Posts Tagged ‘dodd frank’

Giant Omnibus Laws and Comprehensive Immigration

Thursday, May 23rd, 2013

Dear Friends,

It seems to me, the only reason to pass massive omnibus bills, is to hide pernicious things in it. Every time you open the paper lately there is this or that omnibus bill being debated. Everything must be passed in a “comprehensive” bill. We and our representatives are told the World will end if it is not passed. We are subjected to pressure tactics by disingenuous elites who seek nothing like what they pretend to propose. There is a better way… To pass small, easily readable bills that can be understood by the vast majority of the people.

The “Affordable Care Act” is one such example. As the leviathan law is enacted by the bureaucracy the pages of regulation grow alarmingly. Even organizations and groups that initially promoted the bill, because in most cases they got waivers from it, are calling for it’s repeal now they understand their waivers are temporary. You know a bill is not good when the Elite that pass it exempt themselves from it. The labyrinthine rules and regulations have done incalculable damage to our economy and I maintain the Affordable Care Act is the primary reason this economic recovery has been so pathetic.

The Dodd Frank banking regulations create more problems than solutions. The results of Dodd Frank are in direct opposition to the stated goals. This titanic of legislation was supposed to prevent banks from getting “Too big to fail” and stop the systemic risk that such large financial institutions represent to the economy as a whole. Under Dodd Frank the giant banks have grown ever larger at an increased pace. The law’s provisions further lowers economic output by putting huge regulatory strains on small and medium sized banks. The very banks that loan to small businesses! Talk about pernicious, banks are discouraged from loaning to small businesses, under Dodd Frank. This is another reason our economy has performed so poorly.

Now our elected representatives are debating a massive comprehensive immigration bill. This bill is supposed to stop illegal immigration, put an end to defacto amnesty, bring hard working immigrants in from the shadows, stop welfare fraud, stop rampant identity theft, make our system more “fair,” and put a puppy in every child’s arms. Even a cursory look at history shows these are the least likely outcomes of such a bill. When Ronald Reagan passed a similar bill, with the same lofty goals, the results went wide of the target. The enforcement mechanism in that historic bill was draconian enforcement of the illegal immigrant labor laws on firms that hired them. Those businesses would be severely punished. They were at first, but as soon as the monied and elite felt the sting, the enforcement mechanism was tossed out. Does anyone believe, for even a second, the same thing won’t be done now?

Another pernicious result of the last comprehensive immigration bill was to encourage a tsunami of illegal immigration. Millions poured across the porous Mexican US border. Apparently rewarding illegal behavior seems to encourage illegal behavior. Although that may seem obvious to you and I it is a revelation to our lawmakers. The Heritage Foundation wrote a paper claiming that if this bill passed, the cost to the US would run to 6.4 TRILLION dollars, and were pilloried for it. The reason… almost all the illegal immigrants in the US today are low skilled and low wage laborers. Does the US have a dearth of low wage low skilled laborers? Of course not! That is absurd. The US has need of high skilled workers. Those that have come here and have no jobs will certainly remain on the welfare roles. To think otherwise is insane.

If the government passed small bills, the results could be anticipated, if they fall short. it would be an easy task to remove them and pass different ones that actually solve the problem. Take immigration for example. It would be easy to take away the incentive for people to immigrate illegally, by passing a law that anyone found to be in the US illegally, cannot ever become a citizen. Once that law is passed, examine the results, if it needs to be changed, change it. If it doesn’t work at all, repeal it and if it works, leave it alone and go on to the next step. Drastically raising the number of people who can come to the US of the type the economy needs. Keep it simple and it will simply work.

The elite are in love with comprehensive, omnibus laws however. They cannot see any reason to pass small, easily understood bills that work, when giant omnibus bills are so effective at hiding pork. The elite can claim to have done something when they have in fact made matters worse. This plays to their benefit however. Because the worse they make things, the more need we have of large comprehensive bills, to rectify the problems created by past giant comprehensive laws. Laws that continue the slide to a totalitarian state. You see, passing omnibus bills is a self promoting phenomenon, like fire… and no one wants out of control fire, except arsonists.

Sincerely,

John Pepin

Jobs and Demand

Sunday, July 24th, 2011

Dear Friends,

It seems to me that the one thing that would improve the lives of every human would be to drive up demand for labor. This would have several positive effects, wages would increase reflecting the sliding demand/supply curve, more people would be sucked into the workplace as a result of the lowering unemployment rate, and the increase both in labor participation rates along with the increase in wages would allow people to invest and spend more, all having a net positive effect on the economy.

Rising demand always, at least in the short run, drives up costs, as supply struggles to catch up with new demand. Labor is no exception. Malthus claimed that the masses would reproduce themselves into poverty, thus his “swamp of humanity,” but we see his conjecture has not come to pass. Along with all the many other anti capitalist theories prognosticating the fall of the market system as a means of production. The fact is that the lot of the worker has improved every decade since the inception of the market system. Since the ejection of the Jews from Spain and their immigration into Denmark. So we can safely say that rising demand for labor, no matter the type demanded, increases the rate at which labor is paid.

The participation rate would increase due to the rising wages. As wages rise those that are only moderately comfortable in the dole will change their status from dependant to producer. This has many positive effects on an economy. As participation rates improve, the GDP per person improves. GDP per person is an important measure of the standard of living in a society. Higher GDP per person equates to better standard of living. Look at it this way, if a person is dependent on the welfare state, he or she lowers personal GDP as much as they get in dole. If that person becomes productive their wages are added to GDP instead of subtracted. So we can see a doubling of the effect on an economy of a person moving into the job market.

The new money that is created in an economy with a rising demand for labor drives up saving and spending. Investment improves the balance of trade of a country. Every Euro, Dollar, Ruble, Peso or Drachma saved goes into the aggregate supply of investment money in a society. If the demand for investment money in a country exceeds it’s native savings rate the investment capital comes from foreign sources. Those foreign monies subtract from the aggregate balance of trade. All demands for capital contribute to this, from a house loan to government deficit spending, they all effect the balance of trade.

Spending creates more demand for products, goods and services. Additional spending in a country drives up demand for everything which drives up demand for labor. Take our long suffering sofa salesman. The sofa he sells had to be made. It had to be packaged, the packaging had to be also made. The sofa had to be shipped to the store. Which requires trucks and men. The sofa has to be shipped to the buyer’s home. Then the packing material must be disposed of. The economic impact of a single purchase goes far deeper into an economy than most people think. So any increase in the purchasing power of the masses translates into a huge economic impact.

Of course all these goods are predicated on an increasing demand for labor. So we must honestly ask, “What gets in the way of increased demand for labor?” Regulation, corruption in the public service sector and too burdensome taxation are the biggies. Notice the first I mentioned was regulation? Regulation is corrosive to the creation of small business. The more rules that a potential small business owner faces the lower the likelihood he or she will take the risk. Every regulation raises the likelihood of a startup failing. Every regulation is a far greater burden for a small business to bear then a giant mega business and regulation drives up the cost of labor subtracting from any increase in wages. All in all regulation is a drag.

If the US government really wanted more jobs and a greater labor participation rate, it would rescind the Healthcare Law in it’s entirety, and to save the dwindling number of small banks, repeal Dodd Frank. These two actions would quadruple the demand for labor in the US overnight. But the Elite prefer to fight over how quickly which side will bankrupt the country. When the truth is, eventually, probably sooner rather than later, the US government will have an auction and no one will come. Then the demand for labor will drop… World wide.