Rebane's Ruminations

The Liberal Mind – Profits vs Jobs

        'Tax rates have no effect on the behavior of the taxed.' - deeply held liberal tenet

George Rebane

This week President Obama made another extremely important statement that reveals his understanding of how the world works.  At a campaign stop he took Romney's credentials to task, doubting that anyone who has focused on business ventures like reorganizing companies for the purpose of making a profit is suited to be President of the United States.  The better recommendation for such a candidate would be to have focused on creating jobs.  On hearing this I could not help but go slack-jawed.

To be sure, it is a tragedy to have such ignorance (or perfidy?) resident in the chief executive of a putatively capitalistic country, but the portents of making such a statement to the electorate should be our real concern.  Obama spoke those words knowing that a large fraction of voters would agree with him simply because of his position, abetted by their inability to understand the basics of economics beyond their own spending habits.  In other words, the man knowingly pandered to the complacantly ignorant.

The correct message should have been that in free markets all businesses are created to make a profit, and when successful, such enterprises also create jobs.  No business is started for the purpose of creating jobs.  You have to be successfully shielded from reality or just plain dumb not to know that labor – i.e. a job – is an element of cost that makes any product or service more expensive to the customer, makes the business less competitive, reduces profits and the ability to grow, and jeopardizes the survival of the company.  In short, a successful business does its best when it minimizes the jobs needed to function profitably, and thereby best guarantees that the jobs it does provide will be the most secure.

It is only the collectivist state with its twisted ideology that sets up organizations, which employ cadres of inept and inefficient workers to impede the increase of wealth and the quality of life for the most people.  And the collectivist state does this without regard to the unsustainability of the entire scheme, counting on increasing the wholesale level of equally applied misery to mask any alternative approach to creating and distributing wealth.  This is what our President has been successfully selling, and through his cadres, successfully imposing on the country.

Part and parcel of such a downward spiral is the notion of a nation, up to its eyeballs in debt, spending its way to economic recovery and wealth.  The Greeks are now demanding to spend more, instead of tightening their belts from profligate borrowing and spending.  The French just voted in a socialist who promises to put their country on the same road.  Spain and Portugal are ready to sign on.

This entire approach was recently given a mind-boggling justification by Hannes Swoboda, a member of the European Parliament and president of the Progressive Alliance of Socialists and Democrats in that ‘august body’.  In his ‘Europe Can Spend Its Way to Growth’ (21may12 WSJ) he advances some economic prescriptions for the EU that have yet to work on this third planet from the sun – nevertheless, member countries are exhorted to throw themselves into the breech one more time.

First and foremost, he recommends compelled borrowing by states and businesses for the purpose of job creation.  This, of course, requires some mysterious compelling of lenders, since prospects for profits that assure a payback are neither apparent nor a necessity.  He then appeals to la-la-land accounting to dictate that such debts “should not be integrated in calculations of structural deficits and hence be punished because (somehow) investment in growth generates income and taxes, and therefore revenues for the state.”

To achieve this new level of unsustainable indebtedness, Swoboda argues that “European institutions should enact legislation that requires all members to make public investments in growth and employement.”  A staple of economic activity in this direction is to re-ignite the efforts that “would finally lead us onto the path toward a seriously environment-friendly economy.”  This in the face of the disastrous recent history that EU countries have experienced in their pell-mell charge into green industries, an experience which subsequently caused everyone to beat a hasty retreat in order to save their national fiscs.

How will all this be accomplished?  Swoboda’s sure-fire approach spells out that “these additional investments need to be financed, one way or another.”  (No kidding, you can’t make this stuff up.)  And just to make sure that capital has every impediment to moving into its most productive use, he prescribes a new “financial transaction tax".   On top of that, the EU would establish additional regulations to “fight against tax evasion” which then would “channel additional funds into national treasuries.”

To put a nice bow on it, we can now all do a little anticipatory happy dance because “once growth takes off, tax revenues will start flowing.  Tax policy that favors lower-income classes and better regulation of financital markets would (then) already be fostering growth.”  Now, do you see how easy all that would be?  And do you finally understand why Team Obama wants to take us down that same road once “after (his) re-election (he) will have more flexibility”?

The Liberal Mind – Asymmetric 'Cacooning' (updated 25may12)

George Rebane

For some years in these pages I have written about the apparent ignorance of the liberal voices about what’s going on and how things work.  Quite often I, and other conservative bloggers, have been taken to task by our left-leaning readers accusing us of ‘introducing’ some outlandish new notion.  But more often than not, the notion is neither new nor outlandish in the greater scheme of things.  It only appeared so to the more narrowly exposed readers.

I have argued that a contributing factor to these one-sided expressions of outrage is that liberals in the aggregate are disposed to seek out news and information from liberal outlets.  These include the usual lamestream outlets and, of course, the Hollywood led entertainment industry.  Sources which the conservatives cannot help but also frequent, if for nothing else then curiosity as to what the other side is talking about.

National commentator Michael Barone on polipundit.com has noticed that same phenomenon and writes about it here (H/T to Russ Steele for link).  Barone cites the notion of ‘cacooning’ introduced by journalist Bill Bishop in his recent (2009) The Big Sort.  Bishop observes that professionals and idea shapers on both sides migrate to enclaves that best match their views – e.g. San Francisco area and Dallas-FtWorth.  But where liberals in such areas can totally immerse themselves in like-mindedness, conservatives find that impossible to do because of the pervasive left tilt of the national media, academia, the arts, and, of course, Hollywood et al.

The conservatives are bathed in both lights wherever they may live, and therefore benefit from a broader understanding of the beliefs and notions held by the American public.  One indicator of this is the types of fruitless debates that go on between the two sides, where one side wants to examine, say, the impact of a proposed idea of governance while the other side is simply outraged that someone would ‘introduce’ or even consider such an idea.

Some years back Alan Abramowitz and Bishop, while working on his book, wrote a piece, 'The Myth of the Middle', in the Washington Post describing the findings of a study and poll that confirmed what many of us were witnessing daily in the national dialogue.  Again, somehow much of the left (most certainly our local locally focused brethren) missed the report of this revelation.  The article concluded -

For the past three decades, the major parties and the electorate have grown more divided -- in what they think, where they live and how they vote. It may be comforting to believe our problems could be solved if only those vile politicians in Washington would learn to get along. The source of the country's division, however, is nestled much closer to home.

This, of course, contributes to and confirms the overall polarization of the country, and has induced many conservatives to begin exploring the notion of a Great Divide (q.v.).

[25may12 update]  This evening we finished an historic week in the annals of defending the First Amendment and religious freedom.  Over 22 churches and institutions (including the liberal Notre Dame University) have filed suit against the administration regarding Obamacare’s revealed strictures on what is a church and who must deliver abortion services.  This is a big story, and promises to have a material effect on this election as it heads toward SCOTUS, where the justices already have that travesty under their microscope.

But the added news here for the record is that liberals looking to the lamestream for its news have again literally no idea that any of this is going on, let alone the scope of this exploding national debate.  To again demonstrate in which basket it has all of its eggs, the lamestream channels in toto devoted only 19 seconds(!) to reporting this story during the entire week that has passed – this according to people who track media coverage as was reported by Fox News.  Talk about asymmetry.  Exit question: Isn’t there at least one pissed progressive in the country who would stand up and demand that his news not be selectively censored?

Ruminations - 21may12 (updated)

George Rebane

President Obama’s background and biography is throwing people for another loop – at least those with their heads still exposed to the sun.  Who knows where the man was actually born?  Who knows what actually happened in South Chicago?  All we know is that the Washington establishment (both parties) and the lamestream don’t want to go there, no matter what is discovered under newly turned over rocks. 

And Obama’s ‘autobiographies’ will now have to be re-cataloged under fiction.  The disparities from truth are becoming so easy to document that a high school sophomore could do it for her term paper, if only her teacher would countenance such research.  PJMedia, Breitbart, and Drudge, along with some local blogs, have been having a field day on the new revelations about the background of our fearless leader.

Everyone with an ability to buy popcorn at a movie should now understand what a private equity firm like Bain does and did when Romney was there.  Especially revealing is the Left’s celebrated cause of telling the country that Romney and company bankrupted GST Steel and destroyed 750 secure long-lasting jobs; worse, sent them overseas to cheap steel makers.  ('Bain Capitalism 101')  Ol’ Joe can say it best of all from the Team Obama side.  Their lies are understandable, but the puzzle remains as to how well such lies work with the Left’s constituents.  A lot of these must be the parents of kids like those in Florida who flunked the state’s reading test. The answer’s gotta be in the double helix.

The Real Liberal Man

George Rebane

Social futurist(?!) Sara Robinson tells us the real meaning of Mother’s Day, and comes up with quite an analysis of men from both sides of the political spectrum.  Her ‘How the Ayn Rand-Loving Right Is Like a Bunch of Teen Boys Gone Crazy’ is a worthy sample of what sites like AlterNet.com and truthout.com are telling their own kind.  Again, it’s worth a read for our more conservative and libertarian readers to get a measure of the chasm, and also some perspective on the criticism from our more liberal readers clucking their tongues for merely being identified as collectivists or socialists or liberal or leftwing – all labels apparently of a pejorative nature when uttered in mixed company, and in the light of day.  H/T to a reader who definitely does not identify with the right, and yet is a bit embarrassed at the extremes her brethren and cistern (or is it sistern?) dish out.

Ruminations - 8may12

George Rebane

Happy VE Day!  On 8 May 1945 the Rebanes were in Liederberg - a small German farming village that just a few days ago was firmly brought under the control of Patton’s Third Army (more here) - and ready to be carted off to Augsburg and four years of internment in post-war displaced persons camps.  Meanwhile, on the other side of the world the battle for Okinawa was raging with Marine and Army divisions locked in a no-quarter-given combat with Japanese forces that had only one mission, die as slowly as possible while killing as many Americans as possible.  Okinawa was bigger than D-Day, but in America people were too busy celebrating Hitler’s downfall to notice.  That August the world would again change.

Newly elected Hollande promised to tax France to growth and balanced budgets.  And the French believed him.  Now nothing like that will happen, but what the hell, the French could frolic in the streets for a couple of days before they double down on their loudly proclaimed misery.  The French government's spending already accounts for more than 50% of the country’s GDP and it doesn’t generate any wealth.  All it is capable of doing is buying votes with tribute exacted from its private sector whose top marginal tax rates are now going to go above 70%.  The same silly people there as here believe that someone will actually risk their euros to build/expand businesses from which, if successful, the government will leave them 30 cents of every euro they earn.

Some writers view this latest installment of socialist failure in Europe as a golden opportunity for America (here).  They argue that America will be the only place left in the world for entrepreneurial and investment opportunity.  To me it seems that not everyone is paying attention to what Team Obama has accomplished, and what more they have in store for us should they win in November.  America’s crosshairs are focused squarely on being able to replicate the European toilet economy.  And some independents on this side of the Pond still ask, ‘why would we do that?’

The answer is that the socialist on both shores see none of this going on in Europe.  The EU and its subsequent eurozone are instead seen as triumphs in governance.  Happy dancing in the streets as national healthcare systems go broke, retirement ages are lowered (Hollande will return France to 60 from 62), endless vacations at every turn, can’t-get-fired jobs, minimum wages pushed above $20/hr, austerity measures reversed (no more spending cuts), … what’s there not to like?

No one there or here remembers nor has been taught that when governments have taken over the means of creating the country’s wealth, they have created the sorriest places for human existence on earth.  It has always started with taxing the bejeesus out of ‘the rich’, until everyone who earned a private paycheck found themselves suddenly designated as ‘the rich’.

This is also graduation season and our colleges are in the process of disgorging another million or so of young people (the entire US education system releases 4.3M onto the economy each year).  They are of the 'Me Generation', and the great part of them will land in the job market without marketable skills, and dumber than the proverbial 2x4 with a face painted on it.  Bret Stephens in the 8may12 WSJ writes the Class of 2012 a sobering letter; it begins –

Allow me to be the first one not to congratulate you. Through exertions that—let's be honest—were probably less than heroic, most of you have spent the last few years getting inflated grades in useless subjects in order to obtain a debased degree. Now you're entering a lousy economy, courtesy of the very president whom you, as freshmen, voted for with such enthusiasm. Please spare us the self-pity about how tough it is to look for a job while living with your parents. They're the ones who spent a fortune on your education only to get you back— return-to-sender, forwarding address unknown.

Education, teacher meritocracy, and our national future

George Rebane

RR has long promoted the idea that education in wealth producing/sustaining fields is the ONLY solution to America’s economic and social problems.  Former SecState and now distinguished senior fellow at Stanford’s Hoover Institution, George Shultz co-authors ‘Education Is the Key to a Healthy Economy’ with Eric Hanushek in which they acknowledge our broken K-12 public school system, and make the argument that quality STEM (Science, technology, engineering, math) education correlates strongly with and is a causal factor promoting economic growth – see nearby chart.  Their conclusion is that “An improved education system would lead to a dramatically different future for the U.S., because educational outcomes strongly affect economic growth and the distribution of income. ... (And) if we fail to reform K-12 shools, we'll have slow growth and more inequality."

The authors point out research that shows how per capita GDP is affected by STEM proficiency, and that –

Current U.S. students—the future labor force—are no longer competitive with students across the developed world. In the OECD's Programme for International Student Assessment (PISA) rankings for 2009, the U.S. was 31st in math—indistinguishable from Portugal or Italy. In "advanced" performance on math, 16 countries produced twice as many high achievers per capita than the U.S. did.

Continuing on this path, as is the current strategy promoted by the nation’s teachers unions, will guarantee to nail us to a slow growth future in which all the catastrophes from our indebtedness and unfunded liabilities will come home to roost in spades.  We will quickly become a second rate nation and all that entails in our ability to remain as the world’s most salutary and beneficent hegemon in history.

Socialism as predicted ...

George Rebane

Thousands of businesses are paying their 'fines' to opt out of Obamacare as they terminate their healthcare packages and leave their employees to fend for themselves.  Wait until they see how much money they'll be saving sailing steerage class on this Titanic2.

In the meantime, Mercatus Center's Veronique de Rugby has published the graphic below that illustrates the updated report from the Social Security trustees as to when SS will go bust.  Remember how the know-nothing leftwingers were screaming at anyone who dared question that SS was 'fully funded into the indefinite future' because of all those 'Lock Box' IOUs (aka Treasurys).  The more interesting thing to note is how much louder they scream next time when their butt stupid understanding of economics is pointed out to them as being the basis for the last disaster they promoted.

Ruminations - 1may12 (updated++)

George Rebane

It looks like getting your college education subsidized will now become a new ‘right’ across the land.  Neither party is willing to let student loan interest rates increase automatically as they were supposed to.  As a taxpayer, I want the government out of the student loan business (among many other businesses they are in), but as long as they want to play lenders (recall the last time they tried that in real estate) with my money, I want to be able to have a say what areas of study that I and fellow taxpayers will fund.  Most certainly I don’t want to be on the hook for defaulted loans by people whose majors only qualified them to gainfully ask ‘... and would you like fries with that?’ after graduation.

On the whole, our post-high school education system is a mess, which is just a continuation of the mess our high school system is in.  Both secondary and post-secondary school systems are scam operations on the national weal, each costing an arm and a leg, and delivering little brains.

But the President has now made student loans one of his campaign issues since he cannot run on his record.  Speaking of which, the latest poll has 49% of Americans wanting to overturn Obamacare, and 38% wanting to keep it.  The latter have no idea what’s in the legislation, and don’t really care because it just adds on to the other freebies that they already get from taxpayers.

The other big item brought up by the President is to garner the Hispanic vote by demagoguery on the illegal alien issue.  As I have repeatedly argued, the tragic mislabeling of the illegal entrants as illegal immigrants has totally muddied the debate and allowed the leftwing to bamboozle the lightweights with statements like Sen Dick Durbin's (D-IL) recent wail that the Republicans (especially in Arizona) are “considering people as criminals just because of their immigration status.”  Well hello Dick! We should consider them criminals because according to our laws, illegal entrants and aliens are.  And that sumbich regularly raises his hand to uphold the Constitution.

All of this doesn’t seem to be playing as well with the Hispanics because as of yesterday 45% of them support Arizona’s legislation to allow it to enforce federal law on illegal aliens.  43% don’t support it.  When all of our citizens are tallied, the support goes to 62%, and opposed are 27%.

Finally, on the anniversary of the Bin Laden hit we are still not allowed to see the photos that the Seal Team took of the raghead after they dispatched him.  Why?  Because it "may offend" some sensitive Muslims.  No one stops to consider that the willing exercise of power is the ONLY thing that the Islamists understand and respect.  And no one in the administration cares about the ongoing assaults and atrocious murders of Christians and Jews that continue wherever Muslims dominate.  No one checked to see how sensitive I was to the pictures of Danny Pearl’s decapitation, and I suspect that no one cares to this day.

But we are told to celebrate the “gutsy decision” the President made to take down the world’s foremost terrorist leader and accomplished enemy of the United States.  I am still puzzled about what part of that decision was gutsy, save the consideration of his political ass had the mission failed.  Last I saw, the man was still holding the title of our Commander-in-Chief.  Under the circumstances, what was he supposed to do?

However, the bottom line on this issue in this political season is President Obama's declaration that he won't politicize the Bin Laden killing, while at the same time claiming that Romney changed his mind and is now telling people that he too would have authorized the assassination raid.
 
Meanwhile, let's all enjoy the display of socialist solidarity that the Occupiers have promised us across the country on this annual celebration of international collectivism.

[update]  The news is in about California’s April revenues – state socialists surprised (again).  Turns out that corporate and personal income revenues have come in with a substantial shortfall from Moonbeam’s predictions.  The ‘rich’, on whom the state depends and promises to punish even more, are disappearing in greater numbers than anticipated ($2B fewer dollars last month from them alone).  Those who stay are reconfiguring their accounts to avoid confiscatory taxation.  The numbers on corporations are not in yet, but they have done all they can to either vamoose or move their earnings across the state line.

This sideshow is a continuing illustration of the progressive stasist mindset – raising taxes doesn’t matter, nobody will change their behavior.  RR readers have been advised of and discussing the realworld for the past five years, so no one here should be surprised.  Review assignment – Joel Kotkin’s ‘The Great California Exodus’.  But all said and done, don’t you wonder who are these faithful dumbasses whom the Sacramento Democrats continue to target with their BS?

[updated, one mo' time]  The Occupiers across the land, no matter how misguided in their protests, appear to protesting peacefully, and for that they are to be commended.  They have every right to get out there and proclaim their message.  It would be heartening to see them get a clue and put some people in front of the Capitol and the White House.  In the meantime, I'm showing my solidarity with the working man (with or w/o external plumbing) by doing some serious shopping this afternoon at local establishments so that they can continue providing jobs to these nebishes.

More Milestones on our Downward Spiral

George Rebane

This week has seen a lot of dilapidation in our ship of state.  For openers, Peggy Noonan takes an overarching survey of events that reflects on our national character.  From other perspectives we see what it is to be on a careening progressive luge as this administration more fully reveals itself, and what it can accomplish after getting the hang of it during the last three years.  A minimally hopeful sign is that more than a few Democrats are beginning to shake their heads at the excesses of socialist thought.

After all the information sharing between our intelligence services ordained by 9/11, we now hear that the FBI has pulled out of that little daisy chain, and has gone back to its insular ways of doing business.  It seems they weren’t getting that much from other agencies, and their stuff was leaking out.  A correlative to this is that the US seems to have shut down its pursuit of Russian spies on these shores, in spite of professional estimates (including from defectors) that Russia today has more spies in the US than it did during the Cold War, and has declared America to be its number one intelligence target.  The last prosecution of a Russian spy (Robert Hanssen) was in 2001, which case indicated that there was at least one more mole left in the fabric of the DOD.

In the meantime, the Transportation Safety Administration is starting to implement its VIPR program of checkpoints on US highways (google ‘VIPR checkpoints’ for a snootful).  The first ones were being tested in Florida to gauge public reaction to them.  It is, of course, all done for our own safety and to check the terrorist threat.  The counterpart of the policy is a further achievement of Agenda21 goals and objectives.  The checkpoints will spread from commercial transport vehicles to private automobiles in no time.  And, as everything else responding to the terrorist threat, these will remain a permanent fixture of our constantly expanding state that continues to grow 20% faster than our private sector economy.

A couple of years back we were on a bus from Alexandria to Cairo, and shook our heads sadly at what the Egyptians had to live with as we passed checkpoint after checkpoint manned by tough looking guys sporting AK-47s and more sinister stuff.  It can’t happen in America.

Back at the ranch, it seems that harbingers of the Great Divide are already in full swing.  Nationally known demographer and “Truman Democrat” Joel Kotkin writes and extensive peace on ‘The Great California Exodus’ and “what is driving the middle class out of the Golden State” (to loud denials from the loyal looney left).  It used to be only the mobile ‘rich’ who packed their bags and their companies to head to points east (I was going to say more about this, but Russ Steele beat me to it on NC2012).

Adding to the whole picture of our country’s ongoing and growing cross migrations is a report by Art Laffer and Stephen Moore about what impact the states’ income and corporate tax policies have had on states’ revenues and GDPs.  This is in addition to the Mercatus Center report we brought home from their Scottsdale conference last month.

But I don’t know whether to laugh or cry when reading that Elizabeth Warren, running for Congress in Massachusetts, has had at least one epiphany, maybe two.  The border line communist and "liberal heroine", recently on Team Obama, now acknowledges that 1) when you tax something more, you get less of it, and 2) real wealth and jobs are actually created by entrepreneurial private sector companies.  In fact she, along with a growing cohort of Democrats, are daily finding more and more things not to like about the impact this administration’s biggest lie, Obamacare, and faux pas on stopping the Keystone pipeline.  Even Barney Frank (gasp!) has climbed on this wagon.

So that’s a little update on how we are quietly becoming a progressive police state with daily more criminalized behaviors on the books, ever increasing taxes, frantic migrations of people seeking freedom, and a growing government that continues to add bureaus and (monitoring/enforcement) functions employing thousands to sop up the unemployable and increase its cohort of supporters on autopilot.  And then there are the rest of us.

The Eternal Debate with Collectivists (updated 16apr12)

George Rebane

For the benefit of the undecided reader who is truly puzzled as to the nature and fate of collectivist vs (classical) liberal forms of governance, we will take another lap around the barn.  The examination and critique of public policy always circles back to the fundamental arguments between the eternally contending measures of liberty and equality.  Equality is easy to attain and maintain, all it takes is ignorance and the gun.  Liberty is the more difficult to achieve and keep intact.  And that is because 'equality' is always arbitrarily defined by the central imposing agency; the definition of liberty is distributed and requires broad consensus among those who are free.

That all forms of collectivism have an intrinsic tendency toward autocracy is an historical truth that is rejected only by the collectivist, no matter what particular mantle – socialist, Marxist, communist, fascist, … - he wears.  A favorite argument that works on light thinkers is that liberty and the capitalistic free market societies it gives rise to are only theories that have yet to work anywhere in the real world.

Today Michael Moore and his minions are effective teachers of this thought.  Their ancestors would have made the same arguments to our Founders in the aftermath of our Revolution – ‘That man can govern himself is nothing but a theory, show me where in the world we see such form of governance working.’  The intellectual pinnacle of the collectivist seems to be that liberal maxims cannot be trusted to work since nowhere do we see their perfect application, therefore we must only hew to and expand collectivist forms of governance that are observably unsustainable.

In my readings and studies, I find that all successful liberal societies must base their form of governance on the explicit statement and maintenance of the minimum triangle of rights collected by Frederic Bastiat in his ‘The Law’ (1849).  These consist of the rights to private property, security in your person, and individual liberty (see also the Bastiat Triangle).   One of the fundamental and minimal functions of the state is to uniformly guarantee these rights, for the weakening of any one of them immediately weakens the other two.  And it is upon this stable structure of rights that all other legitimate rights can be constructed into a larger and still stable structure of social governance.  Our Constitution prescribes such a structure.