He who is firm in will molds the world to himself.
Johann Gottlieb
Bureaucratic Moment of the Day
Just a sample of the government-mandated crap one has to deal with in starting a new business in Greece (from the Gray Lady (my edits)):
McKinsey & Company described Greece’s economy as “chronically suffering from unfavorable conditions for business.” Start-ups faced immense amounts of red tape, complex administrative and tax systems and procedural disincentives. It took Fotis I. Antonopoulos, a successful Web program designer, 10 months — crisscrossing the city to collect dozens of forms and stamps of approval, including proof that he was up to date on his pension contributions — before he could get started in an e-business selling olive products. But even that was not enough. In perhaps the strangest twist of all, his board members were required by the Health Department to submit lung X-rays — and stool samples — since this was a food company.8.1% Unemployment But Only 115,000 Jobs Added
I'm actually a little surprised; instead of putting out positive spin like I'm sure the White House must have (i.e., "this adds to the last two years of private sector employment gains"), the Gray Lady got it right:
The unemployment rate, which is based on a separate survey of American households, ticked down to 8.1 percent in April, from 8.2 percent. That may sound like good news, but the decline was not because more unemployed workers were hired; it was entirely because 342,000 workers dropped out of the labor force.Remember I said at last month's numbers, don't overgeneralize from one bad datapoint, but what's clear is that the pace of new hiring is decelerating. I'm concerned about a destabilizing anti-austerity backlash in Europe: the structural problems France and other countries are facing cannot be defined away by demagogues. I believe that a deteriorating Europe may have consequences for the American economy.
National Review, "Cut the Payroll Tax": Thumbs DOWN!
This is admittedly is a months-old post by a revered media conservative outlet; the matter has already been decided. Republicans, AS USUAL, have caved, like they ALWAYS DO, when Democrats and special interest groups like AARP start fear-mongering as usual, having "Paul Ryan" dump Grandma over the cliff (as if it's not bad enough that Grandma can only afford to eat cat food!)
Let me state first of all: I don't believe in payroll taxes period, and if it was within my power, I would do away with social security and Medicare altogether. (I can see it now: people will quote that out of context. At least let me briefly finish my thought.) When you are talking about unfunded entitlement liabilities amounting to $45T, when you have the government setting prices below market for Medicare and Medicaid, when you have a federal government that has only managed to balance its budget in decades because of artificially high capital gains revenues during a stock market bubble, IT'S TIME TO STOP THROWING GOOD MONEY AFTER BAD.
Thomas Kuhn wrote an influential book which is required reading for almost all doctoral students (if not most other graduate students, at least in the sciences): The Structure of Scientific Revolutions. I have often used the phrase "paradigm shift". At the risk of oversimplification, an existing paradigm may become an unsustainable patchwork over time as scientists struggle to integrate observed facts (square peg to round hole concept). Eventually an alternative, more robust, conceptually streamlined paradigm emerges. I'm making an analogy here; the obvious point is that a government whom can't even balance its own budget will NEVER be able to micromanage the health care--or any other sector. In fact, all the bureaucratic busy work is both unproductive and extraordinarily expensive.
I think we need to transition to a needs-based supplemental income program (not separate food, housing, medical programs being grossly inefficiently micromanaged by Big Nanny: money is fungible). I think it's time to break FDR's clever little scheme behind social security to make it "independent" and thus keep it out of the hands of budget-cutting politicians. The fact is this little variation of a Ponzi scheme was "invested" as captive loans to cover Congressional overspending. What would have made more sense, perhaps, from the get-go would have been to dedicate federal property income, royalties, etc. to funding needs-based retirement and/or subcontract the funds to professional money managers on a competitive bid basis. In fact, I would entertain the idea of cashing out current reserves and diversifying assets. God knows this government will produce all the Treasury notes the public wants.
I guarantee that progressives' heads are just exploding if they've read this far. I can already hear 101 progressive arguments against it. But for any misguided progressive economists' objections, I have this reply: "$45T". QED. The fat lady has sung. If progressive economists had any legitimate ideas, why didn't the 111th Congress and inexperienced President pass them? These political hacks didn't even begin to look at their legacy initiatives; they wanted to EXPAND their liabilities with new programs. How many times are you going to try to blame a vastly outnumbered political opposition?
National Review briefly addresses 3 conservative objections (I agree with the objections): temporary tax cuts are ineffective, a 2-point tax cut has negligible effects on the economy; and it worsens the unfunded liability problem. National Review argues that all the GOP will do is to cede its hard-earned reputation as middle-class tax cutters playing bad cop to protect a Democratic Ponzi scheme entitlement. (I'm paraphrasing using my own words; they aren't as direct.)
National Review really doesn't discuss the elephant in the room: the Democrats don't like anyone through the middle class having to pay any taxes at all--not even to help defray the costs of their own retirement and health care. The Dems consider payroll taxes--regressive taxes--unfair anyway and hate the idea FDR made the bargain to begin with. Most of them would prefer a pension paid out of general revenues anyway (since 47% don't pay a penny in federal income tax.)
My response to the National Review? I think this is EXACTLY the kind of reasoning that makes independents and moderates suspect GOP credibility when it comes to deficits; Bush didn't veto almost all Democratic spending bills; you had an Alaskan Senator threaten to give up his Senate seat if the Senate didn't fund the Bridge to Nowhere. I think you argue to senior citizens, just like the funding of ObamaCare had undermined Medicare reserves, payroll tax cuts undermine social security funding.
I believe that the American people are NOT as stupid at the Democrats seem to think: they know what happened in the 111th Congress. They know that the Democrats are passing on their excess spending to the children and grandchildren. The emperor is wearing no clothes, and everybody realizes it.
Gideon Rachman/FT, "No Alternative to Austerity":
Thumbs UP!
Rachman echoes some themes I've been raising in posts repeatedly over the past few months about Obama's/Dems' picking winners and losers:
- "[France] is a country where the state already consumes 56 per cent of gross domestic product, which has not balanced a budget since the mid-1970s, and which has some of the highes taxes in the world."
- "Taxes on labour in France are very high. To his credit, Mr Hollande is promising tax breaks for employers who hire young people. But it would be better simply to cut charges on labour across the board. "
- "High rates of youth unemployment in countries such as Spain and Italy are closely connected to the excessive protections and benefits for workers on full-time contracts."
- "Mr Hollande’s programme stresses small, badly-targeted boosts to public spending, while virtually ignoring the structural reforms that are the only route to sustainable growth."
- "If building great roads and trains were the route to lasting prosperity, Greece and Spain would be booming. The past 30 years have seen a huge splurge in infrastructure spending, often funded by the EU. The Athens metro is excellent. The AVE fast-trains in Spain are a marvel."
What Sarkozy should have pointed out, if he didn't, is that Hollande really isn't proposing anything new from ideas Obama himself has tried out--and all have failed.
Obama should learn from the example of Greece and Spain--two of the worst-performing countries in the EU--that his Keynesian boondoggle policies have NOT resulted in the thriving economies Obama envisioned. What is Obama failing to learn from Europe's example?
Personally, I believe that Obama's narcissistic behavior is at the core. Remember how he pooh-poohed the idea people floating that his mid-term election could be as bad as Clinton's, suggesting that he had better political skills than Clinton? No doubt that he believes if he had been at the helm of Greece or Spain, the story would be different today....
A Former Bain Capital Executive Speaks in Favor of the 1%
I don't think I've had a post where I cited 3 sources from the Gray Lady before. But what's amusing is this portion of the URL: romneys-former-bain-partner-makes-a-case-for-inequality. Edward Conard is a former Romney subordinate at Bain Capital whom retired a few years ago at 51 a very wealthy man.
One of the important takeaways from this discussion is a description of the multiplier effects of investment on the economy. The article points out even progressives see a 5-1 benefit to the general economy; Conard argues that it really is more than 20-1. As a case example, he points out how farm productivity has vastly increased since the 1940's because of deployment of more sophisticated technology. The greater crop yields have resulted in much lower food prices for everyday Americans than, say, if farmers continued to rely on older, reliable technology. Conard makes the case that even if the company owners producing innovative, efficient farm equipment become fabulously wealthy, why should the consumer object? After all, they're enjoying quality farm products at a very reasonable price--a better price than if harvest yields were much smaller.
I would have to say I concur with the author that Conard, by embracing federal solutions, e.g., for bank liquidity problems, is basically talking about crony capitalism and/or rent-seeking behavior, both of which I oppose in principle. I have not reviewed policy alternatives for the equivalent of bank runs; I am skeptical, given the moves that the Federal Reserve was already doing on its own to deal with liquidity issues, that TARP was necessary; either the Fed had or didn't have the preexisting authority to do what it did, but what I've recently reviewed, the Fed was doing things which dwarfed what TARP has done--and TARP was not sold on the basis of bailing out AIG, the car companies or the GSE's. If the policy to end bank runs was guaranteed deposits, why wouldn't similar policies exist at higher levels of granularity? (At minimum it seems that the Fed or Treasury, under unusual market conditions, would scrutinize and/or guarantee transactions.)
Political Humor
A periodic reminder: you can find copies of late night show jokes at the shows' respective webpages or summarized online at sources like newsmax and about.com.
"President Obama admitted this week that a former girlfriend that he wrote about in his autobiography was made up and not a real person . . . So Obama had an imaginary girlfriend. Big deal! He had an imaginary economic plan. It’s all the same." - Jay Leno
[Well, his teachers had always told Obama that he had quite an imagination... He told them that one day he was going to be President, end wars, vacation on Martha's Vineyard, balance the budget, play golf with the world's best golfer, eliminate poverty, and appear on the Oprah Show...
A customer asked the bookstore owner where he could find copies of Obama's autobiographies. The owner told him, "In the fiction aisles, right next to the book on his 2008 campaign promises, budget, health care reform bill, stimulus bill, and financial reform bill."
Then there was Obama's imaginary friend in school, one of the Marx Brothers. The teacher asked him, "Which one: Chico, Harpo or Groucho?" Barack looked confused and then said, "No, Karl."
Well, now we know what Obama's follow-up single to his remake of Al Green's "Let's Stay Together" is ...]
"It's weird to me what Obama chose to fabricate in his memoir. It wasn't something cool he made up, like hitting six home runs in a little league game, or faking his own birth certificate. No, it was something lame. He just compressed the details of several girlfriends into one character. I'm thinking, oh, very smooth. Because if there's one thing I know that women love, it's being blurred together with other women." - Craig Ferguson
[Just imagine what Obama said to score with the ladies... Like the time when Obama was at Harvard, he told this one coed that he was from Kenya and had just won the Boston Marathon...
Sometimes it's hard to remember all those details: flowers, birthdays, dinner dates, promises to call, phone numbers, names... It's like a politician trying to keep straight what promises he made to which special interest groups.]
Musical Interlude: My Favorite Groups
The Rolling Stones, "Jumpin' Jack Flash". I guess as a writer myself, I've always wondered how one follows up a major accomplishment, e.g., Albert Einstein's theory of relativity. In the world of pop music, there has been, for instance, Brian Wilson's prodigious string of Beach Boy hits--and then went through a decade of writer's block. Obviously Jagger and Richards have also been prolific, but some hits stand out like something we've never heard before (e.g., Wilson/Love's "Good Vibrations"). "Satisfaction" is/was such a pop music jewel , you had to wonder if they could come up with something that didn't sound like a knockoff of "Satisfaction". And then they come up with "Jumpin' Jack Flash", which would be the signature song for any other band. As a writer, I'm jealous.
