The Declaration states: “He (King George) has forbidden his Governors to pass laws of immediate and pressing importance.” Obama has acted to prevent several states (Arizona) from enforcing laws to protect their citizens from imminent harm.
The Declaration reads: “He has suspended laws in their operation until his assent should be obtained.” Obama just suspended parts of the Patient Protection and Affordable Care Act – unilaterally. Obama also has vowed not to enforce parts of our immigration laws and, in fact, to take actions directly contrary to such laws.
Again the Declaration: “He has dissolved representative houses for opposing his invasions of the rights of the people.” His recess appointments while the Senate clearly was NOT in recess are tantamount to dissolving a representative house solely because he knew the house (Senate) would not assent. Subsequently, even though federal courts have ruled the ersatz recess appointments illegal, the appointees continue in office and to oppose the rights of the people. This final action goes even beyond any horrors promulgated by King George III.
The Declaration: “He has erected a multitude of new offices and sent hither swarms of officers to harass our people and to eat our their substance.” President Obama appointed a multitude of unaccountable czars. His administration directed the IRS to harass his political enemies. He is hiring tens of thousands more IRS agents to enforce his dysfunctional and hated health care law. His EPA, NLRB and HHS have run amok with countless, mind numbing and prolix regulations.
The Declaration: “He has combined with others to subject us to jurisdictions unacknowledged by our laws.” He advocates US law and US courts taking into consideration rulings by international and foreign courts. He has supported treaties and protocols (UN Law of the Sea Treaty) that subjugate Americans to the UN, to other international organizations and to foreign laws and governments.
“We constantly are bumfuzzled by politicians acting illogically.”
This comes as no surprise but politicians are far more interested in winning the next election than in doing the right thing. Their desire to win elections far outstrips their duty to the country. Their personal incentives are grossly misaligned with the public interest.
Politics is extremely shortsighted, favoring debt financing over taxes; that explains why we have had deficits in 47 of the last 52 years. Politicians love to make unfunded promises such as unsustainable pensions and benefits. They want to provide immediate benefits while borrowing, hiding or deferring the costs as far into the future as possible.
Special interest groups and rent seekers (those who extract value from government without giving value in return – such as public sector unions) dominate the process. Politicians always favor highly concentrated and organized groups (that return the favor in various ways) at the public expense and contrary to the public interest. A great example is sugar subsidies where a few growers share nearly $1 billion a year in added profits while all 310 million of us Americans pay $30 too much for sugar each year.
There is a myth that central planning leads to good decisions. This ignores the real world preferences of real people, creates perverse incentives and disincentives and inevitably creates a myriad of unintended consequences. The real world is far more complex and dynamic than any central planner or computer model can ever simulate.
Whereas in business the culture is to quickly recognize and to cut losses, the incentive in government is to deny anything is a blunder and continue to throw more money at it.
“Red light cameras are all about money – not safety.”
“Governments choose tax money over safety of motorists.”
By: George Noga – June 17, 2013
Our hearts go out to the victims of the building collapse in Bangladesh; they were hard workers striving simply to build a better future. The government building inspectors and all others who are complicit deserve severe punishment. However, it is crucial we learn the correct lessons from the workers’ terrible sacrifice. The media and their liberal camp followers have been quick to draw conclusions and to apportion blame; among the things they believe are:
- Greedy capitalists choose to pay subsistence wages for working in intolerable conditions;
- Capitalists’ ill-gotten gains can be used for higher wages and better working conditions;
- Desperate conditions in Bangladesh are due to an absence of government regulation;
- Globalization and free trade harm the poor and exploit child labor; and
- Boycotts of companies that sell products made in bad conditions help the poor.
Each and every one of the above beliefs is wrong; they are voodoo economics and the consequences of acting on these beliefs is highly destructive. The masses in Bangladesh already are living at bare subsistence; anything that increases the cost of employing them – be it higher wages or better conditions – comes at their expense and results in unemployment. The higher the price of anything, the less will be bought; this applies universally including in Bangladesh.
“Economic Liberty – not government intervention – creates wealth.”
Everyone desires higher wages and better working conditions for third-world workers. Ignoring the laws of economics (media and liberals) only worsens the situation. To actually bring about such results requires the maximum degree of economic freedom and the dead minimum of government and outside interference. We have seen time and time again – in Hong Kong, South Korea, India, and now China that within one generation workers are much better off. New factories open with more advanced equipment and competition for labor intensifies leading to higher wages. As wages rise, workers are willing to trade off for better conditions.
Globalization – Free Trade – Child Labor – Boycotts
Globalization and free trade benefit the poor in particular. To the chagrin of elitists, the poor grasp this viscerally; that’s why, inter alia, they embrace Wal-Mart. The greatest beneficiaries are those who live in poor countries (including Bangladesh) with whom we trade. Voluntary labor – yes including children – and even at low wages and less than ideal conditions – is not exploitative. Workers choose to work because it is better than what they had before and offers a path to a better life. This is how they work their way out of poverty.
Workers (including children) in Dickensian England were better off in the factories than the life they voluntarily left. It was the same in the United States where child labor was common until the early part of the twentieth century. My uncle began working in the coal mines at age six because young children with their small, lithe bodies could crawl into small places.
“Who do you trust to look out for children: government or parents?”
In England and the US, child labor had vanished well before the passage of child labor laws. As soon as humanly possible, parents remove their children from the labor force. It comes down to who do you trust to have the best interests of children at heart – their parents or government?
Boycotts are primarily the province of economically illiterate movie stars with too much time on their hands. Even if a boycott could be effective, the greatest harm would befall the displaced workers trying desperately to lift their families out of poverty. Low income Americans also are harmed by having to pay more for many products just to pander to the falsetto angst of Hollywood types who feel but do not think.
The media and liberals set up straw men, in this case greedy businessmen, and then rail against them. They don’t understand economics and they don’t know what they don’t know. They ignorantly call for boycotts that harm those they seek to help. Then, satisfied they have demonstrated their compassion and good intentions, they retreat back inside their plastic bubble where life is so much simpler than in the real world, where thinking rather than feeling counts.
By: George Noga – June 10, 2013
Having blogged extensively about the crisis of spending, debt and deficits, I am constantly alert for new perspectives to present the crisis in terms easier to understand. I have discovered one compelling new way to do this and it is presented herein.
First however, the media have widely reported the decline in the projected federal deficit which normally would be welcome news. Please note I referred to the projected deficit; the actual deficit continues its inexorable march to oblivion. The decline is due to two factors: (1) higher tax collections in late 2012 in advance of the Obama tax increases; and (2) payments from Fannie Mae. Both are one-time phenomena. So you may wonder, won’t the tax increases permanently shrink the deficit? If you believe thusly, you have forgotten Hauser’s Law which teaches tax rates may rise or fall, but the overall percent of revenue to GDP remains unchanged.
The Special Mathematics of a 100% Debt/GDP Ratio
Now for the fresh perspective. As the Debt/GDP ratio approaches 100%, some simple but gripping mathematics come into play. First, a few numbers. GDP now is $16 trillion and the public debt is $12 trillion (75% ratio). At the end of Obama’s term GDP will be $17 trillion, assuming a perhaps optimistic 2.0% compound growth rate. The public debt also will be right at $17 trillion based on continued annual structural deficits of just under $1 trillion combined with the frightening demographics and high annual compound growth of Medicare, Medicaid, Social Security and ObamaCare. Please note I use public debt and not total debt; this is because we must pay interest only on the public portion – a key distinction to bear in mind as you read on.
When the interest-bearing public debt equals GDP, the math gets interesting. Historically, the average maturity of US government debt is 5 years, while the average interest rate is 6%. When public debt equals GDP in 2016-2017, we can make the following observations.
“When debt and GDP are the same, the economy must grow at a rate equal to the composite rate on the debt to prevent a death spiral.”
First, the economy must grow at the same rate as the overall interest rate on government debt to keep from exploding interest costs and the deficit. If interest rates revert to the historic average of 6% while GDP grows at 2%, this will, ceteris paribus, result in a 4% larger deficit. At $17 trillion, the annual debt service (interest) will be over $1 trillion with 4%, or $680 billion, resulting from the gap between GDP growth and interest rates. Note: Interest now consumes less than 1% of GDP because of historically low interest rates – which will not last.
Second, if (miracle of miracles) the interest rate becomes equal to GDP growth, the entire benefits of the expansion of the US economy are offset by and consumed by higher debt service. To put it straight: the US economy never can grow net of interest. One can only imagine the impact of this on unemployment and every other measure of economic well being.
“If both GDP growth and interest rates were at their historic averages, there would be a differential of -2.7% , adding $400 billion a year to the deficit.”
Third, again using historic data, if the US economy grew at its average post WWII rate of 3.3% (phat chance) and also experienced its average interest rate of 6%, that would result in a differential of -2.7%, i.e. debt service would explode by nearly $400 billion more each year compounded. Even if economic growth was high at say 3+%, interest rates would be higher given the concomitant strong economy. Thus, even under such sanguine conditions, debt service would grow much faster than the economy resulting in a debt death spiral.
I hope the above perspective helps readers better understand why countries whose Debt/GDP ratios blow past 90% of their economies rarely, if ever, recover. These United States of America are headed toward a 100% Debt/GDP ratio by the end of the current presidential term. The only alternatives are: (1) massive spending cuts on the order of 30% which will wreck the social contract; (2) Draconian tax increases which will tank the economy further; (3) runaway inflation; (4) repudiation of the debt; and (5) a lost generation much like Greece is experiencing today. In fact, we are likely to experience several of the aforementioned perils. Avoiding widespread civil unrest and maintaining the rule of law will be no small feat.
By: George Noga – June 1, 2013
How often do you receive paternalistic, proselytizing and presumptive emails, both personal and commercial, that contain animadversions in the form of footnotes or subscripts exhorting you to “do not print” the email to “protect the environment”? If you’re like me, it’s far too often. This is nothing more than your friends or the businesses you deal with gratuitously foisting their politics on you.
Friends or companies, who normally would not initiate a political discussion, somehow believe it is acceptable to derogate you thusly. Businesses that do this would not deign to attach email subscripts urging you to vote a certain way. They would not presume to lecture you about abortion, gun control or gay marriage. Yet somehow they arrogantly believe it is copacetic to inflict their somewhat extreme environmental views about paper products on you.
I decided to fight back. Upon receiving an offending email, I always attach (without comment) my own footnotes to the reply; I have one for personal emails and one for business. The following paragraph contains my footnote for personal emails.
Footnote or Subscript for Personal Emails
“Please feel free to print this email along with all the attachments. Trees are a farmed product grown expressly for paper. It makes no more sense to conserve paper to save trees than it makes to conserve cloth to save cotton. Paper is natural, organic, biodegradable, renewable and sustainable. Working forests employ millions of Americans and help the environment by providing clean air and water, wildlife habitat and carbon storage. There are more trees planted commercially each year (by a vast margin) than are consumed; there are more trees than 100 years ago. In a very real sense, failure to print can hasten the conversion of forests to strip malls and parking lots. Therefore, by all means print this email and take satisfaction in knowing you are doing your part to help the environment and to save our American forests.”
Subscript for Business Emails
For commercial emails I use the above paragraph, i.e. the same one as for personal emails. Then I add the following paragraph strictly for business.
“Your company’s email contained a footnote admonishing me not to print it for the ersatz purpose of protecting the environment. By doing this you gratuitously injected contentious and argumentative politics into what should be purely a business relationship. Surely, you would not deign to tell customers how to vote; therefore, why do you assume it is acceptable to foist other political views? Politicizing a business relationship is bad business for many reasons:
- If your company doesn’t believe this to be a divisive political issue, it is ignorant.
- You are wrong; conserving trees grown for paper does not help the environment.
- Even if I agreed with your politics, I would deeply resent your presumptive and unwarranted intrusion into my personal life.
- Inasmuch as I both disagree with your politics and resent your intrusion – I will not do business with your company and hereby demand you remove my name from all lists.
- Injecting politics into business always is a losing proposition. Do your shareholders
- know about this and do they approve?”
You have my permission to use or to modify the above language without attribution. If you disagree with the “do not print” warning or even if you are agnostic or supportive but don’t like people cramming their political views down your throat, then – by all means – fight back!
Note to readers: During the summer months some (but not all) of our blog posts may be updates or revisions of earlier posts – usually from years ago. Our potential readership now is in excess of 100,000 as a result of various electronic journals, websites and other blogs that routinely pick up and republish our posts. Therefore, over 95% of our readers have never seen these posts before and they are just as relevant now as when originally published.
Defining Liberalism – Part 3
Defining Liberalism – Part 2
“Liberals advocate gender-selective abortion, i.e. the systematic abortion ofbaby girls arguing they must abort the girls in order to protect their rights.”
The US has the most progressive tax system in the world; the rich pay a higher share of taxes than in any other country and our corporate tax rate is the highest in the developed world. Nevertheless, liberals argue vociferously that the well off don’t pay their fair share.
Liberals are for diversity in every possible way except for thought where they oppose it.
Organic food fails every independent taste test versus conventionally grown food; isn’t healthier; requires more land; is worse for the environment; and costs more. Yet, it is a darling of liberals who oppose genetically modified food that actually is better for people.
Every one of the top 100 measures of human and environmental well being is the best it has been in the past 50-75 years and is getting better all the time. In the face of all this, liberals continue to argue counter factually that things are bad and getting even worse.
Our schools are terrible and getting worse. This has nothing to do with funding; it is the fault of educrats who regard it as a jobs program for adults and teachers unions that stand in the schoolhouse door blocking poor children from leaving. School choice is the civil rights issue of our age and liberals are on the wrong side despite their falsetto empathy.
Photo IDs are needed to buy tobacco, alcohol, drive, cash checks, fly, open bank accounts and attend the Democratic convention. Liberals believe it is racist to require one to vote.
Defining Liberalism – Part 1
“Liberalism: An emotional state characterized by obvious contradictions, disdain for truth, Utopian fantasies, obsessive desiresto control and to take from others and antipathy for all who differ.”
By: George Noga – February 15, 2013
You could see it in their faces; the look was unmistakable. I noticed it throughout our trip but it was confirmed by Mario on our final day in Europe. My wife and I were staying in Paris and took a hotel shuttle to the airport. We were the only 2 passengers on the shuttle van for the 30 minute ride and immediately struck up a conversation with Mario, our driver.
Mario, age 33, was trilingual and personable. We soon learned he was from Italy where he had completed his schooling but moved to France because there were no jobs in Italy. His job driving the shuttle van had zero possibility for upward mobility and he expected to remain in the same menial, monotonous position his entire working life. He was living with his girlfriend but stated he had no intention ever to marry; he was adamant about never having children. He had already begun to think about his pension which was at least a quarter century in the future.
Contemplate Mario’s situation. He left his native country and family for a low paying, dead end job in another country where he never would totally belong. He already had driven the van for 14 years and was facing another 29 years – a total of 60,000 hotel/airport round trips. He would subsist perpetually on the economic fringe of society, eschewing wife and children. Yet, according to his calculus, this hardscrabble existence was better than the life he left behind in Italy. Multiply Mario by tens of millions of others in Italy, Spain, Portugal, Greece and elsewhere and you will begin to understand the magnitude of the quiet desperation I witnessed.
“We are a lost generation for sure.”
Take Carlos from Madrid, who was quoted in a recent Bloomberg report. He graduated from university but faced Spain’s 52% unemployment rate for those under age 25. He now washes and chops vegetables for a salad bar in London. Of the 17 employees, 13 are from Spain, including 3 from Carlos’s university. “We are a lost generation for sure“, Carlos stated.
As bad as the situation is currently, it is certain to get far worse as governments and central banks impose anti-growth policies including massive tax hikes and pile on ever more onerous regulations. Even the courts add to the perdition. The European Court of Justice just ruled workers who don’t feel well during vacations are entitled to a paid makeup vacation day for every day they were ill. Meanwhile, thanks to many millions like Mario and Carlos, Europe’s demographics are imploding. Unfortunately, Europe’s problems have reached the USA.
America is Becoming More Like Europe
More and more Americans are working part time and in low wage jobs. Our unemployment rate is 15% when including involuntary part-time workers. Unemployment for those under age 25 is higher at 16% and that number is set to soar as ObamaCare kicks in and the cost of insuring full time workers skyrockets. America gradually is descending into a low wage, part-time economy with stagnant growth accompanied by decreasing social mobility.
Obama’s policies fix these trends in place for at least the next 5 years – 4 more years of Obama and at least one year to change course. The high rate of government spending, massive debt, huge deficits and higher taxes are certain to result in tepid economic growth. We will be lucky to average 2% growth per year and to avoid recession and/or an existential debt crisis.
In short, the youth (and increasingly the middle class) of America are becoming more like Mario and Carlos. They will be part of a lost generation and it is just a matter of time until we will begin to see the unmistakable looks of quiet desperation in our children’s faces.