Barry Ritholtz writes about small businesses getting the shaft:
http://bigpicture.typepad.com/comments/2008/07/what-do-bankrup.html
Small businesses in California and elsewhere are being overlooked as Congress and state legislators rely more on corporate donations. We need strong legislators who can help small businesses and who also have the skills to balance the interests of employers and employees. Without predictable regulations and more assistance to small businesses, the path to the American Dream will become limited to the slow hierarchy structure of your nearest mega-corporation. Clark Gable's character famously justified his profession as a freelance horse wrangler by saying, "Better than wages"--but at least he had a choice.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Thursday, July 31, 2008
Wednesday, July 30, 2008
Mark Cuban as Small Business Savior
Sometimes, I imagine I am Mark Cuban's twin, and we were separated at birth. I attract controversy, I'm iconoclastic in my views, and always believe I'm right--and like Mr. Cuban, I usually am. I just need a few billion dollars and an NBA team, and I'd be *right there*. Here is Mr. Cuban's blog post on small businesses, which mirrors my views:
"No taxes of any kind on small businesses with 25 or fewer employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings."
http://www.blogmaverick.com/2008/07/28/how-to-jumpstart-the-economy-tax-free-small-businesses/
I blogged on a related tangent myself in April:
http://willworkforjustice.blogspot.com/2008/04/does-overpopulation-cause-declining.html
I advocated for the "elimination of all civil laws except for wage and contract laws relating to businesses with fewer than six non-family employees and/or gross revenue of less than 575,000 dollars per year (thereby encouraging entrepreneurs and small businesses)." Mr. Cuban doesn't include the cost of complying with unpredictable laws and judges, which is a form of taxation for a small business. Other than farmers, I have not heard of a single state legislator talk about protecting small businesses in California for years. It's disgraceful.
Mr. Cuban, you and I had to be twins in another life. Just let me know when I can shoot hoops with Dirk, and I'll be there. I predict I'll score at least 4 points in a game up to 15, by ones.
"No taxes of any kind on small businesses with 25 or fewer employees. No employer payroll tax. No state or local taxes. No taxes on earnings. Nada. The business owners will pay income taxes on their personal income they pay themselves, but not corporate earnings."
http://www.blogmaverick.com/2008/07/28/how-to-jumpstart-the-economy-tax-free-small-businesses/
I blogged on a related tangent myself in April:
http://willworkforjustice.blogspot.com/2008/04/does-overpopulation-cause-declining.html
I advocated for the "elimination of all civil laws except for wage and contract laws relating to businesses with fewer than six non-family employees and/or gross revenue of less than 575,000 dollars per year (thereby encouraging entrepreneurs and small businesses)." Mr. Cuban doesn't include the cost of complying with unpredictable laws and judges, which is a form of taxation for a small business. Other than farmers, I have not heard of a single state legislator talk about protecting small businesses in California for years. It's disgraceful.
Mr. Cuban, you and I had to be twins in another life. Just let me know when I can shoot hoops with Dirk, and I'll be there. I predict I'll score at least 4 points in a game up to 15, by ones.
Stocks Update, July 30, 2008
I opened new positions in SO, VNQ, GRMN, and EZU. My next buy will either be WFR or NVDA. My largest positions are now SO, CCT (not included because most shares bought before publicly tracking positions), and VNQ. I am concerned about GRMN going down further in the short-term, but plan on holding onto it for at least a year.
My short-term trades continue to be uniformly positive by small margins. With these short-term trades, I regularly invest large dollar amounts and get out quickly, usually making 1% each round-trip. If I do that 10 times a year with all my money, that's a 10% gain, but I've got too many scattered positions right now to commit to a full-time short-term strategy.
The major outstanding question is whether we have experienced capitulation. There is no uniformly accepted definition of "capitulation"--it's the same as Justice Potter Stewart's definition of pornography: "I know it when I see it." The WSJ wrote today the VIX (volatility index) hasn't reached the levels some experts demand before calling a capitulation, but the market hasn't been acting predictably anyway, so perhaps it's all noise. Experts and fund managers probably want to see panic before they commit major amounts in the stock market, and whatever signal they're looking for, they're not seeing it. As a result, most experts say it's not time yet to jump back into the pool. Me, I am slowly getting back in, but I am aiming for September 2008 as a time to consider adding to my existing positions in a serious way. Other than SO, none of my individual positions currently exceeds 5,000 dollars.
Numbers below are based on prices at the close of market on July 30, 2008.
Open Positions
EWM = -3.49
EZU = +1.24
GRMN = -2.41
IF = -4.56
SO = -0.61 [insignificant movement, so not included in average]
VNQ = +3.39
[Average of "Open Positions": losing/negative average 1.17%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from averages and overall record calculations)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
WYE = +2.4%
[Overall Record: Lost an average of 3.97%]
Held less than 7 days:
GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%)
[Overall Record: Gained an average of 2.96%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 7.32%
[from May 30, 2008 (1385.67) to mid-day July 30, 2008 (1284.26)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
My short-term trades continue to be uniformly positive by small margins. With these short-term trades, I regularly invest large dollar amounts and get out quickly, usually making 1% each round-trip. If I do that 10 times a year with all my money, that's a 10% gain, but I've got too many scattered positions right now to commit to a full-time short-term strategy.
The major outstanding question is whether we have experienced capitulation. There is no uniformly accepted definition of "capitulation"--it's the same as Justice Potter Stewart's definition of pornography: "I know it when I see it." The WSJ wrote today the VIX (volatility index) hasn't reached the levels some experts demand before calling a capitulation, but the market hasn't been acting predictably anyway, so perhaps it's all noise. Experts and fund managers probably want to see panic before they commit major amounts in the stock market, and whatever signal they're looking for, they're not seeing it. As a result, most experts say it's not time yet to jump back into the pool. Me, I am slowly getting back in, but I am aiming for September 2008 as a time to consider adding to my existing positions in a serious way. Other than SO, none of my individual positions currently exceeds 5,000 dollars.
Numbers below are based on prices at the close of market on July 30, 2008.
Open Positions
EWM = -3.49
EZU = +1.24
GRMN = -2.41
IF = -4.56
SO = -0.61 [insignificant movement, so not included in average]
VNQ = +3.39
[Average of "Open Positions": losing/negative average 1.17%]
Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from averages and overall record calculations)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
WYE = +2.4%
[Overall Record: Lost an average of 3.97%]
Held less than 7 days:
GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%)
[Overall Record: Gained an average of 2.96%]
Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)
[Overall Record: Gained an average of 1.76%]
Compare to S&P 500: losing/negative 7.32%
[from May 30, 2008 (1385.67) to mid-day July 30, 2008 (1284.26)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
New Positions: SO and GRMN
I opened two new positions: Southern Co. (SO) and Garmin (GRMN).
SO is an electric utility company with an annual dividend of around 4.8%. In turbulent times, electric utilities appear to be the last legitimate widows-and-orphans stocks. Pharma has lost that designation, especially after Wyeth's (WYE) plummet today and Pfizer's (PFE) poor historical performance. The problem with having new drugs in the pipeline is if something goes wrong with them at any stage, gains in the stock price suddenly evaporate. That unpredictability makes electric utilities the safer bet, unless regulation becomes unreasonable.
I bought Southern Co. on July 30, 2008, the last day to collect the quarterly dividend, and after earnings had been released. Here's the skinny on the second-quarter earnings: they declined three percent because of a $67 million charge relating to Southern Co.'s development of international energy projects in the 1990s, more specifically, leveraged leases. Still, Southern Co.'s net quarterly income was $416 million, and most of its customers are located in the faster-growing Southeast region of the United States.
I am concerned about more surprises in the leveraged lease area because like CDOs, it's very hard to ascertain how much money a company is losing on a lease when others are involved to limit risk and when the underlying asset is difficult to value. Here is the best definition of a leveraged leased I found, from allbusiness.com's glossaries:
A lease that involves a lender in addition to the lessor and lessee. The lender, usually a bank or insurance company, puts up a percentage of the cash required to purchase the asset, usually more than half. The balance is put up by the lessor, who is both the equity participant and the borrower. With the cash the lessor acquires the asset, giving the lender (1) a mortgage on the asset and (2) an assignment of the lease and lease payments. The lessee then makes periodic payments to the lessor, who in turn pays the lender. As owner of the asset, the lessor is entitled to tax deductions for depreciation on the asset and interest on the loan.
A more detailed review of these leases is necessary to see whether Southern Co. has fully disclosed its potential liabilities and risks on various projects.
GRMN hit a new 52-week low after indicating its much anticipated new product, Nuvifone, would be delayed. GRMN has aviation, marine, and automobile divisions, and all are affected by the increased price of oil. In addition, GRMN has formidable competition from TomTom and Magellan. According to Yahoo Finance, about 18% of GRMN's float is being sold short, so there are plenty of people who dislike this stock. At these prices, however, I consider GRMN to be a long-term value play. I bought shares at 36.06 dollars and may average down if shares continue to go lower.
Eric Savitz's Tech Trader blog has the best earnings summary:
http://blogs.barrons.com/techtraderdaily/2008/07/30/garmin-q2-misses-outlook-weak-nuvifone-delayed/
If you believe oil prices are preternaturally high, and the U.S. dollar will firm back up, GRMN might have some unexpected upside.
On an unrelated note, I just realized something about McAfee's (MFE) shareholder meeting yesterday--every single employee at the shareholder meeting and on the Board appeared to be a white male, except for two white females. A tech company in Silicon Valley without any Asians, Indians, or Persians in the top ranks? That homogeneity makes a company appear very insular and behind the times, especially with Symantec (SYMC) having more diverse key executives.
SO is an electric utility company with an annual dividend of around 4.8%. In turbulent times, electric utilities appear to be the last legitimate widows-and-orphans stocks. Pharma has lost that designation, especially after Wyeth's (WYE) plummet today and Pfizer's (PFE) poor historical performance. The problem with having new drugs in the pipeline is if something goes wrong with them at any stage, gains in the stock price suddenly evaporate. That unpredictability makes electric utilities the safer bet, unless regulation becomes unreasonable.
I bought Southern Co. on July 30, 2008, the last day to collect the quarterly dividend, and after earnings had been released. Here's the skinny on the second-quarter earnings: they declined three percent because of a $67 million charge relating to Southern Co.'s development of international energy projects in the 1990s, more specifically, leveraged leases. Still, Southern Co.'s net quarterly income was $416 million, and most of its customers are located in the faster-growing Southeast region of the United States.
I am concerned about more surprises in the leveraged lease area because like CDOs, it's very hard to ascertain how much money a company is losing on a lease when others are involved to limit risk and when the underlying asset is difficult to value. Here is the best definition of a leveraged leased I found, from allbusiness.com's glossaries:
A lease that involves a lender in addition to the lessor and lessee. The lender, usually a bank or insurance company, puts up a percentage of the cash required to purchase the asset, usually more than half. The balance is put up by the lessor, who is both the equity participant and the borrower. With the cash the lessor acquires the asset, giving the lender (1) a mortgage on the asset and (2) an assignment of the lease and lease payments. The lessee then makes periodic payments to the lessor, who in turn pays the lender. As owner of the asset, the lessor is entitled to tax deductions for depreciation on the asset and interest on the loan.
A more detailed review of these leases is necessary to see whether Southern Co. has fully disclosed its potential liabilities and risks on various projects.
GRMN hit a new 52-week low after indicating its much anticipated new product, Nuvifone, would be delayed. GRMN has aviation, marine, and automobile divisions, and all are affected by the increased price of oil. In addition, GRMN has formidable competition from TomTom and Magellan. According to Yahoo Finance, about 18% of GRMN's float is being sold short, so there are plenty of people who dislike this stock. At these prices, however, I consider GRMN to be a long-term value play. I bought shares at 36.06 dollars and may average down if shares continue to go lower.
Eric Savitz's Tech Trader blog has the best earnings summary:
http://blogs.barrons.com/techtraderdaily/2008/07/30/garmin-q2-misses-outlook-weak-nuvifone-delayed/
If you believe oil prices are preternaturally high, and the U.S. dollar will firm back up, GRMN might have some unexpected upside.
On an unrelated note, I just realized something about McAfee's (MFE) shareholder meeting yesterday--every single employee at the shareholder meeting and on the Board appeared to be a white male, except for two white females. A tech company in Silicon Valley without any Asians, Indians, or Persians in the top ranks? That homogeneity makes a company appear very insular and behind the times, especially with Symantec (SYMC) having more diverse key executives.
Educational Attainment and Economic Advantage
David Brooks recently wrote a great article about education's impact on the economy:
http://www.nytimes.com/2008/07/29/opinion/29brooks.html?ex=1375070400&en=7286e3c1957017ac&ei=5124&partner=permalink&exprod=permalink
Starting intensive education earlier (Scotland starts its first grade at 4 years old, at least when I was there) and investing in all-day (9AM to 6PM) elementary schools may be a wise choice. When I tutored at UC Davis, I was stunned at how poorly some UC students wrote, especially after the supposedly higher educational requirements for admission. God only knows what teachers and tutors have to deal with in the California State University (CSU) system.
One personal anecdote: the ESL students, usually foreign residents earning math, science, or engineering degrees, worked the hardest on their writing. Some students even hired me for private work. I remember being ecstatic about making 15 dollars an hour when a South Korean student hired me as a private tutor. Back then, 15 dollars was major bling-bling and meant dinner at the local Thai restaurant (Sophie's Kitchen, apparently under different ownership now, so I can't personally vouch for it) rather than the 99 cent chicken sandwich at Jack-in-the-Box. I discovered sushi for the first time in Davis also. Yup, those were the days.
http://www.nytimes.com/2008/07/29/opinion/29brooks.html?ex=1375070400&en=7286e3c1957017ac&ei=5124&partner=permalink&exprod=permalink
Starting intensive education earlier (Scotland starts its first grade at 4 years old, at least when I was there) and investing in all-day (9AM to 6PM) elementary schools may be a wise choice. When I tutored at UC Davis, I was stunned at how poorly some UC students wrote, especially after the supposedly higher educational requirements for admission. God only knows what teachers and tutors have to deal with in the California State University (CSU) system.
One personal anecdote: the ESL students, usually foreign residents earning math, science, or engineering degrees, worked the hardest on their writing. Some students even hired me for private work. I remember being ecstatic about making 15 dollars an hour when a South Korean student hired me as a private tutor. Back then, 15 dollars was major bling-bling and meant dinner at the local Thai restaurant (Sophie's Kitchen, apparently under different ownership now, so I can't personally vouch for it) rather than the 99 cent chicken sandwich at Jack-in-the-Box. I discovered sushi for the first time in Davis also. Yup, those were the days.
Top 25% of Earners Paid 85% of All Taxes in 2006
The numbers the IRS released regarding tax burdens in 2006 is stunning. Basically, the top 10% pay 68% of all income taxes. That means if you're making less than $108,904, your contribution to the pool is fairly small in comparison, and if you're making more, well, thank you.
The above chart is from Kiplinger's:
http://finance.yahoo.com/taxes/article/105468/What%27s-Your-Share-of-the-Nation%27s-Tax-Bill?
This reminds me of a joke I read on Greg Mankiw's (http://gregmankiw.blogspot.com) blog. He told a story about a group of four friends who went out drinking. At first, they divided the bill equally, each paying 10 dollars for a pitcher of beer. Then, the four friends realized that one only made $10/hr, while another made $90/hr. They agreed the higher-earning friend should pay 20 dollars as a "fair" share. The friend agreed, everyone else paid about 7 dollars each, and everyone was happy. Everything was going well, until the other three friends demanded that the higher earner pay 30 dollars as his "fair" share. The friend got ticked off and moved out of the city. The next time the three friends went out for beers, they all paid about 14 dollars each, more than if they had been nicer to the higher wage earner.
The lesson? People will move or take other measures to avoid taxes if they are too high or unreasonable, leaving everyone else with a higher bill.
Update on April 13, 2009: more on income taxes here and here.
Update on August 10, 2012: more on overall tax burdens here: http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html?mod=e2fb (David Wessel, August 6, 2012, The Numbers Inside a Hot-Button Issue)
"In the 1980s, the top 5% averaged 22.6% of income and paid 28.5% of taxes.
In the 1990s, the top 5% averaged 25.3% of income and paid 34.3% of taxes.
In the 2000s, the top 5% averaged 28.4% of the income and paid 40.3% of the taxes."
"Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger--except for those whose income mainly comes from capital gains and dividends."
"The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income."
BREAKDOWN OF INCOME AND TAXES PAID BY CATEGORY
| |||||||||
Income Category
|
2006 AGI
|
Percent of All Income
|
Percent of Income Taxes Paid
| ||||||
Top 1%
|
Over $388,806
|
22%
|
37%
| ||||||
Top 5%
|
Over $153,542
|
37%
|
57%
| ||||||
Top 10%
|
Over $108,904
|
47%
|
68%
| ||||||
Top 25%
|
Over $64,702
|
66%
|
85%
| ||||||
Top 50%
|
Over $31,987
|
87%
|
97%
| ||||||
Bottom 50%
|
Under $31,988
|
13%
|
3%
| ||||||
The above chart is from Kiplinger's:
http://finance.yahoo.com/taxes/article/105468/What%27s-Your-Share-of-the-Nation%27s-Tax-Bill?
This reminds me of a joke I read on Greg Mankiw's (http://gregmankiw.blogspot.com) blog. He told a story about a group of four friends who went out drinking. At first, they divided the bill equally, each paying 10 dollars for a pitcher of beer. Then, the four friends realized that one only made $10/hr, while another made $90/hr. They agreed the higher-earning friend should pay 20 dollars as a "fair" share. The friend agreed, everyone else paid about 7 dollars each, and everyone was happy. Everything was going well, until the other three friends demanded that the higher earner pay 30 dollars as his "fair" share. The friend got ticked off and moved out of the city. The next time the three friends went out for beers, they all paid about 14 dollars each, more than if they had been nicer to the higher wage earner.
The lesson? People will move or take other measures to avoid taxes if they are too high or unreasonable, leaving everyone else with a higher bill.
Update on April 13, 2009: more on income taxes here and here.
Update on August 10, 2012: more on overall tax burdens here: http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html?mod=e2fb (David Wessel, August 6, 2012, The Numbers Inside a Hot-Button Issue)
"In the 1980s, the top 5% averaged 22.6% of income and paid 28.5% of taxes.
In the 1990s, the top 5% averaged 25.3% of income and paid 34.3% of taxes.
In the 2000s, the top 5% averaged 28.4% of the income and paid 40.3% of the taxes."
"Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger--except for those whose income mainly comes from capital gains and dividends."
"The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income."
Tuesday, July 29, 2008
WSJ Review, 7/29/08
Just when I'm ready to throw in the towel on the WSJ's steadily "dumbing down" of content and language and subscribe to the LA Times or NYT, it comes out with a fantastic issue. Here are the highlights:
1. One, a great quote from John Adams I'd never seen before, reminding Americans they are a republic, not a true democracy (Letters to the Editor section):
"Democracy never lasts long. It soon wastes, exhausts and murders itself. There was never a democracy that did not commit suicide."
-- John Adams, Letter, April 15, 1814
2. A reference to Frederic Mishkin's final speech as a Federal Reserve Board (FRB) employee:
http://www.federalreserve.gov/newsevents/speech/mishkin20080728a.htm
All FRB speeches in 2008 can be found here:
http://www.federalreserve.gov/newsevents/speech/2008speech.htm
Mishkin advocates for more FRB transparency and a publicly stated inflation target:
"By establishing a transparent and credible commitment to a specific numerical inflation objective, monetary policy can provide a firm anchor for long-run inflation expectations, thereby directly contributing to the objective of low and stable inflation."
Common sense stated simply and persuasively. Sigh. Why can't the FRB hold onto to someone like this? If the Dallas FRB's Fisher leaves, we won't have any inflation hawks left.
3. An article on Turkey's current turmoil caught my eye. Basically, Turkey has mandated secularism. At one point, it outlawed head scarves. This strict separation of religion and citizenry has caused internal turmoil, as more Turkish citizens demand free exercise of religion reminiscent of the original Americans. Turkey seems to have gone too far, because by outlawing certain religious aspects, it has intruded into its citizens' personal lives. Still, it bears noting and repeating: Muslims in the U.S. have greater religious freedom than in many Muslim countries. On the other hand, Malaysia and Indonesia, as prosperous Muslim countries, are good examples of how to run a religiously-inclined state.
4. Speaking of Indonesia, few people know Indonesia is an OPEC member. However, like Iran, Indonesia is experiencing difficulty with very low domestic oil prices, and needs to import more and more of it. As a result, Indonesia's power grid relies somewhat on coal. The problem is Indonesia's privately owned coal companies can get more money exporting coal (33% more, apparently) than selling it domestically. As a result of the difference in pricing, Indonesia's power grid is becoming inconsistent, like Enron's refusal to power California, causing state-wide problems. Hence, the question: should Indonesia pay more to the private coal companies, or does a state have an interest in demanding lower prices because power is a necessary item for its citizens? The coal companies may not pay much in taxes and do benefit from being in Indonesia, with its low labor costs, rich resources, and wonderful people.
I tend to believe in regulation of essential items, such as food and energy, but of course, the question is always, "How much regulation?" One cannot make the usual argument that regulation should be extended up to a point before the coal companies leave and do business elsewhere. Resource-rich countries have more leverage because of the finite nature and necessity of many natural resources; in other words, services may be regulated differently than natural resources because services, unlike natural resources, are usually more fungible. In any case, an interesting discussion can surely be had about this topic.
1. One, a great quote from John Adams I'd never seen before, reminding Americans they are a republic, not a true democracy (Letters to the Editor section):
"Democracy never lasts long. It soon wastes, exhausts and murders itself. There was never a democracy that did not commit suicide."
-- John Adams, Letter, April 15, 1814
2. A reference to Frederic Mishkin's final speech as a Federal Reserve Board (FRB) employee:
http://www.federalreserve.gov/newsevents/speech/mishkin20080728a.htm
All FRB speeches in 2008 can be found here:
http://www.federalreserve.gov/newsevents/speech/2008speech.htm
Mishkin advocates for more FRB transparency and a publicly stated inflation target:
"By establishing a transparent and credible commitment to a specific numerical inflation objective, monetary policy can provide a firm anchor for long-run inflation expectations, thereby directly contributing to the objective of low and stable inflation."
Common sense stated simply and persuasively. Sigh. Why can't the FRB hold onto to someone like this? If the Dallas FRB's Fisher leaves, we won't have any inflation hawks left.
3. An article on Turkey's current turmoil caught my eye. Basically, Turkey has mandated secularism. At one point, it outlawed head scarves. This strict separation of religion and citizenry has caused internal turmoil, as more Turkish citizens demand free exercise of religion reminiscent of the original Americans. Turkey seems to have gone too far, because by outlawing certain religious aspects, it has intruded into its citizens' personal lives. Still, it bears noting and repeating: Muslims in the U.S. have greater religious freedom than in many Muslim countries. On the other hand, Malaysia and Indonesia, as prosperous Muslim countries, are good examples of how to run a religiously-inclined state.
4. Speaking of Indonesia, few people know Indonesia is an OPEC member. However, like Iran, Indonesia is experiencing difficulty with very low domestic oil prices, and needs to import more and more of it. As a result, Indonesia's power grid relies somewhat on coal. The problem is Indonesia's privately owned coal companies can get more money exporting coal (33% more, apparently) than selling it domestically. As a result of the difference in pricing, Indonesia's power grid is becoming inconsistent, like Enron's refusal to power California, causing state-wide problems. Hence, the question: should Indonesia pay more to the private coal companies, or does a state have an interest in demanding lower prices because power is a necessary item for its citizens? The coal companies may not pay much in taxes and do benefit from being in Indonesia, with its low labor costs, rich resources, and wonderful people.
I tend to believe in regulation of essential items, such as food and energy, but of course, the question is always, "How much regulation?" One cannot make the usual argument that regulation should be extended up to a point before the coal companies leave and do business elsewhere. Resource-rich countries have more leverage because of the finite nature and necessity of many natural resources; in other words, services may be regulated differently than natural resources because services, unlike natural resources, are usually more fungible. In any case, an interesting discussion can surely be had about this topic.
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