Category: Economics

When the economy doesn’t grow enough, we can’t absorb new entrants to the workforce, it doesn’t provide a demand on labor greater than supply, we don’t create new small businesses who see customer needs more accurately than larger companies;… all of us are in trouble.

We tend to fight over the pie rather than growing it. Minimum wages that restrict new job holders from finding work, driving automation to eliminate employees (automated hamburger machines are coming, you can already order your food via Kiosk and go pick it up). Unions who demand more jobs than the company can afford and be competitive. Public associations that make firing someone overly difficult, thus reducing hiring and providing less than stellar service from the incompetents who stay.

The solution; reducing enough regulations and processes so that the U.S. returns to the top five of places that are the best to do business in, we have been sliding down that list for over a decade. Look to where public employees and the government have sat down to work out reasonable rules and pay that makes government efficient and a desirable place to work; and implement those solutions (see WSJ July 24, 2016, “Critics of Wisconsin’s Public-Unino Reforms Keep Firing Blanks.” CJ Szafir and Collin Roth). Ensure regulations have a cost benefit analysis completed before execution, Congress should cut off funding if the regulation doesn’t comply.

Both sides of the issues have valid points, stop yelling and calling each other names as though the other is the incarnation of the devil. Compromise, good grief, it is like 3 year old kids fighting over toys.

 

Our two political parties blather on about “fixing” the economy. They talk about helping the middle class. Both are talking about larger government to do so. Show me some data that says growing the government leads to a sustained economic growth.

Our $18 trillion economy has a great deal of regulation. The WSJ Journal estimates the cost as $1-2 trillion, AMAC at $1.9 trillion. That money goes to whom? Government! Inspectors, licensing personnel, tax recorders, inspectors, lawyers ( a bunch of them to create the rules and then a bunch to sue businesses when the inspectors find us out of compliance).  You get the point.

Some regulation is important, for sure. We shouldn’t allow a bad actor to dump cyanide into the water table. We shouldn’t allow a pedophile to work at a day care center.

So the question is, what is the economic level of regulation that is needed so that opening a business is within reach of the average person? This is where we have gone astray.

Only Congress should be able to lay economic cost on businesses. Yet for every law passed, 30 regulations are put in place by the fourth branch, the bureaucracy!  The Competitive Enterprise Institute calls this an “Unconstitutional Index.”

Some believe that growing the government is good, great jobs, great benefits, hard to get fired, lots of holidays, life is good. But as Margaret Thatcher said, paraphrasing, “The problem with larger government is eventually you run out of other peoples’ money.”

Even worse, the U.S. used to be the best place on the earth where hard work, desire and passion can get you into or above the middle class without permission from the ruling class. We are sliding down the scale of countries where doing business is the easiest, and other measure like opening a business. http://www.doingbusiness.org/rankings.

Want to raise wages in the US? Make it easier to open a business and more will be hired. This is dirt simple! Think of it, if we could put economic sense to regulations and eliminate half of them, a $1,000,000,000,000 program to fund growth, with a single dollar of taxpayer money. Yes, there will some people no longer employed by the government and some of that money should be spent to help them find new jobs; like the money we spent to help coal miners find new jobs.  OOOPS, never mind, we didn’t do that.

WSJ July 27, 2016, “Braids of Liberty”. In Iowa if you wanted to braid hair of others you had to spend $22,000 and go to school for 2100 hours to be a cosmetologist. The Institute for Justice, http://www.ij.org/, helped a woman successfully challenge this ridiculous licensing requirement. A small example of a huge issue in our country, protecting established concerns from competition, limiting personal and economic freedom for all.  Think of Uber!

Government regulations costs our economy between $1 and $2 trillion a year, in an $18 trillion economy.  Some of that is needed. Most isn’t.

Housing prices have gone up 33.8% from 2011 to 2016, according to the WSJ article of July 23, 2016, “The Fees That Inflate Home Costs.”

There is a great deal of heat directed toward evil banks about teh costs of buying a house. How about some of that directed towards governments that don’t have the guts to say, we need to increase property tax to support the infrastructure for new homes.

So, American taxpayer, Puerto Rico is going to “restructure” their debt, which built up under democrat leadership to an untenable level, bailout time! WJC juices up the CRA, threatening banks and mortage companies to loan to those who can’t afford a loan, unscrupulous people take advantage and 2008 happens.  Will the political leaders be held to account by Bernie, or 1/26th American Indian senator, or former secretary of state, don’t hold your breath.  Somehow they will find a conservative to blame.

Now, if the plan Congress is debating goes into effect a reasonable path forward may actually take place, the state can renegotiate their debt and bondholders may not take a haircut.  Lots of maybes.  The same thing happened in Washington, DC, in the 1990’s after decades of democrat leadership. Deju a vu all over again.

Why can’t those who love Hillary and Bernie see the writing on the wall, the more government we have the worse things will get. Santana said, paraphrasing, those who refuse to study history are doomed to relive it.

Thomas Sowell (born in 1930, dropped out of high school, joined the marine corps, then obtained numerous degrees, wrote a bunch of books on economics, https://en.wikipedia.org/wiki/Thomas_Sowell) penned an article with the above title.

Wanting something has nothing to do with getting it done unless  you focus on data that demonstrates what actually accomplishes the goal. Health care, or the ACA, was going to get everyone on insurance AND reduce the cost to all. NEITHER HAPPENED. Public housing was going to help those in poor housing. NEVER HAPPENED…..

This article highlights the lack of seriousness of “The Bern” proclamations, he doesn’t talk about if anything he is proposing has ever worked, IT HASN’T. HRC is close behind with proposals that have never worked. The Donald is in the same camp.

I know everyone is pissed off, I am also. But heaven requires us to do something that may actually accomplish a goal, that means our political “leaders” must have conversations rather than fire fights to try various things that actually produce the result.  The amazing thing is, both sides of this war agree mostly on what needs to happen.

Grow up people.

http://www.nationalreview.com/article/436022/bernie-sanders-fans-dont-bother-think?utm_source=Sailthru&utm_medium=email&utm_campaign=Saturday%20Best%20of%206/4&utm_term=VDHM

 

Brazil’s Senate just impeached Dilma Rousseff, she left office and her Vice President was sworn in as she awaits her trial. This is the result of major corruption eruptions involving the state owned oil company and other issues.

Ms. Rousseff and her party have “..dreamed their whole lives of converting Brazil into a Cuban paradise” per an article in the WSJ today by Mary Anastasia O’Grady.

“The problem with socialism is that you eventually run out of other people’s money.” Margaret Thatcher.

It appears socialism has resurfaced as the Bern’s success seems to indicate. HRC has moved left (at least in her statements, she was never comfortable with Bill’s policies anyway) to obtain her life dream. Trump has certainly issued statements that indicate his lack of free market ideals, eminent domain being one.

How many times do we have learn the lesson that the bigger the organization the less effective they are allocating resources. This especially applies to governments as they have no profit/loss accountability.  In some cases a P&L analysis is not appropriate but it is in most cases.  What were the results of our investment, did we get what we expected.

Ms. O”Grady goes on, ..”But along with state ownership, the heavy regulatory burden has been a drag on growth. Protection increased under Rousseff, which added Brazilian content rules and ship building, oil drilling, etc.”  Let’s see, lets’ protect American workers by renegotiating trade deals, erecting barriers, punishing unfair traders.  Sounds like BOTH of our presumptive nominees and the remaining self described Socialist in our presidential race.

GOOD GRIEF Charlie Brown!

 

Investors’ Business Daily, May 16, 2016. “Embracing Socialism”, an editorial, details the most recent results from countries who decided that evil free market capitalism should be trashed.  Great data! France, Brazil, Venezuela, Argentina. Even more interesting is to go back in time and read the quotes by progressives about how wonderful all those countries are by implementing polices that have beggared their populace. How’s this for prescient thinking, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” Winston Churchill
Read more at: http://www.brainyquote.com/quotes/keywords/socialism.html

Yeah, the rich get off easy say the progressives, and even Trump.  Sanders proposed plan raises taxes for all, ALL, the poorest families taxes would go up $165. The Tax Policy Center has put out data, http://www.taxpolicycenter.org/.

Today 88% of income taxes are paid by 20% of households, 12% by the rest and 45% of income earners pay NO income taxes.

Bernie Sanders and his wife pay an effective rate of 13.4% on their income of $206,000. The average “wealthy” income earner pays and average of 23.4% in income taxes. This is not including medicare, FICA, state income or sales taxes.

So what is “fair?” Some would say an equal, flat tax is fair. Some would say a VAT, or tax on all sales is fair. France tried to levy a 90% tax on millionaires, upon lots of threats to leave they backed off. Some would say let’s spend and borrow the deficit is fair, an eternal question about pros and cons (Fact, if interest rates go up 1%, the federal debt service goes up $180 BILLION a year.)  Fair is such a lousy word, very relative to each speaker. What is fair to you may not be to me. Paying taxes is patriotic, Joe Biden, I agree. What we don’t agree on is how much and how well are our dollars spent.

All of this walks past the root cause, not enough economic growth to fund the governments’ policy decisions. Meaning, the folks we elect spend more money than they take in, and we actually pay them $170,000 a year to do it!

Solution. 1. Stop spending so much. 2. Get out of the way of the economy so it can grow (tax rates-regulations-F.U.D. (fear-uncertainty-doubt)).