Kohtz.org
It's always an injustice when some sort of liberal legislation can't get passed, at least according to the liberals and the media. But what about when conservatives try and reform something like Social Security? It doesn't seem to be as tragic then, even though not fixing will eventually bankrupt our country.
Here is an insightful piece by George Will on our broken government, "For liberals, the filibuster is now the enemy".
Likewise, here is a clip from 2005 showing Democrats defending the filibuster against the power hungry Republicans. Capitol Hill has a short memory.
(both links via CafeHayek.com)
A new study was released that shows in the past decade, doctors have cut their average work week from 55 hours to 51 hours. This decrease in hours happens to coincide with a decrease their pay.
Staiger acknowledges that it's impossible to pinpoint the exact cause for the decline. But the research team does have a "best guess": a combination of lower fees and increased market pressure. The drop in hours worked can be directly stacked up against the decline in doctors' fees over the past decade. And in metro areas, where fees dropped faster and doctors faced greater competition for plum jobs, hours dropped at a greater rate.In fact, doctors' wages dropped about the same proportion as their work hours -- 7 percent, after adjusting for inflation -- from 1995 to 2003. By comparison, salaries for other professionals increased by 7 percent in the same span of time, according to a 2007 report from the Center for Studying Health System Change.
It's basic economics than when you try and put price controls on a particular market, there are shortages. For instance, the gas lines seen in the '70s when Nixon put price controls on oil and gas. Bread lines in Russia.
One of the biggest "cost savings" for any proposed health care reform bill is always Medicare/Medicaid payments. While it may or may not save money for tax payers, it will most certainly reduce and restrict access to doctors.
I was going to write a post today about an article in the Wall Street Journal that seemed to legitimize the use of inflation as a way to solve our debt problems. I also sent the link to Don Boudreaux of Cafe Hayek suggesting that he touch on it (he has a lot more readers then I do).
He did. So, instead of me writing the post, you can read his.
My message to him: "How can the Wall Street Journal of all publications, give any credence to a suggestion like this? Higher inflation is a horrible solution to solve our debt problem for so many reason. Do they even understand what inflation is or what it does?"
P.S. Note the last line. :)
Man loses job, gets $600/week in unemployment benefits. After a year without work, he takes a 3 week construction job. His unemployment benefits are unexpectedly cut to $178/week. He moves in with a friend because he can't support himself on $178/week. After "several months" of being supported by his friend however, he finds a full time job.
The article is saying the people on welfare are being punished for trying to do the right thing - working. If I'm giving you something for nothing, and for whatever reason reduce the amount I give you, how is that punishment? At least in the above case, it seemed to motivate one person to find permanent employment. That's just tough love.
Part of Obama's stimulus plan was going to be winterizing people's homes. I just read an article that says so far 9100 homes have been winterized (they expected about 90,000 by this time), and the government has spent $522 million dollars doing it. That is $57,362 per home.
I looked up what it takes to qualify for this program, and what you get. Basically, for a family of four you must earn less then $44,100 and own your own home. What do you get? "Entitlement is up to $6,500 in insulating and winterizing your home that will decrease energy consumption and your utility bills for years to come."
This means that for every house weatherized by the federal government so far, $50,862 is wasted on bureaucracy! It's truly astounding. Think of what the benefits to our economy and to our country would be if things like this didn't happen.
Head Start is a government program "that provides comprehensive education, health, nutrition, and parent involvement services to low-income children and their families." In other words, it's supposed to help impoverished children prepare for school.
A new government study now shows that forty-five years and $166 billion later, the program makes absolutely no difference. Researchers did a study in which they took a group of applicants who qualified for Head Start, rejected half, and watched both groups until after 1st grade. They then tested them. The results...
"not a single one of the 114 tests administered to first graders -- of academics, socio-emotional development, health care/health status and parenting practice -- showed a reliable, statistically significant effect from participating in Head Start.
So what does this mean for the program? President Obama will increase the funding for the program by $1 billion a year. Our tax dollars at work.
I'm not saying we will never run out of oil, or that there will come a time when we use more oil then we take out of the ground, but you never can tell when that time will come.
Exxon Mobil (XOM) announced today that in 2009 the company's proven reserves increased by 133% of the amount of oil produced.Exxon now has 23.3 billion oil-equivalent-barrels of reserves comprised of about half liquids and half gas. It's the largest amount in the company's history.
Amazingly, Exxon, who has been accused in the past of being too conservative in terms of exploration and development, has been finding more oil than it produces for each of the last 16 years, to the dismay of peak oil proponents.
My opinion is that it's best to let the market decide when and what the replacement for oil should be. Subsidizing things like ethanol just creates an industry dependent on the government to keep it running. If the subsidies go away, the industry collapses. All the resources used building that industry, resources that could have gone to a viable industry, will have been squandered. If there was real demand for alternatives to oil, we wouldn't need subsidies. When oil gets expensive enough, alternatives will emerge.
In case you were not aware, the U.S. housing market has been nationalized, just like 2/3rds of the auto industry. Just like they are trying to do to health care, and like they will do to higher education.
According to Inspector General Neil Barofsky who oversees TARP (the Troubled Asset Relief Program used to bail out the banks), the Federal government is now responsible for 100% of new housing.
The unspoken, bottom line: The federal government has already nationalized the housing industry. We're not just talking about Uncle Sam providing a few subsidies, or even taking over a few of the big players, as they have in the auto industry. This is a complete takeover. Every new mortgage today is a government mortgage.Over the last two years, government mortgage and mortgage-backed holdings have grown on net by nearly $1 trillion. Private investors and institutions have shed more than $1.5 trillion -- through foreclosure losses, pay downs, and by selling to government.
The effective result is a government-run housing market. Barofsky reports that right now, the government is responsible for about 100 percent of all new mortgage activity. You read that correctly. To put it in his own words:
"According to Federal Reserve net borrowings data, the federal government and the organizations it backs now guarantee or issue almost all net new borrowings for mortgages and MBS."
Essentially what this means is that all home prices are still inflated. In fact, it's the government's policy to keep home prices inflated and has been since the financial collapse. And now, if the government ever stops trying to subsidies the housing market, prices will drop and anyone who has purchased a new house in the last 2-3 years will most likely be "underwater." The government hasn't fixed the housing problem at all, they've just bought it. Next time the housing bubble bursts (there still is one, maybe even larger then before), our country (not banks) could fail.
US debt will keep growing even with recovery
"For the U.S., the crushing weight of its debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario - a full recovery and a return to prerecession employment levels."
If we just would have listened to James Madison...
"The powers delegated by the proposed Constitution to the Federal Government, are few and defined. Those which are to remain in the State Governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will for the most part be connected." - Federalist Paper 45
Our founding fathers made a lot of sense. They realized freedom was difficult and sometimes uncomfortable.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom - go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen."- Samuel Adams (via Cafe Hayek)
Sometimes freedom (the absence of government's intrusive good intentions for our own good) is hard and difficult. Two hundred and thirty four years ago, people believed that true freedom was worth the strugle. I think people are starting to believe this again. Read: Colorado Springs Walks the Walk
I ran across an article which relates to my last post where I said, "why on earth would they hire anyone until they knew what that increase would be?" It deals with uncertainty, and the problems associated with a constantly changing economic and political landscape created by the good intentions of the President.
In February 2010 there is no way to know what really lies ahead; there is no way to distinguish between stimulus and the real economy. Too many policy boulders are being dropped in the water. One can hardly determine the effects of one before another one is thrown in the pool.There is stimulus one. Then stimulus two. And now talk of stimulus three. There is TARP. Cash for Clunkers. Cash for Appliances. First home buyers tax credits. Health care revision. Copenhagen. Cap and trade. Jobs programs. Financial reform. Each announced in short succession. The effects of some of these programs are so large that they are readily seen in GDP and construction data. By some counts, about half of 2009's fourth quarter 5.7 percent GDP growth is explained by Cash for Clunkers, a program that came on like gang busters and then faded into oblivion.
Imagine yourself as owner of a small business with 20 employees. You are trying to decide if you should build up inventories again, hire one or two people, and lease another pickup truck. Would you make your decision on the basis of the fourth quarter GDP numbers? Would you base your plans on the explosion of existing home sales that followed the first-home-buyer stimulus? Most likely not. I'll bet you would wait so that you could get a better fix on the real economy.
Perhaps we need six months of political silence.
- Producing Jobs: Thoughts on Obama's Plan for Small Businesses
"Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies." - Unemployment taxes slam businesses
I don't understand how state governments, or anyone for that matter, thinks that raising taxes on businesses to pay people who are unemployed, is in anyway beneficial. Making it more expensive to own and operate a business means businesses hire less people. If a business owner thought their state was going to raise their taxes based on how many employees they have, why on earth would they hire anyone until they knew what that increase would be? Why can't they see this?
The highest paid city employee in Madison Wisconsin is... John E. Nelson, a bus driver. He makes more then the mayor, and his boss, the head of Metro Transit. How much did he make driving a bus? Nelson earned $159,258 in 2009, including $109,892 in overtime and other pay.
That's great for the bus drivers, but what about the citizens who pay his salary?
I heard on NPR last night that D.C. was under a mountain of snow. Getting to work was going to be difficult at best for most commuters, but since the government would be closed for business, it would make life a little easier because of the 250,000 government employees who wouldn't be going to work. I started thinking about it, 250,000 people is slightly higher the number of people who live in Lincoln, NE. So for our country to operate, we need the equivalent of every man, woman, child and student in Lincoln, NE working in our nation's capital. Not one of these people generates wealth in any form. They are overhead necessary for redistributing our tax dollars. And that's just Washington D.C.
So I looked it up, we were paying just under 2.8 million people in 2008 categorized as Federal Government Civilian Employees. That is 1 million more people then live in the state of Nebraska! It's actually all of Nebraska, all of South Dakota, and 1/3 rd of North Dakota. This doesn't include the Post Office (which loses money), Amtrak (which loses money), or the 4-5 million full and part time state and local government employees (well, it does include those in NE, SD and 1/3rd of ND). To account for state and local government employees, we would have to throw in Iowa and Kansas.
I understand it takes people to run the government, but is it necessary to have so many? I'd be interested in knowing the percentage of the population that worked in government in 1876 (100 years after we declared our independence) as compared to now. We already know that government spending accounts for 42.46% of our economy, I highly doubt it was that much in 1876. I'll post an update if I (or anyone else) finds any information on this.
People often point to Canada as a poster child of socialized health care. So why is it then that the government head in charge of health care in Canada, is coming to the United States for heart surgery? Nobody is talking right now, so it's anyone's guess.
It used to be that in the United States, individuals ran the economy. If I want something, I would look for and decide to buy it - or not buy it. If it didn't exist, someone else might see the need, create it, and sell it. Does this kind of free market economy exist today? How much control do we have over our own lives?
According to usgovernmentspending.com, 2009 government spending (Federal, State and Local) accounted for a whopping 42.46% of our economy. Do we really need our government to provide for us to such an extent? Are we so incompetent we can't make our own decisions about what we need? Do companies need guidance in the form of tax incentives and government backed loans to help decide what consumers need?
Adam Smith used the analogy of chess match to explain why central planning doesn't work. The government assumes it can plan the economy like it moves pieces on a chess board. But it doesn't consider that pieces on the chess board have no other way to move except by its hand. In human society, every single piece has its own ability to move whichever direction it wants, which may be in direct opposition to what government wants. The result, "If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder."
How often does the government manage to do what everyone wants? Are things right now easy and harmonious? Or miserable and in the highest degree of disorder? Less government equals a happier, more prosperous society.
BTW, this is my next letter to the editor, we'll see if it gets published.
Another good article from Cafe Hayek today, Adults Are Responsible.
Adults' conversations about financial matters are mature and responsible because adults typically earn and spend their own money. Children's conversations about financial matters are childish and irresponsible largely because children live off of wealth earned by adults. "Buy me this toy!" "Get me that dress!" "Take me to DisneyWorld!" - children too frequently issue selfish demands such as these precisely because children have little to lose by doing so. If these demands are met, other people foot the bills.
Sound like any politicians you know?
This is an especially insightful post into the minds of politicians. Written by Russ Roberts of Cafe Hayek. Why do they feel nothing will work without their guidance? It's their guidance that screws everything up!
Ever since I posted that rap video about Hayek and Keynes, I've been reading the author's website, Cafe Hayek. It's written by Don Boudreaux and Russ Roberts, professors at George Mason University. I highly recommend it.
In economics, there are several schools of thought. The prevailing school of thought right now is Keynesian, which basically advocates consumption as the driving force of the economy. An opposing viewpoint to this theory is the Austrian school of thought, for which Friedrich Hayek is largely responsible. That should give you an idea of what they talk about.
Friedrich August von Hayek was an Austrian-born economist and philosopher known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought.
"The government's response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned." - TARP Watchdog Neil Barofsky: Government Bailout Has Increased Risk Of Economic Crisis
Ok, so maybe the Treasury itself isn't admitting failure, but the person in charge of watching over the TARP program is. He sites multiple instances of corruption, and says the Treasury should "enact clearer walls" to try and stop it.
Treasury said it welcomed Barofsky's oversight but resisted the call to erect new barriers against conflicts of interest. The new rules "would be detrimental to the program," Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules "are a rigorous and effective method of protecting taxpayers," she said.
So the system can't work without there being corruption? Spoken like someone taking advantage of the system. Obviously they aren't rigorous enough. This is typical of government programs though.
Barofsky goes on to say,
"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.
He also makes the same argument that is indicative of any bailout, be it banks, the auto industry, or any business. Most call it a "moral hazard"...
Since Congress passed $700 billion financial bailout, the remaining institutions considered "too big to fail" have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them (emphasis mine) rather than bring down the financial system.
We need to let these companies fail, no matter what the consequence to our economy. If we don't, the consequences will become worse and worse until at some point - like all economies that inflate their currency - the entire economy will collapse.