Beyond the Cusp

February 10, 2013

President Obama Inadvertently Identifies Historic Economic Ailment

President Obama continued his assault on Congress threatening that they could be responsible for a murder. The victims of this Congressional threat are, according to President Obama, thousands of jobs and the continued improvement we have supposedly been enjoying in the economy. The method with which Congress will bludgeon the economy and jobs to death is the death by thousands, nay, millions of cuts via sequestration. According to President Obama, if the Congress does not accept his proposal to match any spending cuts with equal measure of tax increases through the removal of loopholes and credits, then uncountable numbers of jobs will be lost or never filled as without government subsidies sectors of the economy will relapse into a recession-like collapse. This is the fate the Congress will force on a hapless country where its people are thirsting for the continued supply of government milk to suckle and care for them supplying them with jobs and seeing to their every need. Well, at least this would be reality if those who believe in big government as the solution for everything were to have their way. What President Obama has managed to do with his threats is to point to one of the most dire situations confronting the United States today. Actually, this has been a growing problem since Franklin Delano Roosevelt and greatly enhanced by Lyndon Baines Johnson and numerous other assists along the way to the present. The pinnacle of this monster which has been built one bad idea after another was the farce that some companies, banks, investment, insurance, and other chosen favorites of those in power being sold as too big to fail and thus deserving of millions upon millions of taxpayer’s money. Since the too big to fail was not an Obama original but was inspired by the original bailout which was committed with the approval and blessings of President George W. Bush.

The problem is that such a large percentage of the economy and way too many of our major companies rely almost entirely on government largess, tax allowances, contracts, and in a surprising number of cases, their entire margin of profit. That is one of the problems which rarely is discussed when the entitlement debate comes under scrutiny. There are always numerous pundits willing to blame it on Social Security, Medicare, Medicaid, Welfare, Food Stamps, and any of the other programs which assist individuals. When was the last time the evening news covered the amount of farm aid that goes to ADM, a huge agricultural conglomerate, or timber allotments granted to Weyerhaeuser and Georgia Pacific, or the any of the numerous generous funding of other industries or the customs, tariffs, and other regulations which are used to give advantages to the chosen few? No, the only government funding which is ever challenged are those which go to people, which many will claim are bad enough, and never those given to industrial giants and other large firms who often hold numerous politicians hostage to the funding these firms can put together come campaign time. The story about whose funding pig gets gored when the government decides to take austerity measures to avert fiscal crisis will almost always end with the piggy with the least cash affords the least protection. It is the same game as local, city, county and state governments take when they face times of economic hardship. The first cuts that are threatened are always police, firefighters, libraries, teachers, and the closing of parks and other recreational facilities. They never discuss ending their personal Lear Jet used to fly around the state, the limousines used to take them to dinners and other functions, the helicopter used to make grand entrance at public gatherings, or any of the myriad of perks many of which we regular people would never ever dream exist but are what makes their positions so prized that they make careers out of “public service”. I have always defined their “public service” as the elected potentates allowing the peasants to pay above and beyond the necessary so that they may feel their privileges to which they have become accustom.

Actually, there is a very cozy relationship between big business and big government, something which we were warned would be the end of the American experiment by, of all people, President Dwight David Eisenhower. Yep, Dwight D Eisenhower, the President who gave us such Constitutional projects as the Defense Highway Bill establishing the Interstate Road System for emergencies where it would allow the transport of any and all military transport and fast response by government and which in such times the public would be barred from utilizing, and the Defense College Scholarship Act which gave promising students scholarships in order to assure that we would have sufficient numbers of well-educated youth for use in an ever more advanced weapons and other systems which would be necessary for the competent operation of the military. President Eisenhower claimed to care about the Constitution and sold these programs not as being giveaways to the public for their private betterment or any such nonsense, these were purely programs which would supply necessary and desirable results for the competent and efficient utilization of the United States Military. So, the man who warned us about the, his words, “Military-Industrial Complex” also used the military in order to fund the interstate highway system and give student grants and scholarships because such investments were necessary for an adequate military of the future. Talk about your self-fulfilling prophesies.

The problem with a coupling of big government with big business is that such an arrangement discourages inventiveness, competition, efficiency, and eventually economic growth. If certain companies have an arrangement with government, nothing formal or written, just an understanding between the leadership of both parties and the ownership of the companies, sometimes the two are one and the same as many of our Congressional leaders are heavily invested in the same companies, then it becomes much more difficult if not impossible for a smaller company to come along and compete. As soon as a small company gets a foothold and gives the slightest of hints that they might pose a challenge, a threat to the larger established company, if that company can utilize government to change the playing field making it more difficult on the smaller company, then innovation and other possible benefits of competition are snuffed out. Imagine if the carriage industry of the horse and carriage era had an undue influence on government such that laws could be passed which made it impossible to operate motor vehicles on public roads, we would still be watching carefully where we stepped when crossing the street. Companies such as Ford, Packard, Studebaker, and others would never have been allowed to replace the horse drawn vehicles as government could have enacted laws preventing such progress. This sounds ridiculous but there were such laws implemented in some places. Motor carriages were required to have a man walk ahead of them with a flag by day and a lantern by night warning any people who were riding in their horse drawn carriages that a noisy, smelly, frightening motor vehicle was coming.

So, thank you President Obama for pointing out one of the difficulties plaguing our economy, namely that too much of our economy and too many companies are completely addicted and dependent on government monies which damages the competitiveness and equality of opportunity which damages economic progress. With your plea to the Congress, you have, likely inadvertently, made likely the strongest argument in favor of allowing sequestration to strike government spending thus cutting the effect of government on everything back in size. Perhaps, once we find we can survive just fine with less government across the boards, then we might enact planned sequestrations for the future and continue to make cuts with such abandon until government has been shrunk down to a more manageable size. Who knows, if we allow this to go far enough we might even actually return to Constitutional governance and thus return the real American dream. In case you have lost sight of the real American dream, allow us to remind you. The Founding Fathers had a new and previously unimagined idea which had never before been attempted in the history of mankind. Their revolutionary idea was that man; regular, everyday, run-of-the-mill man was capable of governing themselves. Mankind did not need a King or an oligarchy of his betters to lord over him and direct his life because without their higher wisdom and abilities the common man would be lost and all would fall to pieces in ruination. Instead, the Founding Fathers saw mankind as being fully capable of knowing what was best for him and through self-government they would be able to provide adequate, nay, superior governance than that or any potentate or collection of self-righteous individuals who placed themselves above the common man. Simply put, they did not find the simple man to be that simple. Today we are faced with a megalomaniacal governance that had run afoul of the Constitution and no longer believes in the common man but does believe that the common man must be ruled over by his superiors. We do not need superiors and anyways, you in government are supposed to be working at our pleasure, not the other way around. Read the Declaration of Independence, it is also a founding document if not the founding document. Right there it explains the place of government, to serve at the pleasure of the people having only those powers delegated to it by the people. Perhaps it is time to have a vote of the public and let the people once again decide how much government we need. That is our right and someday soon we just may exercise that right.

Beyond the Cusp

June 7, 2012

Is There a Magic Economic Formula?

Ask this question of an economist and he will begin to spell out all kinds of formulae used in either Macro or Micro economics. Believe it or not, these two sectors of economics do have numbers of formulas which apply solely to one or the other and a select few which are used in both. That about exhausts my memory of my ECON 202 and 102 courses I took longer ago than I care to admit. As for what these formulae are, I can fortunately claim not to remember a single one of them and do not feel the slightest remorse for having apparently wasted my time on required elective credits. Looking back on life and what courses were required is another of the mysteries of life, especially since they had changed by the time my children entered college. Apparently required knowledge is flexible entity dependent upon when and where you attain said knowledge. But if we were to ask if there is some magic economic formula that will spur the recovery and speed up the creations of jobs, we are not asking for anything learned in a basic economic course, we are looking for a political answer which is often completely dependent upon your political outlook. As we have seen in fairly recent history, a conservative believes the formula is to remove regulations and free up as many options as possible for what they call the entrepreneurial class while a progressive will call for government to spend stimulus money in selected areas to spur growth which will repay on the investment through increased tax collections. They didn’t exactly teach this in the economics classes I took, at least as far as I remember.

The importance of this particular question is directly related to the choices we will be making in the November elections, both for the Presidency, our Senators and our Representatives. The two parties offer two competing and opposite approaches to the economy. Oddly enough, I have an even simpler idea which would likely have a better result than either Romney or Obama will offer. We have been told that Romney has this legacy of great business sense. The truth is that Romney has been able to choose companies which with a measured infusion of capital and a set of adjustments made, most often to either management or procedural, and the company would turn around. Sometimes it was as simple as modernizing the equipment, other times the overhaul might have required changing personnel or business models. President Obama has already shown his business outlook and it has been defined as quantitative easing and stimulus plans. The stimulus plans are of the Progressive nature where government spending will result in an improved economic outlook as business spend the stimulus monies and this leads to a more active economy. Of course, this also depends on where one invests the stimulus monies. Apparently, stimulating the green industries, two of the three major car makers, Wall Street investors, failing banks, and ecology enterprises were the wrong choices. That aside, we know that President Obama will likely continue with the same model and hopefully, should he be reelected, let’s pray he chooses better in his next term.

Well, now for what may be the most preposterous plan to save the American economy and get things moving in a positive direction you will likely hear this campaign cycle. If any politicians were to make this their plan, they would get my vote, but fear not, nobody would ever recommend this. The promise is to do nothing, allow nothing, change nothing, and leave everything exactly as it is for the foreseeable future. The biggest problem we have in the economy at the moment is not sufficient stimulus monies available; Lord knows we have made more than sufficient available. Currently, the government is putting out as many as a thousand new regulations per month. This rate is without the full implementation of Obama Care which commands that the Secretary of the Department of Health and Human Services fill out the regulations necessary to enact the desired ends of the legislation. This is also before the 2,300-page Dodd-Frank finance industry regulation legislation which directs the regulation writing to the Treasury Department bureaucrats. This is the real problem facing the economy as well as many other things in our lives, endless, uncountable, confusing and unenforceable collection of regulations. If a President could declare a hiatus from new regulations and bring the regulation factory that are the alphabet soup of extra-Constitutional cabinet departments to a screeching halt, businesses and investors would have a known field of play with stable conditions for that period of time. We do not need more investment. We do not necessarily need to undo any number of regulations, though that would not hurt. We do not need to play artificially with the interest rates. We need nothing. Simply nothing. That’s my plan, have the government take a nice long holiday, we’ll even keep paying them. Paying them not to do anything could be looked at as paying them to do no more harm. Just let everybody catch up with all the garbage that has already been enacted and regulated before loading up even more crushing our incentive to be productive. Nothing, what a concept.

Beyond the Cusp

April 20, 2012

The Real Presidential Choice Facing the United States

The loud, cacophonous, clamoring back and forth has only just begun. The candidates of the two main parties will be speaking in opposing terms battling each other on every possible subject exaggerating even the slightest crevice of a difference until it rivals the Grand Canyon. We can expect full-throttle vindictive salvos to be thrown by the Super-PACs even should either candidate choose to stay positive and avoid personal attacks. This coming election has the potential to be the most contentious in recent history if not in all of history. Putting it in the most basic terms possible, we can safely predict that either side has no plans on taking any prisoners and go straight for the jugular of the opponent aiming to render them broken beyond repair if not simply and utterly destroyed. So, what will be the issues most likely to be the main themes of the election and which one will be the singularly most vital question voters will need to address.

The most obvious issues according to the press coverage they are receiving are jobs, taxes, unemployment, the economy, gas prices, and the disparities concerning Warren Buffet versus his secretary. As important as all of these issues may be, they will very likely prove to be secondary when the judgment of history is written some time much later in the century. The underlying theme between the candidates on each of these contentious issues will be the role of government should play in finding the solution. One side will place great importance on the steps the government must take to assure that the people are given the tools to solve any difficulties they are facing while the other candidate will stress getting government out of the way and allowing people to empower themselves without government meddlesome interference. The two sides will argue on which is more advantageous, making the wealthy pay their “fair share” in taxation such that the government will have sufficient funds in order to address and solve the problems the people are facing while on the other hand the argument made claims that allowing the wealthy and everybody else to keep more of their wealth by lowering tax rates so those who are the engines that generate the jobs, such as small businesses, have the additional funds to enable them to invest and employ more people. These themes will be the foundation beneath the discussion on other subjects as well.

Take health-care and health insurance, both of which promise to be a hot potato for both candidates, and again the discourse will revolve around how much responsibility should be granted to the government and how much should remain with the individual. How this particular debate plays out will be of great interest as President Obama can reasonably claim that he molded Obama-care using Romney-care as the prototypical guide. Romney will stress that at least Romney-care was Constitutional as it was a state program while Obama-care is not Constitutional being a Federal program and thus against the limitations placed on the Federal Government by the Constitution. For many in the electorate it will be required of Romney that he convinces them he had a turning point on the idea of government getting so fully involved with health-care thus placing distance between his current position and the position allowing him to sign the Massachusetts Health-Care Insurance Reform Law.

Another subject will be the balance between oil, coal, nuclear, natural gas and green energies which will ensure a sufficient supply for the future while also improving the environment. This will also revolve around the role of government regulations, licensing, involvement and promotion in each of these forms of energy generation. What will be of particular interest on this subject is whether either candidate will have a singular position and remains consistent on their message when talking to the different audiences. Will their position ring with the same message when they are speaking in Texas as when they are talking energy in San Francisco. This is something that both extremes on this issue from the coal and oil workers and the strident environmentalists should be interested and both candidates should be fully vetted and revealed if their message is overly adjustable and tailored for the separate audiences. Energy policies are often a good indicator with which to test the honor and honesty of candidates as the wide gulch between the two extremes between differing audiences provides temptation for candidates to adjust their rhetoric tailoring the message to fit the audience thus proposing contradictory positions at different times.

But what is the seminal issue of this coming Presidential election? When looking at each issue it becomes obvious that even more than has been the historic norm, the role of government in our lives and in all segments of society are going to be the central theme. We are faced with a significant difference between the two candidates. The choice is whether we desire to restore government to the restraints of a limiting Constitution or if we wish to transform the way we interpret our Constitution towards making government proactive by removing the limitations over the role of the Federal government. Will we choose to restructure the United States by dismissing Constitutional constraints or reestablish a restrictive Constitutionally limited governance United States? This is the choice in the starkest of terms with which to demonstrate our choice when we enter the voting booth this November. Either we retain the guards against unlimited government power or transit to a government that can dictate every item in our lives. We will be choosing whether we place the individual over the government or place the government to be preeminent over the individual. Which one do you trust to make all the choices going forward, each individual person with the rights and responsibilities for their own actions or the bureaucratic governance making the choices taking the responsibility for all consequences and doling out rights as they find necessary. Do we desire the responsibility derived from individual liberty or the comfort of simple compliance derived from communal group-think?

Beyond the Cusp

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