30 July 2010

But Now It's OK, Because We're Doing It

The ACLU issues a report saying that all those mean, horrible, unconstitutional things George Bush did in the name of protecting us, Barak Obama is still doing them. But, near as I can see, only the ACLU has said anything about it.
Based on this report on NPR, Democrats think everything is fine because the Obama administration has "changed course." Allegedly there is now congressional involvement in the executive's perfidy.
But in the name of wasting my (and your) time, let's re-hash some old, boring stuff.

The constitution defines and limits the government. All of the government. All of the time. There is no "escape clause" for when communists or terrorists are running about. The government cannot, for example, conduct any unreasonable search or seizure without a warrant. Neither the Bush or Obama administrations claimed that the unwarranted wiretaps were reasonable. They claim authority under Article II of the constitution--where it is mentioned that the president is to be the commander-in-chief of the armed forces and so long as congress kind of nods in his direction can do whatever the hell he wants. Except the founders forgot to add that last bit. Being in charge of the army doesn't mean you get to do whatever you want. Despite your intentions.
I never thought Bush was acting in bad faith, and I don't think Obama is now. But good intentions don't give license to take away the birthright of the sovereign, the natural liberty that we are born with. And congress saying "we're now OK with it" doesn't cut the mustard. The Bill of Rights, or any constitutional provision, doesn't go out the window if 2 out of 3 branches want it to. They can't go out the window if 3 out of 3 think so. There is a defined way of amending the constitution. If you policy isn't popular enough or important enough to make it through that way, then guess what Charlie? It doesn't get done.
Would we be less safe? Perhaps. But we'd be free, and that is what our country was founded on and I hope still stands for.

28 July 2010

Harold Meyerson and Why You Shouldn't Listen to Socialists

Below is the full text of an article by Harold Meyerson, writer for the Washington Post and vice-chair of the Democratic Socialists of America. This is why socialists can't be taken seriously when it comes to economics. All items in parentheses are annotations by me except those italicized, those are from the original piece. There is a footnote (*) by me on the first of Meyerson's parenthetical asides.

The job machine grinds to a halt
By Harold Meyerson
Wednesday, July 28, 2010; A15

Ain't no hiring. And ain't likely to be any for a good long time. (Speculative and grammatically abhorrent)
The problem isn't merely the greatest downturn since the Great Depression. (By any and all indicators, the current recession isn't worse than the one in the early 80s. By repeating the meme "the worst since," the administration can claim all the more credit for any inevitable recovery). It's also that big business has found a way to make big money (bastards) without restoring the jobs it cut the past two years, or increasing its investments or even its sales, at least domestically.
In the mildly halcyon days before the 2008 crash, the one economic outlier was wages. Profit, revenue and GDP all increased; only ordinary Americans' incomes lagged behind (Left unmentioned is that prices also "lagged behind." Disparities between prices and wages can be troublesome, but, in a dynamic economy, unavoidable and usually temporary. Further, there is no direct correlation between profit, revenue and GDP with prices and wages, they measure and are indicative of completely different things). Today, wages are still down, employment remains low and sales revenue isn't up much, either. But profits are the outlier. They're positively soaring. (This is a bad thing why?)
Among the 175 companies in the Standard & Poor's 500-stock index that have released their second-quarter reports, the New York Times reported Sunday, revenue rose by a tidy 6.9 percent, but profits soared by a stunning 42.3 percent. Profits, that is, are increasing seven times faster than revenue. The mind, as it should, boggles. (Not if it contains any sense. If empty, however...)
How can America's corporations so defy gravity? Ever adaptive, they have evolved a business model that enables them to make money even while the strapped American consumer has cut back on purchasing. (They have innovated and increased efficiency. Beyond the realm of Democratic Socialists, these are generally considered good things as they help keep things like prices down so people with stagnant wages can keep paying for them). For one thing, they are increasingly selling and producing overseas. (Helping our balance of trade which keeps things like interest rates in check). General Motors is going like gangbusters in China, where it now sells more cars than it does in the United States. In China, GM employs 32,000 assembly-line workers; that's just 20,000 fewer than the number of such workers it has in the States. And those American workers aren't making what they used to; new hires get $14 an hour, roughly half of what veterans pull down. (Young, unskilled laborers getting paid $14/hour to start is a bad thing? Maybe the wage being paid is the one they are willing to take. Wages are no different than prices in a market. The price (wage) is set by producers (workers) and consumers (firms) on the open market. Prices (wages) cannot be set by ideology).
The GM model typifies that of post-crash American business: massive layoffs, productivity increases, wage reductions (due in part to the weakness of unions*), and reduced sales at home; increased hiring and booming sales abroad (If it is cheaper for a firm to produce something elsewhere, the firm is derelict if it doesn't produce that something elsewhere). Another part of that model is cash retention. A Federal Reserve report last month estimated that American corporations are sitting on a record $1.8 trillion in cash reserves. As a share of corporate assets, that's the highest level since 1964. (In times of uncertainty, firms tend to increase cash reserves. But is that cash sitting underneath the cushions of the CEO's platinum-gilt sofa? No, it is in banks which then lend that cash to others, which does tricky things like increase GDP. Further, much of the uncertainty firms face lies in the fact that successful firms are continuously excoriated for doing things like being profitable by the confederacy of dunces that includes the likes of Harold Meyerson, Keith Olbermann and Barak Obama and they don't know how or when they will be punished via taxation for being so damned profitable).
Why invest in new plants, offices and workers, particularly here at home? Spooked by the 2008 crash, corporations want to keep more money under the mattress (see above). More important, they're sitting pretty as profits rise.
Is this model sustainable? It's hard to say -- a double-dip recession could plunge their profits yet again. But from the American worker's perspective, the model, no less than a new downturn, is an unqualified disaster. (Mr. Marx, Mr. Keynes, you're needed. Again!). It portends the kind of long-term, structural unemployment that we haven't seen since the 1930s (see here. One of the reasons unemployment is as high as it is and some have been unemployed as long as they have has been the increase in quality and duration of unemployment insurance, which can have moral hazard implications, but is generally a good thing in that allows qualified people and firms to find each other for the right fit which leads to better productivity, but not necessarily to higher wages). It locks into place a generation of reduced incomes. (Again, if prices are stagnant, and they are despite the Treasury Department effectively doubling the money supply (M2) in the last 18 months, then wage stagnation isn't a problem--but Meyerson just did a neat trick...above he notes that wages were flat, now they are "reduced." They aren't. Further, a generation is 30 years. No one, especially a scribe of this caliber, knows what wages will be like 1 year from now, much less thirty).
This dystopian** America already stares us in the face. Fully 46 percent of the unemployed have been without work for six months or more -- the highest level since the Bureau of Labor Statistics began measuring such things in 1947 (see above on UC). Two years ago, just 18 percent of the unemployed were jobless for more than six months. America's private-sector job machine -- the marvel of the world since 1940 -- has clanged to a halt, and there's no place for it in corporations' new business model.
The restoration of American prosperity, then, isn't likely to be driven by our corporate sector. Across-the-board business tax cuts make no sense when business is already sitting on oceans of cash (because it's not like the money actually belongs to those who earn it, right?). Targeted tax cuts and credits for strategic investment and hiring within the United States, on the other hand, make excellent sense (this favors the larger firms that can employ the lobbyists Congress requires to figure out who gets what tax credits). The Obama administration has proposed expanding the tax credit for the manufacture of green technology here at home, and congressional Democrats will soon unveil legislation creating further incentives for domestic manufacturing (read: tariffs and quotas, both of which retard GDP growth. If Meyerson and the poor, weakened unions can't close their eyes and wish wages to increase, he'll help take care of one of his idiotic bugaboos and make sure GDP doesn't go up, either).
Another source of jobs would be public, and public-private, investment in infrastructure (You knew this was coming, didn't you? More government spending and deciding what gets done with money they don't have. Which means higher taxes, today or next year doesn't really matter, and crowding out of private investment. Along with the normal objections of the federal government doing that which it has no license to do). As Michael Lind and Sherle Schwenninger of the New America Foundation have argued, building a new American infrastructure of roads, rail and broadband is not only an economic necessity but also the investment with the highest multiplier effect in creating new jobs (wrong, private investment, innovation, efficiency, in other words an unfettered free market has the highest multiplier). A U.S. infrastructure investment bank, such as that proposed by Rep. Rosa DeLauro (D-Conn.), could leverage significant private capital to begin America's rebuilding, though the idea has encountered rough sledding in (surprise) the Senate.
What won't work as an economic solution -- indeed, it amounts to cruel and unusual punishment -- is blaming the unemployed for their failure to find jobs. There are now roughly five unemployed Americans for every open job, according to the Economic Policy Institute's most recent calculations, and that ratio isn't likely to decline much if we leave it to the corporate sector to resume hiring. Corporations have figured out a way to make money without resuming hiring. Their model is premised on not resuming hiring. If the public sector doesn't fill the gap, the era of American prosperity is history. (Taken to it's natural conclusion, unemployment should always be zero, any unemployed person should be hired by the government, even if the labor supplied is unproductive. The hearkening funeral bells of American prosperity have been signaled many times throughout our history. The only meaningful knell will come if anyone listens to idiots like Harold Meyerson).

Post Script
Ok, so what can those corporations do with all that filthy profit? At least that which isn't taxed away? It can: a) put it in the bank; b) pay people more (but with the labor supply greater than that which is now needed, that doesn't make sense practically or economically); invest in capital goods (the factors of production other than labor, which will happen when the market clears). No matter what a firm chooses to do with it, it will benefit society as a whole. Unless, of course, the government takes it.

*As noted, wages are set by market forces taking supply and demand into account, inter alia, ceteris parabus, etc. etc. Unions cartelize the labor force and skew wages beyond their market price. This helps members of the union, but not the people who would otherwise be employed were it not for the union. Wage floors above the market price only create dead-weight loss and increase unemployment. This is not theoretical. Mr. Meyerson also doesn't mention that the minimum wage increase that went into effect last year may, just may, have also boosted unemployment.

**I'll have more on dystopias and the socialist utopias that are always just around the corner in a later post. I'll just leave for now a reminder that More was being ironic and "Utopia" means "no place."

23 July 2010

The Remnant

I think I posted a link to this piece by Albert J. Nock previously, but I can't remember so I'm doing it again. Here Nock defines who the Remnant is:

In the year of Uzziah's death, the Lord commissioned the prophet to go out and
warn the people of the wrath to come. "Tell them what a worthless lot they are."
He said, "Tell them what is wrong, and why and what is going to happen unless
they have a change of heart and straighten up. Don't mince matters. Make it clear
that they are positively down to their last chance. Give it to them good and strong
and keep on giving it to them. I suppose perhaps I ought to tell you", He added,
"that it won't do any good. The official class and their intelligentsia will turn up
their noses at you and the masses will not listen. They will all keep on in their
own ways until they carry everything down to destruction, and you will probably
be lucky if you get out with your life."
Isaiah had been very willing to take on the job -- in fact, he had asked for it -- but the prospect put a new face on the situation. It raised the obvious question: Why, if all that were so -- if the enterprise were to be a failure from the start -- was there any sense in starting it?

"Ah," the Lord said, "you do not get the point. There is a Remnant there that you
know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society; and meanwhile, your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it".
What do we mean by the masses, and what by the Remnant?
As the word "masses" is commonly used, it suggests agglomerations of poor and
underprivileged people, laboring people, proletarians. But it means nothing like
that; it means simply the majority. The mass-man is one who has neither the force
of intellect to apprehend the principles issuing in what we know as the humane
life, nor the force of character to adhere to those principles steadily and strictly as laws of conduct; and because such people make up the great and overwhelming
majority of mankind, they are called collectively "the masses". The line of
differentiation between the masses and the Remnant is set invariably by quality,
not by circumstance. The Remnant are those who by force of intellect are able to
apprehend these principles, and by force of character are able, at least measurably,
to cleave to them. The masses are those who are unable to do either.

14 July 2010

For Me, Everything is Free

Interesting story on NPR this morning on the survival of the European (Bismarkian, no, not that guy, this guy) welfare state. The sense of entitlement such as system breeds is encapsulated nicely by Marites David, formerly of the Philippines now a resident of France. Thank goodness, because, "[m]ostly every summer I have to go to the emergency room because I can't breathe in the summer. They look after you until you're OK. For me, everything is free — for medicine, doctors, hospital. It's nice to live here," she says. (emphasis added)

The problem, of course, is that it isn't free.

Further, the paternalistic generosity of the European states has been possible due to the fact that they haven't had to maintain military defenses, at least not as much as they would have had to absent the military paternalism of the United States.
But even that isn't enough to keep the European system going. After a few generations, the European socialists are starting to come to grips with reality.

I can only hope the American socialists (and their militarist cousins) figure this out before destroying our economy any further.

06 July 2010

Happy 4th

Proud to have been part of the show...