Posts Tagged ‘jobs’

Why Has the Stimulus Failed Us?

Sunday, August 22nd, 2010

Dear Friends,

It seems to me that anything that quenches the natural dynamism in the market system, results in lower economic growth, to the point of recession if the anti stimulus is sufficient. I contend that is exactly what is holding back the US economy now.

As Schumpeter said, everyone hates the entrepreneur. His innovations result in the destruction of whole industries and ways of living. But that dynamism, the “creative destruction” is what continually builds up the economic standard of living of society. Nations unwittingly quench the dynamism that drives economic growth. With regulation aimed at stifling the negative externalities that result in free entrepreneurial enterprise.

Much must be controlled else the markets would seize up. There must be accountability when dealing with people’s money. Especially money someone has saved over many years to have for retirement. Such funds are the most precious that a banker, broker, etc…. will ever handle. Someone went without, to put those funds in the hands of a person, so the capital can be invested effectively. That capital should be invested in the means of production resulting in a short and long term capital gain for the saver. Anything that misappropriates the money of investors must not, under any circumstances, be tolerated.

But regulation too often benefit’s the people regulated at cost to potential competitors. Existing companies get deferrals to upgrade to the new regulation. New businesses don’t. This keeps entrepreneurs from competing with established firms. The established firms then grow larger, taking up more market share and monopolizing their business sector.

Japan is an example of this type of corporatist regulation and banking. We see that when The Japanese corporations were growing entrepreneurially the Japanese economy grew at a fast pace. But for the past few decades the corporatist economy has shown it’s weakness. Once the corporation grows too large it becomes inefficient. In part due to the ever burgeoning bureaucracy. In this way the lack of entrepreneurial competition slows economic growth.

Japan’s embrace of Keynesian economic theory… Japan’s corporatist economic system is the most effectively stimulated by Keynesian economics. Large corporations have the in house legal ability to navigate government bureaucracy. Entrepreneurial companies do not. Even though the Japanese model is best suited for Keynesian intrusion Japan has stagnated, despite huge amounts of government spending, for decades. To the point of turning Japan’s huge government surplus into huge government deficits. I have heard that Japan pours more concrete than the US. That is a lot of government spending… Having produced economic stagnation.

The US economic system is far less responsive to Keynesian style stimulus for exactly the reason Japan is better suited for it. The US model is more entrepreneurial based. Except for some highly regulated sectors the US economy in which corporations are encouraged to grow too big to fail the US model is more free wheeling. Entrepreneurs are heroes in America. (To most people except romantic anti capitalists). But entrepreneurs are far less able to tap into government stimulus.

Entrepreneurs have some specialty. They obsess over something the rest of us overlook. In doing so they come up with a new way of organizing business, manufacturing a product or process for the delivery of goods. They are not good at changing their focus on governmental minutia. Rules to keep fraudsters from bilking the system.

So that is why the Keynesian economic stimulus that the Obama administration has been implementing has not worked. The US economic model is far too entrepreneurial in it’s nature. That nature will have to be changed for Keynesian stimulus to have any effect. But as we see with the Japanese model even under nearly ideal conditions Keynesian economics are no panacea. They still lead to stagnation. So why keep ignoring the obvious.

Take the brakes off the entrepreneurs.

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Arizona Law and Illegal Immigration Law

Thursday, July 8th, 2010

Dear Friends,

It seems to me that the stance of the Federal government as stated by Eric Holder is idiotic. To say that state authorities have no ability to arrest people found to be in violation of federal law opens a whole can of worms.

Is this a blanket statement? If it is then what about machine gun laws? They are federal. If a local law enforcement officer comes across a person brandishing a machine gun, that officer wouldn’t be allowed to even notify federal law enforcement about it… according to Holder. Let alone arrest him or her for it. Does this make sense to you?

If it is not a blanket statement then why the constitutional carve out for illegal immigrants? What legal basis could there be for it? So, if Mr. Holder claims that there is a carve out of federal law for illegal aliens, then is it because, there is a clear need for them in the US. One that is so important that it outweighs the mass of legal precedent. Legal precedent that is… all people are equal, under the law. Or has it changed to… all groups, are equal. There are some that are more equal then others. Illegal Aliens for example…

But if the administration is right, that local and State law enforcement cannot enforce Federal law, then I expect people will be getting out their printing presses and printing up $100 dollar bills. Only the FBI can enforce Federal law under the Holder leadership. A person could knowingly pass a printed counterfeit $20.00 bill and the Federal government would frown on a local police officer taking notice.

Slavery is another example. Does it make sense for local and State officials to turn a blind eye to a slavery ring operating in the US? Say…Trafficking in young girls? Under Holders assertion local and State police would be barred from reporting Human traffickers to federal authorities. To do so would make it less likely that people would report crime to the police. Using Holder’s logic.

What if Local police came across a treason plot that was about to be hatched? Holder would argue that it isn’t local police authority to intervene. If the government was overthrown and a communist regime set up, that then murdered twenty five million Americans, according to Eric Holder, that would be the price for liberty…. Or something. All to overturn a law Mr. Holder has not read.

No… Holder and the administrations want to use illegal immigration as a lever. A lever to use to move the American people to accept “comprehensive” reform. The law, as it is written, is “unsustainable.”

The definition of “comprehensive” is making all the illegal immigrants citizens… again. It had such a negative effect on illegal immigration the last few times it was tried it should definitely be tried again, and again, and again… Government loves to re-try things that have failed in the past. The bigger the failure the more it must try again.

The definition of “unsustainable” is anything the government wants to take over and control. If the government wants to take over and control health care they call it unsustainable. A word that, I am sure, has been thoroughly polled and tested… for it’s public palatability.

The real issue is that a faction of the American political Elite see an opportunity. They believe, if they make millions of poorly educated people who can’t speak English citizens, then the new citizens will reward that faction with their political support. It is not totally unfounded. Most of the poor and uneducated in South America vote reliably for communist governments. The faction of the American Elite that want to make them citizens agree with communist philosophy… they just call it progressivism. Their (illegal immigrants and the Elite’s) interests seem to be aligned.

Of course this would make a true underclass in the USA. Something the progressives have wanted for years. Real inequality… Not the ginned up, pretend variety they have been claiming is in the US. Real poverty, enforced by a language barrier and an education ceiling. Trapped in poverty and ignorance the Elite believe the Latinos will keep them in office forever…

Forever trapping the “undocumented workers” in poverty. Because to ever let them get up would undermine the power of the Elite… And if the power of the Elite is ever threatened… The Elite become dangerous even to their old allies.

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Posted in Group Politics, Law, Mercy, philosophy, polictics of class envy | No Comments »

Calderon’s Hubris

Sunday, May 23rd, 2010

Dear Friends,

It seems to me that Felipe Calderon should be deeply embarrassed. To be the head of a government that has done such a poor job that people want to leave in droves. Fleeing the violence, poverty and government corruption. A human hearted man would be ashamed…

But Calderon is not. He is unabashed. In fact, he even has the gall to go to the nation that is feeding, clothing, housing and otherwise providing for his citizens, and chastising it. Chastising it for not being friendly enough. This guy is the stereotypical hypocrite.

The laws against illegal immigration in Mexico are draconian. The laws regarding legal immigration are draconian as well. Add to this the utter corruption in the Mexican police force. Immigrants cannot receive welfare in Mexico. Especially illegal immigrants. Immigrants in Mexico have to have outside income or be employed by the Mexican state. They are not allowed to have jobs in Mexico.

The US media have been rife with stories about older people going into Mexico to buy prescription drugs. (That were prescribed to them). After the pharmacist sells the US citizen the drugs the pharmacist then calls the police. The police intercept the old folks. Arrest them. Then ransom them back to their children.

The total lack of opportunity in Mexico is directly related to the utterly corrupt and (fortunately less) socialistically inclined government. One example of the foolishness is that the Mexican government has nationalized all it’s oil. The Government run extraction company is extraordinarily inefficient. The ready access to oil money funds more corruption in the Mexican government.

Had the Mexican government went the capitalist route a (possibly Mexican) company would lease the land from the government to extract the oil. The company would be held responsible for environmental problems. The company would be responsible for cleaning up after the oil has been extracted and the company would be responsible to keep the infrastructure up to date. Another advantage of the capitalistic approach would have been better and more thorough geological research. More importantly… less money would be underground to contribute to governmental corruption.

The violence in Mexico is the result of the utter corruption in the Mexican government. Even as Calderon pointed his finger at the US for problems his government has created he disregarded the three fingers pointing back at him.

Put it this way… If the easy access to weapons in the US leads to violence in it’s neighbors… why is Canada so quiet? If keeping drugs illegal creates violence in neighboring countries… Why is Canada so quiet? Huge amounts of Marijuana come into the US from Canada.

So is the problem really somewhere else Mr. Caldron? Or is it closer to home?

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Posted in International Power, Mercy, Societal Myth, economy, media, philosophy, polictics of class envy | No Comments »

Obama Care

Wednesday, March 10th, 2010

Dear Friends,

It seems to me, the two thousand page bill before congress, (that is to be passed without the usual vetting process of a sixty vote majority in the Senate), has to lower healthcare costs… After all, it not only creates more paperwork for doctors to do. It puts restraints on doctors ability to treat patients,. It lowers Medicare and Medicaid payments to doctors. It forces insurance companies to take on unparalleled adverse selection. While forcing insurance companies to submit to onerous regulation. At the same time forcing anyone who has opted not to get insurance to pay to get insurance else be fined… No perverse incentives there.

This healthcare debate has been hanging over the heads of the American people and business like a sword of Damocles. Held by one blond strand. No knows on who’s head it will fall on when it becomes law. We do know this administration has invested too much political capital to let it fail. So fall it must.

Insurance companies seem to be in the crosshairs but if you think about it for a minute we are the ones actually in the cross hairs.

When medicare and Medicaid is cut, but the rolls are enlarged, the extra costs will be born by those that have private insurance. Doctors will have to shift their extra costs of making out paperwork to prevent Medicare/Medicaid fraud. Their costs will necessarily go up. They must recoup them or go out of business. Insurance companies are the ones carrying that water today and it looks like they will be tomorrow too.

When insurance companies pick up the slack for government programs it is like a hidden tax on that industry. Taxes are costs and costs are passed to consumers. The same law that forces us all to be consumers will also force insurance companies to accept very sick people (adverse selection). Further driving up costs.

Moving them from government’s books to the private sector’s books. But the economy is like a pair of pants. No matter what pocket you take money from it must have been put there.

The people who do most of the putting in are the workers of society. Martialed into productive effort by capitalism. We are the workers. So all of us must necessarily pick up the costs government wants to obligate the insurance industry (us) to. Especially those of us who have opted, as self interested maximizes, not to buy insurance and to use the money, (in what they see) as more productive efforts. They will be forced to redirect their revenue stream into what they see as a less productive course or be subjected to fines. Their free will is overridden by the power of the State to compel action.

We, my friends, are they. Some us reading this have opted not to buy insurance. Partially because of the cost. Maybe because we are gamblers and are betting we will have good health. If this passes, we will not only be forced to buy insurance, but, insurance rates will necessarily go up. Our real disposable income will be greatly reduced. The stream of money flowing to the healthcare industry will turn into a torrent. This law will open all of our wallets to the vacuum of unrestrained spending.

But the administration, counter to popular opinion, has been cagey in debating healthcare instead of the economy. Because every thing they propose to restart the economy will choke it. (Especially this health care bill).The administration’s Keynesian economic policies are undermining the economic growth that would be necessary to provide the updraft to float this lead balloon. So any diversion from jobs and the economy helps this administration… politically. Us on the other hand…

When Obama, Biden, Pelosi, or Clinton go to Canada to have surgery I will have much more faith in government run healthcare. But as long as Stephen Harper keeps coming to the US for surgery…

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Posted in Mercy, economy, philosophy | 1 Comment »

Education

Sunday, March 7th, 2010

Dear Friends,

It seems to me that we should introduce our children to the capitalist system as soon as possible. Tying effort to earnings. The quickest and most easy way to do this is to pay for grades.

The cost is not as much as you might think. If the state paid children one dollar for every grade and for every “A” then a child in tenth grade who scored an A in every class would get forty dollars a week and one thousand six hundred dollars in a forty week school year.

This is not a great expense as far as school goes. The extra cost can easily be made up by increasing class size. As students get used to the idea that they will be tested weekly. A good test result will give immediate gratification in the form of money. Think about how this incentive will work.

Younger students, in the first grade, would be paid a dollar for every A. They could earn four dollars a week if they score all A’s. The cost would be far lower and the reduction in class size to make up the funding would be equally small.

Lower grades would get lower amounts. In First grade for example a B would get the student eighty cents and a C would garner fifty cents. A D or lower wouldn’t get rewarded. Students would try harder for the money alone. The result will be better educated children. With the added benefit that they have tied work and effort to earnings.

Tying effort to earnings makes a nation’s workforce much more efficient. That efficiency (productivity) translates into better pay. (Relative to the global economy). A nation’s people can have many attitudes to work. A negative attitude to work is corrosive to economies. A positive one makes a people wealthy.

With children motivated to learn, (or make money), class sizes will naturally be larger. A teacher will be better able to control a group of students that self control. Problems will be solved on the playground. Remember children are human beings. When there is money at stake human beings self regulate. Immediate positive motivators are most efficient to children.

The argument that children should “want to learn. After all they are the ones who will benefit.” Is totally sophist. Children have no concept of reality. They only just got here. There is no way they can deduce what will be in their best interest ten or twenty years from now. That is why God gave children parents. Society takes them (parents and morals) away.

Poor children will have the most inducement to excel. To a poor teenager forty dollars a week is a fair bit of money. Especially if all they have to do to get it is score well on tests. Every teenager wants money to blow on foolishness. Even if they use it to buy food at least they will have extra food. And the money to buy it.

There was an economic study done a few years ago comparing teacher productivity in 1971 to teacher productivity in 2002. During that timeframe American worker productivity rose much faster than the rest of the world. But American teacher productivity as measured in dollars spent per test score went down. The study figured a seventy one percent drop in teacher productivity. Measured in inflation adjusted dollars from 1971 to 2002. Clearly something is wrong.

The first time I heard of this idea I scoffed. ‘Paying for grades… another way someone else can spend my money.‘ Then I thought about it. Put into the context of incentives, perverse and efficient, the idea has real merit. The political forces that have reduced our schools efficiency are too heavy to move. So if we can convince some schools to enact this program as a pilot the results will speak for themselves. Costs will go down. Because teacher productivity will go up.

Student achievement will go up because students will will it. At a faster rate than before, a new rate, that will reset the curve…

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What Government Can “Do For” The American People.

Sunday, February 21st, 2010

Dear Friends,

It seems to me, the absolute best thing the US government could do “for” the American people, would be to all go on an extended luxury vacation. Spending the rest of their term on it at the American tax payer’s expense. Maybe at Herod’s or Hedonism II. As soon as they announced their plans to do so the markets would rebound like we haven’t seen in our lifetimes. The economy would start generating jobs… in the private sector.

All government seems to do lately is to undermine any economic rebound. As we said in our last blog, their energy policies are a poison pill for any recovery. Moreover government’s policies on healthcare is another source of economic destruction.

The argument that other countries provide “corporate welfare” in the form of “free” healthcare is simple sophistry. To believe this one has to also believe that the money that provides the “free” healthcare is generated out of thin air. We all know this is not true. The money to provide free healthcare is taken from some producer to provide that producer healthcare. In the process efficiency is lost or quality goes down.

The “Stimulus’s” elephant in the room is that, as soon as the stimulus money runs out, the jobs will evaporate. Like the ether they are made of. All the jobs saved or created are government jobs. Jobs that will require tax increases to keep. Tax increases that will, again, undermine any economic recovery. Tax increases that will necessarily require the layoffs of these new or saved government workers.

Now government wants to have “targeted” tax cuts. The problem with targeted tax cuts is that they are less efficient than general tax cuts. Part of the reason is that no one knows where an economic rebound will take place. It may be in some overlooked sector of the economy. Or it may be in a sector of the economy that was thought to be dead. Government’s track record of picking winners is very poor. When government target’s a sector or action, that they feel is good for the economy, other sectors or actions that may have greater benefits are undermined. Simply because money and resources are diverted to the sector or action that has been chosen by government. The market is warped by this type of tax cuts.

Constantly threatening greater and greater regulation and interference with the markets forces business to focus on government instead of profit and job creation. When government is in the mood to gore some oxen… everyone wants to be on the side of government. (To protect their ox from being gored).

Simply threatening regulation has a negative effect on job creation. The threat means business must also horde money and resources as well as focus on government instead of their markets. Both to have in case of a new opportunity opening from the new regulation. Also to protect from opening a new branch, product or service, being regulated out of business by the regulatory innovation. Business necessarily slows when regulation is in the works. When it is perpetually in the works…

Politicians always want to tout that they got “something Done for the American people.” Every time they get something done however they make things worse. Most of what they need to get done are problems of government’s making. Unintended consequences of poorly thought out regulation. Government official’s know, the unintended consequences of their new, poorly thought out regulation to mitigate the consequences of their last, poorly thought out regulation, will be the side of the bread the butter will be on… next legislative season.

So… Send the president and his staff, the congress and their staffs all on a luxury vacation. After a few years they will be more rested and relaxed. The economy will have recovered. And they will be able to swoop in and do something for the American people… Break it again.

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Governent and the Job Market

Sunday, November 29th, 2009

Dear Friends,

It seems to me that if the government wanted to actually lower the unemployment rate in the US it would act as such.

Everything the government is doing will inevitably lead to a lower demand for labor. From the health care initiative to the cap and trade forced reductions in carbon output the government is aiming at reducing the demand for labor in the US.

Take Cap and Trade. It will produce a huge amount of new friction to doing business in the US. Costs will inevitably rise. Both of which erodes GDP growth. As GDP growth is curtailed by the higher cost of energy and the friction of regulation, the result is net loss of jobs.

More importantly the government is doing nothing to stimulate jobs. The bill entitled “Stimulus” was anything but. It’s focus was in government spending. Not on new job creation. Since the focus was on raising government spending to new levels… it was a resounding success. It never was focused on job creation so to say that it has failed in that respect is like saying the Medicare program failed in putting a man on the moon. It didn’t do what it was not designed to do. Government rhetoric aside.

Judging from the actions of the people in charge in the US they have as their goal to reduce the demand for labor in the US. A cynic might say that they are intentionally creating a dependant class. In place of the middle class. To do so, do away with the middling element, would result in a people that are dependant on the ruler. (Hard to see where that could go bad). But as I said, a cynic would believe such a thing.

So what could the government do if it really wanted to generate a demand for labor driving down the unemployment rate and raising the value of labor? What about; Targeted tax breaks to businesses that create jobs, announce a first time business startup tax break, change the regulation that funnels money from small business to ACRON, and cut taxes across the board for everyone.

Targeted tax breaks would lower the cost of labor. Lowering the cost of something of value gives people incentive to purchase that thing of value. If a job would be of marginal value to an employer and the imbedded cost of that laborer is lowered the metrics change. The marginally profitable job becomes quite profitable. Making it far more likely a position will be added to the payroll.

A first time business tax and regulation break would have more effect then it’s cost would indicate. Most businesses don’t make a profit for several years but the rhetoric would create a perception. The chief benefit would be that perception, that it is much easier to start a business, than it previously was. Many people who have good ideas are stymied by what they see as daunting regulation, taxes, and some simply fear the government. By removing, (even if only in the minds of individuals) this pernicious incentive, the number of startups would go up dramatically. After all, isn’t small startups that will generate the next Microsoft?

In a fit of stupidity the government changed the regulation of a law that had at it’s core to help fund small businesses through short term downturns. The banks and lending institutions that participated in the program were told that instead of lending to small businesses they could donate money to ACORN. The banks and lending institutions recognized their cost of doing business would go down and their political clout would rise if they donated money to ACORN instead of lending to small businesses. With all the paperwork and government regulatory costs associated with lending to business the cost calculation was easy. So ACORN’s nest has been padded at the cost to small business. (the engine of job creation). What doe’s this action say about the real objectives of the US government?

More importantly an across the board tax cut would put money into the hands of the people that produced it. If people are smart enough to earn the money they should be smart enough to spend it. But government is of another opinion… The fools would waste it on junk like food, clothing, housing, entertainment, paying down debt etc… the government can spend it on something much more valuable for the American people like, A specialized zoo enclosure for animals a zoo will never get, $500.00 hammers, bridges to nowhere, and other such enlightened projects.

But if more money is put into the hands of the people and less taken and spent by government the demand for labor would inevitably increase. More money in the hands of the people drives up demand for the things that require labor. Money in the hands of government is usually flushed down the toilet.

So… Rhetoric aside, what do the actions of the US government tell you?

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Why Isn’t The Economy Creating Jobs?

Wednesday, October 21st, 2009

Dear Friends,

It seems to me that the economy should be humming along creating jobs…

The dollar is very low as compared to other currencies. The Canadian Dollar is almost at par and is predicted to be at par by the end of the year at 60%. With the US Dollar so low wages in the US are lowered as compared to other nations. Notably the European Union. Making American labor comparatively cheap.

With so many talented and skilled workers being laid off Entrepreneurialship should be rampant. When there are no jobs available many people start a business. There is always a demand for something. Doing so fills a vacuum and pulls other people into job creation as well.

Government is spending gobs of money. Trillions of US Dollars are being spent on TARP and Stimulus. Roads are being repaved and bridges are being painted. With an unprecedented amount of government spending, the economy, (according to John Menard Keynes) should be ripping. (Isn’t painting a bridge more productive than burying money at the bottom of an old mine shaft)?

Government has bought General Motors. The government has appointed the board of directors and the president. Ensuring many high paid jobs will stay. Theoretically keeping the economies in the areas that have auto manufacturing plants viable.

The “problem” of sticky wages seems to have been solved. Workers across the US are taking pay cuts. Many are being forced to take unpaid days off. Union contracts are being broken in bankruptsy court. Wages are more reactive to the market conditions.

The stock market is booming. Up 50% this year. Capital is flowing into the stock market driving up the share prices. As the DOW goes up billions are made. All this money at the hands of people.

The Fed is keeping the interest rate near zero. That is like having the accelerator all the way to the floor. But no matter the access to air an engine needs fuel in the right mixture. Thus the pushing on a string analogy. You can pull a string, (slow the economy), but you can only let up on the string. If there is no pulling back the string will only go limp.

So why isn’t the economy creating jobs?

The government has declared profit a bad thing. Part of the societal myth of the United States is that profit is good. Now it is being redefined. So if profit is bad and those that make profit, (everyone except government and nonprofit) is bad. We the people are bad. This pernicious attack on the foundation of our society is corrosive of job creation. Without profit there can be no jobs. It follows necessarily.

Government is roiling the waters as it comes to regulation. Government is threatening, but everyone tacitly knows, the elite friends of government will have their oxen protected. Just as Bastiat said, “Government is seen as a means to plunder the goods of others and protect your goods from being plundered.” Threatening greater regulation puts a hold on some business. Especially that business that is being threatened by regulation. This is the very definition of friction to the economy.

Government is destroying the perceived value of the US Dollar. Remember caveat currency only has the value we give it. But, like it is public opinion that makes a king a king, as soon as the people see the king with no clothes he is no longer king. The currency of a nation is it’s life blood. Poison it at the peril of the nation.

Government is spending the money very unwisely. By trying to decide exactly where each dollar should go the government is handy capping the US economy. If the money were given back as a temporary tax cut the money would naturally flow to where it was needed. If the banks needed the money it would have flowed there. Manufacturing would have gotten a piece of the pie. Landscapers to Architects would have reaped the benefit. But the way government has decided to spend trillions of dollars, basically on reelection campaigns, it has guaranteed our children will have a lower standard of living than we have had.

Besides, most of the stimulus spending will be kicking in in 2010. An election year. I would think that spending timed to coincide with an election season next year won’t help the economy in crisis this year. Generally emergency spending to fend off a depression is spent quickly. Not earmarked for a year later.

It is a Faustian bargain at best to sell the futures of our children and grandchildren… to get reelected.

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