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Cognitive Bias and Friends

As expected, Aristotle gave the best instrumentalist justification for having friends.  To paraphrase: We are disgusting, self-involved, snot-producing, hairy beasts who cannot see our own faults.  We can easily see the faults in others.  By socializing with others, we can see what they do wrong.  With some reflection, we can see if we do those same wrong things: "If it's disgusting that John has snot hanging from his nose, perhaps the same is true of my snotty face."  

“If all these [biases are affecting me] without my knowledge, then I don’t really know why I’m doing what I’m doing, and I don’t really know myself that well apparently. So how can I make the right decisions or make the right choices for myself when all these biases are throwing my decisions all over the place?”

There’s a really simple answer here, which I like and people also seem to like it. It is to ask your friends, ask your family, ask people who are close to you about yourself. Don’t be afraid to hear what they have to say. Tell them to tell you the truth, because they do know you, and in many ways better than you know yourself.

The hardest decision I ever made in my life went as follows: "This is what I am doing."  After consulting every friend: To a person they told me to make the opposite decision.  I am pretty self-satisifed, and happily go against the mob.  But when every friend told me that I was about to make a huge mistake.... I did what they advised - painful though it was.

Now, of course, there are non-instrumentalist reasons to have friends.  Friends are intrinstically good, too.  

I think, though, that people forget to consult their friends about important life decisions.  This is a huge mistake.

Oh, and if you don't have friends whose advice you respect or who are simply yes-(wo)men; then you don't have friends.  

How Does the Recession Affect Friendships?

That seems to be an interesting topic.  I find it boring.  If I have money, my friends have money.  My friends share the same value system.  If your value system is different, then you are not a real friend, and do not have real friends.  Your life is empty. Your friends are not friends; they are knick knacks and fashion accessories.  Please read the section on friendship in the Nicomachean Ethics.  That's all you need to know about friendship.

UPDATE: Here is an IM with my best friend on subject:

Mike: The Big Topic now is recession and friendships
Mike: How pathetic
Mike: Imagine having friends you wouldn’t buy a dinner for.
Friend: lol
Friend: Yeah
Mike: "Oh.  You can’t afford to go out tonight?  I guess we can’t be friends!"
Friend: I wanted to try to estimate how many people are like that, but I can’t say.
Friend: Do you think it’s more than 50%?
Mike: It seems that way, given how many people are talking about it.
Mike: At first I rolled my eyes. 
Mike: But everyone picked up on it.
Mike: Like it’s an interesting subject!
Friend: A “friend” does one of two things.
Friend: It’s pretty simple.
Friend: You either support the relationship by picking it up (paying).
Friend: OR
Friend: You decide to move your standards for activity down (doing less expensive things).
Mike: Right.  lol.  Real fucking complicated!

Body Language Tip of the Day: Talk to the Hands, Cuz the Face Ain't Telling the Truth

If you want to guess a person's age, look at her hands.  More people are using Botox than you'd expect.  So the face is sending off false signals.  The hands show age much more reliably than the face.  

Plus, if you see old hands but a youthful face: You have new information.  Namely, that the person is vain/insecure/uncomforable enough with aging to use Botox.

Are Gold American Eagles Worth What Congress Has Said They Are Worth? Or: The IRS v. Robert Kahre

[Editor’s note: I am not a tax protester. Until researching the issue that is subject to this blog post, I thought all of the arguments raised by the tax protester crowd were frivolous.  On this issue, I am not so confident.]

Take a look at this gold coin.   It's a Gold American Eagle.  Look at the image on the right.  Do you see what the coin says on the bottom half, underneath the nesting baby eagle?Gold American Eagle 50 Dollars

It says $50, right?

Indeed, it is (as I will explain below) $50. It’s worth as much as an Ulysses S. Grant. Well, if you believe it’s really only worth $50, send all of your Gold Eagles to me. I will sell them on eBay for about $1,000 each.

And now you can see the problem of Robert Kahre. Mr. Kahre is facing federal prison because he claimed that Gold Eagles are worth what Congress has said that Gold Eagles are worth.

Is Mr. Kahre’s position frivolous? I don’t think so. Please indulge me.

A Gold Eagle is “Legal Tender.”

Under 31 U.S.C. § 5112: "(a) The Secretary of the Treasury may mint and issue only the following coins: (7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold."

31 U.S.C. § 5112(h) provides: (h) The coins issued under this title shall be legal tender as provided in section 5103 of this title.

Title 31 U.S.C. § 5103 defined “legal tender.” Section 5103 states: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.”

See Mathes v. Commissioner of Internal Revenue, 576 F.2d 70, 71 (5th Cir. 1978) (per curiam) (“Congress has delegated the power to establish this national currency which is lawful money to the Federal Reserve System.”); United States v. Wangrud, 533 F.2d 495, 495 (9th Cir. 1976) (per curiam) (“By statute it is established that federal reserve notes, on an equal basis with other coins and currencies of the United States, shall be legal tender for all debts, public and private, including taxes.”).

The Courts Have Said: “A Dollar Is A Dollar.” In Thompson v. Butler, 95 U.S. 694, 696 (1877) (here), the United States Supreme Court stated: “A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.”

In Crummey v. Klein Independent School District (here), the Fifth Circuit Court of Appeals heard a case where:  "Brent E. Crummey brought this lawsuit complaining that ... two employees of the KISD tax office, declined to accept Crummey’s fifty-dollar United States American Eagle gold coins for any more than the face value of the coins in Federal Reserve Note dollars as tender in payment for taxes Crummey owed."

The Fifth Circuit stated: "Regardless of any currency confusion that may have arisen in bygone eras, our present standard is clear: As legal tender, a dollar is a dollar."  Further: "As legal tender, a dollar is a dollar, regardless of the physical embodiment of the currency."

OK. A dollar is a dollar.

Mr. Kahre owed his employees dollars.  He paid them in dollars.  Specifically, he paid them fifty dollars via a Gold Eagle.  So what's the problem?

Cordner v. United States Does Not Apply.

In Cordner v. United States, 671 F.2d 367, 368- 69 (9th Cir. 1982), a taxpayer "received 275 $20 Double Eagle gold coins as a corporate dividend distribution."  The taxpayer "reported the dividend at the face value of the coins, $5,500 []."  The IRS disagreed, "charg[ing] appellants with a taxable dividend in an amount equal to the fair market value of the coins, which was $70,936."

A three-judge panel of the Ninth Circuit Court of Appeals agreed with the IRS: “We have no difficulty in holding that the gold coins here, though legal tender and hence ‘money’ for some purposes, are also ‘property’ to be taxed at fair market value because they have been withdrawn from circulation and have numismatic worth.”

Mr. Kahre has been paying his employees with coins that have not been withdrawn from circulation. Thefore, Cordner’s holding does not apply.

The panel did say, in dicta: “When legal tender, by reason of its value to collectors or the intrinsic worth of its contents, has a fair market value in excess of its face value or tender, then it should be deemed property other than money for purposes of section 301(b)(1)(A).” There are three problems with this dicta.

First, it is dicta. It is therefore not binding on any non-party. Dicta is, in essence, an unconstitutional advisory opinion – since it addresses issues not necessary to resolve, as Article III to the Constitution requires, to a “case or controversy.”

Second, the dicta was written in 1981. The law I discussed, above, was enacted in 1985. Thus, even if the dicta were binding; it would have been abrogated by federal statute.

Third, it is striking that this dicta does not address any of the statutory arguments I raised, above. It does not address the United States Supreme Court’s opinion in Thompson v. Butler, 95 U.S. 694, 696 (1877). It’s a flip and thoughtless (non) resolution of the complicated issue.

Whatever the case, that language was dicta, since it went beyond the issue presented in the case. It is old dicta, that appears invalid in light of subsequent federal legislation.

You Can’t Convict Unless You Show a Mistake of Law.

Perhaps it is the case that legal tender should be treated differently when you’re paying an employee wages. There are clearly cases stating otherwise.  I spent three hours rather than three days on this post.  I likely have missed something.  That said, I have indeed found strong authority for Kahre's position.

Let’s assume that a legal god would determine that, here, a consistency would be foolish – and therefore the hobgoblin of little minds.

Federal law protects little minds. Ignorance of the law is no excuse – except in tax cases. You cannot convict a taxpayer unless you show that the taxpayer willfully violated federal law. See Cheek v. United States, 498 U.S. 192, 202 (1991); United States v. Bishop, 291 F.3d 1100, 1106 (9th Cir. 2002); Richey v. United States, 9 F.3d 1407 (9th Cir. 1993) (subjective good faith is sufficient).

What is the law of Gold American Eagles?

I know what I’d do. I’d claim the fair market value of the Gold Eagles. I am risk averse. In a Platonic sense, I believe that Gold Eagles should be taxable based on their face value. In the real world, I know what courts will do.

I have no doubt that if the Ninth Circuit hears this issue, it will echo Cordner v. United States. The Ninth Circuit will either ignore the complexities I mentioned; or it will find a way (disingenuous or otherwise) to distinguish them away. Still, I believe that a person could subjectively thing that he wasn’t required to pay taxes based on fair market value.

That I wouldn’t personally take that position does not change the fact that others might disagree with me. That I would not encourage others to take that position, again, do not change anything. A person could subjectively and reasonably believe that he was not required to pay taxed on the fair market value of the Gold American Eagles.

Mr. Kahre should be acquitted.

SEC Bans Madoff from Working in Securities Industry: Go Get 'Em Tiger!

Several years after being warned that Bernie Madoff was running a Ponzi Scheme; and several months after people lost billions of dollars; the SEC has finally taken action:

WASHINGTON (AP) -- Disgraced money manager Bernard Madoff has been prohibited from working in the securities industry under a settlement with the Securities and Exchange Commission.

How Madoff was going to work in the securities industry from prison... I don't know.  The SEC, typical of a do-nothing agency filled with know-nothing bureaucrats, had to do something to make it seems like it... well... does something.  

So there you have it.  Bernie Madoff shall not be allowed to work in the securities industry.  If that doesn't restore confidence in the SEC, what will?

Stallworth Buys 30 Days for Manslaughter?

Isn't killing someone considered a crime against the public?  If so, then why can you buy yourself out of a prison sentence by giving big money to private parties?  That's exactly what happened here:

MIAMI – Cleveland Browns wide receiver Donte' Stallworth is going to serve 30 days in jail after pleading guilty in Florida to a DUI manslaughter charge.


Stallworth also reached a confidential financial settlement with the Reyes' family. A person close to the negotiations told The Association Press about the agreement on the condition of anonymity because they were not authorized to talk about the deal.