“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Friday, June 24, 2011

Congressional Aide Income from Private Corporations

Wednesday's edition of the Wall Street Journal carried a long article discussing the practice of Congressional aides being retained by, and receiving large payments from, firms which have business with the committees on which the aides' Representatives or Senators sit.

Several examples were cited by name, with Senate Majority Leader Reid's aide, David Krone, being paid $1.2MM by Comcast. The table in which the information was highlighted attributed the payment notionally to "reimbursement for a condominium," but you'd have to be an idiot not to expect that, after all the paper trails and laundering are parsed, Krone basically got paid for Comcast's access to his boss, Harry Reid.

The article, and quotes accompanying the various, bi-partisan examples of Congressional aides enriching themselves for access to the members for whom they work, all swear that appropriate conflict-of-interest policies were followed.

But that isn't the point, and it never has been. Which is, I suppose, what these Representatives, Senators and aides all choose to ignore.

I don't care whether David Krone directly helped Comcast in exchange for the $1.2MM in a way that is or was a "conflict of interest."

I care that David Krone is allowed to personally enrich himself way beyond anything sensible simply because he is Harry Reid's aide.

Krone is a federal employee whose job is, or should be, assisting his boss to do the public's business. It isn't right to the other 200MM+ employable Americans that David Krone should make $1.2MM simply because he's a key aide to the leader of the Senate. That's obscene, offensive and insulting to every other American.

If David Krone wants to make millions, he should pursue work in the private sector. Being a federal employee who is gifted such a large sum by a private corporation tells you that influence and/or access is for sale in Washington.

I seriously doubt Brian Roberts and Comcast simply decided that they like David Krone and decided to do him a $1.2MM favor for nothing.

I'm not in favor of numerous laws policing the behaviors of federal employees and elected officials, but when I read of Krone's magical good fortune, I think it's high time for at least one more.

Aides to members of Congress should be prohibited from receiving money from other sources, above some limit (perhaps $25,000), that does not arise from sale of an asset or previously-owned wealth. Sale of real estate and the like should be audited for possible evasion of the policy if the amounts exceed the limit.

It's sad that such mechanisms would have to be considered. But it's evident that it never occurred to Harry Reid that allowing his aide to book a $1.2MM income from a private firm while employed by the Senator looks bad and corrupt, and further lowers the public's trust of Congress.

Has Harry Reid no sense whatsoever? Or does he condone a 'grab all you can while you're here' attitude for members of Congress and their aides? Either way, it's disgraceful for Reid and the other Congressional members mentioned in the Journal piece, including Olympia Snowe and Barney Frank, to be allowing their aides to pad their incomes in such questionable manners.

It's emblematic of the low ethics which obviously rule in Washington, and which so many of us voters realize govern how our tax dollars and the public's business is done by our elected Representatives and Senators- of both parties.

Thursday, June 23, 2011

Regarding Union Dues and Beck

In response to this recent post regarding Boeing vs. the NLRB, one of my readers, Luke, wrote two comments:

"I'm not sure if you were being sarcastic: "I wasn't aware that Boeing's engineers were unionized." The implication being that they aren't...you should know that yes, most of Boeing's engineers are unionized, and I'm one of them. Not by choice of course."

"Well officially I am a "Beck Objector," so I am officially a member but I pay a reduced union fee (supposedly the percentage that they spend on political action). Make sure your teacher friend knows of that right!"

Funny you should mention the Beck excecption. I did mention it to my friend who, on first hearing, was surprised. However, as I repeated what you wrote, he cut me off dismissively and related the following.

If a teacher approaches his union representative to request a Beck-based reduction in dues deducted from his check, he is warned that, although it is his right to do so, if he does, and he is sued by the school, district or any parents, the union will let him hang alone and not lift a finger to protect him.

Nice, huh?

Being a teacher in a public school, it's no stretch to see him being the target of some lawsuit. Who knows, perhaps other unionized teachers could facilitate some parent or the school bringing suit, just to make an example of any teacher foolish enough to try to stiff the union on its legal extortion...... errr.....dues?

Pure union intimidation and coercion. So much for Beck and the niceties that Congress thinks it has legislated on behalf of union employees who it wrongly believes are beyond the reach of union thuggery.

Wednesday, June 22, 2011

More Consequences from ObamaCare- But Are They Unintended?

Karl Rove wrote a nice editorial in the Wall Street Journal last week summarizing the latest estimates of how many currently-insured Americans who are covered through their jobs will be losing that coverage under ObamaCare. It's not pretty. But is it unintended?

Rove presented the financial math, explaining that company-paid health care for a family of four is an average $9,773, while the penalty for dumping such coverage will only be- initially- $2,000. Of course more than merely today's uninsured will end up with federal coverage.

Last year, Douglas Holtz-Eakin estimated that 35 million American workers would have their health care insurance dropped by their employers. The National Center for Policy Analysis weighed in with their estimate of  "87 million to 117 million" such newly-uninsured employees. Now McKinsey estimates the number to be between 80 million and 100 million.

The original Congressional estimate was just 24 million workers being shunted to the federal option.

Rove then went on to quantify the extra costs these larger estimates imply for ObamaCare. Holtz-Eakin's number would add about $200B to the originally-estimated $500B cost, the NCPA's larger number would add $2T for the program's first decade. These added expenses come on top of what was initially, but fraudulently, claimed to be a deficit-reduction bill. In reality, when Medicare cost savings double-counting are eliminated and various other taxes unrelated to health care are stripped out, the law obviously will be a net new cost to the federal budget.

Rove's point was simply that it's going to be much more expensive.

My point is that the expected discharge of perhaps as many as 100 million workers, or nearly a third of the US population, into the new federal program, will effectively end private health care insurance. But if you think that measely $2,000 fine per worker is going to remain fixed, think again.

Once Congress and the various new agencies charged with implementing ObamaCare get a sense of how much unanticipated, but, I believe, actually welcomed new participants are dumped by corporate America, they will duly announce a need to increase the per/worker penalty in order to pay for the extra plan participants.

Maybe the penalties will rise to the average loaded cost per/person of the federal policies. In which case you'd have corporate America maneuvered into not only paying what they paid before ObamaCare, but now forced to pay more, uncontrollably, via penalties, while the federal government exercised total control over the health care choices of the bulk of Americans.

I wish I could write that I believe this predicted tide of workers dumped into ObamaCare was unexpected, but I think it was both expected and desired.

Forget about Wonderboy's promise that under his bill "if you like your health care, you can keep it." He knew that was never going to be true, and I believe he made sure that ObamaCare was designed so that corporations would make it a lie. Watch him avoid responsibility and blame corporations for dumping their workers in order to save money, once again depicting them as evil.

Makes you rethink wanting to be a shareholder of any publicly-held US firm, doesn't it, when Wonderboy is obviously out to ruin them?

Tuesday, June 21, 2011

Misinformation & Disinformation Regarding the Boeing South Carolina Facility

Sometimes I think the Wall Street Journal publishes editorials with little merit both in order to appear to present balanced views and to let readers see how silly and shallow some liberal views truly are.

If so, a recent editorial by Thomas Geoghegan entitled Boeing's Threat to American Enterprise surely qualifies. Geoghegan is evidently a union-representing attorney, so it's not surprising that his perspective is a liberal one. But it also seems to have seriously affected what passes for analysis on his part.

His editorial contains quite a bit of bluster and slanted characterizations of the Boeing situation. Geoghegan matter-of-factly describes Boeing CEO's McNerney's explanation of the opening of its Charleston, South Carolina Dreamliner facility as "payback" for past machinists' strikes in Washington state. It's more likely that, rather than being a second facility, the South Carolina facility would have become the primary and sole assembly site, had Boeing really intended such "payback."

However, what caught my attention was the author's baldface contention that companies which have relocated from largely union shop states in the north of the US to right-to-work states south of the Mason-Dixon line have mostly failed. For example, he wrote,

Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.

"We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That's not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It's because we have too many poorly educated and low-skilled workers that are simply unable to compete."
The author's lack of understanding of economics begins to be apparent in those passages. He summarily equates lower wages with lower skills, ignoring the effect of unions on wages. Plus he freely tosses in macroeconomic fiscal and monetary policies to cloud the very issue he purports to illuminate.

Then Geoghegan delivers his main point,

"We depend on Boeing to out-compete Airbus, its European rival. But when major firms move South, it is usually a harbinger of quality decline. Over and over as a labor lawyer in the 1980s and '90s, I saw companies move away from Chicago, where the pay was $28 an hour, to some place in South Carolina or Louisiana where the pay was about half that. While these moves aggrieved me as a union lawyer, it might have consoled me as an American if those companies went on to thrive globally.

But too often, alas, it was the beginning of the end, as it was for Outboard Marine Corporation, where I once represented workers. In the 1990s the company went from the high wage union North to the low wage South and was bankrupt by 2000. There are reasons workers in the North get $28 an hour while down in the South they get $14 or even $10. Adam Smith could explain it: "productivity," "skill level," "quality."  "

I was expecting another five or six clear-cut examples, but Geoghegan only offers Outboard Marine. We don't know the nature of the market, the firm's competition or overall competitive position. Instead, Geoghegan hangs the firm's ultimate demise purely on its choosing to employ less-expensive labor in the South.

Nowhere does Geoghegan mention that two premier German luxury auto makers, BMW and Mercedes Benz, located US plants in South Carolina. Of course, those examples give the lie to his argument, so that explains their omission.

"Here is yet another American firm seeking to ruin its reputation for quality. Why? To save $14 an hour! Seriously: Is that going to help sell the Dreamliner? In terms of the finished product, the labor cost is minuscule: $14 in hourly wage, at most. It's incredible that conservatives claim such small differences in labor cost would be life or death to Boeing. It's not labor cost but labor skill that is life or death to the survival of Boeing, never mind pilots and passengers."

Ironically, though Geoghegan claims familiarity with McNerney's reasons for Boeing's South Carolina facility, he evidently missed the main one. It's not the hourly labor cost but the need to have a reliable assembly facility not prone to wildcat or other work stoppages which would affect Boeing's ability to deliver its planes to customers as promised.

Some people call that "quality," as in a non-quantitative reason to buy a product. On-time delivery would seem to fall in that category.

Geoghegan then repeats his contention that companies relocating to the South of the US fail, without a single additional example,

"If the history of runaway shops proves anything, it's that many go "South" in more than one sense of the word. If that sounds unfair to the South, it is union busting that has inflicted the real unfairness in the region: income inequality and inferior schools."

Funny how economists have missed what only Mr. Geoghegan knows: that it's the absence of unions in the South that account for its "inferior schools." If true, why would Mercedes and BMW deliberately locate there? Are we to infer that those companies sought out the least-educated workforce possible to man their American production facilities?

Then Geoghegan skips to another point, and it's a socialist one,

"At this moment especially, deep in debt, we cannot afford to let another company like Boeing self-destruct. Boeing is not a product of the free market—it's an extension of the U.S. government. Over the years, our taxpayers have paid to create a Boeing work force with exceptionally high skills. That work force is not just an asset for Boeing—it's an asset for the country. Why should the country let Boeing take it apart? Every American should be rooting for the NLRB's general counsel, as the board itself has not yet found a violation."

I guess that comes as a surprise to Boeing shareholders. Now we learn that Boeing's workforce, which doesn't actually "belong" to Boeing, thanks to our country's free market principles, has been developed to be an asset "for the country" which the firm is going to "take...apart." The author's contentions smack of raw socialism. Everything a company has is government-provided, and what it creates is common property, too. At least Geoghegan isn't shy about displaying his socialism.

His final paragraph reveals his deep misunderstanding of how Boeing operates.

Most depressing of all, Boeing's move would send a market signal to those considering a career in engineering or high-skilled manufacturing. It is a message that corporate America has delivered over and over: Don't go to engineering school, don't bother with fancy apprenticeships, don't invest in skills. No rational person wants to take on college or even community college debt to come out and work on the Dreamliner—which should be the country's finest product—for a miserable $14 an hour. If a single story in the news can sum up the reasons for America's global decline, it's the decision to build a Dreamliner that will gut the American dream."

I wasn't aware that Boeing's engineers are unionized. Or that machinists designed the Dreamliner. All through his editorial, Geoghegan has argued on behalf of the unionized machinists on whose behalf the NLRB's attorney has attempted to stop Boeing's South Carolina plant. But Geoghegan ends his piece arguing on behalf of skilled engineers who are not the subject of the fight over Boeing's Charleston facility.

Aside from the wandering, ill-focused nature of his editorial, I found Geoghegan's lack of extensive convincing examples of his main contention, that moving facilities to the South US causes business failure, to render his position completely lacking in credibility. The rest of his poorly-reasoned piece only adds evidence of the weakness of his case.

Monday, June 20, 2011

Rick Perry's Presidential Bid

I've seen an interview or two with Rick Perry recently, as well as some punditry regarding his prospective presidential bid. I can't honestly say I'm convinced his candidacy would be well-received, nor that I'm particularly enthused by it.

First, there's the obvious liability Perry has as another Texas governor running for president. Whether you liked George W, or not, it's fair to say that one wonders if voters really want another Texan in the Oval Office so soon after the prior one.

Perry's values seem laudable. Texas has created more jobs during the past decade than any other single US state. Perry and the state's legislature have succeeded in crafting an operating environment conducive to businesses, including the landmark 'loser pays' tort lawsuit reform.

However, Perry's viewpoints don't seem to be under-represented in the current field of declared GOP candidates. And while Perry was successful on many fronts as governor, Texas is more conservative than, say, Minnesota, so it's unclear whether his experiences in Texas will actually be reproducible with the US Congress.

Then there's the red herring of secession. I'm not personally clear on just exactly what Perry has said on the topic, but I know, in the media, he's linked with threats of such actions, and that's bound to hurt his credibility.

All that said, however, governors have tended to do better in presidential campaigns since Ford's loss than any other single source of candidates. And, in that sense, you'd think Perry would be preferable to Bachman.

But what I don't know, offhand, is how Perry polls versus other GOP presidential candidates with the nation's independent voters. That, to me, is the key.

No conservative is going to vote for the lying Wonderboy in 2012. Even some Democrats won't. So the margin of victory is going to rest with the independents. Choosing a GOP candidate unpalatable to the independent center will be a mistake.

So, for me, the question is how Perry appeals to those independents in about six months.