burger King down the street was paying $8 at the time (in the 1990s) and begging could net you $20 an hour - if not more - totally tax-free.

At a coffee shop across the street from a drug rehab clinic (now closed) on King Street in Alexandria, there was a guy who weighed at least 300 lbs, who had a sign reading, "Hungry!  Please help!"  It was almost comical, except that he screamed "I'm hungry, dammit!" at everyone passing by and made everyone feel uncomfortable.  The coffee shop owner was not amused and eventually it went out of business.  Begging is not a victimless crime.

Closer to my new home, I ran into a lady at a gas station a few years back, or should I say, she nearly ran into me.  I was pumping gas into my Nissan pickup truck and she came roaring up in a late-model Lexus. She rolled down the window and said, "Sir, can you help a lady in need?"  She had on very nice clothes and had an expensive hair style (with extensions) was was wearing nice jewelry.  This was not a homeless crack addict.  I told her I had no cash, and she drove off - but not far.  She drove to each pump at the station, asking people pumping gas for money.  Incredibly, some actually walked over (she wasn't about to get out of the car!) and handed her a few dollars.  Drive-by begging!

But that may have been an example of what I call "opportunistic begging."  People who are not destitute or who are not full-time "professional" beggars, will routinely put their hand out, even if they don't really need the money, just to see if someone would give it to them.  If they score enough cash to pay for lunch that day, well, they figure they are ahead of the "game."  Usually you can spot the opportunist beggar as they are too well-dressed and coiffed to really be destitute or homeless.

Then there are the "story" beggar - usually with a prop.  I recounted before the young man I met at a home improvement store, carrying a gas can and spinning a tale of how he would be AWOL from Fort Belvoir if he didn't get back to the base soon.  But as fate would have it, he ran out of gas.  Could he have five bucks for gas?  I had no cash, but I saw the next guy he approached give him the money. When I came out of the store, he was still at it, and I saw someone else give him five bucks as well.  Clearly his "story" was bullshit - he wasn't even in the military.

Similarly, I used to get guys coming to the back door of my office, asking for $7.38 (always such an exact amount!) to get their alternator fixed as they had to get to work on time.  My secretary almost gave one such guy the money until I stopped her. "It's my money!" she said, to which I replied, "It's my office, and if you start handing out money to beggars, we will get more of them!"  And indeed, the same guy returned months later with the same sob story.  When I said, "Hey, weren't you here back in March with the broken alternator?" he looked sheepish and left.

I noted before how the buglight effect can make it hard to be compassionate. Mark tried to hand out bags of leftover bakery items from the store he managed. Before long, there was a line of homeless people on the loading dock every afternoon, and Mark's boss wasn't very happy with that.  Not only that, as the numbers increased, they got more aggressive, and if there were no leftovers to hand out, well, fights would start. Paying customers as well as residential neighbors were none-too-pleased with the situation, either.  What started as a nice gesture turned into a nightmare.

Aggressive begging became a problem by the 1980s.  I remember driving my Chevy Van into New York City back then, and being accosted by "squeegie boys" who would jump onto your car at a stoplight and "clean" your windshield uninvited, with dirty water, and then demand money..  Many New Yorkers back then would hand them a dollar to not clean their windshield.  If you didn't pay, they'd give your fender a swift kick.  Fun stuff!

I am not a heartless person, but handing out money acts as an attractant, and apparently word "gets around" somehow (Beggars Monthly, again).  Seriously, back in the day, Hobos would put marks on your fence or a wall or somewhere they knew to look, with coded symbols saying whether you were an easy "mark" or to not bother.  Maybe they still do the same today.  Perhaps there is an "app" for it. Begging isn't as uncomplicated as it looks.

I did have a guy, who was admittedly an alcoholic, who came to my office and offered to wash our windows.  He had a bucket and squeegy and all the supplies and actually did a good job.  I didn't mind giving him money as he was at least making an effort to work. He kept a book with a "schedule" of clients to visit every month.  It is like the older man I saw in New Orleans who was trash-picking scrap metal.  He never begged, he recycled.  Meanwhile, young men and women, 1/3 his age, are playing the cardboard sign game, even as every business in the French Quarter has a "help wanted" sign out front.

The most recent example of this (and the motivation for writing this) happened near the local hospital. I went for physical therapy for my shoulder (tendinitis caused by Cipro/Avalox) and since I was nearly an hour early, I visited the local upscale bakery for an egg sandwich and coffee (over ten bucks!  Never doing that again!).  There was a guy there sort of standing in line but not standing in line.  I went to order as he was on the phone, having a loud conversation.

I sat down to eat my breakfast and he asked me a question from across the room in a soft-talker voice (another beggar strategy to get people's attention).  I cupped my hand to my ear (I am hard of hearing as well) and he started his "story" of how he needed $58 (specific amount!) or he was going to be evicted from his motel room.  He didn't directly ask me for money (more on that, later) but wanted to know if there was a church or charity in town that would help him out, as he was new to the area. I suggested a few places, but he didn't seem to care much. Without asking directly, he sort of implied that maybe I would give him the money.

Once again, this beggar was dressed in nice clothes, nicely coiffed, and had a fairly new iPhone that was far and away more expensive than my ancient Galaxy 7, which I had bought used, years ago, for $99.  He left the building and I mentioned the interaction to the staff.  "He asked you for money?" the cashier said.  "Not directly," I replied, "but he seemed to hint at it"  The cashier said that he came in almost every day, with some sob story and asking for free food.  And being nice people, they often gave him a leftover this or that - which of course, meant that he came back again and again.

The cook heard all this and came out of the kitchen and said, "Shoot!  I know this guy!  I went to school with him, right here this town!"  Apparently, this was his M.O. - to score a free meal, and while he was there, to hit up the customers for some cash.  Ironically, on the front door was a sign saying, "Cashier Wanted!  Now Hiring!"  If he needed $58 he could have earned that in a day, particularly with tips. But that would involve work, of course.

What is interesting to me is that begging culture is now part of the American landscape.  We didn't have this back in 1965, not even in larger cities.  Sure, you might see a "bum" down in the Bowery or something, but not on the scale we have today.  Maybe it is the factors I mentioned above - drugs, mental illness, the economy, or perhaps a breakdown in society.

Or perhaps, for some people, it is just easier than working.  You prowl around looking for opportunities and playing on people's sympathies (or fears) and score more money - tax free - that those "suckers" who are working at "jobs."   There used to be some shame associated with begging and that is no longer the case.  You don't have to hit rock-bottom to become a beggar anymore, it seems.  You can even be an upscale beggar.

And there is something wrong about that.

But like the squirrels at the bird feeder, when you stop putting out the seed, they seem to disappear overnight.  Yet some folks seem to get some joy out of handing out money.  I recounted before how at a stoplight in Virginia on my commute home, this bitch in a fur coat, driving a Jaguar convertible, held up traffic (during rush hour) so she could hand a homeless crack addict a $20 bill.  She might as well as handed him a ceremonial bullet to kill himself with.  And of course, holding up traffic was part of the deal, so that everyone could see how generous she was to the less fortunate and of course, how important she was as well.  It was status-seeking behavior, which always leads to trouble.

Of course, not everyone is a bitch like her.  Others just want to be decent people and cannot distinguish between those in need and those merely scamming. My brother, as an impoverished student, was handing out cash to beggars, and when I pointed out that some did not appear to be "in need" replied to the effect that if he handed out money to all of them, well, some of it might help a person who really needed it.  Not a very efficient method of charity!

The point is, people stop begging, whether they are "needy" or not, when begging yields no real return. Beggars have honed their craft well - finding the best intersections and locations where they maximize profit and minimize risk.  A good intersection should have a high traffic volume of fairly affluent people - preferably tourists.  Some beggars actually "snowbird" between vacation destinations - Key West in the Winter, Provincetown in the Summer.  If you play your cards right, sometimes local authorities will pay your bus fare, just to get you to leave town.

Speaking of which, beggars also know places not to go. Wealthy neighborhoods are usually a poor choice as they will get hassled by the Police.  In tourist towns, a beggar quickly learns that obstructing a business can lead to an encounter with the Police as well - unless a local restaurateur is foolish enough to offer free food to a beggar to get them to leave.

In that regard, I thought this latest upscale beggar had an interesting angle - not directly asking for money, but telling a tale of woe and hoping a customer would take pity on him. He can claim with a straight face that he was not begging, but at the same time, he was.... well.... begging.

Upscale Beggars!

ACTBLUE and Election Donation Scams

ACTBLUE collects money for candidates and PACs.  But very little in the way of vetting these PACs apparently takes place.

I contacted ACTBLUE about this weird PAC that sends me SPAM, threatening me to get donations.  It is a tiny PAC, spending about $50K this year on candidates.  But we have no way of telling how much they took in versus how much they paid out.  If they took in $50K and spent it on election ads, that's great.  On the other hand, if they took in $500K, spent $50K on elections and pocketed the difference, then I have a problem with that.

Actually, within about 60 seconds of searching, I did find the data on the FEC site.  Turns out my "guess" was spot-on.  They took in $500K and spent $50K on actual candidates.  Over $400K was spent on "operating expenditures" which means a ratio of overhead to actual spending, of 10:1!   "Frasier LLC" seems to get a lot of $7500 checks for "fundraising consulting" and a few for ten grand as well.  Who is Frasier, anyway?

If this was a charity, taking in a half-mil and spending only $50K on charity, there would be an outcry.  I suspect maybe even a criminal investigation.  But with Political PACs, all bets are off.

Note that there are regular expenditures to ACTBLUE itself, so you can see why ACTBLUE doesn't do much to "vet" these PACs - they make money from them!  I am disgusted.  It leaves a pit in my stomach.

Before you throw money at a PAC, think carefully as to where it is going.  For the small (individual) donor, a direct contribution to a campaign are a better idea.

Anyway, I sent an e-mail to ACTBLUE which included all of my previous posting.  Today, I received this non-answer to my inquiry:

Hi Robert,

 

Thanks for reaching out! 

 

I can confirm that our team vets all candidates and organizations that use ActBlue to confirm their legal registration and commitment to our mission.

 

We do not endorse any specific campaigns or organizations that use our platform, and we do not choose who receives the money raised through our site. We simply process donations and send them to each donor’s chosen recipient. If you have any concerns about a particular organization’s fundraising strategies, I encourage you to reach out to them directly to share them.

 

Please let me know if you have any other questions!

 

Best,

Jayne

I deleted my ACTBLUE account and I doubt I will be making any other political contributions from now on.  It isn't just that they really don't "vet" these PACs very well (other than to confirm they are registered and of the correct political persuasion) but that ACTBLUE itself comes across as scammy.  They are a clearinghouse for political donations and connect your dollars to political campaigns.  Think of them as the PayPal of politics - and that's not a compliment!  They make it easier for you to donate with nearly a one-click operation.

But click carefully.  Just as Amazon tries to get you to sign up for "Prime" by couching it as "free shipping" (when free shipping is also available without Prime) ACTBLUE tries to get you to make a "recurring" monthly donation.  With the election being over in a month, I am not sure what the point of that is.  Usually, the default is "one-time donation" but I believe one candidate had the default the other way, which is scummy and I noped out of donating to him.  When Amazon does this shit, it sucks.  When ACTBLUE does it, it sucks even more.

What's next?  Gold sneakers and watches?  I guess it ain't just Republicans grifting their supporters.

But it gets better.  On the next page, after you click, they ask for a "TIP" - I kid you not.  I guess this is to cover their overhead or something.   It just comes across as crass and gross, however.

Of course, one has to wonder how they got my e-mail address in the first place.   Yup - some candidate or ACTBLUE itself must have sold it to a mailing list.  Because a one-time donation to the Biden campaign quickly morphed into an e-mail inbox blasted with pleas from all over the country, as well as this PAC.  And every day, text messages telling me how dire things are in Arkansas or some other State, what with the GOP outspending Democrats 2:1.

One just gets exhausted by it all.  Donation fatigue sets in.  And when I overturn this rock and see all the creepy-crawlies underneath, my stomach turns.

Politics is like sausage-making.  You don't want to look too closely "behind the scenes."

Election Donation Scams?

I get lots of e-mails asking for donations to political causes.  Are these legit?

In my SPAM e-mail box is a plea (almost a threat, actually!) from "uniteDemocrats" to "re-join" their group (I never joined such a group - a first tipoff!) and donate a few dollars.  Curious, I searched online and found that the group was founded in February 2020, but the owners of the website are anonymous and located in Ontario, Canada.

Well, OK, I guess.  They don't want online harassment and maybe their domain name is registered with a Canadian entity for.... reasons.  After all, the Internet knows no national boundaries.

But what do they do with this money they want me to send them?  Not much, as it turns out. So far this year, they have spent about $50,000 on the election - a drop in the bucket in this era of hundred-million-dollar campaigns.  In 2022 they spent about five grand and in 2020 they spent about fifteen grand.

So what's the deal?  Are they just an unsuccessful PAC or is something else going on?  Who runs the PAC and what kind of salaries are they drawing?  We may never know!

In a way, this reminds me of charity scams that are out there.  You set up a charity with a name that sounds like a legitimate charity.  You hire yourself as CEO and your wife and relatives as employees.  You all draw six-figure salaries and then, to make it look "legit" you spend a pittance on the actual charity you claim to be supporting.  I have written about this before.

I am not saying "uniteDemocrats" is along the same lines, but the fact that the organizers of this PAC seem to remain anonymous (even on their website) is a big red flag.  The fact that they have spent only $50,000 so far to "defeat Republicans" is also troubling.  I am sure Peter Thiel is worried! It takes little effort to set up a website and collection donations.

Their physical address on their website (499 South Capitol St SW, Suite 407 Washington, DC 20003) is shown in the lightest of fonts (because, again, reasons) and appears to be little more than a mail drop or office front - we'll never know!  Why white-out the address?  Why no detailed description of what they are doing with their $50,000 spending?  Why so little spent?  Who are these people and why does ACTBLUE take donations for them?

Why does their "contact us" page link do nothing?

If you google their address, you get hits from a plethora of lobbying groups, including:

• Blue Wave Political Partners
• American Indian Impact
• American Association of Interior Designers (wtf?)
• Blue South PAC
• Defeat Republicans
• BFP PAC

And that's just the first page of Google!  Suite 407 is super-busy!

NOTE: UniteDemocrats.org does not seem to be anyway related to UniteDemocrats.com, which is a Maryland Democratic group.  Interesting, though, they have similar names!  The Maryland group seems to have gone dormant since the 2016 election, however.

I have more questions than answers - and throwing money into the void of the Internet is like throwing money away.

NOTE ALSO that I suspect that there may be scam PACs aimed at MAGA-heads.  In fact, I feel certain of this!

Donating to candidates is not a bad thing. Just make sure your donation goes to a candidate and not some lobbyist!