The Internet is responsible for the creation of a great amount of wealth over the years. Granted, it is also responsible for the elimination of many businesses as well. This is how “creative destruction” works in our economy. New ideas and progress make people rich while old ideas die and go away.

If only this were true of the government though. Every year it just gets bigger and bigger. It looks for more ways to generate income to satisfy its insatiable appetite. In lean times, it resorts to stupid ideas like this one. It changes, many times for the worse, how the economic game of progress is played. Governments do well when the economy is doing well. They should do everything they can to help the companies within their borders to succeed. Instead, this looks like a destructive way to fill a budget gap. I fear that this is going to kill eCommerce as we know it.

Currently a great number of people make money sharing their expertise on the Internet. They get paid by promoting good products and warning us about bad ones. They inform us of ways to better our lives, and in return we purchase the products they recommend and they get paid by those selling the products. This is no different than sending a letter through the mail to a friend saying the new car they bought is incredible and that they should get one. Just because a company is willing to pay a finders fee doesn’t mean it has hired a person to do any work. It is rewarding the efforts of people to share information about products. This is advertising at its core and has been the basis of our economy for other 100 years. Companies pay millions to get the word out using advertising agencies. Does this mean that they now have a business interest in the state where the the ad agency resides? Most decidedly not.

Companies like Amazon agree to pay someone for help in selling a product. It is strictly advertising revenue, and they have no business interest in any state except where they have a physical presense. Saying otherwise means that every business has a business interest in every state. Any company wants to sell its products and doesn’t necessarily care whether what state the customer lives in.

If I recommend to a relative some service and I get a discount as a result, does that mean the company now has a business interest in my state? That kind of logic just boggles the mind. I was not hired by the company to do anything. I was encouraged to share information and for that they are most grateful when a sale occurs. To encourage this sharing of information, they offer an incentive. It is just that simple. Affiliate programs are just the same except that people have made a business out of it. If they are a business, then they must pay taxes where they live. That is how the system works and that still doesn’t mean that the seller of a product has a business interest there. Only that the person creating the link and posting information has a business interest. It is they who should be paying income taxes on the money they collect. But they didn’t sell a product. They didn’t handle any money. They didn’t do any activity that would connect them with the seller other than mentioning where a product may be bought.

For decades traditional companies have sold items across state lines. The products were shipped to other states and no sales tax was collected. There was no legal right to it because the purchase was from a company in another state and so no tax was collected. Internet companies operate the same way except that with the Internet, it is now easier to find their products and make a purchase. Lots of technologies have converged to help make this simplicity a reality. Now the states are rushing in and crying foul. They want to collect taxes on sales to which they are not entitled.

Companies are not stupid and the best will survive. If they find it cheaper to shut down an affiliate program than to continue one, then standard business practice demands that it be shut down. The states have essentially pushed a logical decision in response to their illogical argument. It should be no surprise that the small business will suffer as a result.

I find it despicable that a state would even consider pursuing such a course. They stand to loose a great deal. Many small companies will shut their doors since their income has been cut off. Millions in taxes collected from these business and their workers will disappear. In its place will be people filing for unemployment benefits along with all the other welfare handouts the government has to offer. States should spend their time trying to figure out how to get people back to work. They should try to educate workers, helping them train for the jobs in demand today. Instead, they seem determined to look for the quick path to cash as a means to solve their problems. This is destined to end in failure bodes ill for the country. Millions of jobs have already been lost. Let’s stop looking for ways to eliminate even more jobs.

My vehicle qualifies for the voucher program being considered, but why would I want to buy another vehicle in this economy? They want to give me money toward the purchase of a more efficient vehicle. But it will cost me money because I’ll have to get a loan or pay cash for the difference. Why would anyone want to do that, especially when future income may be in doubt? I’m trying to avoid expenses and make due with what I have. Buying a newer vehicle means higher insurance, less money in my pocket, and a vehicle that I am more afraid to put a scratch on. I think I’ll just stick with my 100% paid for Ford F150.

RULE: Investors may only have up to 4 investment property loans as per Fannie Mae. It used to be 10.

PROBLEM: Investors are unable to buy homes and they they sit on the market. Getting loans to buy these homes has gotten very expensive.

RESULT: Homes are going to be on the market much longer and the housing market is going to remain repressed for much longer than it should. Investors would love to buy homes but they can not. People who want to sell are unable to find people who can get a loan. The value of homes will decrease much further as a result because investors will have to use more of their own money to buy a house and will want a greater discount as a result.

What should Fannie Mae do? Put the limit back to 10. I am not suggesting that they raise it higher than 10, but there are a lot of people who would be willing to buy homes right now because of the low cost. Another thing Fannie Mae should do is not allow these loans to be less than 20% down. This will ensure that the investor has money at stake and not the 0% down or 5% down that got everyone into trouble.

Finally, they should require that the foreclosure proceedings are more quickly executed. In Ohio, it takes about a year for the entire process to be worked out. In that time the house has been empty, unkept, and is loosing value because of damage, copper being stolen, water damage, and a host of other problems because it the house sitting vacant for so long. By the time these homes are back on the market everyone is loosing a ton of money, especially the banks, and an investor who wants to buy has to do so at a big discount because of all the repairs that will be needed. If the house was pushed through the foreclosure process in 2-3 months, the houses wouldn’t be in bad shape and they could be sold at a better price.

At other companies I am told that larger monitors, bigger hard drives, split keyboards, and other hardware items are too expensive or are not in the budget. I don’t understand how companies can spend $60,000 per year on a developer but not spend $2000 on hardware to make sure they are productive. I can see frivolous items like 30 inch monitors costing $3000 being rejected. But if a developer says they need a 28 inch monitor that costs $500 at COSTCO, why not get it for them? If they want a $100 mouse and keyboard, why not get it for them? They will be happy to come to work using the latest and the greatest tools that can be bought, and will be that much more productive. They will definitely think twice before leaving a company that is so nice to them making sure they are being taken care of.

Now Joel goes as far as taking employees to a Broadway play, trips to scenic places, and much more. There is no way I would want to live in New York City. But I definitely like the idea of what he is trying to do and respect the reasons for him doing. My hope is that others will pick up on what they are doing, especially in the Midwest.