Posts Tagged ‘business’

Another Sign Atlas Is Shrugging

Wednesday, September 26th, 2012

Prophet?

Long time readers will know that I am a fan of Ayn Rand’s greatest work of fiction, Atlas Shrugged, first published in 1957.  The famed novel  has developed a following over the years because it describes a frighteningly similar world in which the global economy has collapsed, while America remains as the last enclave of a free market, also on its way to collapse under the dogmatic application of the statist doctrine of mass sacrifice.   Through the novel, readers are transported to a world in which the news media has become a lapdog for the statists, economic news is contrived and rigged to hide the onrushing collapse, while most people go about their lives with self-constructed blinders by which they are able to permit themselves not to know or even notice the facts of their increasingly dire situation.  Rand never intended the book to be prophetic, and yet with each passing day, the global economy and the financial markets provide daily reminders of her fictional work.  Economic conditions have grown steadily more awful, and yet we find the media is unwilling to show the American people more than a glimpse of the truth confronting them.  It’s as though Rand’s fifty-five year-old novel is being acted out in real life, in a modern setting wherein the technology has changed, but acts merely as another shady disguise behind which to conceal the operative laws of nature.  It now appears that Atlas is finally Shrugging.

Government has become an enormous bully, not concerned with improving the economic conditions, but instead with concealing them, and companies across the nation have been forced to collaborate in the deceit. Consider the case of Comcast.  The company announced on Tuesday that it would be closing all of its California-based call centers, reducing their number nationwide from thirteen to ten.  The original announcement mentioned that the reason the California centers were being closed was due to the extraordinarily high cost of doing business in that state. According to the Mercury News, Comcast spokesman Andrew Johnson said:

“We have concluded that the cost of doing business makes operations in California expensive and very difficult”

Scott Anderson, the chief economist with Bank of the West is quoted in the same article:

“The cost of doing business in California is a well-known problem across the country and among business owners in the United States. With the fiscal problems in California, these expenses will likely get higher. Tax rates may rise in California.”

As bad as that may be on its surface, the truth is far worse.  After pressure from the state’s Senate President Pro Tempore, Darrell Steinberg(D-Sacramento,) Comcast withdrew its earlier announcement, backing away from a statement that made clear the cause of the decision for the California closures. From the Belleville News Democrat:

“Instead, it said the California closures were needed for cost efficiencies and to consolidate its Western call centers from 13 to 10, based on customer needs, “rather than geography.” It noted that many customers rely on self-help and online tools to handle their service questions, which meant it doesn’t need as many call centers as in the past.”

I would direct my readers to consider what follows in the same article:

That turnaround was greeted warmly by the Governor’s Office.

“It is unfortunate that Comcast’s announcement to eliminate jobs in California inaccurately placed blame on the state, but I am pleased to see the executives at Comcast taking responsibility and correcting the statement,” said Mike Rossi, the governor’s senior adviser for jobs and business development, in a statement.

The governor’s involvement came after Steinberg issued a personal invitation to Comcast executives to meet “to outline their issues and discuss what my office and the Legislature might do to resolve their concerns.” Pending a meeting, he urged Comcast executives “to reconsider their actions.”

Steinberg said he was “puzzled and extremely disappointed” that Comcast representatives had not contacted his office, which represents the Natomas area, until after making its public announcement.

This is what the beleaguered people of California have as a state government:  A Governor who is more concerned with appearances and blame than with the facts.  Notice that Comcast is still going to close the centers, and more than 1,000 California workers are still going to lose their jobs, but the company’s official statements now reflect a more politically acceptable cause for the closures.  This is the sort of crime-boss mentality that now pervades government, from the Federal Government all the way down to State and local institutions of government.  They are no longer concerned with stopping the bleeding, but instead merely concealing it from your eyes, or in this case, merely causing you to believe they hadn’t been the cause.

Ladies and gentlemen, this is precisely the sort of thing that Rand described in her famous novel, and indeed, she even described a breakdown particularly in California, but she was no prophet, much as some might by now be convinced to the contrary.  Rand unflinchingly described the world as it is, and what happens when a people come to believe they have no further need to adhere to the laws of Nature, and that the technologies invented and built by others somehow insulate them the necessity to know the truth, or to somehow evade the objective reality that has been established by the laws of Nature.

At all levels, our governments now join in the gruesome spectacle of pretending that what matters is not what has happened or that will happen, but instead who will be blamed.  The mad rush of politicians to twist corporate arms is another small sign that we are well on our way to a national demise, and I expect that these instances will become more frequent as politicians try to disclaim and evade responsibility for their respective roles in the looming disaster.  Even now, our financial markets are beginning to realize the truth of QE3 (Quantitative Easing, round 3,) and as they do, the market will begin to lose its luster as a concealment for the impending collapse, and the banking industry will no longer be able to hide the truth of the looming collapse by effectively counterfeiting the value of collateral. As real household median income has fallen by 8.2% under President Obama, and as the shrinking number of jobs have caused the number of low-wage workers to increase by more than 30%, it is going to become increasingly difficult to maintain the illusion that “all is well.”

As bad as the government and media collusion in this deception may be, what may be more frightening is that as economic conditions worsen, ordinary Americans will become more polarized, divided into two general groups on either side of the gulf described by the bold line of truth:  Those who see what is and are no longer willing to conceal it for any cause or contrivance, and those who will avert their eyes lest they be forced to grasp the nature of the horrors their continuing silence will have enabled. It is questionable whether disaster may be averted, but it is certain that if the American people fail to recognize the danger, there can be no avoiding it.  It is therefore fitting that as we approach the release date of the second installment of Atlas Shrugged, the movie, and as we watch politicians scramble to avoid blame all while continuing their unrepentant war against us, it’s more important than ever that we refuse to accept the comforting lies they tell.  Their attempt to conceal their responsibility in the impending collapse should not serve as our excuse to conceal our own as Rand’s unintended prophecy continues to manifest around us.
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Note: For those interested, here’s the trailer for the upcoming release of Part II of the movie Atlas Shrugged

 

Staring Down the Barrel of a Gun We Loaded

Saturday, September 15th, 2012

We Loaded It...

I’ve written and re-written this piece a number of times, in part because I don’t wish to cause undo angst, but also in part because I don’t wish to cause too little.  You can blame Barack Obama, George W. Bush, Congresses past and present, or Ben Bernanke and his predecessors for all it matters, because in the context and scope of your life, it won’t make much difference.  We are headed for a complete collapse, and the collapse is no longer some vague notion in some nebulous, faraway universe of remote possibilities.  At least one analyst has concluded that by 2014, at the latest, this country is going to enter a period of economic turmoil that will make the Great Depression of the 1930s look like a garden party.  The media won’t tell you this, whether CNN or the New York Times; neither FoxNews nor the Wall Street Journal.  We are staring directly at the muzzle of a colossal gun, and it’s aimed at the heads of every American, but neither the current President nor the current Congress will tell you how bad it has become.  For two generations or more, the hand-writing has been on the wall, but unlike ordinary ink that will fade with the passage of time, this bit of script has become bolder, heavier and finally, indelible.  There will be no avoiding it.  There will be no escape.  This time, we will go down, and we may well never stage a comeback. The gun is aimed at our heads, and we loaded it.

To understand this will take a little time, although regular readers of this site will know most if not all of the gory details.  For a brief primer on what will soon confront us, please take a look at this report on Hyperinflation at John Williams’ Shadow Government Statistics website.  It’s lengthy, but it is information every American should learn and know, because while it is a bit of a reading chore, particularly for those whose eyes glaze over at the first hint of economic and financial terminology, it is nevertheless important information, and Williams does a remarkable job of not allowing the material to become overly dry. His report really doesn’t need any dressing-up or embellishment to be terrifying.

If you’ve been paying attention to the news beyond the international developments of the last few days, you will not have missed the fact that today, the US credit rating was again down-graded again by Egan Jones.  You should expect this trend to continue for some time, but this downgrade, like the last round of them a little more than one year ago, really doesn’t tell us anything we should not have known: Our currency is on the verge of collapse, and our ability to repay debt is becoming more challenged, but the fools in Washington DC don’t tell you about it because they’re afraid if you knew how bad it really is, you might react badly.  In the movies Armageddon and Deep Impact, the governments portrayed did their best to keep their respective impending disasters secret for as long as possible.  The thinking was: If it’s inevitable, such that all we can do is make things worse between now and the impact(s) by disclosing it in advance, we should say nothing until the last possible moment.  Another way of looking at this is the question I once posited:

“The government is spending like there’s no tomorrow. What if there isn’t?”

The fact is that we don’t need Hollywood or the Mayans to provide apocalyptic scenarios to fulfill this role in our immediate future.  Our Federal Reserve(hereafter, simply “the Fed”) in concert with our Federal government have created something nearly as disastrous, and potentially, every bit as deadly.  As Ben Bernanke uses his powers as Chairman of the Fed to undertake another round of quantitative easing.  As you’ll remember from previous rounds of this same tactic, this amounts to money printing, a way to inject more cash into the market in the attempt to stimulate lending and business activity.  The problem is that each time this is done, what actually happens is that the value of the dollar falls versus commodities such as oil, or other energy sources, and the cost of everything increases.  When this happens, it makes it harder for business to operate, harder for consumers to spend such cash as they may have, and otherwise has precisely the exact opposite effect, all while driving us closer to the brink.  Bernanke is trying to drive us away from a deflationary cycle that could result if the economy stalls too steeply, but the problem is that he’s going to cause what will be infinitely worse.

At the same time, our Congress and our President have added to the problem, because each time they borrow money, the Fed is printing it into existence.  In short, both our fiscal and monetary policies are rigged in favor of inflation, and with all the money-printing, it is only a matter of time before the dollar becomes completely worthless in the world market.  Any small displacement in the market could lead to our economic demise.  Williams’ report for 2012 goes so far as to suggest that you concentrate on bare survival strategies, and defending yourself in the face of complete political and social disintegration.

I know that you’ve been reading about a “financial cliff” somewhere in the distant and murky future, but what I’m telling you to do at this point is that the veil of fog is beginning to lift because that future is no longer distant.  Williams’ report explains thoroughly the main causes of our impending doom, and this isn’t some conspiracy nut.  When he published this update earlier this year, his warnings sounded eerily like my own, and also those of a few other people who have been sounding the alarm, including some in talk radio, in conservative media, and notably, Governor Palin.  At the time of the announcement of QE2, Gov. Palin did a rather bold thing:  She announced to the world the dangers and the certain results.  Naturally, since her evaluation was based on sound economic understanding, her conclusions might well have seemed prophetic in light of all that has happened since.  The truth is that she was merely telling you what must be based on the immutable laws of the universe: There are no free lunches…or anything.

I believe this is one of the reasons the Republican leadership in Congress has done nothing to substantially obstruct President Obama’s agenda.  It is true that they would have faced some political consequences, but what’s more the case is that they are every bit as aware of the impending collapse as anybody in the executive branch.  One might view Congress cynically, and suppose they are “getting while the getting’s good,” and there’s no doubt that some of that goes on, but it’s also true that the problem is so gargantuan that they do not see how they can correct it without throwing the country into complete chaos, and since that’s what’s coming anyway, they see no point in hurrying the matter.

Some have concluded that Bernanke is taking this up now in order to try to help Obama’s re-election, and while there may be some truth to it, the fact is that the situation has been and remains much worse than you’re being told by the media.  We have been in a bottom-bouncing depression since at least 2009, and nothing has animated us very far from the floor.  As I have written many times, they stimulate via the printing press and the deficit, and we get a brief improvement, but then the increased costs in the market come home to roost, and we’re set back to a place no better than before as the costs, driven in large measure by the inflationary effects of the stimulus that quickly act as a brake upon the alleged “recovery” that never materializes.

Elsewhere on Williams’ site, you can find a detailed examination of his treatment of unemployment, and the numbers will shock you.  Add to this the tidbits about the deficit and inflation, and you will begin to understand how you’ve been misled, not only by the media and the administration, but also by decades of shoulder-shrugging politicians in both parties.  By Williams’ assessment, it may be impossible to rescue our nation any longer.

Ladies and gentlemen, I have been urging you since the inception of this blog to make preparations to the best of your abilities.  I hope you’ve been diligent.  Check out Williams’ Hyperinflation report, and think it through carefully.  The evidence of your own daily lives has been telling you all of the happy-talk about “economic recovery” had been a farce.  Like the approach of a colossal asteroid, the government’s ability to hide the impending disaster or disguise the seriousness of our worsening situation has begun to fail.  That is really the only significant meaning of the latest downgrade.  They can’t hide it much longer.  The Piper will be paid.

Some are choosing to ignore all of this in the hope that a change of administration might give us one last chance at a way out, but irrespective of the outcome in November, the chances that our currency survives three more years in its current form is probably fewer than one in ten.  The possibility that we will survive as a nation may be somewhat less.  Fixing this problem will require the institution of spending cuts on a scale that may cause complete social collapse.  Do we expect John Boehner to take on such a monumental chore?  Even if the Republicans take the Senate, Mitch McConnell isn’t exactly the picture of courageous and vigorous leadership.

Saving our nation is no longer simply a political problem in the sense of replacing certain politicians.  It’s a cultural and economic crisis as well, and with all that is going on abroad, it may come down to a matter of literal survival.  It’s time that we begin to face up to this, because our politicians aren’t going to address the  problem until it no longer matters, at which point, they’ll do nothing, but we’ll pay the price.  We always do.  People have asked me what we could do to remedy the problem, but when I tell them, they look away, because they don’t want to face the implications that attend the proposed actions.

At present, we have an annual published deficit of around $1.3 Trillion.  As Mr. Williams’ report makes plain, if the government were forced to use GAAP(Generally Accepted Accounting Principles) in their accounting, the actual annual deficit is in the neighborhood of $5 Trillion. The added $3.7 Trillion consists of new future obligations that the government does not pay, but has promised at some future date.  Many refer to these as the “unfunded liabilities” of our government, but they add up to a staggering amount, in the range of $80 to $120 Trillion dollars in promises.  When one makes promises on this scale, it is sure to affect one’s creditworthiness, never mind one’s credit rating.

Consider the fact that our government collects approximately $2.5 Trillion in taxes, fees, and the like throughout the year, but that this is still well short of the $3.8 Trillion it spends, and then propose cuts in response.  Here’s a dirty, ugly secret the DC crowd won’t point out to you: If you cut everything that is not an entitlement program or debt service, you would still have a deficit.  That’s right, if you eliminated every bureaucrat, soldier, judge, roads project, education expenditure, and all of the other things that government does apart from pay interest on its debt or send payments to individuals through entitlement programs, you could not balance the budget.

What this makes clear is that the problem exists not on the “discretionary” line of the ledger, but entirely on the “non-discretionary” lines in the book.  Leftists will argue that the problem is the lack of revenues, but that’s an absurd hoax. Anything done to increase revenues at this point will actually cause them to decline.  Increased tax rates?  People will earn less to avoid the taxes.  Even those who want to earn more won’t be able to because there will be insufficient demand in the marketplace to provide the commerce needed to generate the revenues we have now.

The only answer to this problem is sharp cuts in government spending, combined with a cessation of Quantitative Easing.  The entitlement programs have become such a massive anchor on our economy that it cannot recover, and they have squeezed out all other spending.  This is why people look away when you explain to them the problem.  They know what it implies about all of our sacred cows in the entitlement sector of government.  As with the old lament, everybody is in favor of massive government cuts until we arrive at their favorite Federal program.  At that point, you are given a stack of excuses, complaints, and ultimately: “Never mind.”

I have news for you, and it’s not pleasant:  These programs will end.  Virtually all of them.  None of them will survive in their current form, if at all.  We are like Greece, only worse, and much larger.  The question our elected leaders have not faced is whether to break the news to us now, while there is some small hope of recovery, or whether they shall just “get while the getting’s good,” and make off in the dark of night after the collapse, leaving us to figure it out.  The fact is that I can’t blame them for opting toward the latter, because we will be worse than Greece in every dimension and measure, both in size, but also in degree, and I believe when a responsible politician ever tells this truth, he will be pilloried, at first in media, and then later by mobs.  Paul Ryan has had just the first taste of this.  Sarah Palin was mocked for such warnings to an extent I’ve never seen for simply stating the dangers of QE2 and all the money-printing.  She was right, naturally, as is Paul Ryan on the matter of entitlements.

The problem is now that it may be too late for any sort of remediation.  The problem has become too vast, and it is as late as that.  What we can do as individuals is to grasp the reality laid out before us.  We can prepare ourselves and our families.  We can vote accordingly.  We can make noise about it.  In the end, we may be forced to watch our nation slide back into the pre-industrial, pre-republican muck from which it emerged.  It’s been a long decline, and we’ve mostly done little but to urge it on as a people.  We’re peering down the loaded barrel, and it’s been our finger’s twitch upon which we are waiting.

One false move… A hiccough… One little lurch…

All The President’s Help

Tuesday, July 17th, 2012

Is this man drunk?

Listening to President Jack-Ass, one would think that nobody could create the first thing without the government standing there to help them.  I take offense at the notion, and more, I am willing to demonstrate how the biggest obstacles I have faced have been born of government regulation, idiotic laws, and crony-capitalism powered by criminal thugs like Barack Obama. As many of you will know by now, I am a horseman, in addition to the profession in which I work, and I have a small thoroughbred farm together with my wife. When we began this endeavor, there was no barn, no tractor, no fences, or horses or even running water. There was no electricity, there was no dwelling, and there wasn’t much at all but an empty field alongside a rural highway with a dozen or so trees scattered far and wide upon it. From the outset, there were problems, and almost all of them were induced by government, and our trials and tribulations have been exacerbated by that same entity, though not exclusively the federal ones. With “help” like his, I would think we’d have been better off on our own.

First, I’d like you to consider the words of the jack-ass-in-chief:

 


Apart from the fact that this maniacal leftist clearly views us all as his property, and all as the beneficiaries of his master plans, he also contends that nobody gets success on their own. In his America, that may be increasingly true, as to be successful, it often seems you must grease the palms of an inordinate number of politicians, both in Washington, and in your home state. Let me take you through a brief litany of how all of these dear helpers, these masterminds of distribution, have helped to hold my small farm down.

In 2004, the entirety of Texas began to fall under a drought that lasted and lasted. For those of us dependent upon feeds and hay, the costs were striking. We watched an ordinary round-bale of coastal Bermuda hay go from a price between $30-40 dollars up to over $110. Just when one thought it couldn’t possibly get worse, the government stepped in to “help.” If you happened to be a cattleman, it was fine help. The government was handing out drought relief, but the key qualification is that your crop had to be for food. Horses did not qualify, since their primary use is not down at the burger stand. Some of you might wonder if I’m not complaining merely because I didn’t get the cash, but I tell you that it was a horrible situation, and I didn’t want the cash, but what I really didn’t want was government deciding who would win and who would lose. You see, all of the cattlemen were now flush with cash, and they could go into the market and buy whatever scarce hay was in existence, and import it from other states too. We soon saw the price of a round-bale escalate from around $100 up to a high of over $170. Now, some of you might be asking: “Well, what if the government hadn’t given them the cash, how would they have fed their cows?” The answer is: They wouldn’t. They would have loaded them up and trucked them to the feedlots and sold them while they could get what they could for them. In short, the market would have responded appropriately. The price of beef would have dropped briefly before spiking upwards, and that would have brought higher prices for future beef that would have eased the pressure on the hay side of the market for everybody.

Of course, in 2005, as all of this was happening, I thought this was a temporary condition, and that the drought would end, and people would come to their senses, and I wouldn’t have need of drastic measures like selling my horses for meat. You see, in a market in which fuel prices were also spiking, and the disposable income of many people was suddenly thin, guess what wasn’t such a big seller any longer? That’s right: Horses. Now you would think that with the end of the drought, the troubles might begin to ease, but no, that wasn’t to be. Government had another nasty surprise: They effectively banned the funding of inspections of horses taken for slaughter. As you might well guess, I hadn’t intended to slaughter mine, but that’s hardly the point. Horse meat is a fine source of protein, much leaner than beef from cattle, and has fed people the world over for eons. In point of fact, long before man ever mounted a horse, he ate them. Some relatively small number of horses always went to slaughter, and much of the meat was exported, or fed large cats at the zoo. These animals shared one general characteristic: They were unfit for other uses, by and large.

What resulted when government decided to “help” again was a glut of unwanted horses, competing for and taking up resources that drove up the cost of maintaining every horse, market-wide. Worst of all, it had exactly the opposite effect of what had been advertised: Many horses were being abandoned, under-nourished, and dumped wherever and whenever their hard-pressed owners could dispense with them. Perhaps all the more ironic, a huge number began to be trucked over the Southern border into Mexican slaughter plants, where they don’t give a damn about humane conditions, never mind meat inspections. In many cases, the horses that did go to slaughter met a more gruesome fate than had they merely been slaughtered here. Meanwhile, the prices of horses was plummeting across the industry, as consumers were under all sorts of new pressures, and as the value of their homes and their money fell, buying a horse hit near rock-bottom on the priority list for many who had enjoyed them for decades. It got so bad, that late last year, Congress actually repealed the ban, although I don’t know if any domestic horse slaughter operations are back in business. The damage has been done.

Just these two federal actions might be enough to convince you of the obstacles government has put in the way of my family’s farm, but there is still a good deal to consider even at the state level, particularly here in Texas. You see, our state hasn’t participated in arrangements like its neighboring states. If you go to Louisiana, Oklahoma, Arkansas, or New Mexico, you will find state-bred programs that actually encourage the breeding of horses in those states. Texas has such a program too, though on principle, I do not participate because I see it as a socialistic subsidy. The difference is that in the adjoining states, they have permitted the expansion of gambling to include “video lottery terminals”(that look suspiciously like slot machines) but the deal struck in these states to allow for the enhanced gambling requires that they be placed at racetracks, and that a portion of the revenues be plowed back into purses for qualifying races limited to state-bred horses. Texas has opted to forgo this form of revenue, with pious-sounding legislators pretending they have been swayed by a moral concern over gambling. In truth, like anything in politics, what you must do is follow the money. Various estimates show that as much as $6 Billion leaves Texas for gambling venues in these adjoining states. There are bus-trips you can get on that will take you over to Louisiana from Houston, where you can sample those “video lottery terminals.” Even if the estimate were double the actual amount, it’s still a huge amount of cash that flows out of Texas into our neighboring states.

How much money do you suppose is spent lobbying legislators in this state to continue to uphold their firm “moral” stance against expanded gambling in Texas? That’s right, for all their posturing, many of the legislators in question are merely taking cash in order to vote against something that would provide large revenues to the state that is now merely bleeding out across our borders. Every other year, in our biennial legislative session, somebody brings a bill up, and in short order, it is killed. It’s brought up because it’s like ringing an alarm, to which all the lobbyists respond, and their answer is always in cash. Suddenly, all these legislators concerned about the evils of gambling are able to jump up and make strong statements against expanded gambling, while no small number of them have their palms greased.

Now you might say that because I don’t participate in the State-bred program anyway, it shouldn’t be of concern to me, but it is, and the reason is clear. What has happened is that while the purses in adjoining states have grown in proportion to their VLT revenues, they have stagnated or even shrunk in Texas. At this competitive disadvantage, how do you suppose Texas-bred horses now sell? Even if you were inclined to participate, the ROI isn’t there. Austin has a proposed track license, with the Austin Jockey Club. That license may never be exercised because the industry is suffering so badly in Texas under this scheme. Lone Star Park in Grand Prairie filed for bankruptcy protection. Other tracks are operating on the edge of solvency. The legislators don’t care because they’re getting positive press for their “moral stand” against gambling, while the competing-state lobbyists pile on the dough. That, my friends, is crony capitalism disguised as the moral majority.

Locally, it’s getting harder and harder for a farm to do business. In addition to the mountains of regulations rolling downhill from the EPA, local water control boards are making life difficult even for long-established farms. Oh well, more palms to be greased, I suppose. Of course, then you have the cities that now annex as much as the law allows every chance they get, and if they keep on at this pace, you will soon be able to remain with the boundaries of some municipality or other all the way from Oklahoma to Laredo.

Barack Obama goes to great pains to say that all of us are the beneficiary of some form of government help. That’s his implication, hidden behind a more acceptable-sounding notion that none of us get anywhere on our own, implying everything from the parents who brought us into this world to the teacher who may or may not have taught us the first thing in school. What my wife and I have experienced is something quite remarkably different, and it is that at every turn, it has been some governmental nonsense impeding us, obstructing us, or otherwise prohibiting us from making a go of it. You would think from listening to him that a brigade of his Obama-bots had accompanied us across the blazing hot pasture in July, driving t-posts into the scorched soil until the point of heat exhaustion, but I don’t remember any help. The wife and I, and our daughter a little bit, doing what Americans had always done: Building something where there had been nothing.

We never asked for any of this infernal “help,” and given its nature, we’d be just as happy if government stopped lending its “helping hands” and simply got the hell out of our way. We know how to choose good breeding stock, and we know all the important aspects of good animal husbandry, and I know my way around farm equipment and all the ordinary construction techniques we employ. I’m fairly certain that wasn’t Michelle Obama I lifted onto the skin of the barn’s roof to screw panels down as they were slid into place. I know for certain it wasn’t Barack who was running that welder. That was me. When we stretched thousands of feet of field fencing tight across all those newly planted posts, neither Secretary Clinton nor Sebelius were anywhere in sight, and neither was Harry Reid nor Nancy Pelosi, and not even a soul who had ever seen their offices.

Of course, when it came time to put up the mailbox, there was the guy from the Highway department to tell us how many feet it must be from the road’s edge, and what sort of super-duper break-away mount it must use, lest some weaving drunkard hit something much too firm alongside the road and do himself unnecessary harm. When we wanted to place our driveway, we were told what sort of culvert we must build, if we could build one at all, and so expensive was it that we simply opted to scatter a smattering of gravel across the ditch, and simply put some new gravel down each season. No culvert? No problem. There was the problem of bringing electricity to our homestead, and all of the government rules the electric company must follow, and how this all determined the siting of our home, rather than logic, and what we damn-well pleased. Yes, I am familiar with all the little helpers we’ve had along the way, and to be quite blunt about it, I hope they’ll all line up to help Barack Obama too. The problem is that it won’t bother him at all, because he doesn’t build anything, and he’s never accomplished anything on his own.

Oil Price Slippage Constitutes Warning

Sunday, May 6th, 2012

Producing Our Economic Life-blood

Over the life of this blog, one of the subjects that has arisen repeatedly is our energy problem, and the effects Obama’s policies are having on our nation’s economic condition.  I have offered you charts, graphs, economic theory, and an understanding of why we remain in the economic trouble we’re in, and much of our troubles originate with energy concerns.  Again validating what I’ve previously reported, global oil prices are now falling in response to the economic outlook in the US and in Europe.  The reason I again bring this to your attention is not to thump my chest, since there’s nothing revolutionary in what I’ve argued, but instead to reinforce the point, because in the broader media, there are too many sources interested in obfuscating and otherwise muddling the matter.  To have a growing, vital economy, the US has relied historically on inexpensive energy.

The American economy is a vehicle of vast capacity for growth, and the American people remain its vital engine, both as consumers and producers.  What the Obama policies have done is to choke down this engine, and the result is an economy that is bottom-bouncing at an idle, struggling for air that a reckless government policy forbids it to consume.  Every time the American people start to accelerate, the market effects of the regressive policies of our government govern the capacity of our economy like a vast engine choke. You could rightly call the policies of Barack Obama the “stuck choke” of American economics.

An engine makes a great analog for the state of our economy, because an engine must both consume energy, and convert it into motive power.  In a healthy state, that’s what the US economy does, and it’s why we must not ignore the grave costs of the current Obama policies.  Consider what happens when you step on the gas in your car:  The throttle opens up, allowing the engine to draw more of the air-fuel mixture, permitting the engine to accelerate, reciprocating more rapidly, and those converting the energy to the horsepower needed to make the vehicle go.  This is how our economy functions: It’s demand for consumption increases, and we have traditionally answered it by permitting more air-fuel mix(energy and capital) into the engine, and it accelerates(grows) providing output some of which is reintroduced back into the stream going in.  It’s a marvelous thing, and the prosperity of every American increases on average.

The situation we’ve been placed in by the Obama policies, combined with the inflationary policies of the Federal Reserve is that the air-fuel mix becomes prohibitively expensive.  Imagine driving down the road at 30mph in order to conserve fuel.  You could come up to speed, but because fuel is so expensive, you really can’t afford to put your foot in it, so instead, you patiently move along at a snail’s pace because you’re trying to do the minimum consumption you can manage and still get to your destination.  This is what happens each and every time the economic engine gets going these last several years:  The price of fuel begins to tick rapidly upward, we get a price spike, and everybody goes into conservation mode, and as a result, the economy slows down.  Naturally, as soon as the economy slows, the prices for fuel begin to fall again, and one can expect that at around the time they hit the bottom of the trough, people will begin to feel safe accelerating their cars back up to highway speeds, and the process begins once more.

The slippage in oil prices this week constitute a warning, because what it implies is that you’ve already hit that point of conservation.  Of course, it’s not merely consumers, but businesses and every form of productive endeavor that uses energy, which is of course all of them.  In that environment of rationing, what occurs is that people necessarily become more frugal, but so do businesses.  It’s unavoidable.  You can only afford to spend so much of your capital on energy, because you must still pay for all of the other necessities of living, and the United States has been operating very close to this line for several years.  A rational Federal policy would realize that this is a supply-side problem, and that to alleviate the problem, what we must do is increase the supply of energy available to the market, but our government has instead answered with tepid notions about conservation, and highly speculative and fanciful programs for “green energy” while it chokes off the supply of real energy to the market.

This is our situation, and the current drop in oil prices is a result of the fact that our economy is again on the downside, and that is further substantiated by the poor numbers of jobs being created.  At this point, it should be so obvious to every living person with two brain cells remaining to clack together that there ought to be a national movement to remove any politician who isn’t focused on this problem.  Instead, we have an administration that is dithering, and is actually making things substantially worse through its regulatory paradigm that insists America simply do more with less.  This insane, nearly maniacal policy is impossible to sustain, because it is driving us to the poor-house, and yet the radical left is fine with that outcome.  They want to make us poorer, and the reason is clear:  Poor people who must choose between groceries and gasoline are easily managed by a central authority, and they are only too willing to do the “managing.”

Let us place this in context:  Imagine that you have a home that is all electric.  Many Americans do.  Imagine that the power grid that supplies electricity to your home generates that power with coal, oil, and nuclear processes.  You might also have a little hydroelectric power, or a little wind and solar, but on average, those supply only a small fraction of our power generation.  Remembering that oil derivatives are one of the primary fuels used in power generation, what happens if we take away one of the others, like coal?  Coal currently provides half of our electric generation, nationwide.  What happens to the price of oil and all its derivatives, including the gasoline or diesel for your vehicle when coal is taken away from power generation?  The answer is obvious, and so is the result, because we’re living it.

Understanding the relationship between energy and our economic prospects is key to understanding our current economic malaise, and the impending disaster we face if our policy is not soon changed to promote more energy production, and to unshackle energy producers from the chains that prevent them from providing to the market the energy that a growing economy requires in order to sustain itself in that state.   This is why Newt Gingrich’s idea of $2.50/gallon gasoline was important, and it’s also one more reason so many of us had hoped that  we would see a Sarah Palin candidacy, because she understands, perhaps better than any other politician in the country, how thorough is our reliance upon energy, but also how to best develop the resources we already have at our disposal.  We desperately need an “energy President,” who understands that growth and prosperity are only possible with abundant and inexpensive energy, permitting the American people to do what they already know how to do, and want to do: Build, grow, and prosper.

The proof of this thesis is contained in our cycle of boom-spike-conserve-bottom. When energy prices fall, the economy (and the American people who drive it) respond with jobs, growth, and productivity.  The problem is that in our current environment of government regulation and governmentally-induced inflation, when the growth begins, the price of energy begins to immediately climb upward, eventually spiking to unsustainable costs.  This places the entire economy into conservation mode, and very rapidly, we slide to the bottom again.  It’s no longer a matter of proving the theory.  It’s proven, and the evidence is all around us, but until we make the conscious decision to end the misery, we’re stuck.

Carbonite Pays a Price for Dropping Limbaugh

Wednesday, March 7th, 2012

(Click to enlarge)

The Daily Caller is reporting that Carbonite has taken a significant stock price hit since CEO David Friend came out on Saturday to dump advertising on Rush Limbaugh’s show.  Call it bad luck, or call it “El Rushbo’s Revenge,” but whatever you call it, it’s a well-deserved smack-down for cowardice by a sponsor.  Of course, as it has turned out, Sandra Fluke is a hardcore leftist activist, and more and more, this is looking like a plot into which Limbaugh stepped, perhaps as the unintended target.

From the Daily Caller article:

However, it hasn’t done much to contribute to his company’s stock price. Since the market opened on Monday through its close today, Carbonite stock (NASDAQ:CARB) has plummeted nearly 12 percent, outpacing the drop of the NASDAQ index in that same time period by nine-and-a-half points. It was also one of the biggest decliners on the NASDAQ on Tuesday.

Some will consider this justice, but frankly, I think it should serve as a lesson.  Even publicly traded companies ought to be careful about dumping ads from the most popular talk-show in the land, and certainly not in the angry tone that David Friend used in his statement Saturday.  I think that the fact that he did so while acknowledging that Limbaugh had already apologized probably explains it.  Nobody likes to see that sort of ridiculous, overbearing reaction. It gives the impression of putting on a show.

 

The Economy and the Price of Gas

Thursday, February 16th, 2012

The Costs of Bad Policy

Most have noted with disgust the rising price of fuel.  In most places around the country, the price per gallon of regular unleaded is creeping up on $4.00.  There has been some talk about an improving economy, but that’s mostly fluff.  The truth is that our economy is in miserable condition, and as I’ve previously reported, the price of energy has the most immediate deleterious effect on our growth.  As you look at the numbers for housing starts, as fuel ratchets up over $3.50, it begins to retard growth and investment.  This happens because it affects every stop along the production chain, from the raw materials to final distribution, delivery or retail sales.  Now that the price of fuels is driving markedly upward again, it is important to note the causes.  The first is the inflationary policies of our government, and the second is a whole host of worries over the world supply of oil, now threatened by an increasingly hostile and vociferous Iran.  These two factors threaten to drive prices over six dollars by summer’s end.

This would collapse our economy completely, and the only thing leveraging against it is that as prices soar, more projects will be canceled, and new construction will not commence, leading to a balancing reduction in demand.  This natural signaling would not be so bad if it weren’t for the fact that our economy is already flat-lined.  Anything that would cause a serious price spike at this juncture would likely ruin our economy for the immediate future, and might even push us off the economic cliff.

At present, the Obama administration is claiming unemployment numbers that are plainly rigged.  What they have done is to discount people who have expended their unemployment benefits, but who still have no job, and they consider them to have disappeared from the job market.  More, they’re started lop off people who have attained a certain age, and now consider them retired, thus removing them from the work force.  In short, they’re rigging the outcome of the quotient by reducing the number of people in the job market in statistics only, as many of the people they have excluded are still actively seeking work.

If the current rise in energy prices continues, it will put a downward pressure on economic activity.  As we’ve seen in each previous instance when this administration has claimed the economy was in recovery, the rise in fuel prices will tend to knock down the recovery.  An economy cannot grow with a shrinking pool of energy resources, and this president knows it, or should.  This is why such actions as the denial of the construction of the Keystone XL Pipeline was so astonishing.  The construction alone would have provided tens of thousands of jobs with decent wages, and it wouldn’t have been very long before we would be receiving the Canadian oil at the distant end, proposed to have terminated in Texas, in the refining centers along the Gulf Coast.

The presumably short-sighted thinking of this administration is so baffling that many have begun to conclude this is all by design.  What is clear is that we will not truly begin a recovery until energy prices are brought down by the government standing aside as the primary obstacle to energy development.  The federal government under this president has been pushing various “green jobs” initiatives that promise much, but have delivered very little, either in the way of job, or in the production of energy.  The scale of the problem is gargantuan, and no collection of windmills or solar panels is going to do much about it, but worse, since these are still not economically viable models, they actually waste money.

The immediate future of American energy production is weak, because we have a president hostile to the various forms of energy most Americans for the near-term future will employ, in the forms of coal, gas, and oil.   The problem is that these still represent the bulk of American energy production, with coal-fired power plants still accounting for at least half of all electric generation in the country.  Worst of all, Obama’s EPA is shutting down coal-fired plants, as three more plants are scheduled to be shut down this year in Texas.  Texas may see a summer of rolling black-outs that will have been the product of these mandates, and there is no way to build an economic recovery in that environment.

Be prepared to see fuels to continue their uphill climb through the spring, and as they do, you will see a repeat of the pattern we have seen numerous times over the last four years.  As energy prices increase, any alleged recovery will falter. It’s the unavoidable result of a policy that has set us up for repeated failure.  With the monetary problems in Europe, however, it threatens to be much worse.

 

The Business of Government Differs From Private Sector

Sunday, February 5th, 2012

I am certain that we have all heard at least one-dozen times or more how Mitt Romney’s private sector experience will pay off in cleaning up government.  It’s the thing he stresses relentlessly, and his campaign generally can’t wait to get to that subject.  Naturally, any candidate will seek to push his virtues, and downplay his weaknesses, and so it is with Romney or any of the other candidates in this race for the GOP nomination.  As discerning voters, however, it is incumbent upon us to examine their complete records, and not simply cherry-pick which parts we like or dislike.  We must consider the bad with the good, and part of this process includes deciding what parts of their records are relevant.  The Romney campaign loves to talk about his business experience, but during this primary, they’re mostly avoiding his record as Governor of Massachusetts, and this is an important sleight-of-hand we ought not overlook, because it is the relevant part of his record that will be most important in this election.

We all like to imagine that if we could somehow bring the work ethic of the private sector to government, we could some how improve its efficiency.  This stems in large measure from our natural observations of how wasteful our government is with abundant resources we provide it, that still never seem to be enough.  Who among us wouldn’t like to see government become more efficient in this regard?  Four-hundred dollar hammers and six-hundred dollar toilet seats are just two of the historical examples we can identify in an endless sea of waste.  Unfortunately, however, businesses waste money too, and in many of the same ways.  Walmart wastes tens of millions in accepted returns they ought not to have permitted, because it’s easier than making a scene.  Taking back six-months used shoes on the basis that “they don’t fit quite right” is probably a sure way to eventually hurt your business. Of course, businesses do things far more wasteful than this, but my point to you is merely that business is only presumed to be less wasteful in most respects, but in the facts, it isn’t always this way.

Another problem is that government really doesn’t function like business, and you wouldn’t want it to do so.  In business, there is a profit and pay-seeking motive that militates in the direction of preserving capital, and that motive generally works to make the company stronger.  In contrast, government turns no profit, and you wouldn’t want it to seek one.  If so, it would stop making medicare payments and simply cut off social security.  After all, there’s no profit in those programs.  “Death Panels,” anyone?

Consider your own local government, and how often its policing seems more thoroughly motivated by writing traffic tickets in the name of revenue than in apprehending criminals who are rampaging through your streets, committing theft and burglary and other property crimes.  They would expend a good deal of money investigating such crimes but they wouldn’t generate any revenue.  On the other hand, writing speeding tickets is relatively easier work, and it brings in revenues to cash-strapped municipalities and their courts.   Do you really want your police motivated by the profitability of their particular crime-fighting?

Realizing that government doesn’t and shouldn’t seek profits, it is therefore much more important to consider Governor Romney’s experiences in that capacity.  When he ran a state, what was his record, and how did he perform in that office?  Did he cut spending, or expand it?  By any measure of which I am aware, it must be the latter, as his health-care program alone is costing the state of Massachusetts a fortune it does not have.  In business, it would be normal to expand operations to provide new products or services, but is that what government should do?  At least 65% of Americans don’t want their federal government taking over health insurance, but we’re well on our way to having done so with Obamacare.  Yet this is precisely what Romney did in his own state.

Another important difference between government and business is that business is forbidden a captive clientele. If it doesn’t serve you to  your satisfaction, you need only find one of its competitors.  This competitive nature in free markets tends toward keeping businesses more honest.  Obviously, government has no such restrictions or competition.  The closest we get to that is the differences between the local, state and federal levels, but in recent decades, the federal government has all but erased the differences.  What had once been the best check against overpowering government authority is mostly gone, and in its place, a network of co-dependent and cooperating layer-cake of government that simply acts without reference to any constitutional restraints.  There is no longer any healthy competition, but instead mere delegation among the levels.  In this sense, government has taken on a corporate structure.

So where does Mitt Romney’s private sector experience fit into this picture?  At Bain, or any other company, the CEO effectively acts day to day as a dictator of sorts.  Of course, that’s natural enough, much as in your own castle, you are King. The problem comes in when you take this theory over to government, and find that you are not and must not be a dictator in that office.  You have a Congress to contend with, and courts that will countermand your dictates from time to time, and the response we’ve seen from Obama is probably not unlike that which Romney would offer: “How can I circumvent these constitutional checks on my directives?”

When he was governor of Massachusetts, he implemented programs without input from that state’s legislative branch, for instance in the area of environmental concerns and regulation.  This hints strongly that in the most important ways, he is likely to make the same sort of power-plays as Obama.  Do you want who is merely another anti-constitutional politician with an “R” next to his name rather than a “D?”

When we view Romney’s records, it isn’t his alleged “job creation” we should examine, because that has very few applications in government, except as Obama has practiced them, whereby he merely created new departments and staffed them, calling this “job creation” while you and I are now left to pay for these too.  Remembering that the growth of a business is constrained only by its revenues in many cases, what sort of business would it be that had revenues as large as it could dictate at gunpoint?

I don’t think we need a businessman for President, but instead a statesman who understands the real nature of government, and what its limits ought to be.  I don’t think anything in Mitt Romney’s resume demonstrates that sort of suitability, and obscuring this fact won’t make our government any better, and threatens only to make it worse.

 

 

 

Mitt Romney Is Anti-Capitalist

Friday, February 3rd, 2012

Another "Mastermind"

Something is wrong with Mitt Romney, and it’s fundamental to his understanding of capitalism.  Here we have a man who governed what is arguably the most liberal state in the union, and he surely didn’t do so as a conservative, but now he’s demonstrating why liberal Republicans like him cannot win, and it comes down to the simplest of economics.  Thursday, Mitt Romney explained how he would index the minimum wage to automatically keep pace with inflation, proving that he has no Main street experience, but worse, that his alleged business sense is more about making deals than understanding economics.  Mitt Romney is no conservative, and by this pronouncement, we now know that neither is he a capitalist.

While it may appeal to some of the more ignorant in the electorate, and to the leftist intelligentsia, the simple truth is that a conservative who understands capitalism would be talking about eliminating the minimum wage laws.  Proving his expressions of Wednesday were statements of his true beliefs – that he is “not concerned about the very poor” – Romney advocates a system of wage controls that is economically inefficient, and immoral, but most importantly, in the context of his remarks Wednesday, actually disadvantages the poor, condemning them to perpetual poverty. Before you break out the torches and pitchforks to occupy my front porch in anger, let me explain to you the truth of the matter, and why it is that a minimum wage actually punishes the poor, but setting up a system to perpetually raise it guarantees increased unemployment and corresponding poverty.

In a free market unhampered by government mandates, wages are determined by negotiations between employers and employees.  That which sets the price is their mutual agreement to mutual advantage: Each believes he is getting the better of the deal.  In fact, in a free market, this is how all exchange is characterized, and it is the best determining factor available, because everybody walks away happy provided that the conditions on both sides of the deal are satisfied.  This requires no government involvement, and it requires no government coercion.  More, it is morally correct because it permits each party choice.

You might argue that the employer always wins, since he controls the purse strings.  I contend that this is not so, and cannot be, so long as men are free to choose.  If an employer makes unreasonable offers in payment for labor, he will be refused, and refused again, and this acts as the market’s signal to him.  If he does not respond, the labor will go undone, and he will lose the profit he might have made.  Since he is doubtless working for a customer, the impetus will be to complete the job to satisfy the deal he’s made with somebody else, and eventually, he will raise the wage he’s offering to get sufficient labor to fulfill his customer’s demand.

You might say “but he will only raise it enough to get a warm body,” and this could happen, but if it does, it may cost him more in the long run, because the labor will be poorly done, and perhaps have need to be re-done, or it might not be completed on time, or some variation on this general theme.  This too will act as a signal that higher wages are needed, and the under-performing employee will be dismissed and a higher wage paid to his replacement.  Notice that in this whole process, nobody has been coerced.  This is the moral superiority of the free market.

What Mitt Romney and the statist, anti-capitalist phalanx demands is a short-circuiting of this natural process.  What he contends more than anything is that you should not have the right to negotiate your own contracts in labor at a price you are willing to pay, or a wage you are willing to accept.  Imagine Newt Gingrich’s example of the kids who are paid a trivial wage for trivial chores at a school rather than to a full-time janitor at a much-inflated union wage.  That sort of thing mustn’t be ignored, because the janitor who is likely over-paid by the education bureaucracy in many jurisdictions probably produces less actual labor than the aggregate labor of the squad of wage-seeking children would accomplish in the same period.

Once upon a time, in a universe far away, as a young teenager, I got my father to co-sign with me on a contract.  It was my first crack at entrepreneurship, and it was with the local home-owners’ association to mow grass around the facilities made available to the residents by annual subscription fee.  Basketball courts, tennis courts, a baseball diamond, and a swimming pool, along with a fishing pond were all surrounded by acres of grass.  The bids were solicited on a per-cutting basis, with the President of the association to monitor and decide the frequency of the cuttings.  I came in at a bid that was a gold-mine to me, but far below any competitors.

Doing the math on how many hours it took me to complete a cutting, it was clear I was beneath the minimum wage even in that day.  Had they been forced to pay the minimum wage on an hourly basis, I would not have been able to compete, but because it was a per-job basis, I was able to bid what I thought was the minimum I could accept for my time.  I won the bidding, and that year I cut grass as my legs and arms and back muscles grew stronger under the beating sun. Mitt Romney wouldn’t understand this by any measure, but applying the minimum wage to that situation would have driven me out, because if you have to pay a minimum wage, who’s going to hire a fourteen year old rather than an adult?  One of the few virtues I had to offer apart from my eagerness had been that my low price allowed them to take a risk that at a higher price they could not have taken.

Under a minimum wage, the employee isn’t permitted to accept a lower wage so that the employer will take a risk on an inexperience though perhaps eager worker. This is the flip-side of the argument Frederic Bastiat would have called “that which is not seen.”  I don’t believe it is any government’s right to prescribe the upper limit of what I may earn, or the lower limit of what I will accept in payment for my labor.  That’s none of government’s business, and they ought to get out of it.

It has been shown repeatedly that a minimum wage increases unemployment by the process of making it too expensive for employers to try out new employees with little or no experience, or to take them on in a capacity to effectively serve as apprentices or trainees, but this is the leg up millions of Americans had used to obtain skills, prove workplace diligence and reliability, and otherwise promote themselves in an act of economic self-efficacy that fueled the growth of our nation.

These facts are well-known to economists, and well-known to all students of capitalism, and yet somewhere along the way, Mitt Romney has managed never to learn them, and I will tell you that it springs from the same place as his desire to “reform and strengthen the safety net:” A sense of collectivized charity rather than the honest desire to promote dignity of people in lifting themselves out of poverty.  The Club for Growth has taken on Romney’s suggested auto-indexing of the minimum wage on much the same basis.

The idea that Romney claims to be a capitalist has now been proven false. A capitalist would know that the minimum wage does more damage than good, and that the longterm result is inflationary pressure combined with increased unemployment among the young and the disadvantaged. Frankly, Romney should be ashamed of this pandering, but he needn’t fear because so many people suffer in economic ignorance that his tyrannical, big government idea will be seen as “compassionate” as it sentences more people to perpetual reliance upon the safety net he’s much too willing to strengthen.  Romney isn’t a capitalist, or a conservative, and he’s actually no better than Obama, and in some ways worse, because while I expect this sort of thing from a man who is not so ashamed to be tagged as a socialist, it is unforgivable from a man who claims he is not.

The Coming Facebook Initial Public Offering – How Many Pols Will Profit?

Tuesday, January 31st, 2012

The Financial Times has put up an article about the coming initial public offering of Facebook stock, and as I read it, I wondered: “How many politicians will get fat[ter] on this IPO when it happens?  Going as far back as the early 1990s, I remember stories of how then Speaker of the House, Tom Foley, managed to get in on an unusually large number of IPOs.  It looked very strange, since getting in on initial offerings of stock is a highly lucrative segment of the market, but it’s harder than you might think, yet somehow, I think politicians must have an edge.

Of course, as Peter Schweizer has described in his book Throw Them All Out, we can easily guess that it has very little to do with luck.  Politicians seem to have an edge in virtually every department, but what we should realize about this is that they’re simply adept at working the system.  The insider information in which they trade enables them to make money in ways you and I cannot, and what’s worse is that if you and I behave as they do, it’s huge fines and jail for us little people.

As you watch Facebook go public someday soon, you might stop and wonder as you click through the pages which politicians are getting richer as you browse through those pages.

On Health-Care Rationing

Friday, January 27th, 2012

Including Death Panels

As a fellow who is a student of economics, one  of my pet peeves is the confusion that often arises when economic concepts are misused out of context to justify political ends.  In the discussion and debate leading up to the passage of Obama-care, it was famously noted by Sarah Palin that “death panels” are a feature of that plan.  In short, the death panels would make “ethical decisions” based not on what was ethical with respect to individuals, but with respect to what was ethical in choosing on behalf of society at large, i.e, the government. The supporters of the Obama-care program maintained that “there were already death panels” imposed by insurers, and that in any event, rationing would always take place as a matter of economics.  In this last point, they were correct in the strictest terms, but they were wrong to compare government actions to the actions of individuals and private businesses in the free market.  This is one example of the abuse of economics by politicians, so let us examine it more closely.

In economics, everything is rationed, because it is assumed that there is a basic unlimited demand for all goods and services.  Since there exists no infinite supply of anything, it is necessarily true that all things are rationed in some fashion.  Gasoline is rationed.  It’s happening right this moment.  Food is rationed.  Housing is rationed.  There is no good or service that isn’t rationed, and the primary instrument for determining the allocation of the limited supply in a free market is money.  The smaller the supply of a thing, relative to the quantity demanded by the market, the greater will be the price.  This is the manner in which everything is rationed:  There is a only so much money, and he who possesses enough of it can tap into the limited supply.  This form of rationing is natural, or free market-based, meaning that this happens organically with or without formal rules, and always has, even before the notion of money as a medium of exchange had occurred to primitive cultures and barter systems still dominated commerce and trade.  Strictly speaking, in economic terms, it is true to say that all things are rationed somehow. This is how we reconcile the basic premise underlying modern economics as the study of an unlimited wishes in pursuit of finite supplies.

The question then arises whether natural allocation(or rationing) is “fair.”  Since fairness is a wholly subjective term, it cannot be answered in the realm of economics, but instead becomes a matter of politics.  This is where the trouble begins, because what politicians most frequently do is to apply their own subjective notions of what is fair in place of the much more objective standard of a natural market.   They concoct these notions to satisfy political constituencies, but the twist and turn in order to define the question as a matter of economics.  Inevitably, they do so by reducing the question to the subjective grounds of a particular individual, or group, and ask whether it is “fair” that so-and-so cannot afford such-and-such.  In this sense, the economics they are discussing are applicable to small groups, but not to the whole market.

What government schemers for socialized medicine have done is to insert government coercion into the place of the natural market allocation.  If you say to me, “It is sad that Johnny cannot get his surgery because he has not the money,” if my answer is based on the free market, I must say “it may be sad, but it is fair because he could have obtained the money by previous work, insurance, charity, or even credit.”  The fact that Johnny hadn’t the money for the surgery is not a justification to disclaim the objective fairness of the free market system, but sadly, that is how it is used by politicians.  Enter the statist, and he will proclaim that he can reintroduce “human fairness” or “social justice” or some such enfeebling concept by virtue of government coercion.  If Johnny hasn’t the money, the politician will take it from somebody else at gunpoint to pay for Johnny’s surgery, provided Johnny meets any requirements they may have enacted.

Perhaps the surgery Johnny needs is a kidney transplant, but rather than expend the resources, since Johnny is also a wheelchair-bound, elderly man, the government may say “You’re not worth saving.”  Worse, if the government denies Johnny the ability to obtain his own health-care by his own means outside the government system, what the government is doing is to pronounce a sentence of death on Johnny.  If Johnny happens to be a recent college graduate in his twenties, in otherwise good health, the government will view it as a good investment in many cases since he will pay much more in taxes over his expected lifetime than the surgery may cost.  Notice that the decision criteria is entirely social, and based on the economics of government expenditures, which actually means: Political considerations.  It is also the reason that every system of socialized medicine ultimately leads to many more people dying prematurely as they are denied treatments of which they would have availed themselves in an open market. If this were not true, we would not see so many from around the socialized world flocking here to pay cash for treatments they cannot obtain by any means in their home countries.

You might contend, as the leftists do, that this is done by private insurers routinely.  There is some truth to this, but it is also substantially dishonest.  As a participant in a free market system, you are free to choose an insurer and pay such premiums as you are willing and able, to cover everything to some gargantuan limit, or you may choose a policy less expensive, but also less thorough.  In this manner, the rationing occurs because you have enough money, or you don’t, but that is up to your own resourcefulness and diligence and all the factors that frequently make the difference between relative poverty and relative affluence.  You might decide at this point to take me back to the argument of the “unfairness of money,” but as I’ve already explained, in a free market, fairness is measured differently than in your subjective wishes.

If it was my choice as to which system I would endure, I would prefer to take my chances in the free market system, because I believe I can manage to afford the coverage I might need, but in a government system, no matter how diligent and efficacious had been my own labors, I might be told “sorry, you’re outside the limits established for this procedure,” and be denied treatment irrespective of my ability to pay.  I would always choose this latter option, because it affords me the greater measure of freedom, and if it winds up that I was unable to provide the coverage I actually wound up needing, at least I will have nobody else to blame. That’s where the politicians come in, again.

Get Ready For More Inflation

Saturday, January 14th, 2012

What Will It Buy You?

There’s a new report by CNBC that the Federal Reserve is considering some more “quantitative easing,” also known as “firing up the printing presses.” They’re going to make money cheaper again, and when it’s cheaper, it’s necessarily worth less.  For those of you who don’t really follow how all of this works, let me remind you of a few things I’m sure you’ve heard, but which you may not pay much ongoing attention.  The idea is to try to stimulate the economic activity by putting more cash into circulation, theoretically making it easier for banks to loan money for new home construction, businesses, and all manner of things.  The notion is that with more cash flowing, more economic activity will result, and more jobs will be created.  That’s the theory, and it sounds simple enough until you recognize some complicating factors.

First, every time the Federal Reserve follows this procedure, what’s really happening is that for all intents and purposes, they’re flooding the economy with new money.  There’s really no new value being added to the system, so what this effectively accomplishes is to devalue all existing money by some amount.  What this causes in turn is a diminution of your money’s purchasing power.  A loaf of bread costs $1.20 instead of $1.10, or a gallon of gasoline goes from $3.50 up to $4.00, or a 2″x4″ down at the home improvement store goes up in price, but the total effect is that money is less valuable.

Back when QE2(Quantitative Easing, Round 2) was announced, back in late 2010, Sarah Palin came out and warned against it, and was scoffed at by the geniuses who push this inflationary policy upon us. Of course, with predictable regularity, she was right about it, as we who pay attention knew would be the case, so now the Federal Reserve is considering more of the same. As with last time, most of the inflation has been hidden by the fact that amazingly, energy and food are not counted in the CPI(Consumer Price Index) but of course, that’s an absurdity since it’s where much of our spending is concentrated.  This helps the politicians and the Federal Reserve shield from your eyes the true cost of their stimulus, but what you should know is that it amounts only to a delaying tactic.  What they’re hoping is to buy time until the economy can somehow catch up, but the problem is that the policy they’ve undertaken ultimately leverages against that end, since it will take ever more dollars for you to fund your energy and food costs, and those aren’t things on which you can really do substantial trimming if you intend to go to work each day.

The whole thing is a colossal fraud, and it’s one of the reasons I agree with Ron Paul that we need to re-examine the role of the Federal Reserve.  It’s become obvious that they’re just as willing as most politicians to lie to you about the end result of their policies.

GOP Commits Political Suicide By Mitt

Saturday, January 14th, 2012

2012: GOP Commits Political Suicide?

Most of you will be familiar with the concept of “Suicide by Cop,” the practice by which somebody who is unwilling to do the deed themselves, instead puts themselves a position to be threatening, thereby drawing fire from police.  In the same way, the Republican Party now seems poised to commit political suicide by nominating Mitt Romney.  It really wouldn’t take a great deal of explanation were all of my countrymen versed in the principles of capitalism.  Sadly, they are not, so let us make them plain:  Mitt Romney is not a capitalist, but he will be attacked as one.  Just like his false conservatism will lead to attacks on our philosophy, so  too will capitalism come under attack even though neither he nor we any longer practices it.

Many people have defended Mitt Romney over the last several days when he was attacked by Gingrich and Perry on the basis that his work at Bain harmed workers and destroyed jobs.  Others were quick to point out that this sounded very much like an attack on capitalism, in almost the same manner that the left attacks it.  For my part, I pointed out that Romney has enough baggage that you could easily assail his record without seeming to attack capitalism, and I offered up a few specifics.  The problem is that much of this is complicated information, and most people simply don’t have the time or patience to sort through all the details.  I find that frustrating, because we cannot render just opinions on the matter of Romney’s qualifications for the office of President if we’re not willing to chase this all the way into the weeds.

One of the concerns about Bain Capital that hasn’t been mentioned much is how it has relied upon corporate welfare to improve its profitability.  Consider the case of Steel Dynamics, which was provided various incentives and breaks in order to locate in DeKalb, Indiana, a company in which Bain was the largest domestic equity holder.  The state and county provided $37 million in incentives, and even levied a new county income tax in order to get the plant located there.  While this sort of thing isn’t all that uncommon, what it reveals is how thoroughly involved in wringing money out of tax-payers Bain’s operations had really been.

From the same LA Times article:

“This is corporate welfare,” said Tad DeHaven, a budget analyst with the Washington-based Cato Institute, which encourages free-market economic policies. DeHaven, who is familiar with corporate tax subsidies in Indiana and other states, called the incentives Steel Dynamics received “an example of the government stepping into the marketplace, picking winners and losers, providing profits to business owners and leaving taxpayers stuck with the bill.”

That’s a shocking disclosure about a man who has claimed to work in “free enterprise.”  The people of DeKalb County aren’t free, as they’re undoubtedly still paying off the debt they incurred as a result.  Some will point out that this isn’t uncommon, and I agree, but I’m not sure that’s a valid argument for doing it.  Still, the larger point in all of this is that Romney and his company were the beneficiaries of this, and that it wasn’t all “free market.”

Of course, Steel Dynamics was one of the companies that went into the total of his preposterous claim of 100,000 net jobs created, and of course we now know that this too had been smoke and mirrors.  Of course, this is just a sample of his private sector experience, but what you come to learn about Romney during his term as Massachusetts Governor is much more frightening.  While having a president with private sector experience would certainly be useful, Romney’s really not the sort of private sector person we need.  We need a person who understands Main Street, and knows what it is to make a payroll in a business with a few doen employees.  Those are the kinds of enterprises that aren’t being established in this economy, and they’re the sorts hardest hit by the ridiculous big government regulatory regime under which the economy now suffers.

Small businesses are the ones that don’t get tax breaks, and they’re the sort on which we have depended for most job creation over the last fifty years.  They’re also the kind of endeavor that provide slim profit margins, are often held together on a wing and a prayer, and are completely devastated by programs like Romneycare.

What the GOP establishment doesn’t understand is that by going along with Mitt Romney, what will be accomplished is to institutionalize the very sort of government that will destroy the economic growth we so desperately need to climb out of the gargantuan debt pit into which Obama has heaved our nation.  At Bain Capital, Romney could turn to a bankruptcy court for a company that didn’t make it, and at the state level, he could turn to the federal government for grants and similar when Romneycare ran the state short of funds, but as the President of the United States, to whom can you turn?  The Chinese? Even they have had enough of our easy-money policies.

A Romney nomination threatens to destroy the GOP, because if he fails to defeat Obama, or perhaps worse, defeats him but then goes on to govern the nation like he did the State of Massachusetts, there will be no coming back from it.   We haven’t been practicing capitalism for some time, but instead muddling through what is known as a “mixed economy,” meaning one that is neither fully dominated by the state, nor by the free market.  What we allow with Romney is the continuation of the lie that we are a capitalist nation, and yet it will be for all the flaws of statism that capitalism will take the blame. It’s little different from the phenomenon by which George Bush claimed to be a “compassionate conservative” while practicing his own nuanced form of statism.  It had been these government programs and initiatives where government failed worst under Bush, and it was in these that conservatism took the blame.

Conservatives would not implement socialist prescription drug programs.  Conservatives would not further empower a federal education establishment.  Conservatives would not resort to a government takeover of airport security on a permanent basis, and then extend that security to all manner of places as has happened with the TSA.  A Conservative would not have borrowed and spent as George Bush did for the two terms he held office, and certainly wouldn’t have closed out that administration with a program like TARP(which Romney approves.)   All of these things were done by an allegedly conservative president, so are you surprised that by 2006, conservatism was taking the blame?

Terms like “conservative” or “capitalist” are only good as short-cuts to understanding when we deny their use from labeling the things they are not.  In permitting George Bush to stand before us claiming to be both a capitalist, and a conservative, we damned both when he turned out to be neither, in fact.  Labeling McCain with these labels was ineffective because for the party’s base, they clearly weren’t true, and the labels now held a negative connotation in much of the electorate because they had been associated falsely.  It’s the reason McCain had to bring in Sarah Palin, because he had to restore credibility to the terms.  Mitt Romney will fare no better than McCain, and perhaps worse, because Obama will be able to blame conservatism and capitalism for the failings of his own ideology.  Again.  If Republicans permit this to happen again, they’re foolish, and there’s to be no going back.  Even on the slim chance that Romney is elected, he won’t save the country because his solutions are merely a slower implementation of the same statist ideas. It will throw the GOP into a banishment that may turn out to be permanent.  If the Republican party wants to commit political suicide, Mitt Romney is 2012′s perfect and perhaps final solution.

Why Government Isn’t Like Business

Wednesday, January 11th, 2012

Why Is Government Constituted?

Like most people, I’ve changed my thinking on a number of things over the course of my life, and one of them is the idea that government ought to function as a business.  I once believed that if government could only function with the efficiency of corporations, it would be phenomenal, and make much more sense.  I hear or read this proposition raised from time to time, mostly by people who are discouraged by the wastefulness of governments, and I share their frustrations though I now differ with their conclusions.   Many things have helped shape my opinion, but over the course of time, nothing has done more to change my thinking on this than seeing government in action, up close and in person.  My first experience with that was as a soldier, of course, and along the way to where I am now, I’ve held a temporary position in federal government employ and what I learned there, and since, has made me decide I had been wrong.  It’s not that government can’t be made more efficient, or more careful with our money, but that government is not a business, and if it were to operate like one, we would all shortly regret it.

Imagine a government that can flow into new endeavors by shifting its focus by direction from the top.  Businesses do this very thing all the time, and frequently to the inestimable benefit of employees and investors.  Even if an institution of government could behave this way, would you want it to do so?   Various statists will argue that such a government would be a grand institution, and return much value to its investors, also known as “tax-payers.”  The problem with this is that no company gets to decide the size of investors’ stakes in the business. No company is empowered in law to dictate greater investments, but at least a company has paying customers.  Government has a few who pay various fees of little consequence, but it cannot rightly be said that government has customers, since theirs is a captive market.

Companies try to obtain greater and greater shares of the market, in order to increase their investors’ profits, but governments with such an imperative would soon overrun every boundary we had previously imposed upon its growth.  In fact, our government is already squeezing out private enterprise, and the fact is that with a captive market, government can squeeze out as much as it is institutionally and politically able.  The last dozen years give witness to the fact that the proportion of the total economy the government dominates is increasingly oppressive.  Government already has a legal monopoly on coercion, and it lends that monopoly power to various enterprises on a continuous basis.  Some of these enterprises are government-owned, or formed, and a few more are simply companies that have figured out how to get their fingers in the government’s pie, but in any event, what results is not the sort of government most Americans would want.  It’s plain to see that a nation like Cuba has a governmental monopoly on everything, and Michael Moore’s panting endorsements of Cuban health-care notwithstanding, I think it’s fairly clear this is not a model we should follow.

Of course, there are those who argue that rather than at this very fundamental level, we could simply use common business practices to make government more efficient.  I wonder what efficiencies people seek in government?  Do you want them to become more efficient at tracking you?  Do you want it to become more effective at regulating you?  Do you want it to be more aggressive in taxing you?  I think not.  It is true to say, and I am certain that you will agree, that we can do things to make government accomplish more with less, and to likewise spend less altogether, but what that means is the ability to strictly limit the stake of the so-called “investors.”  Therein lies the problem:  All too often, those who bring business management experience to government see a vast ocean of potential revenue, and notice that unlike in the businesses to which they’re accustomed, the only limitation on their expenditure is their periodic requirement to stand for re-election.

Let us be circumspect in suggesting that we want government to function like business.  They have entirely different imperatives in a society such as ours.  Government exists for the purposes of defending the nation, minting the money, policing the criminals, and preventing commercial and civil conflict from becoming violent ones by the administration of an objectively moral law.  There is damned little else government should do, and can do effectively, and yet it is in this manner that we are told we must extend government’s power to encompass functions over which it has no just claim.  You might tell me some vaunted majority wants this or that, but does this legitimize the claim?  Can an orderly vote by wolves legitimize their consumption of the sheep, if they happen to be the more numerous?

This illustrates the most fundamental reason government must not function like a business:  Business is a voluntary endeavor, and it is business that must seek the agreement of others, and must find those who will purchase its products and services by choice.  Of all our founders, the one who might well have understood this more thoroughly than any was George Washington, and while it is in dispute as to whether he said this, it is nevertheless true, and whomever its actual source, it is a worthy idea:

“Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.”

Imbuing such an entity with the purpose of business is as great a danger as I can imagine.  For those who argue that government should function like business, I wish you’d reconsider as have I.  I realize most think of this premise in terms of the tendency of government to be so wasteful, and the desire for greater efficiency, but we do not ever gain these efficiencies, and government grows only more powerful.  The government we now have all too often mimics the aspects of business that when empowered with monopoly and coercive power to implement its will, becomes a grave threat to its stakeholders.  Imitations of business practices do not make of government a business, and we must bear in mind its actual constitutional role, and limit it to those duties with great fervor.

A Flawed Understanding of Capitalism

Wednesday, January 11th, 2012

Who's The Real Capitalist?

In listening to the argument between those who say Romney’s actions at Bain represent the so-called “excesses” of capitalism, and those who argue Romney had been nothing but a capitalist, and that there’s nothing wrong here, I find both sides of the dispute to be guilty of playing on bad definitions, poorly informed public sentiments, and worst of all, pure political hyperbole that may advance this candidate or that one for a short period of time, but will not accrue to the benefit on the right side of the aisle.  Rather than all this bomb-throwing, I’d prefer to sort this out, step by step, and weigh out the results as it is, rather than how any particular party wants it to be.  It’s time to untangle this so we can move on.

The parties representing the various points of view in this discussion to which I will confine my remarks are these:  Gingrich, Romney, and the media(left, right, and stooge.)  The first I will address is the view advanced by Newt Gingrich that Mitt Romney’s profits at Bain were excessive in light of closing down companies to do so.  First of all, let’s be honest enough to admit that there is nothing fundamentally wrong with profit from selling one’s labor, one’s property, or one’s investments.  This argument is so thoroughly flawed that as Limbaugh suggested Tuesday, it is more akin to the argument of Elizabeth Warren than a Republican seeking the nomination for President.  In justice, however, let us admit also that with 98% of all SuperPac advertising in Iowa and New Hampshire being used to assail Newt Gingrich, he was probably a little bit angry and lashing out.  I expect this wasn’t Gingrich’s strongest argument, and if  he had to do it again, I suspect he might change his approach.

In reviewing media defenses of Gingrich, I have read arguments that are roughly like this:  “Well, capitalism is all well and good, but you still have to temper it with morality.”  I want those purveyors of this opinion to pay closest attention to me, as I tell them that they’re shoveling manure.  Capitalism reflects a system of morality, and if you don’t share it, fine, but do not pretend that it means something else.  Do not take “capitalism” and twist the label to fit what is merely modified socialism.  There is nothing wrong with profits, whether large or small, nor any size in between, provided only this:  Those making profits do so by their own efforts and with their own wealth and property.  That’s the morality of capitalism.  It’s a morality I endorse entirely, and unreservedly.  Do not offer to me that capitalism must be “tempered” by something.  To temper a thing is to alter its fundamental structure.  In this case, “temper” is merely happy talk for “rigging the outcomes we prefer in spite of the market.”

You might claim “but to tear down a company in order to liquidate it and thereby turn a profit, when they didn’t build it is to be a vulture.”  True, but in capitalism as in nature, vultures perform a vital role, and while we may not regard the vulture with much sympathy, the truth is that he’s cleaning  up messes and putting to use that which would otherwise go to waste.  Then there are those who argue that if Bain hadn’t liquidated such companies as Smith Corona, they might still be in existence, and that their employees might still have jobs.  Let’s get something straight, right here, and right now:  There is no entitlement to a job.  There is no guarantee of work.  When a person accepts a job working for others, he is taking a risk that is subject to all the same vagaries of the market as those who invest in it.  This notion that capital must be the risk-taker, while labor must never shoulder the burdens of risk is absurd.  As long as a person works for others, that employee is accepting as one of the inherent risks of such an arrangement that the job could end for any reason, tomorrow. To make the petulantly childish argument that employment should be without risk is a tired attempt to subvert capitalism with collectivist ethics, and I will be no party to that.

On the other side of this ledger, we have Mitt Romney who argues that what Bain Capital did was perfectly legal, ethical, and within the description of capitalism.  When it comes to this “vulture” function others have derided, he’s correct, and even in his statement that he likes to be able to fire people, he is committing no breach.  The truth is that I like to be able to fire people, and if you’ve ever worked in an environment wherein getting rid of incompetent employees is institutionally difficult, you’d understand why.  Nothing saps the strength of any company more than the incompetent, the slackers, or those simply not up to the job for which they were hired.  With all of this in mind then, let us make clear where Romney falls off the tracks and plummets into the abyss, if this isn’t it.

Romney’s problems with capitalism are birthed less of his actions while at Bain than while in the Governor’s office in Massachusetts.  Romney-care, the completely socialist Massachusetts program that is the logical forerunner of Obamacare, is as anti-capitalist as it gets, complete with an insurance mandate.  This may be the shortest argument in this article, but it’s the most important:  Any health-care mandate, and any redistributionism is flatly anti-capitalistic.  Romney can parade around with his faulty excuses for this program on the basis of federalism, but it doesn’t wash.   This program forces people to buy insurance, and that is a tyrannical, anti-free market, anti-capitalist assault on the rights of individuals.

Another problem with Romney is that he implemented other socialistic programs while Governor, including “Welfare Wheels.”  It’s impossible for Romney to claim that Romney-care was a one-off or some sort of aberration in an otherwise capitalistic record.  More, he favored TARP, and this by itself is as anti-capitalistic as can be described, and I really don’t understand how the defenders of Romney on this issue can avoid addressing this, because it has been one of the staggering expenses absorbed by tax-payers, and if Romney’s support of TARP is any indication of how he will govern as President, he is a walking disaster for all Americans, and for capitalism in general.  There’s also some indication that while at Bain Capital, he was one of several beneficiaries of a bail-out when the parent company, Bain Company, sought and received forgiveness of some $10million in debt from the FDIC.

One of the things that demonstrates the point is a statement Romney made during a CBS interview on Wednesday, via TheHill:

“In the general election I’ll be pointing out that the president took the reins at General Motors and Chrysler – closed factories, closed dealerships laid off thousands and thousands of workers – he did it to try to save the business.”

Romney is now holding forth Obama’s GM bail-out as an example?  This isn’t the view of a capitalist, and I want you to understand that when Romney holds forth this view, he’s become a statist. The truth may be closer to this, and it’s what Mark Levin said in the first hour of his show last night:  Mitt Romney may be less a capitalist, and more of a corporatist.

Understanding this vital distinction is to enlighten the difference at stake in this nomination fight.  Capitalism is a distinctly classically liberal ideology inasmuch as it requires a strict observance of individual liberties, and almost complete sovereignty for actors within the free market.  Corporatism is illiberal, meaning it relies on coercion of individuals on behalf of corporate entities.  In that sense, it can be accurately stated that corporatism is a non-monarchical development of feudalism.  In corporatism, dynasties are favored, and the ruling class may not exercise direct power, but instead command economic decisions through their influence over the state.  In effect, it’s another manifestation of what you know as “crony capitalism,” a concept recently revived by Sarah Palin and other critics, who have accurately pointed out how thoroughly corrupting such a system can be.  What is critical to know about corporatism is that in order to operate, there must be a strong and thorough collusion with state authority and intervention into the market.  It often co-exists with socialism, and in fact, this has been the operative condition of the United States since approximately the time of Teddy Roosevelt.

Progressives of both parties are those who have sought to unite the worst features of corporatism with the worst actions of socialism.  This is the true nature of Mitt Romney, and of his general governing demeanor.  This is why I cannot support him, in point of fact, but it is also why such critics of Romney as Gingrich and Perry have a difficult time engaging in credible criticisms of him: In various ways, they too have been guilty of the same basic flaws, to degrees greater or lesser.  The media that is defending Romney is a part of the corporatist front, and it’s clear when you view Fox News that in the main, that is the nature of their advocacy.  Many have noted in the last several months that Fox News seems less and less conservative, while becoming increasingly friendly to establishment Republicans.  Bill O’Reilly is the perfect example, but the continuous presence of Karl Rove is another.  Rove is merely a political strategist and public relations master for the progressive, corporatist front.

The truth is that we must defeat not merely socialism, but also corporatism, and the problem is that while Gingrich runs around making arguments from the point of view of a socialist, he does so in grotesquely erroneous  identification of Romney’s worst actions as those of a capitalist.   Gingrich dare not assail Romney as a corporatist, of course, because Newt has had his dalliances with corporatism too.  Clearly, Perry and Santorum also avoid this, and for precisely the same reason.

So it is that at the moment, in the GOP you have a battle among progressive corporatists and a single libertarian, but no true capitalists.

A Challenge to Gingrich, Perry, Romney

Tuesday, January 10th, 2012

Attacking or Governing Like Libs

A number of Republican candidates have begun to assail Mitt Romney on the basis of his time with Bain Capital, notably Newt Gingrich and Rick Perry, but the criticisms they level miss the mark in most respects, and worse, play upon the very worst arguments of leftists who say capitalism is inherently evil because it seeks profit and will occasionally lead to short-term job losses.  I have no problem criticizing Mitt Romney when it’s deserved, as these pages witness, but I have definite problems with this approach to attacking Romney.  It’s not that he’s immune to attack, and as I have covered, not everything ever done under the banner of Bain is beyond reproach, but this idea that buying companies, and subsequently liquidating them to turn a profit is a bad thing is quite obviously not one of them.

I have some pointed advice for former Speaker Newt Gingrich, and my own Governor, Rick Perry of Texas:  If you want to criticize Mitt Romney, stick to those parts of his record where he actually did something wrong.  Don’t berate him with the same things Obama will use to appeal to  his base, but instead concentrate on those things that appeal to the conservative base.  In short, focus on how Mitt Romney governed.

It’s amazing when even Ron Paul defends Romney on this point, while Gingrich and Perry attack.  None but the ignorant who live in a capitalist nation should have a problem with the aspects of capitalism that seek profit, sometimes by liquidating assets.  That’s not altogether unlike you having a garage sale and getting rid of things you aren’t using, or that are not up to snuff any longer, trying to recover some of their value before they become effectively worthless.  The money you re-capture by such a sale certainly helps you to pay other bills, or buy new items that more fully suit one’s purposes.  You can take the cash and invest it in a completely new venture.  This is an important function in any market, including in business, and to besmirch it as somehow wrong is a terrible disservice to the entire notion of capitalism.

I can name a number of things that Mitt Romney has done while governor of Massachusetts that deserve more than a little derision.  The problem is that neither Gingrich nor Perry are apt to say much about them, since they’ve advocated or  implemented similar.   Gingrich formerly favored healthcare mandates, and while he’s reversed his position on that, it’s hard for him to take pot-shots at Romney on this basis without somebody pulling out the label “hypocrite.”  Perry pushed for his Gardasil vaccine, and that too is a mandate, though of a different character and scale, but both speak to the same basic problem Romney has, and it’s worthwhile to note that where Gingrich and Romney differ on the healthcare insurance mandate is this:  Only Mitt ever actually imposed one.

I have addressed Romney’s imposition of health-care mandates and the various other programs of a socialist nature he imposed while governor of Massachusetts, and it’s true that in terms of what he has actually enacted, he is certainly the most socialistic big-government-inclined politician of the bunch.  He is definitely the candidate the media will attack most vigorously for both his vices and his virtues, but it is disappointing to see Gingrich and Perry attack on this basis.  If they’re smart, they’ll stop it, but part of the problem is that they’re falling into a well-laid trap set by the mainstream media:  The media is left-biased in the extreme, so what Gingrich and Perry are doing is to pick up the criticisms that will travel farthest in the media.  The media loves these attacks, and will revisit them many times over if Romney gets the nomination, but the attacks conservative Republicans should be aiming at Mitt Romney are not things the overwhelmingly liberal media wants to attack.

Falling for this is a terrible mistake, because it will not be the liberal media that chooses the Republicans’ nominee.  Gingrich is right to point out that Romney’s Massachusetts healthcare plan is a terrible leftist disaster, and that Obamacare had been largely modeled after it.  Perry would be right to raise Mitt’s “Welfare Wheels” program, or any of the other big government ideas that advanced while Romney was governor there.  Either would make perfect sense explaining how Romney was a friend of Teddy Kennedy’s legislative agenda, or how Romney was the beneficiary of crony capitalism on a few occasions.  Nobody on the conservative side would be offended by that.  The problem is that both of them are vulnerable on similar issues, and while perhaps to lesser degrees, they still have some explaining to do.  The problem is that it’s all the easier to simply attack Romney from a point of view more appealing to leftists in part because the media will transmit that message more willingly, but also in part because they believe they will get away with it.

I’d issue this challenge to Governor Perry and Speaker Gingrich:  Tell us the things about Mitt Romney’s record that condemn him as a big-government statist, and those things that mitigate the timber in your own eyes on these issues, and we’ll get along famously.  I’d issue a further challenged to Governor Romney:  Be prepared to explain in some sensible terms why tyranny imposed at the Federal level is bad, but at the state level, it’s no problem at all.  His pathetic “federalism” excuse for  Romney-care doesn’t cut it, and never has.   Governor Romney can impress the hell out of me by explaining to the American people why capitalism is good, but then he’s going to need to explain why he undertook so many programs and laws as the governor of Massachusetts that did nothing but undermine it.

This has been the sick irony of this insufficient field. It’s why 58% of Republicans don’t really like any of these candidates.  Gingrich and Perry had better drop the politically expedient attacks that are merely anti-capitalist rants, and instead hammer on Romney for those things that were egregiously offensive to liberty, and they’d better prepare when questions are raised about their own big-government reflexes.  Otherwise, voters just might get wise to this whole sad game, and walk away from the party this fall. After all, what is worse?  A nominee like Romney who would effectively govern like Obama, or a nominee who relies upon Obama’s tired class-warfare and anti-capitalist rhetoric?  Neither do I want a nominee who subverts capitalism in governing, nor do I want one who assails it in the press.  We need a president who will undertake to restore capitalism, and I don’t see much evidence that any of these three will do so.

IMF: Global Economy Threatened

Monday, December 26th, 2011

Another Day, Another Euro

This has to be one of the most ridiculous pronouncements made by a governmental body in some time, not because it is inaccurate, but because they’ve apparently just now taken notice.  YahooNews is reporting that the IMF’s worried about the global economy, and it’s new head, Christine Lagarde is pointing out the problem as a “crisis in confidence in public debt.”  No, really, she said this.  (For her next trick, Lagarde will likely tell you the sky is blue and that the sun rises in the East, while she’s giving out revolutionary information.) What Lagarde doesn’t mention is the IMF’s role in all of this, and the fact that the grotesque amounts of public debt have been augmented by loans from the IMF itself, in propping up all of these nations.  This is much in keeping with the failed policies that have threatened the world economy, but rather than re-think the strategy that has only deepened our troubles, Lagarde criticized nations that seek to shore up their own economies and financial markets, and while she didn’t name names, it’s clear that she’s talking primarily about the British.  She offered this:

Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.”

Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.”

Let me translated Lagarde’s lament:  Politicians in much of the world (excepting perhaps only the US) are beginning to heed the voices of their people, who are beginning to demand that their politicians begin to look out for their own nations first, before worrying about the sovereign debt crises of others.  So Britain, for instance, that is doing the smart thing and walking back its relations with the European Union and its failing currency is a bad country, while we in the US who continue to shovel dollars into the IMF via the Federal Reserve are “smart” and “thoughtful,” and the rest of that patronizing tripe that only works on liberals and statists.  Meanwhile, those of us who live in Realityville, USA, are beginning to understand that this crisis is largely the result of bad ideas promulgated by statists the likes of Christine Lagarde.

This announcement is an insult to every thinking person on the globe, and it show just how far these people will go in order to prop up a lousy idea, or a whole play-book full of them.  As if this wasn’t bad enough on its face, Lagarde offers still worse advice by way of a warning:

Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia.

“These countries, which were the engines, will suffer from instability factors,” she told the newspaper.

In other words, these countries that have all seen burgeoning exports are now beginning to contract because general consumer demand is down in the importing nations, including the US and the EU. In short, Lagarde doesn’t want you to notice that she’s making an admission about the future prospect of the EU, with its currency in turmoil, and the US, where currency in large amounts has been sent to prop up this entire mess.  What she doesn’t say directly, and dares not admit, is that the coming collapse is already beginning in a more serious way, measured in the GDP of what had been the leading growth engines prior to the onset of the financial crisis.

In short, Lagarde is asking, or even chiding countries to continue a policy that is nothing short of suicidal, all on the basis of the proposal that the IMF be provided more money to loan to nations already deeply indebted. This is both the financial and moral equivalent of urging the family with twice their annual income in short term debt to apply for another credit card or two.  What she is pretending is that the situation can be repaired by some notion of restored confidence among investors and consumers who now [rightly] fear that nothing but collapse lays along this road.

They’re right to doubt, and the people of Britain and every other nation are right to worry as what Lagarde seems to be suggesting to European politicians, but indeed politicians everywhere, is that they should take one for the team, not as politicians, but as sovereign nations.  Britain would be right to reject her words as the ravings of a con artist, selling the same old Ponzi scheme again and again.  We in the US could only improve our position by following the British lead away from the EU, and the Euro, but our current financial and political leadership is instead tying us more closely to it.

It’s time to face reality:  The Euro was a doomed currency from the outset, and inviting in those nations with questionable currency and dishonest fiscal policies was never going to make anything but a disaster, but the people of Europe were suckered into it, and now the US is going along.  Their shrill warnings of dire collapses if we don’t go along are merely a postponement of a greater crisis with each subsequent delay.  It’s time to face the music, and as the old saying goes, we must refuse to put even more good money after bad.  So bad is it now that it would be more accurate to say that we are putting bad money after even worse.

The only way to prevent a global collapse is to cut our losses now. Stern fiscal policies must prevail, and money must grow tighter.  At this very moment, at the US Treasury and the Federal Reserve, they’re concocting plans to export your future wealth to Europe in order to buttress a currency that won’t be saved, and each dollar they pour into the effort only devalues the ones in your pockets.  It’s time to put a stop to all of this, and if we’re to save our country, we must start here, and we must start now, and short-run extensions of payroll tax-cuts won’t get it done.  We need real, drastic spending cuts that sharply curtail our budget deficit, something on the order of what Ron Paul is proposing, in the realm of one trillion dollars or more in spending cuts immediately.  If you want sound currency, it has to start at home, and whatever else you may think of Ron Paul, he’s right about this.

 

Does Money Corrupt Politics?

Saturday, December 10th, 2011

Which is Corrupted: Money or Politics?

Many people believe that money corrupts politics.  It’s certainly an easy conclusion to draw from the evidence if you consider only the superficial aspects of the problem, but my argument is a bit different.  I don’t believe that money corrupts politics nearly so much as politics corrupts money.  Money is merely a symbol of value. It’s a token we use in place of a barter system, since it’s far easier to exchange.  When you work, you’re creating value, but it’s difficult to exchange the value of that work directly to those from whom you would like to purchase, so the people to whom you sell your labor pay you in money, and then you take that money to all the places you would like to spend it.  This is the nature of money.  It’s an efficient system of exchange and it works quite well, right up until the moment you insert politics.  Rather than spend our time on a question I think misses the mark, let us now examine how politics corrupts money.

If you earn your money by honest labor, whether by manual or mental exertions, you are creating new wealth.  If you consider a block of wood, and you carve it into something fantastic, whether practical or artistic, if somebody will pay you more than it had cost you in materials and energy, that net payment is both an assessment of the value of your time and therefore also your profit.  Some of us are able to turn very little time into huge profits, while others of us are able to make only minimal profits on our time and exertions because what we are producing is not so valuable to others.  That is natural, and normal, and must always be the case.  The maker of candles will never be rewarded as highly as the person who invents a light bulb or the electric generation system to power it.  The reason is simple:  Almost anybody can make a candle.  Workers who can do this are numerous.  The mind that can imagine a light bulb or a generator are rarer, and therefore, their efforts are more valuable. It is the market in which you sell that labor that decides its worth.

Here is where politics enters to corrupt money:  Because candle-makers are more plentiful than inventors, they have many more votes.   They can turn to the political class and demand laws to make their candle-making unnaturally more valuable.  Politicians can follow a number of courses in response to the demands of the numerous candle-makers:

  • They can enact a law making candle-making more valuable than it is in fact
  • They can enact a law making inventors’ efforts less valuable than they are in fact
  • They can steal money from the inventor and give it to the candle-maker
  • They can say “No, property is property, you have yours, and the inventor has his!”

Which of these do you suppose the politicians is least likely to do, since it will not satisfy all his candle-making constituents, and thus will lose him his next re-election?  Of course, this situation becomes a good bit more complicated when we add competing inventors.  Suppose somebody comes along with an invention to replace the ordinary light bulb. Let us imagine that unlike compact florescent bulbs, it has no toxic mercury, and it’s much more efficient at the same brightness. If it’s also less expensive than the ordinary light bulb, and is in all measures a superior product, the market will answer by making it the new leader, and it will become the new ordinary light bulb in short order.  Now, the manufacturers of the older style light bulb will descend on politicians to demand protection of their market.  Politicians can respond in a number of ways:

  • They can enact a law outlawing the new style light bulb
  • They can enact a law requiring the use of the old style light bulb
  • They can add extra taxes to the manufacturer of the new style light bulb, driving up its cost
  • They can give a tax break to the manufacturer of the old style light bulb, driving down its cost
  • They can do nothing at all, and ignore contributions from the manufacturers of the old style bulb

Which of these options is the politician unlikely to choose?  Now let us imagine that the new light bulb is actually a terrible idea.  Let us imagine that it is filled with toxic mercury, and that in the long run, you’ll have EPA hazards created in your home if one breaks, and that while they are slightly more efficient, they are also annoying, and the light is actually modulating at a very high rate, and while barely perceptible to you, your eyes lead you to constant headaches, and besides the high frequency buzzing drives your pets insane, because they can hear frequencies you cannot.  Let us now imagine what politicians might do, not on behalf of the old style bulb manufacturers, but on behalf of the new ones:

  • They can enact a law outlawing the old style bulb
  • They can give tax credits to purchasers of the new style bulb
  • They can do nothing and let the market decide and skip the opportunity of contributions

Which of these have politicians actually done?

Now some will tell me this is all well and good, and merely proves their point, in that the money offered to politicians corrupted them.  Instead, I will tell you this is a lie, and now I will be happy to explain it if you missed what has really happened over the course of this post: The law was used as an instrument of enrichment by already corrupt  politicians.  They had no money apart from their salaries and immediate benefits, but in order to have more money, either in their own pockets, or in their campaign war chests, they used the law, your law, in each and every case to skim money from the system for their own purposes.  What this has the effect of doing is to change the market, and to change what people do in the market.  That means you are changing the value of the labor and the value therefore of money irrespective of what the market might prefer.  What you have done is to use politics to corrupt money.

There is an economic law, “Say’s law,” that tells us something about natural economic function, and it is that a supply creates its own demand.  The inverse and equally true corollary of this law tells us that without a supply, there can be no demand.  (Demand as an economic term, but not as a human behavior.)  What does this mean in the question of politics and money?  It means simply that you cannot purchase that which is not for sale.  No candle-maker, no light-bulb inventor, and no manufacturer of any sort can purchase influence that is not first offered for sale.  This is not a question of corruption by money, but of money.  When the politician uses his position and his legislation to influence the markets, whether he takes payment from a player in the market, or instead merely profits directly by his previous purchases in the market, this is not a matter of money corrupting politics.  It is the much more deadly issue of politics being used to corrupt money.

In every way, this upsets the natural order of the market.  Things that the market would find worthless are suddenly made precious, by law, and things that had been precious are made worthless, or even illegal to possess.  Any such action commits a fraud on all holders of money everywhere and at once.  What else could be the meaning of a law that imposes on you the purchase of compact florescent bulbs, that cost many times their traditional competitor, the incandescent bulb?  Do you have any doubt that most of the politicians who supported this law did so in order to profit in some way from the law, your law?  Notice, however, the ordering of cause and effect, and this will tell you which has corrupted the other, money or politics:  Which came first?  The political action, or the monetary result?  How many of these elected thieves had invested in GE or other CFL producers, before the enactment of the law, knowing what gains their investments would see once they made a law banning the good old incandescent bulb?

I am sympathetic to those who believe, innocently, that money corrupts politics, but the truth is something else:  Politics is being used to corrupt money.  When people make money by graft, it is the money that is corrupted.  It is a form of counterfeiting money, and since money is just an expression of value, what you must see if you’re to have any hope of reversing the trend is that the reason our system is so corrupt is not because of money, but because of those who use the law, and the power of government to extort, coerce, and otherwise gain money they haven’t really earned.  This is because government is involved in far too many things, and I’d ask you to consider Bastiat’s view of plunder to understand it.  If you want to solve the problem, don’t seek to get the money out of politics, but instead get politics and politicians out of money and markets.  That’s a real reform that could save our country.

As Europe Trembles, Federal Reserve Attempts Bail-Out

Tuesday, December 6th, 2011

We’re well past the end of the efficacy of such charades as the one the Federal Reserve is now undertaking.  With Europe’s currency on the verge of collapse, Standard and Poor’s has put 15 European nations on negative credit-watch.  Worst of all, the Federal Reserve sees the threat to financial stability, and rather than moving to protect the American people, our own monetary agent is instead moving to shore up the Euro via the International Monetary Fund (IMF).  Every American should be incensed by this move, because what it really offers is an international version of “too big to fail.”  The US has  become so entrenched in the future prospects of the Euro currency that the Federal Reserve now believes bailing it out may be the only way to save ourselves.  If this sounds vaguely familiar, it should, because this is the same basis by which the American people were suckered into backing up and bailing-out those banks deemed “too big to fail” back in 2008 and 2009, under Presidents Bush and Obama, respectively.

Readers may remember a few weeks ago that I reported the swindle being permitted by Treasury, where Euro-based derivatives were now to be backed by the FDIC.  That risky scheme actually puts American tax-payers on the hook for hundreds of billions of dollars. Our Federal Reserve has already lent more than $7Trillion to foreign banks, and now it seems they’re intent upon providing still more.  It’s an obscenity that at this late date, we’re still pursuing a failed policy that puts bad money after worse money.  Why?  Simply put, we are so thoroughly invested in the Euro experiment that if we simply walk away, it will fall, and likely take us with it.  The problem is, as I’ve previously explained, that one cannot save the Euro by this method.  There is only one way in which the Euro might be saved, but it will require something the European people likely will riot to oppose:  Vastly more effective fiscal control.

To approach this problem will require that which governments virtually never do:  Restrain spending, while giving up some controls over the economies of their respective nations.  It will require that they cut social spending, but also government employment dramatically.  That’s where the real problem begins, because people now long-accustomed to a vast and prolific welfare state do not give them up without a fight.  Of course, give them up they will, one way or another, when their system ultimately collapses.

We’re not much behind Europe in that development, and our own credit-rating downgrade earlier this year was simply the beginning.  We face the same choices, although still less severe.  Unfortunately, by entangling us with the Europeans, what the Federal Reserve and all of those banks deemed “too big to fail” that have been major players in the  Euro-zone, what this means is that it will accelerate our own collapse.  We may even go down, not following behind Europe, but holding hands and walking side-by-side with them over the precipice.

It’s anybody’s guess how long this can be extended.  It’s possible we might not make the end of the year, or the end of two years before this collapses, but with the direction in which we’ve been heading, collapse seems to be inevitable.  The one and only saving grace America may have, as distinct from Europe, is a healthy sense of charity by comparison.  Americans remain, even in our current economic distress, the most giving of people.  If we are finally forced to confront out own welfare state, there may be some hope that the nation will find some way at least to feed its people, but for Europe, I have no such hope.

Reality Check: Horses and Slaughter

Wednesday, November 30th, 2011

It's Time to Face Reality

I’ve had horses for a long time.  I love horses.  It’s fair to say that I know a good deal about them, and have successfully bred and raised them, and also taken mercy on horses by relieving them of undue suffering.  It’s also fair to say that one of the things I have learned in all my time with horses is that some people, most of whom have never owned a horse, have no idea what is entailed in the ownership, maintenance, and medical demands of a horse.  Too many people have a “happy-talk” view of horses that does not match reality.  Too many people believe that they shouldn’t ever be slaughtered, because it’s a fate too cruel to contemplate as some of the same people wolf down hamburgers or buckets of chicken.

The Congress has finally lifted an effective ban enacted five years ago on the slaughter of horses for human consumption here in the US, and the lifting  of this folly in law will finally permit some hope for an industry that has suffered grave harm because some in government have been listening to the well-meaning, but uninformed folks who believe that horses should be exempt from the same fate as other livestock.  Some of you are going to hate me after this post, but so be it.  If you’ve not yet tackled this truth, today is your day.  The truth is that with the glut of unwanted horses now flooding the market, all horses are suffering as a result.  More are being abandoned, and more are slowly starving, because owners have been deprived of one method of disposal because some people don’t like it.

People talk about the cruelty of horse slaughter, as if it is any more cruel for a horse than for a cow, pig, or sheep.  Newsflash:  It’s no different.  If you like bacon dressing your plate of eggs and hash, you’d better grip reality.  Slaughter is what it is.  I make no excuses for it, because it is necessary.  If you’re one of those “vegans” who believe that eating all meat is bad, congratulations on your philosophical consistency, but at the same time, I offer you my condolences since growing children need meat proteins and if you’re not providing them to children in your care because of your beliefs on slaughter or meat, I think you’re a blooming idiot.  The simple fact of the matter is that humans need meat in their diets.  You can murmur and whine all you like, and you can call me names until you’re blue in the face, but our nature is not that of a herbivore. Nature didn’t give you incisors to slice through veggies.  Deal with it.

Now as to the particulars of horses, let’s get something straight:  Long before mankind saddled up on horseback, early man was rubbing his belly after a fine meal of horse meat.  Horse is leaner than beef from cattle, and is every bit as nutritious.  In World War I, when most of the world still fought wars on foot and on horseback, the United States sent more than a million head of horse to Europe to fight the war.  None came home.  Most of the surviving horses went to feed a starving continent in the aftermath of that war, and millions of Frenchmen and Germans, among others, owed their survival to a diet of horse stew.  This was less than one-hundred years ago, meaning there are many still around who remember those days.  Check in with them before condemning horse slaughter.  It wasn’t only the meat that the Europeans used.  As in any such calamitous circumstance, almost every part of the horse was used, including the coats, from which winter clothing was made.  My wife still has a coat passed down to her through generations that finds its origin in that period.  She doesn’t wear it, but it remains as a reminder of her heritage and how her family like so many in Europe were forced to survive.

Having covered the purely practical questions, let’s move on to the economic ones.  Horse slaughter fulfills a vital function in the horse industry:  It puts to good use animals that would otherwise be dumped in landfills or buried in massive pits.  As it stands, we have a surplus of horses since the prohibition on federal funding of inspections of horses slaughtered for human consumption enacted through Congress five years ago.  It has long been true that excess horses found their way to slaughter because only the most useful animals are kept.  There are a few organizations that run horse rescue operations, but the truth is that those subsist almost entirely on charity, and in these hard economic times, they’ve been suffering, and a few have even gotten themselves into trouble, unable to feed or care for the growing number of discarded horses.  Too many people have come to the irrational view of horses as pets, but this is a nonsensical view that cannot be sustained in the real world.  Horses are livestock, and when treated as such in the market, the market handles the problems associated.

In days gone by, but thankfully perhaps now returning, horses past their usefulness went to “the glue factory,” as the euphemism promised.  Only the rare horse, perhaps famous for racing or other equestrian endeavor managed to avoid this fate.  The reason is simple enough to understand, and I know a thing or two about it:  Horses are expensive to maintain, feed, and pasture or stable, and because they are no longer a necessity of our culture, the demand for them comes only from entertainment, sports, and yes, that practice of slaughter for food and other byproducts. As a matter of economics, the lack of slaughter has devalued all  horses, because we now have a glut of unwanted horses too infirm from old injuries and old age to ever be of use other than as pasture ornaments.  Let’s conduct an economic exercise:  When slaughter was legal, we saw prices of nearly $0.60/lb. for horse on the hoof.  This meant that a 1000lb. horse could be expected to bring six-hundred dollars.  While that’s not a great deal of money, if the horse is fit for no other use, that’s the most the horse is worth.  You can attempt to attach non-market emotional value to the horse, but that’s a matter of subjective considerations that has nothing to do with the market.  Now, let’s take that same horse, and rather than slaughter, let’s euthanize the horse.  Depending on the veterinarian, that may cost anywhere from $100 to $300, or more.  Then you must dispose of the carcass.  Yes, horses go somewhere, and most of them end up in a landfill.  You can expect to pay between $200 and $300 for that.  Let’s stay on the cheap side of this argument. Let’s assume you euthanize and dispose of the horse for a grand total of $300.  As compared to taking that same horse to slaughter, you’re out $900.  Math is hard.  Nature is harder.

Let’s imagine that this animal is going to be kept as a pasture ornament.  Let’s just say we’re going to keep the animal around indefinitely.  You will spend an average of $1500 annually on veterinary care, and another $600 on farriers’ services, and you will feed the horse hay and some sort of bulk protein in the form of grain or pelletized feed products.  The average one-thousand pound horse is going to consume $40 in hay and $20 in feed for a week.  Do the math.  You’re going to spend a load of money on a horse that isn’t doing anything else.  It’s not at all difficult to suggest that with the average horse, even bargain-shopping on all the necessities, you’re going to spend $5000 per year to maintain the existence of the animal.   At present, the average healthy young horse does not fetch $1000 at a sale in my home state.  I want you to think about that reality: On average, in my state, if you can give a horse away, you’re doing well.  Texas has some particular problems in its horse market brought about by politicians, but nationwide, the industry has suffered from this horse slaughter ban.  Too many unfit, infirm animals are taking up too many resources, because for the last five years, we have been prevented from slaughtering the excess.  While horses haven’t been going to slaughter, many horse farms have been killed off, because they can no longer sell their product at a profit for all the useless animals stacking up all over the country.

Now, before some PETA-minded “animals have rights too” whack-job starts in on me, no, I have never personally shipped a horse to slaughter.  Every horse we’ve ever had that became seriously injured or sick was euthanized.  Yes, I paid the freight to haul off their carcasses, but understand that in all but one hopeless case, we tried to save the horse first, meaning its meat was unfit for human consumption anyway due to the medications that were used in the animal’s treatment.  With perhaps all but one of them, if I had known that the treatments would have been futile, and that they were going to die irrespective of our veterinary efforts, I would rather they had gone to slaughter than spend untold thousands on treatments that were ultimately followed by euthanasia and disposal.  At least that way, some good would have come of them.

I realize that seems harsh to some people.  Part of this sense is born of the fact that some people mistake livestock for pets.  Pets live indoors. Pets are generally in some manner housebroken.  If you’ve managed that with an equine, you’ve one serious horse-whisperer.  The simple fact is that the bias in favor of horses on the part of some resides purely in their minds, much like any other bias.  I mentioned “all but one of them,” and that was such a case, where my bias in favor of the horse would have caused me to expend a good deal more if the veterinarians had not convinced me it would be fruitless.  It had nothing to do with the horse’s market worth, but his worth to me personally, but the fact that one particular horse was especially valuable to me doesn’t change the fact that horses are livestock.

I also think with the shape of things in our world, the time is quickly coming when we will have no room for purely sentimental legislation that effectively leads to asinine bans on the slaughter of horses for human consumption.  The simple truth that none of the do-gooders ever address is that horses will die. All horses will die.  How they will die comes down in many cases to human choice, but the only end accomplished by slaughter bans is to deny to horse owners a residual, token amount for the tens of thousands of dollars they will have spent over the life of a horse, and to make those owners slaves to animals long beyond their use.  You can call me a mean and ruthless bastard if you like, but the truth of the matter is something else entirely.

I love horses, but  I know that the only way we will preserve them is that if they are maintained as private property.  A thing is defined as property in part by the right of its owner to use and dispose of it.  If the argument of the anti-slaughter advocates is that I should be denied the use and disposal of my property, they are merely communists acting under another claim of “the public interest,” or “the public good.”  If I knew who inserted that provision into the bill that eliminated the ban, I would give them a big sloppy kiss and $100 toward their re-election.  So would most others in the horse husbandry business.   It’s not that any of us in the horse industry seek to slaughter horses, but we know so long as they exist, this will be necessary, if unpleasant.

Follow-up: A Note to Horsemen

Warning: Euro May Trigger Global Collapse

Tuesday, November 29th, 2011

What Democracy Really Looks Like

Over the last week, I’ve been watching events unfolding with growing concern, and while I truly hate the idea that I might inadvertently offer myself up as just one more “Chicken Little,” I must in all candor tell you that because the sky is not falling now, do not assume it will not fall tomorrow.  We’ve listened to the media talking heads, the pundits, the analysts, the economists, and even the politicians, and virtually all of them have made rosy predictions and hopeful prognostications for the immediate future, and your federal government feeds this view with its own phony numbers, endlessly amendable and adjustable statistics, and a common lie that consists of telling you: “It’s all going to be just fine.”  As I’ve reported to you within the last few weeks, more downgrades were coming, and banks moved Euro liabilities under cover of FDIC, but now the downgrades are here.  There will be more.  When the Euro falls, it may very well take the United States with it.  The time to prepare has very nearly expired, and there will be no turning back.

Ladies and gentlemen, I am now going to tell you the truth, and I will place no bunting of red, white and blue around it, because you deserve to know it all lest you be left penniless and homeless and starving in the streets, unable to defend yourself from the cold, never mind the brigands that will likely swarm our cities:  If the Euro collapses, the blow-back may not merely damage our economy, but thoroughly destroy it, and there is absolutely nothing we can do but deepen and worsen the results by more delaying tactics.  Businesses are scrambling to come up with options if the Euro collapses, but the truth is that many of them are now in a position from which they will not recover.   The choices you make now may mean the literal life or death of you, but it’s important that you know how we arrived here so that if ever there is a chance to arise anew, you will already know the answer.  Even now, the statists of Europe are seeking ways to loot you. One world government will come riding in on the back of this nightmarish trojan horse.

It is a truism that few wish to acknowledge that one cannot consume more than one produces without eventually becoming subject to the sort of collapse we now face.  It goes for nations as well as people,  and just as people can hide the growing disparity between their financial underpinnings and their lifestyles for a time, nations can do so, and for even longer and to a greater degree because they can pilfer the value of the few still producing among their citizens.  The problem is that just like individuals, even nations and unions of nations run afoul of nature’s basic truism requiring one to produce at least as much as one consumes.  Herein lies the sickening truth of the impending Euro collapse, and the collapse of all those who have tied themselves to the Euro, including the United States.  For far too long, far too many of us have lived without producing while others camouflaged their bankruptcy, willingly or [more often] unwillingly carrying their burdens.  No nation can survive that.  No people can sustain that.

The single currency of the European Union was advertised to make them more competitive as a trading bloc with the United States and Asia.  In truth, that’s not the whole story.  The Euro was also devised as the means by which to buy a little more time before the welfare states of Europe failed.  No rational person ever thought otherwise, and every politician from Rome to Madrid to London to Paris and Berlin has known this for two generations or more.  Your politicians right here in the good ol’ US of A have known it too, and yet when they had a chance to do something to change it, they instead accelerated it.  You might ask: “Why?”

The answer has ever been the same, and it is the endless pursuit of power at the cost of any and every principle.  This ambition has blinded mankind almost from the very start of the first civilizations.  In our modern society, if you think politicians are the greatest bribe-takers, I urge you to think again: Modern politicians are the greatest source of offers in bribery but the greatest recipients are we the people.  You wonder who is guilty?  He who offers a bribe is powerless in the face of rejection, but he who accepts that bribe is guilty for all his days.  In small increments, and in bits and pieces, the people of Europe were convinced to surrender their liberty in exchange for small bribes.  Over time, the bribes became so large that to maintain them demanded more and more from the producers, until the relative few producers began to join the gravy train.  While they bribed your silence and your complicity with the get from your neighbors’ pockets, be assured that they have been busily lining their own.

The Euro was concocted to hide this.  All those nations whose fiscal problems are now manifest have always been unstable, and it’s because successive generations of politicians in those nations have been carrying out this sort of bribery of its citizenry from time immemorial.  The French revolution was a Marxist affair, though not known by that name in those days, and nations such as Greece, Italy, and Spain haven’t been fiscally responsible for centuries.  The disease is not heritable, but it often visits subsequent generations, because it is born of a bad idea that is passed from one to the next.  That idea is statism.  Statism is the ruin of mankind, and always has been, because its fundamental claim is that man exists to serve the state before himself.  Whether statism took the form of Monarchy, Theocracy, Democracy, or some brand of Totalitarianism, it has ever been the bane of human existence, and yet no idea has more staying power among people than this one.  It plays upon one of mankind’s greatest weaknesses:  The temptation of covetousness and envy, born ever of sloth.  It is enabled  by the deadliest sins against nature, or nature’s God.  It offers the false promise of a life without discomfort, effort, or pain, but in the end, it returns only misery.

A little more than a century ago, this idea began to catch on even in  America.  It has slowly grown as a cancer, and it has spread its tendrils through every community, on every level, and in all things.  We’ve been hiding it, too.  This disease has its own fuel, and the Federal Reserve provides it, and not surprisingly, has been providing it for most of the time in question: Easy money.  Low interest rates and plentiful credit has made this possible.  Consider the individual who runs up a pocket-full of credit cards, and struggles to make the monthly minimum payments.  That’s our nation.  Just as a weak-minded, or necessity-driven person can quickly run into debt to a dangerous level, so too can a country, and just as the easy availability of credit can act as an inducement for an individual, so does it work as a great temptation to nations.  Nations fall when they permit politicians to bribe them with credit.  Look around you: How many votes have been bought by a budget that is nearly two-thirds entitlement programs?

As has been reported this week, our own Federal Reserve loaned out over $7 Trillion at impossibly low interest rates.  That’s half the GDP of the United States, in loans.  Yet you may rightly ask:  Where does the Fed get the money?  Answer: It loans it into existence, i.e., it prints it.  Only the promise of the debtor to pay gives it any value, but if that debtor defaults, well, the value of the dollar is diminished accordingly, but even if the debtor makes payments, there is always risk attached, and that risk is shown in inflation.  This is why the Credit rating of the US Government has been such a big deal:  It is the single largest debtor, and substantially so. As our government looks less and less likely to be able to repay its debts, while it continues to borrow money at an increasing pace, what do you suppose will happen to the value of your money?  Why did Thanksgiving dinner cost an average of 13% more this year than last?  Next year’s will cost 20% more, or worse.

This is the real truth of this situation, and unless and until you are ready to confront it, and to reject the myriad bribes from politicians, you are going to see things grow much worse.  Perhaps most frightening, they may have successfully engineered not only the collapse of the Euro, but also the Dollar, and every other major currency on the planet, but what they will offer as a “fix” is a global currency that will make of us all slaves to the same masters.  They will offer you more bribes, or at least threaten to take away the ones you currently enjoy, all so you will go along.

Ladies and gentlemen, make no mistake about it:  With the current crisis ready to explode in Europe, and with the state of our own economy, under the willfully absent leadership of Barack Obama, we are waiting on the edge of collapse.  This may be a most un-Merry Christmas, and it only promises to worsen.  If we somehow survive as a nation, it will be surprising, but it will only have been possible if we reject calls for a global currency even at the expense of the bribes we are now so accustomed to taking that we believe them to be our entitlements.  From now until then, you can spend your time in contemplation: Do you prefer life as a slave?  Many of your neighbors will say “yes” without flinching.  Somehow, somewhere, we must find the strength to say “No.”   Prepare, my friends, and by the strength of your preparations may the republic endure.

Possible Euro Collapse Sparks Civil Unrest Fears

Sunday, November 27th, 2011

Prepare For the Worst

Those who have been paying attention have known the Euro is in deep trouble, and much of it stems from the way in which is was created.  Too many member states were admitted which had currency that was overvalued for the merger, and they’ve done nothing to curb ridiculous fiscal policies in those countries.  This includes nations such as Greece, Italy, Portugal, Spain, but also to a lesser degree, France.  Now, it’s time to pay the piper, and predictably, nobody wants to do so.  Governments in Europe are now forced to consider what will happen if the Euro falls and the member states wind up reverting to their prior forms of currency.  Some estimates suggest that GDP would decline in Europe among member states by as much as half, or more, and that widespread unemployment on a scale that would dwarf any previous depressions in scale and depth.  In short, they’re now planning for a calamity, complete with riots and revolutions, and the reason is simple: It’s now a very real possibility. From a story in the UK Telegraph:

The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.

Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.

Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.

“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.

Of course, many Americans are not moved by these tidings, somehow believing that we are insulated from a European crisis, but nothing could be further from the truth.  If such drastic circumstances arise in Europe, the effects will be global, and so will be the civil unrest that accompanies it.  This is the  kind of calamity from which there is virtually no escape, anywhere on Earth.  In such an environment, not only would our own exports to Europe would collapse, but also we would find our own currency in free-fall because we have so thoroughly tied it to the Euro.  The defaults alone would wreck our own currency, and leave the United States in a similar situation.

Reuters is now carrying a story about the French and German effort to establish some fiscal controls to stave off a calamity, but the truth is that this will likely be too little, too late. Some authorities realize that this will be a stalling tactic at best, and are using the time it may buy to prepare for what is increasingly being seen as an inevitable collapse. From the Telegraph:

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.

Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

As is now obvious, this is all a play for time.  They’re buying time, but they’re not going to save things, and the Europeans seem to know it.  The question thus becomes:  What is our own government doing to prepare?  What are they telling you to do in preparation?  Nothing.  Your own federal government is behaving irresponsibly in the face of this looming crisis.

For three years or more, the hand-writing has been on the wall, and our own government has obfuscated and lied about the direction of things, but has done little to prepare the American people for the possibilities now in the offing.  Let me suggest to you that the recent sporadic reports of spikes in the purchase of survival supplies is an indicator that the American people have begun to figure it out without governmental warnings.  No rational person can examine what’s been happening on the global economic and financial front and not have some sense of the very real dangers now accumulating.  It remains a prudent course of action for Americans to prepare for any sort of emergency, but with the real possibility of complete Euro-zone collapse now seemingly imminent, prudence would dictate an uptick in preparedness planning.  Our own currency has been tied too closely to the Euro currency to avoid the consequences of its collapse.

Obamanomics Delivers Worst Turkey Since 1932

Saturday, November 26th, 2011

One Turkey Gets Reprieve; Rest Get Axe

Nobody is really surprised by this development, but CNBC dutifully reports that this Thanksgiving week was the worst for the markets since 1932.  On the heals of miserable economic performance, and with all that has happened in Europe, it’s not likely to improve any time soon.  The Euro is on the verge of collapse, as US-based investors continue to balk at European banking institutions, and as they slide over the precipice, things aren’t looking any better here at home.  As I’ve explained before, our own banking system has thoroughly tied itself to the European mess that a significant collapse there will tend to spread its tentacles to this country in rapid fashion.  Perhaps in the worst sign of the day, now comes an early report that Black Friday spending by consumers was altogether flat.

No prolonged, significant recovery can commence until energy prices are brought under control, and as is now obvious, the only way to combat this in any sustainable fashion is to unleash domestic energy production.  Alas, the Obama administration is strangling our energy production, using EPA regulations to shut down coal-fired electric plants with no replacement of lost capacity.  Barack Obama is doing for the nation what his party first inflicted on California.  Rolling black-outs will likely become the norm next summer.  An economy like ours can never attain its most efficient stride under such a regime. Wealth and job creation require production, and production of anything at all requires energy.

Let us be honest enough to admit that we cannot recover while our President and his administration maintain their current course.  Since they are not likely to change course, we are stuck with this miserable economy.  It is for this reason that I believe that Barack Obama will go down to massive defeat in 2012.  Whomever replaces him, it will need to be an actual conservative, who will push for energy production, and who will act to lessen the regulatory burdens on the people of the United States.  Americans have been adaptive and creative people, but no people can be flexible enough to live on nothing, with no resources, and no energy.  This may be the most important lesson of the Obama administration:  You can’t make something out of nothing.  People who are accustomed to making lemonade have found that under this president, unless you happen to be one of those connected cronies, there aren’t even lemons.

The other thing we are going to be forced to address is the welfare state.  The welfare state in all its myriad forms has become a vast and overpowering drag on the economy of the United States.  Non-defense spending has exploded under Obama, and while many look to the defense budget when it comes time to swing the cutting axe, the truth is that the welfare state consumes fully two-thirds of our budget.  It is this spending that accounts for most of the growth in the federal deficit these last three years, and the time is rapidly approaching when we will be forced to choose: Welfare spending or economic growth.  Some will wonder what one has to do with the other, but it’s simply understood in this way:  Welfare-state spending is squeezing out private production and economic activity.  For far too many Americans, the welfare state has become a viable permanent alternative to work.

Barack Obama will be remembered for many things, and very few of them will be good.  When this President leaves office in January 2013, there can be some hope of a turnaround.  Until then, the American people are going to be made to suffer.  On the world stage too, Barack Obama has been a miserable failure, and with all the promises about making America more respected in the world, all this President has done is to multiply the contempt with which we are viewed.  If we are to have growth, and if we are to have hopeful economic times, we must replace this President and his band of cronies.  Like Sarah Palin, I believe “November [2012] can’t come soon enough.”

Tea Party Opposes Occupy Black Friday with BUYcott

Thursday, November 24th, 2011

Now They Have Opposition

In an interesting development sure to finally put the lie to the notion that the Tea Party and the Occupy Wall Street crowds are similar, one Tea Party group has decided enough is enough with all the “Occupy” nonsense, and is planning to support stores by encouraging the public to shop like crazy on Friday in opposition to the “Occupy Black Friday” boycott aimed at publicly traded retail outlets.  The Occu-pests don’t want you to buy from corporate America, but the truth is that they’re actually trying to stall economic recovery in order to foment revolution.  It’s a maniacal plan, but it tells you a good deal about the motives of the two groups.  The Occupiers want to use the economy for political purposes, and they wish to make it worse rather than better.  Meanwhile, the Tea Party, largely a conservative-minded, guided by a generally pro-capitalist philosophy, is trying to help the economy recover.

One of these groups is concerned with the economic hardships the American people are enduring under Obama, while the other intends to make things worse in order to inflame the situation and further empower Obama.  If it wasn’t clear to you before, it certainly should be after this debacle.  According to the cynical politics of Washington DC, the Tea Party should be trying to make the economy worse in order to hurt Obama at the polls next year,  but that’s not what drives the Tea Party.  Instead, they are sincere Americans who want to create a rising tide that will lift all boats.  The Tea Party is not a destructive organization, but is instead made up of Americans who believe in creating wealth because they understand that to create jobs, you must create wealth, and you must aggregate capital.  The Tea Party wants the country to rise, and to do that, people must engage in commerce.  The group Liberate Philadelphia/Liberate America put out a statement on their BUYcott. From their statement:

“At a time when our economy is most fragile and ratings agencies are talking about another downgrade of the U.S. credit rating, it’s completely irresponsible for Occupy Wall Street to attempt to bring the U.S. economy to a halt on the busiest shopping day of the year,” says Liberate organizer, John Sullivan, spokesman for the Cherry Hill Area Tea Party.

Meanwhile, the Occupiers now intend to punish the economy.  They are focusing on Malls and also on Corporations, claiming to make a distinction between small businesses and publicly traded firms, but the problem with this argument is two-fold:  First, many of the shops and stores in any mall are small businesses. Second, corporations provide jobs to millions of Americans.  What sort of lame-brain pretends otherwise?  Black Friday often causes those retailers to spend more money on employees, hiring seasonal workers, and paying additional overtime to current employees, almost all of which is converted into spending in the economy.  Particularly at this time of year, anything that boosts employment and wages in the private sector can only be considered a positive thing, unless you’re a ne’er-do-well Occu-Pest or leftist, and these anti-capitalists (despite their disingenuous claims to the contrary) are intentionally setting out to wreck the biggest shopping day of the year.

There’s no doubt that we have a serious problem in the economy, and on Wall Street, but most of that problem originates from Government’s tinkering in the free market, and from grotesque cronyism.  If the Occupiers want to make a real difference, they’d Boycott Obama.  They’d help the Tea Party Occupy the White House.  Unfortunately, they’re not that kind of movement, and their intentions are clearly anti-free market, anti-capitalist, and anti-liberty.  I agree with the Tea Party organizers who wish to have a BUYcott tomorrow:  Let us elevate ourselves without the government.  If the government and their shills in the media intend to flat-line this economy, and they’ve cooked up the Occu-pests to help, I say we oppose them.   I’m not ordinarily the sort to go Black Friday shopping, but tomorrow I will, because I believe in the free market, and I’m going to damned-well engage in it irrespective of, and in spite of the Occupiers, Obama, and all their miserable cronies.

US Cranes Company Policy: No Hiring Until Obama Gone

Wednesday, November 23rd, 2011

No Work Means No Jobs - Thank Obama

You might think this is a joke, and it sounds outrageous, but imagine how poor Bill Looman feels:  It’s his company and his policy.  Looman began posting signs on his trucks and properties roughly six months ago, but now it’s gone viral.  Looman explained that it’s not that he’s actively choosing to refuse to hire but that he says it’s not possible to hire under the economic condition the Obama administration’s policies.  In short, this isn’t the course he would have chosen, but it’s simply not economically feasible to hire.  I’m certain thousands of other businesses share his sentiment, and the employment numbers reflect this reality.

The same philosophy that brought us the disaster of Obamanomics has put forth the notion that businesses ought to hire as a matter of some form of charity.  What such wizards don’t quite grasp is that this is what has gotten us into the trouble in the first place.  The housing market collapse was largely due to giving people loans and mortgages for which there was little chance they would repay based on credit history, as an act of charity.

This sort of policy-making is an attempt to short-circuit the free market, but it never works.  Those who argue Looman should hire even though it would be an economic detriment to his company simply haven’t grasped the fact that if companies implement that policy, it will destroy more companies, and once they’re destroyed, their current employees will be joining the proposed new employees in the unemployment line.  Hiring people for the sake of hiring them won’t fix the economy, either, because growth is fueled in part by increases in productivity which doesn’t improve with idle workers hired for the sake of “giving somebody a job.”

Companies aren’t charities.  They exist to make money, and create wealth, and when they are able to do so, jobs are created not as the cause of the company’s prosperity, but as an effect of its growth.  This is the fact Looman’s signs are intended to convey: You can’t hire workers when you have no work for them to do.  That seems obvious to those of us who confront reality daily, but those in the Obama administration who continue to push radical, job-killing policies simply don’t understand economics or free  markets, or worse don’t hold prosperity of the American economy as the goal for which they’re working.

Bill Looman, US Cranes LLC

11Alive, an NBC affiliate, sent a reporter to Waco, GA, to speak to employer Bill Looman.  Looman, a Marine Corps veteran explained “Can’t afford it,” Tuesday evening. “I’ve got people that I want to hire now, but I just can’t afford it. And I don’t foresee that I’ll be able to afford it unless some things change in D.C.”

He went on to say: “I just spent 10 years in the Marine Corps protecting the rights of people… the First Amendment, and the Second Amendment and the [rest of the] Bill of Rights,” he said. “Lord knows they’re calling me at 2 in the morning, all night long, and voicing their opinion. And I respect their right to do that. I’m getting a reaction, a lot of it’s negative, now. But a lot of people are waking up.”

Looman is now being harassed by some who are unhappy with his signs, but he seems undeterred.  See a video at 11Alive Here.