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”?

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.

Conspiracy Theories by the Dozen, Oh My! (updated 21may12)

George Rebane

[Correction: This is the submitted form of my column that appeared belatedly in the print edition of the 25may12 Union.  I was informed of the delay due to a rush of political columns and articles on the new marijuana ordnance.]

In this election year all the weird stuff we’ve been hearing about seems to be coming at us more loudly and from every direction.  Each piece by itself sounds like a purposed effort to drive America deeper into a place that most of us don’t want it to go; each piece sounds like the revelation of another quiet conspiracy at work.  And when you gather all the pieces together, they don’t look like separate pieces at all, but to many they appear to fit into one big concerted effort from somewhere by some people who are working together.

And what makes it even more curious is that the individual pieces have been promoted by people from all political parties – most certainly including Republicans and Democrats.  So we can’t just point our finger at one side and blame the whole thing on them.

We start with the International Democrat Union (idu.org) founded in 1983 by the likes of Margaret Thatcher and Republican Party National Committee’s John Allen, and joined by VPOTUS George HW Bush.  It is a self-declared union of ‘centre and centre right’ parties with high sounding principles that include abiding by the anti-constitutional UN Universal Declaration of Human Rights, and calls for unspecified obligations between nations.  Who knows what the IDU does, but it meets every four years near the Republican Convention.

Then we have the notorious UN Agenda21 initiative to which President GHW Bush signed us up (http://www.un.org/esa/dsd/agenda21/res_agenda21_00.shtml).  Reading its tenets and principles calls for a one world in which human activity is restricted to a fraction of the earth’s land surface, and everyone belongs to a wholesome, sustainable, inclusive, happy society of peacefully like-minded and sensitive people.  The progressive principles of this future UN-dominated world are being implemented through something called the ICLEI Global (iclei.org) which organizes “local governments for sustainability” and already has over 550 US cities as members.

Next we come to the National Defense Authorization Act of 2012 with its draconian Title X, Subtitle D.  There its anti-terrorism provisions give the President powers to do all kinds of spooky and unconstitutional things like constructing a gulag of stalags in the US for forcibly interning thousands of US citizens when the need arises.

Prelude to an American Spring?

George Rebane

Last night after supper I spent several hours with a Nevada County high school teacher talking about the state of education here and across the country.  He told of how top students, some of them brilliant, appear directionless with no focus or fire to go and do some definite thing with their lives.  No desire to be the next whatever that would benefit society, or even make themselves wealthy.

The college bound seem to care only about getting good grades, and therefore take the softer subjects.  Even their counselors understand that motivation and advise them to take this easier course vs that one so their GPA will be maximized.  This motivation extends to students who demonstrate abilities to master STEM (science, technology, engineering, math) courses and enter productive STEM careers.  Many (most?) who enter college as STEM majors quickly change direction into something like sociology, psychology, or English after their freshman encounter with a first real math class.

Talking to them about a future with family, house, kids, … makes no dent.  The focus of the best of them is limited to getting into a better school and then looking around to discover how to graduate with the least work.  Telling them about the prospects of finding a job or what different jobs pay also makes little impact.  ‘$35K a year’s OK, I can live on that’ too often is their depth of planning ahead.  The dismal numbers on local college graduates coming back to live with their parents is replicated across the country.

‘… to shift the burden of hardship to the rich …’

George Rebane

That promise is resounding worldwide as socialist/communist politicians promise to ease the long overdue payments for profligate government spending in countries facing financial ruin.  Today France elected Francois Hollande to be its new president.  How did Hollande beat Sarkozy?  by promising to shift the burden of hardship, naturally.

The rich are already paying more than the lion’s share, and could not supply the spending spigots if their earnings were confiscated in toto.  But none of this matters while the other half pays nothing into those tills, and still demands more.  No one among the sheeple is aware of the greater problem that has nothing to do with ‘the rich’ who are prominently dangled to fill their attention spans.

The same thing is happening in Greece, and soon in Spain, Italy, Portugal, …, and, of course, the United States which is already in the lead bringing such policies to the fore with messianic force.  In California, we have been ahead of that curve for years, and show no inclination to let slip our position of leadership.

How have you prepared for this future?

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.

‘Why the technical stuff?’

George Rebane

I was asked that question recently by a regular RR reader.  He went on to opine that not many of my readers would make the effort to understand all that high falootin’ stuff and just skip over it.  In short, I’m wasting time and effort in offering up such posts.  And, of course, he may be right.  When you’re selling, you never want to discount what a customer tells you.  And make no mistake about it, I am selling my little heart out here on RR.

As I later reflected on the reader’s question, it occurred to me that it’s been some years now since I posted anything on the larger purpose and objective(s) for flogging the keyboard and debating various esoteria with RR commenters.  Being a rewarded lifelong teacher has provided some intrinsic impetus to this enterprise – first in the Army, then with my kids and grandkids (no claims of success there), as a professional engineer/scientist/academic, and now again working with high schoolers.

RR is structured to continuously build on what has been written and discussed before in its pages.  I attempt to back-link all of its pieces to their appropriate ancestors, in addition to the usual outside references.  To the extent that this is successful, RR is an accumulating body of thought offered by me, and subsequently expanded and critiqued by the blog’s commenters.  Relatively few pieces here start out of whole cloth.  I make a considerable and not always successful effort to circle the barn as few times as possible; previous orbits on any given topic are always available by searching RR through its built in function or with an engine like Google (just add ‘rebane’ to the keyword list, and voila!).

Ideologically I am a conservetarian, promoting a careful and hopefully coherent amalgam of conservative and libertarian thought as seen through the Austrian lens.  For good or ill, I am an elitist.  I know I cannot reach everyone with all possible ideas/notions through my heartfelt diatribes, so I just try to target and contend with a small number of interested readers, all of whom should evince that they have at least three solid digits in their IQ.  In that and other things, I am terribly incorrect according to the dominant political perspective of the day as spouted by both Republicans and Democrats.

Sacramento vs California (updated 28apr12)

George Rebane

[This is the transcript of my regular KVMR commentary which was broadcast on 27 April 2012.  I have annotated it with notes and links as appropriate.]

One of the nation’s premier demographers Democrat Joel Kotkin was recently interviewed by the WSJ on his study of ‘The Great California Exodus’, that has been vehemently denied by the state’s progressive pundits and local leftists.  Kotkin reviewed the grand history of the golden state and its downward spiral that is now entering its third decade.  This demographer has been busy for a number of years studying and publishing on our economic and demographic decline.  (for more google ‘joel kotkin, california exodus’)

Among the more recent developments is that the great exodus which started with corporations – no one wants to expand in California – grew to include the well-to-do, and now includes middle class workers who are priced out its real estate markets, and taxed out of their income and ability to save.  Kotkin points out that California ranks at or near the bottom on every important comparison of the states ranging from ‘ease of doing business’ through cost of living to individual liberties.   Along with states like Illinois and New Jersey, we have become the poster child of how not to govern a state.

Where California used to invite the founding of innovative companies such as those which gave us Silicon Valley, today the main product of California, according to Kotkin, is red tape.  He goes on to explain that “part of California's dysfunction … stems from state and local government restrictions on development.”

That “local government” part hits home here in Nevada County.  Our county’s population has been stagnant for the last decade.  Both businesses and developers have been taking a pass on the county for some years now claiming that it is just too hard to get anything done in these foothills.  The leftwing activists, of course, celebrate this as an achievement in their eternal quest for a sustainable stasis.  And our local municipal and county governments have long had a bi-partisan effort to support these prohibitions and delays.  The cynical part of all this is the expressed denial by our electeds as they give lip service to promote yet another business development workshop or public meeting.

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.

Scattershots – 17apr12

George Rebane

The Financial Times reports (here) that Spain’s central government is looking to federalize financially distressed regions of the country.  (Greece essentially succumbed to such central control early on so as to avoid the rush.)  RR has anticipated a similar fate for California and states like Illinois, New Jersey, … under equally astute financial management by their state governments.  It’s all part of the European model that Team Obama is forging for us.

On another and more earth-shaking note, artificial intelligence may be at the threshold of passing the Turing Test (q.v.).  The new direction taken in AI recently depends on being able to manage ‘big data’.  That is, being able to organize and draw cross connections and correlations similar to what humans are able to do, and to do this much better than IBM’s Watson (q.v.).  the 12apr12 issue of Wired reports (here) that “there is reason to believe that code kernels for the first Turing-intelligent machine have already been written.”

The anticipated breakout is due to “Two revolutionary advances in information technology (which) may bring the Turing test out of retirement,” wrote Robert French, a cognitive scientist at the French National Center for Scientific Research, in a 12apr12 Science essay. “The first is the ready availability of vast amounts of raw data — from video feeds to complete sound environments, and from casual conversations to technical documents on every conceivable subject. The second is the advent of sophisticated techniques for collecting, organizing, and processing this rich collection of data.”  The pre-Singularity threshold for hiring human workers continues to inch upward.

Meanwhile the Senate Democrats failed in their attempt to pass the ‘Buffett Rule’ tax increase.  This much ballyhooed piece of snowball’s-chance-in-hell legislation is the centerpiece of Obama’s campaign initiative sold to the sheeple under the rubric of “fairness” in solving our debt and deficit  problems in coming years.  But without even going into the examination of ‘fairness’, the Buffet Rule tax will accomplish none of this, and serve only as the transom to massive tax increases on the middle class (some history here).  The Heritage Foundation covers more detail on this.

The facts of the Buffett Rule are simple. The President wants millionaires (and small businesses taxed as individuals) to pay a minimum tax of 30 percent. For all of his rhetoric that the measure would "stabilize our debt and deficits for the next decade," the Buffett Rule would bring in only $47 billion in revenue in ten years. To put those numbers in context, President Obama's budget calls for adding $6.7 trillion to the national debt. So the Buffett Rule would cover just 0.007% of all of Obama's debt and .001% of Obama's spending.

We shudder to contemplate that there are millions of Democrats with sufficient deficits as to make such election year demogauging a profitable enterprise for their progressive elite.  No one doubts that they know their constiuents.