"It's very clear that private-sector jobs have been doing just fine; it's the public-sector jobs where we've lost huge numbers, and that's what this legislation is all about."
Just incredible.That's Harry Reid's defense of Wonderboy's public sector union-hiring proposals, according to a recent Wall Street Journal staff editorial.
The piece noted that 111.8MM Americans were employed in the private sector at the end of 2008. As of last month, the number was 109.3MM, a loss of roughly 2.5MM private-sector jobs, and a 2% decline. At the federal level, government employed 1.9MM FTE in late 2008, which increased to 2.1MM at the end of last year, for a 11% gain.
State and local government employment numbers in the editorial don't go back to 2008. Instead, the Journal reports that local governments cut just 210,000 by last month out of 14.28MM a year earlier. For state governments, the numbers were 49,000 and 5.14MM. That's only a quarter of a million state and local government employees cut out of some 19MM, or just a 1.3% decline. Even so, these numbers are polluted by the first stimulus having paid for some of those workers in prior years. That also would make comparisons from the end of 2008 problematic.
What's clear, however, is that the private sector has taken the most pain in terms of job losses.
You would like to think the Senate Majority Leader would at least be able to understand that fact.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Wednesday, October 26, 2011
Thursday, September 15, 2011
Wonderboy's Approach To Job Creation
I heard some of Wonderboy's latest jobs stump speech yesterday afternoon on Bloomberg. It was hilarious.
From the soundbite I caught, his understanding of how businesses create jobs amounted to this,
'....so business owners can get some more money in their pockets and say, hey, I can hire some more people.....'
Hahaha....if only!
What a simpleton the president shows himself to be.
Business owners don't make decisions about the future based on today's cash balances. They don't take near-term income as the basis for long-term investments in hiring or buying capital equipment.
No, those decisions are based on their projections of future sales and costs. Currently, it's looking like the US economy is re-entering a recessionary phase. And taxes for next year and after are highly uncertain. Thus, most business people who can, will defer investments in people or assets until the future becomes clearer and brighter.
But Wonderboy's wrong-headed, simplistic view of economics and business is what you get when you elect a lawyer who has never actually managed anything in his life.
Except, of course, his election campaigns.
From the soundbite I caught, his understanding of how businesses create jobs amounted to this,
'....so business owners can get some more money in their pockets and say, hey, I can hire some more people.....'
Hahaha....if only!
What a simpleton the president shows himself to be.
Business owners don't make decisions about the future based on today's cash balances. They don't take near-term income as the basis for long-term investments in hiring or buying capital equipment.
No, those decisions are based on their projections of future sales and costs. Currently, it's looking like the US economy is re-entering a recessionary phase. And taxes for next year and after are highly uncertain. Thus, most business people who can, will defer investments in people or assets until the future becomes clearer and brighter.
But Wonderboy's wrong-headed, simplistic view of economics and business is what you get when you elect a lawyer who has never actually managed anything in his life.
Except, of course, his election campaigns.
Wednesday, September 14, 2011
Rick Perry's Texas Economy
I've been thinking recently about the comments would-be detractors have made concerning Governor Rick Perry's state's economy.
We know from various reports that Texas has created more jobs than any other single state in the past several years. Perhaps even the decade- I forget. And, more than any one state, I believe over a period of years, Texas has created more jobs than all other states combined.
It sounds like a really good story.
Then Democrats and Mitt Romney weighed in to say that those are low-wage jobs. Wonderboy's education secretary said he pities Texas kids for having to settle for such poor schooling.
Romney, in a recent debate, reminded Perry and viewers that Texas is blessed with gas and oil. Assets for which Rick Perry can take no credit.
Separately, a Texas university economist, while a guest on Tom Keene's noontime Bloomberg program, described the state's social safety net as 'thin.' Jobless benefits are low and of short duration. State spending on social benefits are, on the whole, low by national standards. And, yes, he said the jobs were, on average, low-paying by national standards, as well.
So we are left with the image of a large state which has coped with an enormous net inflow of residents, made the most of its energy resources, kept taxes and spending low, allowing for job creation which has absorbed the bulk of those new residents.
My question is, regardless of what credit Rick Perry does, or does not take for the Texas economy and employment situation, can and does the US, as a nation, want the Texan solution?
If Rick Perry replaced Wonderboy in the Oval Office tomorrow, what would he do to ignite job growth? Cut unemployment benefits? Social Security? Other entitlement spending?
Mind you, personally, I'm all for that. But I'm not sure that's what voters in Massachusetts, Illinois, California and other solidly blue states are expecting.
It's not clear to me that Rick Perry's Texas is a role model for employment strategies that we want to implement nationwide. In fact, regardless of Texas' spending on social programs, we really can't afford Texas-style employment nationwide.
It's not Rick Perry's fault that Texas is not home to more high-value-added, high-paying jobs. Financial service firms aren't chock-a-block in Austin, Dallas or Houston. Nor are many other large, white-collar sector employers which pay high compensation for high-value work.
Which, I think, means that Rick Perry's policies for facilitating job growth in Texas may not really matter much to the rest of the US, unless we are ready to implement, almost immediately, the drastic reduction of federal entitlement programs of which many speak, but none, save Paul Ryan, have really dared describe in detail.
That doesn't mean I wouldn't vote for Rick Perry. But it does mean I'd be cautious about believing he can transfer much of what has worked economically for Texas to the federal level very soon.
We know from various reports that Texas has created more jobs than any other single state in the past several years. Perhaps even the decade- I forget. And, more than any one state, I believe over a period of years, Texas has created more jobs than all other states combined.
It sounds like a really good story.
Then Democrats and Mitt Romney weighed in to say that those are low-wage jobs. Wonderboy's education secretary said he pities Texas kids for having to settle for such poor schooling.
Romney, in a recent debate, reminded Perry and viewers that Texas is blessed with gas and oil. Assets for which Rick Perry can take no credit.
Separately, a Texas university economist, while a guest on Tom Keene's noontime Bloomberg program, described the state's social safety net as 'thin.' Jobless benefits are low and of short duration. State spending on social benefits are, on the whole, low by national standards. And, yes, he said the jobs were, on average, low-paying by national standards, as well.
So we are left with the image of a large state which has coped with an enormous net inflow of residents, made the most of its energy resources, kept taxes and spending low, allowing for job creation which has absorbed the bulk of those new residents.
My question is, regardless of what credit Rick Perry does, or does not take for the Texas economy and employment situation, can and does the US, as a nation, want the Texan solution?
If Rick Perry replaced Wonderboy in the Oval Office tomorrow, what would he do to ignite job growth? Cut unemployment benefits? Social Security? Other entitlement spending?
Mind you, personally, I'm all for that. But I'm not sure that's what voters in Massachusetts, Illinois, California and other solidly blue states are expecting.
It's not clear to me that Rick Perry's Texas is a role model for employment strategies that we want to implement nationwide. In fact, regardless of Texas' spending on social programs, we really can't afford Texas-style employment nationwide.
It's not Rick Perry's fault that Texas is not home to more high-value-added, high-paying jobs. Financial service firms aren't chock-a-block in Austin, Dallas or Houston. Nor are many other large, white-collar sector employers which pay high compensation for high-value work.
Which, I think, means that Rick Perry's policies for facilitating job growth in Texas may not really matter much to the rest of the US, unless we are ready to implement, almost immediately, the drastic reduction of federal entitlement programs of which many speak, but none, save Paul Ryan, have really dared describe in detail.
That doesn't mean I wouldn't vote for Rick Perry. But it does mean I'd be cautious about believing he can transfer much of what has worked economically for Texas to the federal level very soon.
Friday, September 9, 2011
Wonderboy's New Stimulus....errr....Jobs Package'- "Pass It Now!"
This morning's financial networks were full of anchors asking everyone in sight:
a)What did you think of Wonderboy's jobs package?
b)Will it pass as proposed?
Pretty funny stuff. The proposals, of course, are simply more public- and labor-union friendly stimulus spending to be paid for by....well....tax hikes and unnamed reductions to planned future spending increases.
Why are all of this president's ideas for jobs targeted on construction, teachers, fire and police? Maybe because that's where the union votes are?
But of course.
"Pass it now???!!!!!"
You've got to be kidding! This from the guy who plotted with Frisco Nan and Harry Reid how to ram through his health care without giving any Congress members time to read the whole thing.
But, don't take my words for these reactions.
God bless Frank Luntz and Fox News for bringing his scintillating focus groups to light. Last night on Hannity's program, Luntz had a roomful of between 40 and 50 voters, split evenly between McCain and Wonderboy supporters in 2008, to react to the jobs speech.
When Luntz asked how many were 'inspired' by the speech, only two people raised their hands. Based on prior remarks, they were certifiable idiots. Really.
The only two people in the entire room who supported the First Rookie were two not-very-bright minority women who looked and talked like they were on welfare already. One got the sense they'd support absolutely anything Wonderboy proposed.
The group overwhelmingly pronounced the proposals in the speech as just more stimulus, more appeals to raise taxes, neither of which will work.
Of the entire room, I believe only 3-4 raised their hands to indicated they'd re-elect the president, and perhaps 2 more were considering it. That's it.
On the subject of "pass it now," all of those commenting remarked that this was merely a rerun of the call to pass ObamaCare sight unseen. Nobody advocated for it.
Honestly, it had to be pretty depressing for Wonderboy's team, and Hannity said as much.
By the way, does anybody else recall that presidents send legislation up to the Hill all the time, have for decades, only to have it cut to pieces and rewritten by both chambers?
Who does Wonderboy think he is so special as to demand immediate passage of his proposals intact?
a)What did you think of Wonderboy's jobs package?
b)Will it pass as proposed?
Pretty funny stuff. The proposals, of course, are simply more public- and labor-union friendly stimulus spending to be paid for by....well....tax hikes and unnamed reductions to planned future spending increases.
Why are all of this president's ideas for jobs targeted on construction, teachers, fire and police? Maybe because that's where the union votes are?
But of course.
"Pass it now???!!!!!"
You've got to be kidding! This from the guy who plotted with Frisco Nan and Harry Reid how to ram through his health care without giving any Congress members time to read the whole thing.
But, don't take my words for these reactions.
God bless Frank Luntz and Fox News for bringing his scintillating focus groups to light. Last night on Hannity's program, Luntz had a roomful of between 40 and 50 voters, split evenly between McCain and Wonderboy supporters in 2008, to react to the jobs speech.
When Luntz asked how many were 'inspired' by the speech, only two people raised their hands. Based on prior remarks, they were certifiable idiots. Really.
The only two people in the entire room who supported the First Rookie were two not-very-bright minority women who looked and talked like they were on welfare already. One got the sense they'd support absolutely anything Wonderboy proposed.
The group overwhelmingly pronounced the proposals in the speech as just more stimulus, more appeals to raise taxes, neither of which will work.
Of the entire room, I believe only 3-4 raised their hands to indicated they'd re-elect the president, and perhaps 2 more were considering it. That's it.
On the subject of "pass it now," all of those commenting remarked that this was merely a rerun of the call to pass ObamaCare sight unseen. Nobody advocated for it.
Honestly, it had to be pretty depressing for Wonderboy's team, and Hannity said as much.
By the way, does anybody else recall that presidents send legislation up to the Hill all the time, have for decades, only to have it cut to pieces and rewritten by both chambers?
Who does Wonderboy think he is so special as to demand immediate passage of his proposals intact?
Wednesday, August 24, 2011
Luddite Economics
As a person with a substantial academic background in economics and business, it always pains me to hear politicians- of any partisan stripe- talk about jobs as if they are simply created out of thin air. Or to hear officeholders, especially presidents and governors, say 'I created' so many jobs.
Right now, as Republican governor of Texas Rick Perry campaigns, he, and the media, are full of the 'I created' speak. But real conservatives don't believe government creates private sector jobs, per se. Unless, of course, they nationalize something or give money to a company specifically for job creation.
But, mostly, the best one can say about a government executive is,
'S/he orchestrated ab environment of regulatory restraint, moderate taxes and generally favorable conditions for business, thus attracting new companies and facilitating higher employment.'
Further, hearing politicians negatively remark on technology's impact on employment, like Wonderboy did recently, also pains me greatly.
To vilify ATMs, the internet and/or other capital-equipment based productivity increasing tools is to be an economic Luddite.
These inventions either improve existing products and services for customers, lower prices of goods and services, or provide new capabilities, such as online search for and purchase of goods or services. All good things. Things which improve living standards, when measured by consumption and satisfaction per dollar.
That many of these technological improvements or facilitators also result in the elimination of jobs and businesses is simply part of the advance of human civilization.
As a corollary, I think it represents a serious mistake for government officials, e.g., presidents, senators, representatives, governors, to speak of government institutions focusing on 'job creation,' per se.
Since governments don't, and shouldn't, directly create jobs, it would be better to know that those elected officials are working to create environments which are favorable to the growth of existing businesses and the birth of appropriate new ones. Both of which may create jobs.
Yes, ideally one thinks of full employment as a good thing which stimulates economic growth. But that doesn't mean that, say, by borrowing or taxing to raise money, a government entity can then just pay that money to people for "jobs," whatever they may be, and magically create sustained, healthy and productive economic growth.
As I noted in this recent post on my companion business blog,
""All economic problems are about removing impediments to supply, not demand," Arthur Laffer reminds us.
I highlighted Art Laffer's comment because it seems useful to me to focus on the true fundamental nature of man's economic problem: scarcity. Economics has always been, at root, about how to allocate scarce resources for the production of goods and services to satisfy a population's demands, at prices which satisfy both producer and consumer. "
Thus, productivity is a good thing. Producing more goods or services with fewer inputs results in the freeing up of more resources. Perhaps lower prices.
And without productivity growth, there can't be non-inflationary wage growth for workers. Nor, for that matter, non-inflationary growth at all, absent simply adding more resources, such as people or materials.
Productivity increases allow healthy, sustainable and non-inflationary economic growth by releasing resources for other uses, instead of just requiring more resources for a society's economic growth.
Higher productivity is a good and necessary aspect of an economy, not a phenomenon to be lamented or denigrated, as some politicians are in the habit of doing.
Right now, as Republican governor of Texas Rick Perry campaigns, he, and the media, are full of the 'I created' speak. But real conservatives don't believe government creates private sector jobs, per se. Unless, of course, they nationalize something or give money to a company specifically for job creation.
But, mostly, the best one can say about a government executive is,
'S/he orchestrated ab environment of regulatory restraint, moderate taxes and generally favorable conditions for business, thus attracting new companies and facilitating higher employment.'
Further, hearing politicians negatively remark on technology's impact on employment, like Wonderboy did recently, also pains me greatly.
To vilify ATMs, the internet and/or other capital-equipment based productivity increasing tools is to be an economic Luddite.
These inventions either improve existing products and services for customers, lower prices of goods and services, or provide new capabilities, such as online search for and purchase of goods or services. All good things. Things which improve living standards, when measured by consumption and satisfaction per dollar.
That many of these technological improvements or facilitators also result in the elimination of jobs and businesses is simply part of the advance of human civilization.
As a corollary, I think it represents a serious mistake for government officials, e.g., presidents, senators, representatives, governors, to speak of government institutions focusing on 'job creation,' per se.
Since governments don't, and shouldn't, directly create jobs, it would be better to know that those elected officials are working to create environments which are favorable to the growth of existing businesses and the birth of appropriate new ones. Both of which may create jobs.
Yes, ideally one thinks of full employment as a good thing which stimulates economic growth. But that doesn't mean that, say, by borrowing or taxing to raise money, a government entity can then just pay that money to people for "jobs," whatever they may be, and magically create sustained, healthy and productive economic growth.
As I noted in this recent post on my companion business blog,
""All economic problems are about removing impediments to supply, not demand," Arthur Laffer reminds us.
I highlighted Art Laffer's comment because it seems useful to me to focus on the true fundamental nature of man's economic problem: scarcity. Economics has always been, at root, about how to allocate scarce resources for the production of goods and services to satisfy a population's demands, at prices which satisfy both producer and consumer. "
Thus, productivity is a good thing. Producing more goods or services with fewer inputs results in the freeing up of more resources. Perhaps lower prices.
And without productivity growth, there can't be non-inflationary wage growth for workers. Nor, for that matter, non-inflationary growth at all, absent simply adding more resources, such as people or materials.
Productivity increases allow healthy, sustainable and non-inflationary economic growth by releasing resources for other uses, instead of just requiring more resources for a society's economic growth.
Higher productivity is a good and necessary aspect of an economy, not a phenomenon to be lamented or denigrated, as some politicians are in the habit of doing.
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.
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.
Thursday, June 16, 2011
Public Union Employees Know.....
James Bovard wrote a hilarious editorial in a recent edition of the Wall Street Journal describing his stint with the Virginia Highway Department as a youth, entitled My Summer Road to Perdition.
In it, he quotes his crew's number two man, John, on the subject of the department building a new road,
"Why does the state government have to do this? Private businesses could build the road much more efficiently, and cheaper, too."
The rest of Bovard's editorial detail the shenanigans we all suspect, but rarely actually see, whereby the state employees wasted taxpayers' money while ostensibly doing the public's business.
Ironically, one of my close friends, a public school teacher, echoed Bovard's sentiments regarding a recent local road construction project.
The road in question has been closed or opened for limited usage, with delays, for months. It has, of course, affected nearby roads, completely disturbing pre-existing traffic volumes and patterns and causing huge delays.
What galls my public sector friend is driving by other unionized public sector employees who are doing either nothing, very little, or something at a glacial pace.
As a fellow public sector union employee, he knows what they are doing and told me so,
'They're obviously going slowly to make the project last longer so they are paid more for that work.'
Being a taxpayer, and seeing an activity performed by public sector union employees which could have been bid to private contractors, my friend knows he's paying too much. Of course, as an employee of a monopolized trade- public school teaching- he knows he isn't vulnerable, so he feels safe and entitled to criticize the state and county road crews.
But it's obvious he knows, instinctively, what they are doing. Because he does the same thing.
In it, he quotes his crew's number two man, John, on the subject of the department building a new road,
"Why does the state government have to do this? Private businesses could build the road much more efficiently, and cheaper, too."
The rest of Bovard's editorial detail the shenanigans we all suspect, but rarely actually see, whereby the state employees wasted taxpayers' money while ostensibly doing the public's business.
Ironically, one of my close friends, a public school teacher, echoed Bovard's sentiments regarding a recent local road construction project.
The road in question has been closed or opened for limited usage, with delays, for months. It has, of course, affected nearby roads, completely disturbing pre-existing traffic volumes and patterns and causing huge delays.
What galls my public sector friend is driving by other unionized public sector employees who are doing either nothing, very little, or something at a glacial pace.
As a fellow public sector union employee, he knows what they are doing and told me so,
'They're obviously going slowly to make the project last longer so they are paid more for that work.'
Being a taxpayer, and seeing an activity performed by public sector union employees which could have been bid to private contractors, my friend knows he's paying too much. Of course, as an employee of a monopolized trade- public school teaching- he knows he isn't vulnerable, so he feels safe and entitled to criticize the state and county road crews.
But it's obvious he knows, instinctively, what they are doing. Because he does the same thing.
Monday, April 25, 2011
John Taylor's Simple Spending/GDP Chart
Economist John B. Taylor wrote an editorial in this weekend's edition in which he simply focused on how federal spending has exploded under Wonderboy from its much lower prior levels, as expressed as a percentage of GDP.
Here's the chart he produced.
Scary, isn't it?
Taylor asks why we can't simply return to federal spending levels, as a percent of GDP, that we experienced prior to 2009? Otherwise, as Taylor's chart demonstrates, Wonderboy plans to lock in new, higher levels of spending which are unusual and, ultimately, unsustainable.
Good question.
Scary, isn't it?
Taylor asks why we can't simply return to federal spending levels, as a percent of GDP, that we experienced prior to 2009? Otherwise, as Taylor's chart demonstrates, Wonderboy plans to lock in new, higher levels of spending which are unusual and, ultimately, unsustainable.
Good question.
Monday, April 18, 2011
Two Important WSJ Editorials by Alan Reynolds & Phil Gramm
In two editions of the Wall Street Journal late last week, Alan Reynolds and Phil Gramm provided key insights into why Wonderboy's proposed tax policies and overall tax-and-regulatory programs of since he took office in 2009 are bound to fail in reviving the US economy and placing it on a sound footing for long term, non-inflationary growth.
Reynolds, whose sensible pieces on tax policies may be found under posts on my companion business blog under his name, wrote that,
"Both individual income taxes and overall federal taxes have long been a surprisingly constant percentage of GDP- 8% and 18%, respectively- regardless of top tax rates on salaries, small business and investors. It follows that the only reliable way to raise real federal revenues over time is to raise real GDP."
The 18% figure which Reynolds cites is supported by David Ranson's WSJ editorial from May of last year, in which he refers to "Hauser's Law." That is his term for the nearly-constant relationship of federal taxes collected being a near-constant 19% of GDP.
Reynold's recent editorial is worth reading for the wealth of detail he provides on behalf of his argument. It's very convincing.
Further, as he notes, "rich" has been defined, or dumbed, down to only the $250K and up level. It's sounds, as Reynolds quotes the First Rookie, impressive to say "trillions of dollars in....tax cuts that went to every millionaire and billionaire in the country."
But we've all read pieces dissecting how a real family of 3-4 with an income of between $250-300K is far from "rich," never mind very, very far from being "millionaires."
What I take away from Reynolds' excellent piece is the continuing confusion, whether deliberate or the result of genuine economic illiteracy by the administration's and Congressional Democrats, is that incomes associated with specific tax rates, total taxes paid, and taxes as a percentage of GDP, are all quite different.
Regardless of rates being moved up or down, over time, personal income tax filers generally pay about 8% of US GDP. Raising rates won't change this because the economic behavior of people, and economies, are extremely sensitive to tax policies. Taxes are not a static arithmetic product of incomes and new, higher tax rates.
Phil Gramm, also a trained economist, and former Texas Senator, makes a different, but equally important point in his editorial entitled The Obama Growth Discount.
Gramm provides a simple Gordian-style analysis of the relative changes in economic situation from Carter to Reagan and, again, from pre-Obama to Obama.
Gramm's point is that,
"A compelling case can be made that Reagan's tax cuts, Social Security reforms, regulatory reforms, and limits on the growth and power of the federal government not only helped the economy shake off the malaise of the 1970s but generated an economic growth premium that bore dividends for Americans until 2007."
Like Reynolds, Gramm provides a wealth of statistics to support his contention.
He then observes the federal government's actions under the current administration, concluding,
"Whether in absolute or relative terms, whether in comparison to our own experience or the performance of our competitors, America's wealth-producing ability has been diminished.....Big government costs more than higher taxes. It is paid for with diminished freedom and less opportunity. You can't have unlimited opportunity and unlimited government."
It's a simple but powerful insight. And, with Reynolds' reminder that Americans can really only afford some 18-19% of GDP as tax revenues, Gramm's points explain why our current economic 'recovery' has been so anemic. It's not a Reagan-style recovery, but a much more limited, stifled one.
Reynolds, whose sensible pieces on tax policies may be found under posts on my companion business blog under his name, wrote that,
"Both individual income taxes and overall federal taxes have long been a surprisingly constant percentage of GDP- 8% and 18%, respectively- regardless of top tax rates on salaries, small business and investors. It follows that the only reliable way to raise real federal revenues over time is to raise real GDP."
The 18% figure which Reynolds cites is supported by David Ranson's WSJ editorial from May of last year, in which he refers to "Hauser's Law." That is his term for the nearly-constant relationship of federal taxes collected being a near-constant 19% of GDP.
Reynold's recent editorial is worth reading for the wealth of detail he provides on behalf of his argument. It's very convincing.
Further, as he notes, "rich" has been defined, or dumbed, down to only the $250K and up level. It's sounds, as Reynolds quotes the First Rookie, impressive to say "trillions of dollars in....tax cuts that went to every millionaire and billionaire in the country."
But we've all read pieces dissecting how a real family of 3-4 with an income of between $250-300K is far from "rich," never mind very, very far from being "millionaires."
What I take away from Reynolds' excellent piece is the continuing confusion, whether deliberate or the result of genuine economic illiteracy by the administration's and Congressional Democrats, is that incomes associated with specific tax rates, total taxes paid, and taxes as a percentage of GDP, are all quite different.
Regardless of rates being moved up or down, over time, personal income tax filers generally pay about 8% of US GDP. Raising rates won't change this because the economic behavior of people, and economies, are extremely sensitive to tax policies. Taxes are not a static arithmetic product of incomes and new, higher tax rates.
Phil Gramm, also a trained economist, and former Texas Senator, makes a different, but equally important point in his editorial entitled The Obama Growth Discount.
Gramm provides a simple Gordian-style analysis of the relative changes in economic situation from Carter to Reagan and, again, from pre-Obama to Obama.
Gramm's point is that,
"A compelling case can be made that Reagan's tax cuts, Social Security reforms, regulatory reforms, and limits on the growth and power of the federal government not only helped the economy shake off the malaise of the 1970s but generated an economic growth premium that bore dividends for Americans until 2007."
Like Reynolds, Gramm provides a wealth of statistics to support his contention.
He then observes the federal government's actions under the current administration, concluding,
"Whether in absolute or relative terms, whether in comparison to our own experience or the performance of our competitors, America's wealth-producing ability has been diminished.....Big government costs more than higher taxes. It is paid for with diminished freedom and less opportunity. You can't have unlimited opportunity and unlimited government."
It's a simple but powerful insight. And, with Reynolds' reminder that Americans can really only afford some 18-19% of GDP as tax revenues, Gramm's points explain why our current economic 'recovery' has been so anemic. It's not a Reagan-style recovery, but a much more limited, stifled one.
Friday, February 11, 2011
Job Creation Weighs On Wonderboy's Re-Election In 2012
I'm effectively cross-posing from this post on my companion business blog today.
The "overtly political" passages which I elided from Schiller's piece were these,
"President Obama has urged us to be "patient" with this jobless recovery. But it's worth asking how long it will take to get back to the employment levels we experienced before the recession of 2008-09. How patient will we need to be?
The "overtly political" passages which I elided from Schiller's piece were these,
"President Obama has urged us to be "patient" with this jobless recovery. But it's worth asking how long it will take to get back to the employment levels we experienced before the recession of 2008-09. How patient will we need to be?
The White House keeps hoping for monthly job gains of 250,000. But even gains of that magnitude—more than double the average gain last year— would not get America
Bubba Clinton's adviser, James Carville, authored the famous sign in his boss' campaign war room,
"It's the economy, stupid."
This job growth math ought to be scaring the pants off of Wonderboy and his campaigners.
It ought to cheer those of us who believe, despite Wonderboy's assertions in his interview with Bill O'Reilly that he's a socialist. With the First Rookie gone, the more job-killing 'accomplishments' of his administration, including excessive regulation, uncertainty regarding government intrusion into business, and health care legislation, could be reversed, and robust job growth once more unleashed in America.
Monday, January 3, 2011
Austin Goolsbee's Debt Ceiling Lies
I happened to catch the perennially wan-looking administration chief economic hack, Austin Goolsbee, on CNBC this morning. Or at least some recently-recorded remarks by him.
The topic was the House Republicans' threat to maintain the US debt level ceiling, rather than, as is typically done, automatically vote to raise it.
Doing so is much like your credit card issuer routinely raising your account limit every time you come within a few dollars of exceeding it, no questions asked.
To illustrate how surreal administrations, particularly this one, have become, Goolsbee claimed that failing to increase the debt ceiling would cause a US default.
Isn't it interesting that Goolsbee chose not to argue for drastic federal budget slashing, in order to fit spending within the existing debt ceiling by cutting new borrowing?
The administration's culture is simply out of touch with America's current fiscal reality. We indifferently run continuing annual deficits and ever-increasing external debt, while continuing to fund overly-generous transfer payment programs which are unlinked to the national economic health.
I hope Congress does hold firm on the debt ceiling, citing fiscal prudence. Then the administration will be forced to come to terms with its lavish spending and begin to live within the existing debt levels.
Let the spending rollback begin!
The topic was the House Republicans' threat to maintain the US debt level ceiling, rather than, as is typically done, automatically vote to raise it.
Doing so is much like your credit card issuer routinely raising your account limit every time you come within a few dollars of exceeding it, no questions asked.
To illustrate how surreal administrations, particularly this one, have become, Goolsbee claimed that failing to increase the debt ceiling would cause a US default.
Isn't it interesting that Goolsbee chose not to argue for drastic federal budget slashing, in order to fit spending within the existing debt ceiling by cutting new borrowing?
The administration's culture is simply out of touch with America's current fiscal reality. We indifferently run continuing annual deficits and ever-increasing external debt, while continuing to fund overly-generous transfer payment programs which are unlinked to the national economic health.
I hope Congress does hold firm on the debt ceiling, citing fiscal prudence. Then the administration will be forced to come to terms with its lavish spending and begin to live within the existing debt levels.
Let the spending rollback begin!
Thursday, December 9, 2010
The Tax Rate & Unemployment Insurance Deal
The recent Congressional-White House deal to retain tax rates for two more years on all incomes, in exchange for 13 more months of unemployment insurance, strikes me as just more business as usual in Washington.
I know many will credit the Republicans with forcing the tax rate hikes, due to lapsing cuts from 2001, two years into the future.
But only temporarily delaying their expiration- again- and allowing yet another unprecedented extension of unemployment insurance benefits, doesn't fix anything. It simply expands the deficit from the latter spending.
Couldn't the GOP members of Congress have at least insisted on offsetting spending cuts for the unemployment benefits? I'm all for helping the needy, but the US taxpayer and government budget is not a bottomless pit. We're so clearly at a point of requiring spending ceilings and tradeoffs that this would have been an ideal time for the GOP to stick to that point.
Instead, voters see more of the same old games. Dangling temporary tax cuts while borrowing or taxing them to transfer their wealth to those who aren't creating value.
Hardly the dynamic US economy that so enriched our nation for generations.
I know many will credit the Republicans with forcing the tax rate hikes, due to lapsing cuts from 2001, two years into the future.
But only temporarily delaying their expiration- again- and allowing yet another unprecedented extension of unemployment insurance benefits, doesn't fix anything. It simply expands the deficit from the latter spending.
Couldn't the GOP members of Congress have at least insisted on offsetting spending cuts for the unemployment benefits? I'm all for helping the needy, but the US taxpayer and government budget is not a bottomless pit. We're so clearly at a point of requiring spending ceilings and tradeoffs that this would have been an ideal time for the GOP to stick to that point.
Instead, voters see more of the same old games. Dangling temporary tax cuts while borrowing or taxing them to transfer their wealth to those who aren't creating value.
Hardly the dynamic US economy that so enriched our nation for generations.
Wednesday, December 1, 2010
More Tax Cut Drivel On CNBC
The other morning on CNBC's SquawkBox program, Carlos Whatshisname was debating the now-constantly newsworthy topic of of extending the Bush-era tax cuts.
As the guest pundit described the economic stimulus to be experienced by such extension, Carlos, ever the dyed-in-the-wool, mindless liberal, solemnly intoned,
"But they'll have to be paid for sometime down the road."
What is it about liberals and ignorance of so-called dynamic scoring? Do they really still believe that cutting tax rates loses revenue, because nobody invests more or works harder when they get to keep more of what they earn?
You'd think CNBC would be less backward than that. But they're not. Instead, they continue to spread misleading propaganda that all tax cuts must be 'paid for,' because the problem is never government spending, it's the wealthy not paying their 'fair share,' however that is determined.
As the guest pundit described the economic stimulus to be experienced by such extension, Carlos, ever the dyed-in-the-wool, mindless liberal, solemnly intoned,
"But they'll have to be paid for sometime down the road."
What is it about liberals and ignorance of so-called dynamic scoring? Do they really still believe that cutting tax rates loses revenue, because nobody invests more or works harder when they get to keep more of what they earn?
You'd think CNBC would be less backward than that. But they're not. Instead, they continue to spread misleading propaganda that all tax cuts must be 'paid for,' because the problem is never government spending, it's the wealthy not paying their 'fair share,' however that is determined.
Friday, October 1, 2010
Ohio Democratic Congressman Tim Ryan's Bizarre Alternative Universe
This morning's CNBC program, Squawkbox, featured an interview with Democratic Ohio Congressman Tim Ryan. Listening to Ryan made me wonder if he doesn't live in some bizarre, alternative universe.
For example, he defended Wonderboy's healthcare bill, blithely claiming that 'much middle class suffering would have been avoided if we'd passed this years ago.'
Really? It's already resulting in rising premiums and, yesterday, McDonalds Corporation's internal email regarding dropping its employee healthcare plans. More expensive coverage of fewer people before the plan has even hit its stride. Just great.
Then Ryan assailed the Chinese yuan, claiming that they are dumping because, thanks to lower wage rates, some specific good they produce hits US shores at a price that equals the US cost to simply produce the same item.
Ryan then bizarrely launched into a diatribe about green energy, and how its use would make the US competitive in some heavy industry product sectors. Too bad Ryan seems not to understand that wind and solar can't be reliably used for heavy power applications, never mind their higher prices, sans subsidies.
In Ryan's world, real economics don't matter. Only what politicians want to attempt to create with subsidies, transfer payments and other schemes which make King Canute's command of the sea to retreat look reasonable, by comparison.
It evidently doesn't occur to Ryan that we shouldn't want growth in jobs in the US which rely on trade wars or subsidies to make them "competitive" with low-end Chinese jobs. That this is a losing battle.
Ryan happily identified himself with Wonderboy's entire agenda. But, then again, he was named by Frisco Nan to the House Democratic leadership team, so you'd expect nothing less from a true believer.
A true believer in a solidly blue Ohio district, at that.
Still, it's a troubling but revealing portrait of how screwed up and out of touch the ruling liberal Democrats are on important matters of economics, trade and healthcare.
For example, he defended Wonderboy's healthcare bill, blithely claiming that 'much middle class suffering would have been avoided if we'd passed this years ago.'
Really? It's already resulting in rising premiums and, yesterday, McDonalds Corporation's internal email regarding dropping its employee healthcare plans. More expensive coverage of fewer people before the plan has even hit its stride. Just great.
Then Ryan assailed the Chinese yuan, claiming that they are dumping because, thanks to lower wage rates, some specific good they produce hits US shores at a price that equals the US cost to simply produce the same item.
Ryan then bizarrely launched into a diatribe about green energy, and how its use would make the US competitive in some heavy industry product sectors. Too bad Ryan seems not to understand that wind and solar can't be reliably used for heavy power applications, never mind their higher prices, sans subsidies.
In Ryan's world, real economics don't matter. Only what politicians want to attempt to create with subsidies, transfer payments and other schemes which make King Canute's command of the sea to retreat look reasonable, by comparison.
It evidently doesn't occur to Ryan that we shouldn't want growth in jobs in the US which rely on trade wars or subsidies to make them "competitive" with low-end Chinese jobs. That this is a losing battle.
Ryan happily identified himself with Wonderboy's entire agenda. But, then again, he was named by Frisco Nan to the House Democratic leadership team, so you'd expect nothing less from a true believer.
A true believer in a solidly blue Ohio district, at that.
Still, it's a troubling but revealing portrait of how screwed up and out of touch the ruling liberal Democrats are on important matters of economics, trade and healthcare.
Tuesday, September 28, 2010
Regarding Michigan's State Investments In Battery Producers
Jennifer Granholm, Michigan's governor, was recently on CNBC crowing loudly about how the state has invested in battery makers which chose to locate facilities in Michigan.
Beaming happily and egged on by a typically-clueless Maria Bartiromo, Granholm gushed about how the state had attracted business to the state to create jobs by investing government, which is to say, state taxpayer money, in the companies.
When I heard this, my first thought was,
'How much more corrupt can you get?'
Far from providing a level playing field for industry, Granholm's form of crony capitalism makes the state the heavy-handed goon, with legislative and police powers, which can fend off any legitimate competition from the state's pet investments.
From what I gathered, Granholm's team selected new battery makers as the recipients of the state's capital. In time, it's reasonable that a group of workers skilled in related production and design may develop. Perhaps some of them will have better ideas on how to design and produce similar batteries.
What if a group of them seek to attract capital and set up a new company?
Won't it be in the state's interest to obstruct that? After all, a new competitor to a company in which the state has invested could result in losses, or fewer profits, for the taxpayer-backed firm.
It doesn't take much thought to see how dangerous and potentially corrupt the practice of state's investing in private enterprise can be, does it?
As soon as the state become a partner in a particular business, it has an interest in using its absolute powers to prevent competition from arising, or punishing it if it does.
Rather like, well, the US government owning GM. It has a vested interest in its car producer besting competitors.
It's very disturbing to see this occurring at the state level. And, worse, to see a governor trumpeting it as a positive thing.
Of course, Baritromo never thought to grill Granholm on these issues. If such a question even entered Maria's head, it's likely she chose future access to the governor over doing a thorough, journalistic interview on the topic of Michigan favoring some businesses over others with its investment capital.
It marks just how fascist our economy is becoming. And I use the word literally, not emotionally, i.e., according to this description,
"Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it."
Granholm's investments in private companies certainly follows this logic, doesn't it? And, having Michigan investment dollars as capital, the companies involved are more prone to suasion by the state on matters of labor, unions, and who knows how many other aspects of the businesses?
It's an entanglement that should never occur in the US, whether at the federal or state level. It boils down to government favoring one or more businesses over others, and then being suspect of using government power to favor its pet investments.
Beaming happily and egged on by a typically-clueless Maria Bartiromo, Granholm gushed about how the state had attracted business to the state to create jobs by investing government, which is to say, state taxpayer money, in the companies.
When I heard this, my first thought was,
'How much more corrupt can you get?'
Far from providing a level playing field for industry, Granholm's form of crony capitalism makes the state the heavy-handed goon, with legislative and police powers, which can fend off any legitimate competition from the state's pet investments.
From what I gathered, Granholm's team selected new battery makers as the recipients of the state's capital. In time, it's reasonable that a group of workers skilled in related production and design may develop. Perhaps some of them will have better ideas on how to design and produce similar batteries.
What if a group of them seek to attract capital and set up a new company?
Won't it be in the state's interest to obstruct that? After all, a new competitor to a company in which the state has invested could result in losses, or fewer profits, for the taxpayer-backed firm.
It doesn't take much thought to see how dangerous and potentially corrupt the practice of state's investing in private enterprise can be, does it?
As soon as the state become a partner in a particular business, it has an interest in using its absolute powers to prevent competition from arising, or punishing it if it does.
Rather like, well, the US government owning GM. It has a vested interest in its car producer besting competitors.
It's very disturbing to see this occurring at the state level. And, worse, to see a governor trumpeting it as a positive thing.
Of course, Baritromo never thought to grill Granholm on these issues. If such a question even entered Maria's head, it's likely she chose future access to the governor over doing a thorough, journalistic interview on the topic of Michigan favoring some businesses over others with its investment capital.
It marks just how fascist our economy is becoming. And I use the word literally, not emotionally, i.e., according to this description,
"Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it."
Granholm's investments in private companies certainly follows this logic, doesn't it? And, having Michigan investment dollars as capital, the companies involved are more prone to suasion by the state on matters of labor, unions, and who knows how many other aspects of the businesses?
It's an entanglement that should never occur in the US, whether at the federal or state level. It boils down to government favoring one or more businesses over others, and then being suspect of using government power to favor its pet investments.
Friday, September 24, 2010
Another One of Wonderboy's Failed Economic Team Departs
Larry Summers announced his resignation from Wonderboy's economic team on Tuesday evening.
Coming after the departures of budget chief Peter Orzag and economic adviser Christine Romer, Summers' departure pretty clearly signals that even Wonderboy realizes, if only privately, that his team has propagated an economic disaster.
Of course, every pundit in sight, including even conservative Larry Lindsay, spun Summers' resignation as natural, expected, completely normal, etc. I guess it's the usual public ass kissing so that Summers won't be angry with anyone, lest they need to be on good terms with him in the future for business.
Despite all the protestations that these jobs are so grueling and, thus, everyone wants to leave in two years, you really have to wonder. Summers apparently loses tenure at Harvard if he's not back by January.
And, if the team were doing so well, why wouldn't these people simply move into new administration jobs, rather than fleeing the (sinking?) ship?
And what happened to be Summers replacing Geithner, or becoming Fed Chairman? Surely Wonderboy doesn't want to lose such a proven, excellent economic aide?
And why is it that the prior, published work of both Romer and Summers contradicts their statements while members of Wonderboy's economic team? Maybe Paul Krugman should have had either Summers' or Romer's job in the first place. Then, again, if he had, who would have been on the outside, writing purportedly-objective editorials favoring the administration's economic actions, when not complaining that they weren't liberal enough?
Coming after the departures of budget chief Peter Orzag and economic adviser Christine Romer, Summers' departure pretty clearly signals that even Wonderboy realizes, if only privately, that his team has propagated an economic disaster.
Of course, every pundit in sight, including even conservative Larry Lindsay, spun Summers' resignation as natural, expected, completely normal, etc. I guess it's the usual public ass kissing so that Summers won't be angry with anyone, lest they need to be on good terms with him in the future for business.
Despite all the protestations that these jobs are so grueling and, thus, everyone wants to leave in two years, you really have to wonder. Summers apparently loses tenure at Harvard if he's not back by January.
And, if the team were doing so well, why wouldn't these people simply move into new administration jobs, rather than fleeing the (sinking?) ship?
And what happened to be Summers replacing Geithner, or becoming Fed Chairman? Surely Wonderboy doesn't want to lose such a proven, excellent economic aide?
And why is it that the prior, published work of both Romer and Summers contradicts their statements while members of Wonderboy's economic team? Maybe Paul Krugman should have had either Summers' or Romer's job in the first place. Then, again, if he had, who would have been on the outside, writing purportedly-objective editorials favoring the administration's economic actions, when not complaining that they weren't liberal enough?
Thursday, July 8, 2010
Frisco Nan on Economics, Job Creation & Unemployment Insurance
You cannot make this stuff up.
Over the recent July 4th holiday weekend, I was nauseated to see a video clip of Frisco Nan explaining why and how extended unemployment insurance benefits "are the best way" to create jobs.
According to economics Nobel Laureate Nan, giving the idle your tax dollars, after a rinsing and haircut by the federal government's sticky fingers, to the unemployed allows them to spend, spend, spend!
All that spending will, of course, create new jobs!
Yep....untold millions of jobs. That's why it's "the best way" to create new jobs.
Not cutting payroll taxes for everyone. Or extending the Bush tax cuts. Or lowering income tax rates across the board.
Those old, unworkable ideas would give people their own money back to spend or invest. Maybe start a new business.
No fun there for Nan and her Progressive friends, is there?
Nope. Instead, it's much much better for billions of your tax dollars, either taxed now, or in the future, to pay for borrowed money, to be sprinkled onto people who aren't working. See, they are better positioned to spend your money than you are!
See?
Good. Now you understand Frisco Nan's school of economics.
Over the recent July 4th holiday weekend, I was nauseated to see a video clip of Frisco Nan explaining why and how extended unemployment insurance benefits "are the best way" to create jobs.
According to economics Nobel Laureate Nan, giving the idle your tax dollars, after a rinsing and haircut by the federal government's sticky fingers, to the unemployed allows them to spend, spend, spend!
All that spending will, of course, create new jobs!
Yep....untold millions of jobs. That's why it's "the best way" to create new jobs.
Not cutting payroll taxes for everyone. Or extending the Bush tax cuts. Or lowering income tax rates across the board.
Those old, unworkable ideas would give people their own money back to spend or invest. Maybe start a new business.
No fun there for Nan and her Progressive friends, is there?
Nope. Instead, it's much much better for billions of your tax dollars, either taxed now, or in the future, to pay for borrowed money, to be sprinkled onto people who aren't working. See, they are better positioned to spend your money than you are!
See?
Good. Now you understand Frisco Nan's school of economics.
Tuesday, June 29, 2010
Hillary's Unintended Support for Supply-Side Economics
Steve Forbes wrote a priceless editorial in the Wall Street Journal on Monday lambasting Hillary Clinton for her misguided support of Brazil's tax policies.
Quoting Hillary as saying regarding the US,
"The rich are not paying their fair share,"
Forbes went on to cite her extolling Brazil's tax-to-GDP rate.
Unfortunately for Hill, as Forbes pointed out, that doesn't mean Brazil has high tax rates on the rich. Quite the contrary, it's a textbook example of Reaganomics. The highest Brazilian rate is,
"a mere 27.5%, far below our top federal rate of 35%, which, given the complexity of our tax code, is actually closer to 38%."
This would be funny, if it weren't so sad as a commentary on the economic illiteracy of our current leaders and administration.
I'd love to hear Hillary's rebuttal when someone pointed out Forbes' editorial and asked her about her closet endorsement of low tax rates.
Quoting Hillary as saying regarding the US,
"The rich are not paying their fair share,"
Forbes went on to cite her extolling Brazil's tax-to-GDP rate.
Unfortunately for Hill, as Forbes pointed out, that doesn't mean Brazil has high tax rates on the rich. Quite the contrary, it's a textbook example of Reaganomics. The highest Brazilian rate is,
"a mere 27.5%, far below our top federal rate of 35%, which, given the complexity of our tax code, is actually closer to 38%."
This would be funny, if it weren't so sad as a commentary on the economic illiteracy of our current leaders and administration.
I'd love to hear Hillary's rebuttal when someone pointed out Forbes' editorial and asked her about her closet endorsement of low tax rates.
Friday, June 11, 2010
Liberals & Economic Illiteracy: Now We Have Proof
In a recent Wall Street Journal editorial entitled Are You Smarter Than a Fifth Grader?, Daniel B. Klein, a professor of economics at George Mason University, provided evidence that liberals truly are less economically literate.
Rather than try to restate this provocative article, I'll just quote the salient passages,
"Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.
Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents' (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian.
Consider one of the economic propositions in the December 2008 poll: "Restrictions on housing development make housing less affordable." People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.
Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.
Therefore, we counted as incorrect responses of "somewhat disagree" and "strongly disagree." This treatment gives leeway for those who think the question is ambiguous or half right and half wrong.
The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).
How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.
Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.
Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.
Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%).
The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect.
Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us."
So the conclusion is inescapable. By a wide margin, liberals are simply less informed about economic realities.
This helps explain Wonderboy's and Congress' current mistakes- endless bailouts for favored constituencies, endless borrowing and printing of money to subsidize the unemployed, endless housing subsidies, etc.
A lot of what must occur to fix America's economic ills is to replace the current economic dunderheads with less liberal, more economically literate members of Congress and the next administration.
Rather than try to restate this provocative article, I'll just quote the salient passages,
"Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.
Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents' (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian.
Consider one of the economic propositions in the December 2008 poll: "Restrictions on housing development make housing less affordable." People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.
Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.
Therefore, we counted as incorrect responses of "somewhat disagree" and "strongly disagree." This treatment gives leeway for those who think the question is ambiguous or half right and half wrong.
The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).
How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.
Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.
Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.
Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%).
The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect.
Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us."
So the conclusion is inescapable. By a wide margin, liberals are simply less informed about economic realities.
This helps explain Wonderboy's and Congress' current mistakes- endless bailouts for favored constituencies, endless borrowing and printing of money to subsidize the unemployed, endless housing subsidies, etc.
A lot of what must occur to fix America's economic ills is to replace the current economic dunderheads with less liberal, more economically literate members of Congress and the next administration.
Friday, March 19, 2010
As Went Detroit....So Goes America?
A friend of mine, born in Detroit, sent me the URL to this sad video.
If, as the reporter notes, you want to see the future of the US under Wonderboy's maximal socialistic plans, Detroit in the present is a good place to start.
Sad. Very, very sad.
If, as the reporter notes, you want to see the future of the US under Wonderboy's maximal socialistic plans, Detroit in the present is a good place to start.
Sad. Very, very sad.
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