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Archive for the ‘Economy’ Category

Many people have heard the saying “War is the mother of all invention”, but I tend to think desperation works just as well. Only when you are backed into a corner and disaster looms inevitably ahead are you willing to consider the most creative solutions to the situation you’re in. As is the case in California, where possibly the worst state budget crisis in the country exists, and drastic cutbacks will be necessary to avoid bankruptcy. It looks like Gov. Arnold Schwarzenegger has got his thinking cap on, and is listening to any money-saving proposal that comes across his desk. We’ve been critical of Gov. Schwarzenegger in the past (in the article Don’t Lay a Finger on my 40″ Plasma), but this time I think he deserves acknowledgement for promoting (or maybe even coming up with) a true Red Seat Idea.

Gov. Schwarzenegger has put forward a plan to send 20,000 illegal immigrant prisoners that are currently housed in California state prisons back to Mexico, and although he has the right to seek deportation for any person that is here illegally, that’s not what’s happening here (read the full story from the AFP here). There isn’t going to be a caravan of buses filled with Mexican criminals showing up at the border, but instead Gov. Schwarzenegger would like to give Mexico the money to build and operate a new prison for it’s citizens that have committed crimes on our soil. Is this genius? You decide. The first benefit of such a proposal is the cost savings. The Governor’s office put out a statement saying that this plan would save close to 1 Billion, because it would half the costs of building and running a prison in the U.S., and when you’ve got a budget deficit of 19.9 billion, every billion helps. The second benefit is that it eases the already overcrowded prison system in California which currently houses 70,000 prisoners over it’s intended capacity. The third foreseeable benefit is that when the prisoners sentences are complete, they are already in Mexico, and can be released into Mexico without any deportation costs or the risk of having them back on the streets of California right away, which can’t hurt the crime rate, and might save them from having to pay to house these prisoners all over again when they become repeat offenders (that would be Mexico’s problem). On a side note, I’m not naive enough to think that some of these inmates won’t make their way back into the U.S. after their release, but it’s still a much more equitable situation, for surely not all of them will, and the alternative is trusting the INS to do their job and send them back to Mexico after they’re released from a prison here. I like the idea of having all of them all start off back in Mexico, and we take our chances.

What’s in it for Mexico? Money and jobs. California gives them the money to build a prison that they get to keep, and that prison is staffed with Mexican citizens, which creates hundreds or maybe even a thousand jobs for a country that could sure use it. I doubt the Mexican government would pass up the opportunity for economic gain, and this could lead to more states trying this option in the future, which brings me to the most important point. This story has great national relevance, because although most states aren’t in as bad a shape as California, they’re on their way, and many more creative ideas will be needed to stem the tide. Maybe your state could implement a similar idea, or maybe something like this will inspire your state’s leaders to not be afraid of trying something unconventional. Either way, coming up with aggressive cost-cutting measures would be prudent in any state right now, before they end up in same hole that California currently resides in. It’s also the right thing for the people. If any level of government is spending tax dollars that it doesn’t need to, it’s stealing from it’s citizens, and in the end, hurting it’s own economy. Sound Familiar?

U.S. Senate

I was looking over some recent poll data this week, and was struck by a very odd pattern that I though was worthy of discussion. In the last 7 days alone I saw 5 polls that showed a disconnect between the views of American voters and the policies being pushed by our elected representatives. I thought I would outline these items here, and see if anyone can tell me who our “representatives” are actually representing.

Item #1: Religious displays being allowed on public lands and the celebration of religious holidays in public schools. ‘Tis the season,…unless your a government bureaucrat. Every news outlet lately seems to be reporting some story about a Fire Department being forced to take down their Christmas tree, or state employees being told that using the greeting “Merry Christmas” is a punishable offense, or a school being banned from singing Christmas carols in their holiday pageant. There was even one school that would not allow students to exchange gifts that had any connection to Santa Claus, Rudolph, christmas trees, candy canes, mistletoe, etc. and banned the use of wrapping paper that had a red and green color scheme (I couldn’t make this stuff up if I tried). Most of these anti-holiday policies and bans are dished out by the elected officials of local municipalities (although State and Federal entities aren’t innocent of it), usually after they receive a complaint from a singular party, and also under the threat of a lawsuit. It’s good to know that our local officials will stand up for us when one misanthrope claims their offended (God forbid). Where do the American voters stand on this? Well, I am happy to report that a Rasmussen poll conducted this week shows that “76% of adults believe religious symbols like Christmas Nativity scenes, Hanukkah menorahs and Muslim crescents should be allowed on public land.” Only 13% disagreed. Even better, “Eighty-three percent (83%) believe public schools should celebrate religious holidays.” Only 14% Disagreed. (read the full Rasmussen report here). I won’t go into all the reasons that I feel the same way, but if you’d like my full opinion on this topic you can read my post “Melting Pot or Empty Pot?“. Why is it that the average American adult can read the statement “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press;”, as written in the 1st Amendment of the Constitution, and clearly see that no law prohibiting people from freely expressing their religion should be made, and that having religiously associated symbols (like Christmas Trees) displayed anywhere on public land, or displayed by a public employee does not constitute a law establishing a religion? Whereas our elected officials and legislators read this and somehow twist it into something that bans any mention of religious holidays in any place owned, operated, or even slightly funded by the government. Those poll numbers are pretty overwhelming, so I hope that our representatives get the message or get replaced.

Item #2: Health Care Reform. I won’t bore you with the details on this one either, as my views are clearly expressed in my articles, “Helath Care of Today vs. Health Care of Tomorrow” and “BS Detector: Urgency of Health Care Reform“. However I think it is worth noting that as of 12/14, “Fifty-six percent (56%) of U.S. voters now oppose the health care plan proposed by President Obama and congressional Democrats.” Only 40% support it, and that is the highest level of opposition found in the last six months of polling. Rasmussen also notes, “Perhaps more significantly, 46% now Strongly Oppose the plan, compared to 19% who Strongly Favor it.” (see the full Rasmussen report here). Doesn’t it seem odd that the more our Federal legislators push this reform, and the closer it gets to passing, the more we as a nation object to it? Shouldn’t the opposite dynamic be in place?

Item #3: A second stimulus package and bailout money for states. Just this week another 446.8 Billion dollar omnibus spending bill passed the senate, and all this spending has Americans heads spinning (read the full story from Politico here). As if that wasn’t bad enough, there has also been a lot of talk on capitol hill about a financial bailout of state and local governments, which seems like the equivalent of some financially irresponsible parents giving a credit card to their even more irresponsible children. Unfortunately, the children in this example probably got their spending habits from watching their parents, if you catch my drift. A Rasmussen poll conducted on 12/08 shows that “Fifty-eight percent (58%) oppose giving bailout money to financially troubled states.” Only 22% favor this initiative (read the full Rasmussen report here). “On top of that, 56% of Americans oppose the passage of another economic stimulus package this year.” Only 33% favor it, yet the parade of spending seemingly has no end.

Item #4: Free market economy. This one shouldn’t even be up for debate, as a free market economy is what this nation was founded on, but increased government regulation on businesses, the banning or over-taxation of particular products or services that the public desires, the creation of more and more public sector jobs at the expense of private sector jobs, government-run health care, and tax-funded government bailouts of private industry are just a few examples of items that have begun to undermine our free market system. However, “A new Rasmussen Reports national telephone survey finds that 76% of voters now say a free market economy is better than one managed by the government. Only 10% prefer an economy managed by the government” (read the full Rasmussen report here). This really doesn’t come as a huge surprise to me, but the folks on Capitol Hill seem to be marching to a different drummer, and that drummer is playing a song called “Oh what a glorious day, when the free market becomes a little less free” (or something along those lines).

Item #5: The culmination of these factors. When you add together all four of the items above, what do you get? According to Rasmussen Reports, “For the second straight week, just 30% of U.S. voters say the country is heading in the right direction”. 65% believe it is headed in the wrong direction, and that’s the highest level that number has reached during all of 2009 (read the full Rasmussen report here). So why do our politicians continue down this track? Who are they truly representing? The only logical conclusion is that they’re not representing us, but representing themselves (or the special interest groups/high-powered organizations that fund their elections). Either that, or they think they are that much smarter than the people that elected them, and no what is best for us when we don’t. Would you rather be treated like an idiot, or have someone sell out your interests for personal gain?

So what can we do about it? Well let me assure you that our democracy is not dead yet, and we, as a people, still have the power to remove individuals from office if they don’t do the job we elected them to, and our weapon is a simple vote. Vote them right on out the door. I know it seems as though these corrupt politicians are in there for life, but hope is springing up around the nation, and we need to maintain and strengthen the momentum that has begun. If you don’t believe me, let me leave you with one last Rasmussen poll that I thought was telling this week. Senate Majority Leader Harry Reid, who is the primary architect of the Senate health care reform bill and has been at the forefront of the health care reform debate since day one is up for re-election in 2010. Reid is seeking a fifth term, holds the prestigious “Majority Leader” status and has already served for 24 years as a Nevada Senator, so he’s a shoe-in, right? Not at all. Rasmussen has been polling him against 3 different possible Republican opponents, and no matter who they pit him against, he is losing (read the full Rasmussen report here). In each race he trails by 4-7 percentage points, with only 2-3% undecided. This shows a great deal of fortitude on the part of the people of Nevada, and an even greater sign of what’s to come nationwide in the 2010 midterm elections, because if his seat is at stake, every incumbent’s seat is at stake. It would sure be a poor time to let your voter registration lapse…

There is a historic United Nations Convention on Climate Change taking place right now in Copenhagen, Denmark. Many proposals on how to fix global warming are being discussed, but one very popular idea is for wealthier industrialized nations to transfer massive amounts of wealth to poorer nations (somewhere in the neighborhood of 10 Trillion) to help them deal with the “ravages” of climate change (read the full NY Times article here). The theory is that since industrialized nations contribute the most to pollution, and thus climate change, we should pay for our sins by giving trillions of dollars to poorer, less-developed countries in Africa, Latin America, etc. that will feel a stronger effect from the climate change we’ve caused. Sounds pretty fair to me, after all, if you cause the damage you should pay the price right? Actually, in this case, no.

The first thing we need come to grips with is the truth of this proposal. So often all the money our government spends seems distant, and we lose our personal connection to it. We see numbers like 100 Million, 1 Billion, 10 Trillion, and it almost seems like and endless well of funds that is unrelated to our daily lives. We must remember that every dollar they spend comes out of your paycheck and mine. You should always ask yourself if something that the government is spending your money on is justified. Should they have taken that hard earned money from you to pay for that item, or should they have let you keep it. So let’s apply that to this situation. Should the U.S. government take your money and give it to third-world countries, so that they can spend it on environmental initiatives? If your answer was no, your going to be upset, because in that same NY Times article I referenced earlier, President Obama said that the U.S. would pay “it’s fair share” and a White House statement referred to this monetary assistance as a “humanitarian imperative” and “an investment in our common security”. I urge you to remember this the next time your feel financially strapped. Look at you paycheck, see how much the Federal government is taking, and picture dump trucks full of money pulling up at the borders of countries like Bolivia, Nigeria, and Singapore, and dumping their loads (your dollars are in there somewhere). Maybe the driver of the truck will lean out and yell, “Enjoy going green” as he pulls away.

Let’s look past the fact that hard working Americans will be subsidising the “environmental makeovers” of some impoverished nations for a moment, and look at some of the other issues with this proposal. First, there is the “global warming and ravages of climate change” component, which is the necessary fact to justify our donation. This proposal places a “guilt trip” on all the wealthy and industrialized nations, saying that they have obviously caused the climate change which will ruin the conditions in many countries that did nothing to deserve it, and when you put it like that, you almost feel the need to whip out your check book and start writing. However their “you did the crime, now you must do the time” approach is a sham, because they neglected to mention that the crime has yet to occur. They want use to start shoveling billions of dollars per year to help them handle the “ravages” of climate change that will occur. There has been no evidence of any sea level rise worth noting, no property lost, no people hurt, and even worse, the average temperature around the globe has decreased since 1998, as CO2 levels have continued to climb (read the full story from The Australian here). These countries are selling use a case of snake oil to cure environmental woes that they have yet to experience. If these countries do eventually suffer any loses, and if these loses can be directly attributed to climate change, and if that climate change can be directly attributed to things done by the U.S., then we’ll talk.

Another big problem with this proposal is the economy. There is a lot of legislation floating around Washington that would put massive taxes on energy, strict laws on carbon emissions, and much higher standards on businesses to reduce their carbon footprint. All of these things cost money, and will lead to much higher energy costs, product costs, and taxes on the American people. It will also add one more expense to American businesses that can’t afford it, which will lead to job stagnancy, job loss, higher product costs, or certain businesses having to shut down altogether. Implementing these things at a time when our economy is so fragile can’t be a recipe for success. I’d have no problem with these moves if we were facing the worldwide catastrophe that many environmental groups would have you believe, after all being alive and paying more taxes or higher product costs sure beats being dead with all my money, but the science doesn’t support those dire conclusions. The Wall Street Journal wrote a piece back in 2008 that points out lots of great facts about the earth’s surface temperature only increasing 0.31 degrees Fahrenheit since the 70’s, Greenland having the same temperature today as it did as it did in the mid-50’s (don’t worry about its ice sheets melting), and lots of other great stuff (read the article here). There’s no denying that climate change exists. Records indicate that the earth was cooling from the 1930s-1960’s (when industrialized nations began pumping the most CO2 into the atmosphere), and definitely warmed from the 1970’s-1990’s, and since 1998 has cooled slightly again. The climate does change, but the only question that I don’t hear enough people asking is, “How do we know that climate change hasn’t always been occurring, with some periods warmer and some colder, and we’re just the first generation that’s had the technology to measure it?” Are we naive enough to think that because we can now measure and quantify a climate change, that it must be the first time in global history that it has happened, and to further that point, because it is the first time we must be the cause? There have been periods of time throughout history where the planet has been abnormally warm (such as the Medieval Warm Period, 800-1300 A.D.) and abnormally cold (such as the Little Ice Age, 16th-19th Century). These periods are historic fact and can be researched by anyone with a computer or local library, and they are facts that are not in dispute. We also know that the planetary civilization at that time could not have been a contributing factor to these climatic swings, as the population was not sufficient enough and the industrial technology was not advanced enough to add pollution of a significant scale.

So let’s say that you don’t agree with my first point about our tax dollars going to other nations, and let’s also say that my argument against the certainties of global warming didn’t change your mind, I’m going to surely get you with this last point. If you believe that our government should be spending billions of dollars to help fix the environment, why wouldn’t we spend that money right here at home? It’s would be a win-win situation. We know that smog clouds over Los Angeles are real, we know that overflowing landfills and dumps are a real threat in towns around the country, and just today a story came out that millions of Americans are drinking dirty tap water that doesn’t meet the standards of Safe Water Drinking Act (read the full story from CBS News here). This report showed that 20% of the water treatment systems in the U.S. have had violations in the last 5 years, and that these violations included “dangerous bacteria or illegal concentrations of toxic or radioactive substances” that may have gone out to as many as 49 million people. Now there’s an environmental problem we can all get behind. The other side of this is economical, for if we spend the money here on cleaning up our own environmental issues, instead of sending it to foreign countries, it will create tons of jobs and bolster the economy, which is something our government should be trying to do anyway. I told you, win-win. Our money improving our country, what a novel concept.

The U.S. House expenditures for last quarter were released today, and while they were accompanied by the usual sound of a toilet flushing away our tax dollars, there were two surprises. Minnesota Representative Tim Walz and Alabama Representative Spencer Bachus both returned $2,500 that had gone unspent in their budgets to the government, in an effort to help reduce the deficit (read the story from politico.com here). Considering that the national deficit is hovering around 12 trillion, giving back $5,000 won’t do much, but at a time when House Speaker Nancy Pelosi spends $2,740 on bottled water, and House Minority Leader John Boehner averages $273.52 per day on catering services, it’s an excellent symbolic gesture. Considering how much money the various House offices blow through, these two Reps. could have spent that excess on anything and it never would’ve been missed, but both of them are outspoken Fiscal Conservatives (one a Democrat and one a Republican), and they’re willing to put their money where their mouth is. That’s something that is often lacking amongst today’s politicians and that is definitely worthy of a “Roar of Approval”.

Wait,…there’s more. Back in 2008 Rep. Walz took a stand against Congressional pay raises, saying that if one was voted through he would refuse it and give the money back to help balance the budget (read the story from The Minnesota Independent). Rep. Bachus has always refused to take cost-of-living increases in the middle of a Congressional term. Could we have two politicians on our hands that actually practice what they preach, and have the best interests of their constituents at heart, rather than their own pocket books (or at the very least, their stylish man-purses)? If that is the case, I’ve got to say it caught me off-guard. I’ve spent too many days reading story after story about political corruption and fraudulent tax spending practices, and I think I’ve grown cynical. It crept over me slowly, like rust growing on some forgotten Studebaker parked in a cornfield somewhere. It wasn’t intentional, but it can effect my opinion, and it’s nice to have these two Representatives snap me out of it with their actions. Thanks guys.

If you’d like to tell Rep. Walz or Rep. Bachus what you think about their decisions, you can contact them by clicking their name.

I don’t think it will shock anyone to find out that I was totally against the auto bailouts from the beginning, but when I made my list of reasons for having an anti-bailout position, “consumer resentment” was never on there. I guess after watching these Rasmussen polling results I should go back and add it.

If you spend too much time thinking about the auto bailouts, it can be quite infuriating. First off, it really raises my ire to see the government interfering in private businesses, which the Constitution does not give them the power to do even if they feel it is for the greater good. Then you have to think about how they interfered,…by giving these companies our money! The main reason these companies were in trouble is because most Americans didn’t want to give them their money by buying their cars. However, we ended up giving them our money anyway, against our will, and didn’t even get a lousy car in return, all in an effort to keep them in business because we didn’t buy their cars. Does that seem like a really cruel irony to anyone?

But what about the jobs? That is the main justification used by the federal government for these auto bailouts. They say that during the current economic crisis, if GM and Chrysler had gone under, the subsequent job loss would have been just too much for the economy to take, and things would’ve gotten a lot worse than they did. I don’t dispute that, losing all those jobs at once would’ve made things worse at that time, but the economy can’t begin to permanently heal until the final blows are dealt. The Government is making the death of GM and Chrysler a more drawn out and painful one, and they’re doing it on your dime. It’s not unlike a hospital patient being kept alive on a respirator despite having no brain function. The patient is the auto manufacturers (specifically GM and Chrysler) and they are brain dead (as evidenced by the fact that the would’ve gone out of business), but they’re being kept alive with the use of hospital machines (in this case your tax dollars). The most unfortunate similarity in this analogy is the final outcome. Eventually these types of patients are taken off the machines and pass away (in many cases because health insurance or family funds run out), and in the case of GM and Chrysler, they too look like they will die anyway, despite the artificial means that the government used to revive them (I just hope it happens before our tax dollars run out).

Maybe the Federal Government should just classify GM and Chrysler as non-profit charity organizations, because that’s how they’re currently operating. They’re making no-profit, but remaining open so that people can have jobs. These are jobs that don’t really exist, because by any Government-Unaltered economic conditions, these companies would no longer exist, and that’s where the charity part comes in. In the end you may ask, “what’s the harm? If it keeps people working and keeps the economy from getting worse, that seems like it’s worth a few of my tax dollars, right?” The harm is the same harm that always occurs when you apply a short-term solution to a long-term problem. The problem festers. It seems to be at bay because you’ve managed to mask it a bit, like dragging a rug over a giant, rotting whole in the floor. The floor is still rotting, and the whole is getting bigger, but everything seems alright.

Not allowing GM and Chrysler to fold is a short-term solution. If they had simply shut down, things would have been bleak, and I’m the first to admit it. Then the free market begins to heal itself. Think about why they were going to go out-of-business in the first place. The government would have you believe that these companies are just helpless victims of the bad economy, but that’s simply not the case. Many other auto manufacturers have managed to survive without government funding. Ford is still alive, last I checked, and many foreign car companies that have U.S. manufacturing plants, such as Toyota, Hyundai, Nissan, and Honda all seem to be doing alright. The sad truth is that GM and Chrysler engaged in business practices that caused them to make an inferior product (or at least a product that was not as desirable to the American public) at a price that didn’t compete. That’s how the free market works. Survival of the fittest. If you make a better product at a lower price you will get more customers, and if your competition can’t do the same, they will no longer be in business. So what would’ve happened if GM and Chrysler had shut their doors?

Any cars that GM and Chrysler have sold since they were bailed out would have been sold by another company, since those car buyers still would’ve needed cars. When you split the “pie” of car buyers into fewer pieces, each remaining car company would’ve done more business, and more business means potential growth. Over time, having two fewer giants competing for auto sales should allow continuous growth among the remain companies, and as the economy gets better, possibly even room for a new upstart company or two in the mix. Business growth and new companies means jobs, and that works out well considering all the unemployed people who would be looking for jobs, that used to be employed by GM or Chrysler. That’s how the economy heals itself, but it has not been allowed to do so. The car companies that were viable on their own have not reaped the benefits of running a better business, by gaining the market share or customers that they should have from the closings of GM and Chrysler, and therefore they haven’t grown their businesses. Any business that GM and Chrysler is still getting is a waste, since it won’t help to heal the economy once these companies eventually go under anyway.

I think that the bitter frosting on this cake of poor economic policy is the fact that Americans should want to buy cars from GM and Chrysler, so that they can succeed and we can see a return on our investment of tax dollars (don’t ever forget that those are your dollars that were invested, not the Government’s), but instead the resentment towards the bailouts are so high they would prefer to just write-off the billions and buy a car elsewhere. Maybe the White House can quantify that sentiment, and factor it into their next set of economic projections.