Thursday, December 31, 2009

Amazing natural phenomena

I got hooked into some fascinating blog posts about just about unbelievable natural phenomena.

Of course, I'm sure you've heard of the Aurora Borealis or Northern Lights,

Eielson Air Force Base, Alaska — The Aurora Bo...Image via Wikipedia

. . . and if you've been to the Caribbean almost anywhere on the U.S. coastline, you're probably familiar with Red Tides caused by algal blooms.

Red Tide at the Institute of Ocean SciencesImage by Chris Willey via Flickr

Maybe you've heard of Supercells (though if you're like me, you've never either seen one or a photo of one before).

But how about Mammatus Clouds, Fire Whirls, Ice Circles, and Hums? (Check out 10 Most Fascinating Natural Phenomena.)

And better than these, I'm impressed with the virtually eternal "Relámpago del Catatumbo" (Catatumbo lightning) and the Pororoca--a surfable wave that lasts for more than half an hour! (Check out 7 Incredible Natural Phenomena you've never seen.)

. . . By the way: Happy Old Year's Night!

And if you're seeing this on Facebook and can't find the links: you'll find this post on my personal blog.

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Sunday, December 27, 2009

Thyroid difficulties . . . and the US government

I had my thyroid destroyed back in 1984 as a result of a hyper-hyper case of Grave's Disease. --The lab that did the tests said they had never seen thyroxine levels as high as mine; they were "off the charts."

So my doctor gave me the radioactive isotope Iodine-131 to destroy my thyroid gland . . . and a few months later I had none.

I have been taking thyroxine tablets ever since. For some time, now, I've been taking the "natural" stuff sold under the Armour® brand name by a company named Forest Phar­ma­ceu­ti­cals (what, in just the last few days, I found out are desiccated and pulverized pig thyroid glands formed into pills). Most of the time, however, I've been taking synthesized thyroxine sold as generic levothryroxine or a branded product like Synthroid®.

What's the difference between the two? I mean, physiologically . . . for the person like me who is ingesting the stuff?

I will confess that, for me, I haven't really been able to tell the difference. But then, I haven't been all that attentive to my physical condition until the last couple of years.

For many people, however, the difference between the two concoctions is dramatic, though the majority of doctors seem to believe the difference is all in hypothyroid sufferers' heads.

Happily, only one of my doctors has actively opposed my use of the Armour® tablets. But despite his opposition, I've been able to use the Armour® product for the past seven years or so.

This last year, however, I started bumping into supply difficulties. Back in January I was told the pharmacy didn't have 120 mg tablets (the daily dose I needed at the time). . . . Happily, they "simply" gave me the equivalent in the form of two 60 mg tablets per day. No big deal.

Last time I refilled prior to when I began writing this post in mid-October, I still had almost a month's worth of pills left. But for various reasons, at that time I got a three-month supply of 60 mg tablets from our insurer's mail order pharmacy. . . . Then, only a few days after I got my three-month supply, I was told I should reduce my dose to only 90 mg--1½ tablets--a day. So in mid-October, I was just coming to the end of my supply.

Meanwhile, in mid-October I had another blood test to see how my thyroxine levels were.

My doctor wanted to run with the "standard" TSH-only (thyroid stimulating hormone-only) test. I said I believed we really needed the T4 and T3 levels measured as well. (Since then I have found some interesting data on the need for all three tests.)

TSH measures what your body "thinks" it needs in the way of thyroxine. T4 and T3 measure actual thyroxine levels in the blood--and, based on tests I've been having done throughout this past year on the direction of my longevity and vitality doctor, I know that one or more of these numbers can be "out" of range while TSH is "in" range.

My doctor relented.

The tests came back: TSH and T4 levels both indicated a significant deficiency, but T3 was slightly out-of-range on the high end.

"How about bumping your dose back up?" my doctor asked.

"Sounds reasonable," I said. (I had gotten the sense, somehow, that my body was slowing down a bit.)
But what should we make of the T3? Why is that so high?

Is it that kind of anomalous/strange number that got Armour's thyroxine in trouble, here, in the last year [so that it is unavailable for purchase]?

I still have a few weeks' worth of Armour left if I take it at 120 mg/day.
Meanwhile, I asked, "Is there any 'natural' thyroxine that can/will replace Armour while they are out of production?"

I thanked him for any help he could provide.

He replied:
1. I've been in touch with my pharmacologist. She states that since Armour is an animal product, the amount of T3 and T4 will vary from batch to batch which might explain the high T3 and low T4. Synthetic products like synthroid are more consistently dosed.

2. I don't think Kaiser has any of the other brands of the natural thyroid of any kind so we might have to get you to get it elsewhere during the shortage.
Somehow, I had this feeling the pharmacologist was misinformed. I can't imagine Armour/Forest Pharmaceuticals has been able to get away with inconsistent product quality for all these years.

So I did a little research. And then some more. And then a lot more.

I'm astonished at what I have found.
  • First--not terribly astonishing, but worth noting: The pharmacist really was "blowing smoke" about the supposed quality or lack thereof in the Armour thyroid. Armour Natural Thyroid is carefully controlled for potency and purity:
    The amount of thyroid hormone present in the thyroid gland may vary from animal to animal. To ensure that Armour Thyroid tablets are consistently potent from tablet to tablet and lot to lot, analytical tests are performed on the thyroid powder (raw material) and on the actual tablets (finished product) to measure actual T4 and T3 activity.

    Different lots of thyroid powder are mixed together and analyzed to achieve the desired ratio of T4 to T3 in each lot of tablets. This method ensures that each strength of Armour Thyroid will be consistent with the United States Pharmacopeia (USP) official standards and specifications for desiccated thyroid lot-to-lot consistency. The ratio of T4 to T3 equals 4.22:1 (4.22 parts of T4 to one part of T3).
    Beyond that, however, the synthetic hormone manufacturers have faced numerous and "significant stability and potency problems" themselves with their products. It's not as if they are above reproach.
  • Despite the statements about quality control by the manufacturer of the Armour brand thyroid, you can still read claims such as this:
    Armour Thyroid was the only treatment for hypothyroidism for about 50 years, but it was found that the amounts of T3 and T4 varied greatly from batch to batch. Eventually, synthetic T4 (Synthroid) was being produced and widely used because it did not have similar problems of standardization in common with the naturally derived Armour Thyroid.
    You can also find even stranger and more inaccurate information from the American Thyroid Association.

    But, as Mary Shomom notes in the Guide to Thyroid Disease, there may be good reasons for this kind of disinformation even "from the top." Just follow the money--from Abbott Laboratories, maker of Synthroid, to the American Thyroid Association, for example. [Look toward the bottom of this article for the evidence.] --Or how about the payments from all the synthetic hormone manufacturers to the FDA in order to get their products approved in the early 2000s after the FDA threatened them with being pulled off the market due to those "significant stability and potency problems" I mentioned above?
  • Armour REFORMULATED its thyroid product in the spring of 2009--changing its binders and excipients . . . and causing a bunch of problems for many patients.
  • Whether Armour thyroid is efficacious or not, it turns out there really is no source of natural thyroid in the United States as of this moment. And, it appears, the FDA may have actually outlawed--or may be in the process of outlawing--the manufacture of this product in the United States, a product that has been on the market and helping people like me for more than 100 years.

    The more I have read, the more disturbed I have become at this turn of events.
  • Despite the shortage here in the United States,
    Canada has a generic natural desiccated thyroid drug, referred to as 'Thyroid,' which is made by ERFA Drugs . . . [and s]ome of the foreign pharmacies that ship to the US may have some remaining stock of Nature-Throid, Westhroid, Armour Thyroid, or foreign brands of natural desiccated thyroid like Thyroid-S.
    It took a while, but eventually I discovered the natural thyroid preparation made by Greater Pharma of Thailand: a product that goes by the brand name Thiroyd and available in wholesale quantities at a wonderful price. I also found a Canadian source with very good prices of the ERFA Thyroid and in a wide variety of specific dosages.

    I had my doctor write me a highly "generic" prescription for natural thyroid along the lines of the following advice from the article:
    During the shortages, ask your doctor to write your prescription for desiccated thyroid as broadly as possible. For example, a prescription for 'desiccated thyroid, 1 grain' can be filled with Armour, Nature-Throid, Biotech, or a generic. But if they write 'Armour Thyroid, 60 mg' for example, you won't be able to get 'Nature-Throid.'
  • I should have learned these things years ago, but I just now discovered: the synthetic thyroxines normally prescribed by the medical profession supply only one form of thyroxine, "T4"--tetra­iodothyronine--commonly formulated as levothy­ro­xine sodium (a synthetic thyroxine molecule that contains four molecules of iodine bonded by sodium). Our bodies, however, use T4, T3 (triio­dothy­ro­nine--i.e., thyroxine with three iodine molecules), T2 (diiodothyronine--thyroxine with two iodines), T1 (monoiodothyronine), and something called cal­ci­to­nin, a hormone that participates in and/or regulates calcium loss from bone, calcium levels in the blood, and, possibly (proven in rats and monkeys; not yet demonstrated in humans), satiety.

    Not only do our bodies use all five of these hormones, when they are healthy, our bodies manufacture them. If--as happened to me via Iodine-131 therapy--your thyroid has been knocked completely out of commission, the only way you're going to get the T2, T1 and calcitonin is if you take natural thyroid. Yes, your body can convert some T4 to T3, but, I am given to understand, it cannot further break down the T3 to T2, T1, or calcitonin.
  • An article published in the February 11, 1999 issue of the New England Journal of Medicine (1999;340:424-429, 469-470) reports that treatment with thyroxine [T4--the commonly prescribed synthetic levothyroxine/Synthroid hormone] plus triiodothyronine [T3--rarely prescribed by American doctors, but available under the brand name Cytomel; a synthetic T4/T3 combination product is also available under the brand name Thyrolar] improved the quality of life for most hypothyroid patients. Indeed, "Among 17 scores on tests of cognitive performance and assessments of mood, 6 were better or closer to normal after treatment with thyroxine plus triiodothyronine. Similarly, among 15 . . . scales used to indicate mood and physical status, the results for 10 were significantly better after treatment with thyroxine plus triiodothyronine [i.e., T4 plus T3]."

    Of course, that is a dispassionate medical/scientific statement.

    A more partisan description comes from the website:
    [I]n nearly ALL patients on T4 meds, the T4 does NOT convert into an adequate amount of T3, leaving you with symptoms that neither you OR your uninformed doctor realize are related to inadequate treatment—poor stamina compared to others, chronic low grade depression, thinning hair or outer eyebrows, feeling cold when others are warm, cholesterol problems, aches and pains, hard or small stools, easy weight gain, memory problems, foggy thinking, a diagnosis of Chronic Fatigue Syndrome or Fibromyalgia, difficulty conceiving . . . the list is long and pathetic. In other words, healthy thyroids are NOT meant to rely solely on T4-to-T3 conversion!
    (I should note, for full disclosure, a report issued by the British Thyroid Association in 2007 says,
    Since [the] initial study [reported in the NEJM in 1999], there have been a further seven rigorously conducted (“randomised, double-blind, placebo-controlled”) studies, encompassing more than 900 hypothyroid patients (summarised in refs. 3 & 4). None of the subsequent studies showed a beneficial effect of combined T4/T3 therapy on measures of wellbeing, health and mental functioning. Three of the seven studies show harmful or undesirable effects of the T4/T3 combination. . . .

    In three of the subsequent studies of combination treatment, the patients were asked which treatment they preferred, and in two of these 3 studies more patients preferred the combination T4/T3 therapy. There is no obvious explanation for these observations, and it may or may not be a reproducible effect.
    [One last note on these statements: I found an article in the journal Thyroid in 2004 that seems to prove at least one of the negative statements, here, wrong. Clearly, at least one subsequent study "showed a beneficial effect of combined T4/T3 therapy on measures of wellbeing, health and mental functioning"!
  • Despite the fact that the medical profession recently tightened the definition of "normal TSH" to no more than 3.04 mU/l (they used to say "normal" went as high as 5 mU/l), a 1997 article in the British Medical Journal concluded, "Thyroid stimulating hormone concentrations above 2 mU/l are associated with an increased risk of hypothyroidism." --And again the author at ups the ante:
    Around 1973, the TSH lab test was developed. Based on a sampling of several volunteers, a so-called “normal” range was established—.5 to 5.0 (recently lowered to 3.0). But volunteers with a history of family hypothyroid were NOT excluded, leaving us with a range that leans towards being hypothyroid! In fact, the TSH RARELY corresponds to how a patient feels [i.e. to actual hypothyroid symptoms]. There is a large majority of patients who have a “normal” TSH, even in the “one” area of the range, and have a myriad of hypo symptoms. There is a complete chapter on the TSH with more information in the Stop the Thyroid Madness book.
I am deeply tempted to continue, but I need to post this, finally, after sitting on the story for the better part of three months.

Perhaps at a later date I can talk about the FDA's apparent war against non-Big Pharma medicine. (Imagine the position we skeptics will face when the federal government begins to dictate all medical care!)

But this is more than enough for one post.

Well . . . maybe not quite.

One last note. There are reasons to consider avoiding the desiccated thyroid pills and taking synthetic T4 and synthetic T3 pills as an alternative. Two reasons that I've found:

1) The ratio of T4 to T3 in the desiccated thyroid pills does not match the ratio normally found in the human body. Indeed, I am given to understand, the ratio of T3 to T4 is higher than is normal in humans. Desiccated thyroid pills give you an approximate 1:4 ratio (T3:T4) as compared to--I have seen numbers anywhere from 1:7, to 1:14, to 1:20! Whatever the "correct" normal ratio, it is clearly different from the standard ratio found in desiccated thyroid pills.

2) Most of the desiccated thyroid pills are made from pig thyroids. If you are allergic to pig, you may have difficulties finding a "natural" product you can use. I am told a few exist, but they are exceedingly difficult to find. (I have not found any.)

For more on the T4/T3 controversy, check out the T4/T3 Thyroid Drug Controversy page.

[NOTE: If you are reading this article on Facebook, it originally appeared on my personal blog.]

Saturday, December 26, 2009

Nationalized Health Care

I woke up Christmas morning thinking about this video (0:31):

The people who put the video together obviously believe that a nationalized healthcare system would be/will be a good thing.

Clearly, this family was put into a tremendously difficult circumstance. And then their neighbors came together and bailed them out. Indeed, all the footage and, it seems, all the music, too, is from neighbors' fundraising efforts.

"It took our neighborhood to come together to save us," the narrator says.

But rather than noticing how her family's difficult circumstance were actually overcome through unified community effort. And rather than noticing how truly thrilled participants seem to have been to have helped her, she concludes:
If we can get it in Washington Park [Winston-Salem, NC], then why can't they get it in Washington, DC? Look: "Public Option," "Trigger" . . . --I really don't care what they call it: something's got to change."

And then, finally, a placard: "Isn't it time to put people before politics?"


My morning wake-up dream/thoughts included these things:
  • I would prefer recipients of aid recognize it is a privilege and it is the result of the largesse--the charity, if you will--of those who make it possible for them to enjoy the help they are receiving.
  • If we are receiving services for which we have not paid, that is a gift; it is not a "right."
  • Someone is sacrificing in order to make it possible for any or all of us to receive medical help beyond our means. Those of us who receive that aid should recognize the sacrifices of others and express appropriate gratitude. We ought, certainly, not to take the attitude that the receipt of such aid is our "right" and we have the "right" to "demand" such aid.
Upon further reflection, what really bothers me is the notion that some bureaucrats in Washington can cobble together a better, more equitable, more efficient system--in the space of even a few months--than the free market, with all the competing forces of open competition, has been able to create over centuries.

Beyond that, I am deeply disturbed by what I have experienced within and under the drugs regime of our federal government.

I have meant to write on the problems of thyroid/thyroxine over the last couple of months. I expect I will finally get to it sometime in the next week.

I do not regard our government as my friend in the realm of pharmaceuticals. To put them in charge of our entire health care industry is downright scary to me.


And one last set of comments.

I noted the concluding placard in the video: "Isn't it time to put people before politics?"

My question: Are we really dealing with "politics," here? Aren't we dealing with a bankrupt government, already acknowledging it is in debt equivalent to almost 100% of Gross Domestic Product (GDP) ($12.1 trillion of acknowledged debt in a country with a GDP of just under $14.25 trillion) . . . and, if it were to account for its contracted future obligations the way normal businesses are required to account for such things: its total "unfunded future obligations" amount to just a bit over seven times GDP ($106.5 trillion).

Let's put that into perspective.

The ratio of government debt to GDP is really not as important as government debt in comparison to government revenue. After all, the government can't consider total GDP as grounds for spending--either on new obligations or to pay off old ones. It can only spend its actual revenue. And when we look at the debt-v.-revenue numbers, here's what we're really looking at: a government with revenue of not quite $2.2 trillion and an acknowledged debt of $12.1 trillion already on the books.

Put in terms that you and I might be able to digest, that means a family with a net (post-tax) income of $35,000, has a current debt load of (12.1/2.2=5.5; 5.5 x $35,000 =) $192,500. And if we were to include future obligations not funded, the federal government's obligations, for a family with net (post-tax) income of $35,000 is (106.5/2.2 = 48.4; 48.4 x $35,000 =) $1,694,000.

--And this government--this government, that hasn't been able to balance its budget in more than 30 years--through good times and bad--is proposing to take on additional major obligations?

With what money? Whose money?

Do you think the Chinese, who hold close to $800 billion of our government's debt, and the Japanese, who hold about $700 billion, are going to sit idly by as American congresspeople continue to ratchet up their debt with no reasonable idea of how they ever intend to repay it?

I don't. And so, until the American Congress can come up with a plan to pay off its debt, I say: "No new purchases."
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Monday, December 21, 2009

New Iran-Iraq War? New Iran-US War?

I had not heard about this Iranian incursion into Iraq until I received an email from STRATFOR with a link to this video (the entire story is covered in the first 4:09):

STRATFOR's summary:
The Iranian incursion into an Iraqi oil field just across the border looks like a wake-up call to Washington. George Friedman, founder of STRATFOR, discusses the possibility that Iran is signaling its readiness to act first if an armed confrontation over the nuclear issue looks inevitable. Meanwhile, the price for Russia’s help on the issue has gone up.
Consider signing up for free strategic analysis of international news on the STRATFOR website.

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Monday, December 14, 2009

The future of free speech in the United States?

From the Dearborn, Michigan, Islamic Festival 2009: "Welcome to Sharia--and dhimmitude--in America."

Introduction (1:34):

Follow-through (10:00):

And "the rest of the story" (2:45):

Fascinating and disturbing view of Israel and the Middle East

I have not understood why the UN seems so anti-Israel. I understand it even less after watching the Terrorism Awareness Project's What Really Happened in the Middle East. (Turn your speakers on!)

Saturday, December 12, 2009


Saw this today. Reminds me, for some reason, of many people's de facto definition of "tolerance":
To me consensus seems to be the process of abandoning all beliefs, principles, values and policies in search of something in which no one believes, but to which no one objects. Margaret Thatcher - 1981
How sad!

Friday, December 11, 2009

Semi-universal cancer cure?

I've been sitting on this one for several weeks now. I don't remember how it first came across my radar, but Dr. Evangelos Michelakis, a professor at the University of Alberta Department of Medicine, has shown that sodium dichloroacetate (DCA) causes regression in several cancers, including lung, breast, and brain tumors.

Apparently, the story has been out for well over a year (actually, according to the U of A website, since March of 2007), but it still seems to be a "back page" and "small print" story.

The problem: "The DCA compound is not patented and not owned by any pharmaceutical company, and, therefore, . . . difficult to find funding . . . to test . . . in clinical trials" and, of course, to promote.

For a popularized presentation of what this is all about, here's a Glen Beck TV spot:

For a summary webpage that includes links to almost anything you might be interested in finding, check out "The DCA Site."

Want to buy DCA? Here's your source.

And, finally, a full academic paper published in the British Journal of Cancer.

Michelakis is a quiet and understated man. You can see and hear him on the Glen Beck segment. But how is this for an understated summary (from the BJC article)?
The preclinical work on DCA (showing effectiveness in a variety of tumours and relatively low toxicity) (Bonnet et al, 2007), its structure (a very small molecule), the low price (it is a generic drug) and the fact that DCA has already been used in humans for more than 30 years, provide a strong rationale for rapid clinical translation.

Wednesday, December 09, 2009

If you think it's bad in the United States . . .

. . . and I will confess: I am deeply concerned about our runaway federal government--you should get a look at things in other parts of the world.

For example . . . Andhra Pradesh, India.

I received an email this morning from the president of Mission India (United States) who forwarded the following email from a key contact in Hyderabad, Andhra Pradesh, India:
We need your prayers for our tomorrow 10th Dec. The panicky state government has brought 9000 para military and rapid action force from New Delhi to meet any challenge in view of the fluid situation in the state. The Joint Action Committee of the Students and some of the political parties have planned to take a big march towards the State Legislative Assembly to present their demands. They are mobilizing people in a large number. There is a possibility that the Maoists might also play mischief in the agitation tomorrow. We are waiting for the update tonight to know more about the situation. I do not know how many of our staff will turn to the office as the whole life in Hyderabad will come to stand still not even an auto is going to ply on the roads. All the roads leading to Hyderabad from all corners have barricades stopping the inflow of any people into the city.

The civil unrest is going to be intensified tomorrow and literally Hyderabad will be under the control of police. The health of KCR who is on fast unto death is deteriorating and the doctors say that he might slip into coma if he continues the fast. Both the central and state governments have not yet made their stand clear with regard to the separate statehood for Telengana.
I wrote back:

Who is KCR who is on this “fast unto death”? –Sorry I'm so “out of it”!
And he wrote to me:
Hello John. No, you are not “out of it.” I don’t know the actual name of “KCR” either! It’s the initials of a politician in Andhra Pradesh who is leading the political movement that is demanding statehood for the Telengana region – which is about the northern third of A.P. Everyone just refers to him as “KCR” – a fairly common practice in India. Another practice that is not unusual is suicides over these kinds of issues. When the Christian leader of AP died in a helicopter accident two months ago, it was reported that in the following days, 50 people committed suicide!

The AP politicians might be over-reacting however this conflict could cause severe disruption.
Another recipient of his email wrote to him, and he forwarded it to me:
Thanks for your e-mail this morning. When reading it I wondered “What’s going on”? I am sure that those of you at the office are in the know. But [the recipients of your email] may not be.

The article below from June 8, 2009 gives some background.

Stratfor logo

India: A Region's Independence Hampered by National Interest

June 8, 2006 | 0013 GMT


India’s opposition Bharatiya Janata Party recently announced its backing for a Telangana state independent of Andhra Pradesh, reaching a rare accord with the governing Congress party, and challenged the latter to prove its commitment to the cause. The Congress party won the state of Andhra Pradesh in the 2004 general elections as a result of its alliance with the secessionist Telangana Rashtra Samiti party. Although Congress inserted Telangana independence into its election manifesto, it has not acted upon it in the two years since the election, and it has no incentive to do so.


The Telangana region of India’s Andhra Pradesh state has been campaigning for separation from the state for decades. The Telangana separatists claim that the 1956 decision to merge the region — then known as Hyderabad state — with Andhra Pradesh created a state too unwieldy to be governed properly. The movement believes the region has been shortchanged by policymakers and has not developed as the same pace as the rest of Andhra Pradesh. The secessionist movement gained a formal voice with the formation of the Telangana Rashtra Samiti (TRS) political party, which developed a national presence when it allied itself with the Congress party and won 26 assembly seats in the 2004 general elections.

The Congress party formalized its support for an independent Telangana in its election manifesto, but supporters of the Congress-TRS alliance have been disappointed by the lack of progress towards that goal. As the Congress party itself won 185 seats in the 2004 state elections, it has no electoral compulsion to mollify the TRS. Though Congress won the state of Andhra Pradesh in 2004 as a result of the party’s alliance with the TRS, the smaller party does not have sufficient strength to place any overwhelming political pressure on Congress.

Now, the opposition Bharatiya Janata Party (BJP) has announced its support for Telangana’s independence and challenged the Congress party to demonstrate its commitment to the cause. However, the Congress party has no incentive to seriously pursue an independent Telangana. Doing so would disrupt the party’s larger national objectives because of three factors: the city of Hyderabad, Telangana’s religious demography and the Naxalite problem in the region.

Hyderabad has been Andhra Pradesh’s state capital since the state’s formal creation in 1956. Today, it is one of India’s major economic hubs and has developed into one of the country’s two primary technology centers (the other being Bangalore). Many large multinational firms, such as IBM, Dell Inc. and Microsoft Corp., have established a presence there. In 2004, Hyderabad’s software exports reached the $1 billion mark. The 2005 World Knowledge Competitiveness Index ranked Hyderabad the most competitive of Indian cities. Given Hyderabad’s credentials, Andhra Pradesh would be loath to give up such an important source of economic power and prestige.

If Telangana secedes from Andhra Pradesh, the TRS would be pressured into boosting development revenue for the province’s more rural districts. This could result in new economic regulations and tax laws affecting firms in Hyderabad — which the Congress-led national government does not want. The government has had to strive to persuade international investors that despite its leftist tendencies, it is still business-friendly. Thus, changes that could affect large firms in Hyderabad would be discouraged in New Delhi.

The Telangana movement is predominantly Hindu-led, and local Muslims have been less than enthusiastic about the idea of the region’s succession. Telangana was controlled by a succession of Muslim rulers for centuries before Indian independence, and though the region’s Muslim population is around 12 percent, an estimated 40 percent of the population in the twin cities of Hyderabad and Secunderabad are Muslim. Muslims in Andhra Pradesh are satisfied with the status quo, and talk of a separate Telangana is disquieting enough to them that an influential Hyderabad-based Muslim political party, the All-India Majlis-e-Ittehadul Muslimeen, has made an (unrealistic) call for the city of Hyderabad to be declared a state of its own in the event of Telangana’s secession.

Indian Muslims have traditionally voted for the Congress party, as Congress is viewed as the more reliable guardian of India’s secular traditions. Therefore, it would not be in Congress’ best interests to weaken its support in this constituency. The party is unwilling to deal with the Hindu-Muslim tension that Telangana’s independence would bring.

Yet another factor in Congress’ lackadaisical approach to the Telangana issue is the Naxalite movement. Since the late 1960s, the Naxalites — communist guerrillas — have led a widespread insurgency in hopes of fomenting revolution across India. Indian Prime Minister Manmohan Singh has declared the Naxalites the country’s biggest internal security challenge. One Naxalite group, the People’s War Group (PWG), has an established presence in Telangana and has gone so far as to publicly support the region’s independence. PWG claims to have established “special guerrilla zones” in both northern and southern Telangana, and many observers believe that TRS supporters are linked with the Naxalites.

New Delhi would not wish to be seen as caving in on the Naxalites’ demands for Telangana’s independence, especially since the Naxalite threat has consistently hampered India’s ability to attract more foreign investment and continues to wear down domestic security forces. An unwritten rule of Indian politics states that allowing one separatist group’s demands to be fulfilled would lead to a hundred more such groups coming out of the woodwork. Thus, the government’s slow approach could be an intentional choice meant to give regional anti-Naxalite policing strategies time to work.

The BJP, meanwhile, is clearly attempting to win the support of regional parties like the TRS as part of its overall electoral strategy. Therefore, it is not clear that the BJP would be any more likely to move forward toward Telangana’s secession if it were in power.


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Can you imagine?!? If you think politics here in the States is tough! How do you get anything done in India?

Monday, December 07, 2009

Tax avoidance as a civic good

Sarita handed me several file folders full of old papers she thought I could get rid of.

She was right that I could get rid of most of the papers. But one caught my eye. It was a newsletter from March of 2000. The lead article was titled "Tax Avoidance Pays Off" and it is by James Dale Davidson.

"One of the more cloying conceits of the 'Goo-Goos,' the good government crowd, is that tax-avoidance defrauds other taxpayers and harms the economy. Don't believe it," he writes.


Before I go any further, let me note the difference between tax avoidance and tax evasion. The first is legal. The second is not.

As Wikipedia notes,
Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. By contrast, tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative to the pejorative term tax avoidance. Latterly the term has also been used in the tax regulations of some jurisdictions to distinguish tax avoidance foreseen by the legislators from tax avoidance which exploits loopholes in the law.
But back to Davidson's article.

He wrote his article immediately following Team New Zealand's 5-0 win in 2000 over Italy's Prada to retain the oldest grand prize in sport--the America's Cup.

Davidson first tells the story of the America's Cup, and then a little about how Team New Zealand came to own the technology that gave them the winning edge. I'll skip the story of the America's Cup. Let me tell you about Team New Zealand.
Italy's Prada entry, Luna Rosa, funded by fashion tycoon Patrizio Bertilli, to the tune of a reported $120 million, proved to be faster than the yachts entered by all five American syndicates, as well as those from Japan, Australia and elsewhere. But while Prada was the champion among the challengers, it could not take even one race from Team New Zealand.

The puzzle is that a small economy like New Zealand['s] . . . was able to achieve breakthroughs in fluid dynamics and the computer modelling of wind propulsion sufficient to create a super-yacht speedier than any produced in much wealthier and larger economies.
How was New Zealand able to do this? Ultimately, said Davidson, it had to do with a tax avoidance scheme.
A merchant banking firm, Fay, Richwhite had found a brilliant way to satisfy New Zealand tax liabilities at a 90% discount to the taxpayers.

As a result of this scheme, the partners of Fay, Richwhite became very rich.
And it was with these riches that Sir Michael Fay, principal of Fay, Richwhite, engineered New Zealand's rise to prominence in international yacht racing.



But what about all the other New Zealand taxpayers who were forced to pay far higher tax rates? And (this really chapped my hide): How and why could Davidson make the fantastic claim--as he did several times in the article--that Fay's decision to invest in an ultra-expensive yacht racer was some kind of "high value" use for the money he had earned and been able to keep because he was paying relatively low taxes?

Indeed, how could Davidson claim--as he did--that the New Zealand media were foolish and wrong to suggest that Fay and his cohorts had done something dishonorable--or, at least, less honorable--than their compatriots who had failed to use the loophole? Why and how could Davidson suggest it was inappropriate for the media to tell New Zealanders "that they were victims of a terrible outrage [and that t]hey had been 'defrauded' of billions in tax revenue by wealthy corporations"? And why did Davidson suggest that, "[w]hen courts determined that the tax avoidance formula at issue was perfectly legal, New Zealand's parliament [acted against New Zealanders' best interests when it] promptly enacted legislation to close the 'loopholes'"?

Listen to his logic:
As welfare states mature, an ever-larger share of government expenditures around the world is devoted to simple income transfers, which are just about the lowest order possible use of money.

Let me illustrate. One of the more high value uses of money in the 20th century was when Misters Hewlett and Packard started their company with a total investment of less than $400 during the waning years of the Great Depression. In time, that $400 grew to be tens of billions. Clearly, they deployed their money in a way that created a lot of value.

As a counter-example, suppose the U.S. government in the late 1930s had succeeded in taxing away Hewlett and Packard's founding stake, and had used it instead to fund roughly $400 of soup kitchens for the unemployed. The public would have cheered. But the money would have been consumed in short order and little or nothing of value would have been created. Subsidizing the lowest orders of human endeavor generally results in the minimum possible value creation.
He continues:
Tax rates are set at the margin. The greater the degree of compliance, the higher rates can be. If tax avoidance is widespread, governments must lower tax rates in order to raise additional revenues, the so-called Laffer Curve, in action. In that sense, taxpayers who successfully avoid taxes are not forcing others to pay higher burdens in their stead. Rather they are performing a public service in placing downward pressure on tax rates for everyone.

The strongest confirmation of this is provided by the outraged responses of governments to successful tax avoidance. If it were really true that lower tax payments from you simply meant that your neighbors had to pay more, governments should logically be indifferent to tax avoidance. By their arguments they would get the money anyway.

In fact, they treat tax avoidance as a mortal threat.

Note in this respect the ominous efforts by the OECD, prodded by the Clinton Administration to destroy off-shore tax havens. The destruction of tax havens would make tax avoidance more difficult thus facilitating still higher taxes in the world's high tax countries.
Counter-intuitive, but I think Davidson has convinced me: Long live the creative souls who find and utilize every loophole in the tax law!

Oh. And one last comment.

I said it really chapped my hide to have Davidson suggest that entering a yacht in the America's Cup could, somehow, be a "high value proposition." With what I have quoted so far, I'm sure we can see that tax avoidance, per se, offers some strange but very real potential economic benefits to broader society. Kind of.

But how can Davidson suggest, as he does, that the America's Cup investment, per se, was a high value investment?

Listen to his conclusion.
How do I know that the America's Cup has been a high value proposition for New Zealand? The mayor of Auckland and the New Zealand Herald have kindly provided public calculations of the hundreds of millions in benefits accruing to New Zealand as the result of the America's Cup. As Alan Bond said of his four challenges for the America's Cup, it draws a good crowd. "Successful men come to the America's Cup to be with other successful men."

By the same token, it is not solely an elitist activity. No one who was in Auckland on March 2 could doubt the genuine enthusiasm and delight that hundreds of thousands of ordinary New Zealanders experienced from Team New Zealand's victory in what might be considered an anachronistic, rich man's sport.

It probably would never have happened if Sir Michael Fay had not succeeded in mastering the arts of tax avoidance sufficiently to accumulate such great wealth that he could he write the big checks necessary to fund an America's Cup yacht challenge.

The long and short of it is that Michael Fay and his associates can create more value deploying money for their own amusement than governments can with the most sober of intentions. Note that Fay, Richwhite also played a leading role in privatizing Telecom New Zealand and New Zealand Rail, in each case creating a staggering increment to value in the worth of those enterprises.

Counter-intuitive all the way through.
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Wednesday, December 02, 2009

Fundamental music education . . .

Oh. My. Goodness.

I was involved with the early stages of a music education project at Sonlight Curriculum several months ago. I was intrigued . . . and inspired . . . and excited about the prospects of the program we settled on, but the developers really hadn't "put it all together" in a way that I felt comfortable promoting . . . yet.

I invested a number of hours in the project, offering input and feedback and critiques of what the manufacturer had done and was proposing to do. But I finally gave up. It was taking too much time. I still loved the concept, but considering the minuscule profit potential for Sonlight and all the other things I have on my plate, I bowed out.

Just this morning, having returned from a "Family Fun Week," I noticed that the rest of the Sonlight team and the manufacturer did not give up and, in fact, took much of my input and put together a tightly integrated, truly complete music education package . . . for preschoolers to adults. Truly.


I wouldn't have believed it if I hadn't tried it myself . . . and seen and heard the responses and remarks of other people--from preschoolers to adults.

What a brilliant integration of computer gaming technology and education! Absolutely riveting.


If you've ever wanted to learn how to read music and/or play the piano, I encourage you to check out the truly astonishing special offer Sonlight and the Music Wizard Company have put together.

U.S. taxes . . . and taxpayers

Bob Bauman, former congressman and commentator for The Sovereign Society, published an interesting article back on November 21st about "income taxes" in the United States.

He concludes his brief article with the comment that "democracy is much like two wolves and one sheep voting on what’s for dinner."

The meaning of that phrase becomes clear when you read what he said immediately prior to that aphorism:
[A]n astonishing 43.4% of all Americans now pay zero or "negative" federal income taxes, (negative is a liberal cover word meaning they get welfare payments simply for filing their tax forms for various reasons Congress has deemed to be tax-free worthy).

The number of single or jointly-filing "taxpayers" - the word must be applied sparingly - who pay no taxes or receive government handouts has reached 65.6 million out of the 151 million who do file.

I might remind you at this point of the risks of unrestrained majoritarianism.

That is; should that number make its way from 65.6 million to, say, 75.6 million . . . then a simple majority of Americans who file will be paying no taxes at all.

Senator Jim DeMint (R-SC) described the prospects of such a world over a year ago,: "I think we've got a major crisis in democracy . . . We assume that voters will restrain the growth of government because it becomes burdensome to them personally. But today fewer and fewer people pay taxes, and more and more are dependent on government, so the politician who promises the most from government is likely to win.”
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