For Proof that President Obama’s Economic Policies are bad just look at Singapore

Posted by PITHOCRATES - March 30th, 2013

Week in Review

Singapore is one of the Four Asian Tigers.  The economy boomed in Hong Kong, South Korea, Taiwan and Singapore because of their business-friendly environments.  Free markets.  And free trade.  Which is why the Four Asian Tigers had some of the strongest economies in the world.  Because the government did not interfere with market forces.  Like they are doing more and more in the United States.  And if we compare the two economies we can see which system is better (see More than half of employees in Singapore planning to leave jobs: Survey by Cheng Jingjie posted 3/28/2013 on Breaking News Singapore).

More than one in two employees in Singapore are planning to leave their jobs within the next two years because of unsatisfactory compensation.

This isn’t a problem they’re having in the United States.  Americans may be unhappy in their jobs and dissatisfied with their compensation.  But all they do is complain.  They’re not leaving their jobs.  Because unlike in Singapore there are no other jobs to go to.  Because President Obama, unlike in Singapore, is trying to fix the economy with government spending.  And new regulations.  Making the current recovery the worst recovery since that following the Great Depression.  While Singapore’s economy hums along the United States have seen people disappear from the labor force since 2008.  Which is why no one is threatening to leave their jobs.  No.  In the United States their biggest concern is getting laid off.  No matter how unhappy or how poorly paid they are.

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Thanks to a Horrible Economy a lot of Starbucks Baristas have a BA Degree

Posted by PITHOCRATES - March 30th, 2013

Week in Review

President Obama is always talking about sending more kids to college.  And investing into the future.  But as it turns out a lot of kids are going to college.  Taking on enormous amounts of student loan debt.  But they’re not graduating with a useful degree that they can use to help build that future (see Why a BA is Now a Ticket to A Job in a Coffee Shop by Megan McArdle posted 3/27/2013 on The Daily Beast).

Too many college kids are living in Mom’s basement, or working at Starbucks…A while back, I found myself talking to a professor whose school has a number of impressive-sounding graduate programs that were originally conceived as add-ons for a professional degree in law or medicine or business.  They are now attracting a number of students who just go for the standalone degree.  He didn’t understand what the career path was for these kids, and he wasn’t sure that they did either.

“It sounds good, so they can persuade their parents to pay for it,” he said, a touch guiltily…

Skilled workers with higher degrees are increasingly ending up in lower-skilled jobs that don’t really require a degree–and in the process, they’re pushing unskilled workers out of the labor force altogether…

I made quite a splash with a Newsweek story arguing that we may be overinvesting in college.  There were basically three parts to this argument: first, that a lot of college attendance is signalling activity rather than skill acquisition; second, that more students with BAs are ending up in jobs that don’t require them; and third, that a substantial number of kids don’t finish, washing out with a lot of debt and no commensurate earning power to pay it…

So while college graduates are having trouble getting college-style jobs, the unskilled workers are doing even worse.  This is not necessarily evidence that the college degree is producing the wage–it might be that folks capable of getting into college would be able to get that barista job even if they didn’t go…

It suggests that we’re pushing more and more people into (more and more expensive) college programs, even as the number of jobs in which they can use those skills has declined.  A growing number of students may be in a credentialling arms race to gain access to routine service jobs.  Or maybe the productivity of our nation’s wait staff is spiking as more skilled workers flood into these jobs.

Unfortunately, there’s no obvious policy response to this.  It’s easier to create more college educated workers through government policy than it is to create jobs for them.  It’s not even obvious what the personal response should be–except that if you’re planning to major in English, you should maybe see if you can’t get a job at Starbucks instead.

A lot of kids go to college for the fun.  And because it’s the fun that they care about they take the easy degree programs.  Like English.  Because studying physics, engineering, medicine, etc., would just take too much time away from having a good time.  This is why they can’t get a job with their degree.  Because their degree is useless in the high-tech future that the president says we must invest in.

This is why the high-tech companies are hiring Asians and Indians.  Because they study hard in school.  Getting degrees in the hard programs.  Because they grow up with the values of their parents.  They work hard and are willing to wait to enjoy the fruits of all their labors.  Unlike American kids that can’t wait for anything.  Especially when it comes to having a good time.

When the economy is booming again and good workers are hard to find businesses will be hiring people with BAs again.  Maybe even those people earning degrees in economics.  Like those who are advising the government on how to create jobs.  But until the economy recovers from the worst recession since the Great Depression they will only hire those with the more valuable degrees.  The useful degrees.  The degrees that can actually help bring their goods and service to market.  And if their business is developing new hardware for the Internet or communication satellites knowing what a split infinitive just isn’t a useful skill.

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The NHS sets up new Non-Emergency Phone Service to Reduce the Overload on the Emergency Phone Service

Posted by PITHOCRATES - March 30th, 2013

Week in Review

Once upon a time Americans worked hard, saved their money and lived austere lives.  Always saving, planning and waiting for the future.  When they could finally enjoy the things they worked so hard and so long for.  Today’s world is a little more hedonistic.  Where few wait for anything.  Or save.  Like that classic Eagles song.  Life in the Fast Lane.  “Everything all the time.”  Especially those on the left.  Who want government to take care of them so they can enjoy life in the fast lane.  Pensions.  Health care.  A college education.  Birth control.  Childcare.  All the things that would take away from their having a good time if they had to pay for these themselves.

This is why they wanted national health care.  And fervently hope Obamacare will evolve into national health care.  So they can enjoy life to the fullest.  Knowing that if they crash the government will be there to take care of them.  For free. Just like the utopian National Health Service (NHS) in Britain.  Where everyone has everything all the time (see NHS 111 line should be delayed, says BMA posted 3/28/2013 on BBC News Health).

The organisation representing British doctors has written to NHS bosses to call for a delay in the launch of a new non-emergency telephone advice line…

Lord Howe has already admitted the new 111 telephone advice service – which the government has said will ease pressure on emergency 999 phone lines – had run into “teething problems”…

Dr Laurence Buckman, chairman of the the BMA’s GP committee, said: “There have been widespread reports of patients being unable to get through to an operator or waiting hours before getting a call back with the health information they have requested,

“In some areas, such as Greater Manchester, NHS 111 effectively crashed because it was unable to cope with the number of calls it was receiving. The quality of advice being given out has also been questionable in some instances.”

He said the “chaotic mess” of 111 was “placing strain” on overstretched parts of the NHS, such as the ambulance service, and potentially placing patients at risk.

Of course it doesn’t work like that in real life.  For free stuff is very expensive.  It is so costly that the NHS cannot put enough ambulances on the street.  Placing patients at risk.

The problem with free stuff is that people see no reason NOT to use it.  So they use it.  And over consume it.  Which is why emergency rooms back up.  And emergency phone lines are overloaded.  The shortage of services is so bad that they have to create a new telephone service to reduce the call volume on the emergency telephone service.

When everything is free people over consume.  Which stretches the resources of the NHS.  Leading to longer wait times.  Rationing.  And service denials.  They don’t even have the resources to staff a non-emergency telephone service.  Which they added to reduce the burden on the emergency telephone service.  Which would hopefully reduce the burden on their emergency rooms.  As well as freeing up the ambulance service.  Just something else they’re adding with things like the Liverpool Care Pathway (LCP) for the Dying Patient.  What some families who had their loved ones placed on the LCP without their knowledge call a death panel.  So these patients die sooner to free up some beds.  And health care workers.  All to try and make their limited resources cover more people.  For you just can’t have everything all the time.  At least not in the NHS.  And if they can’t what chance do we have with Obamacare?

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British Columbia’s Carbon Trading System did not make the B.C. Liberal Government Carbon Neutral

Posted by PITHOCRATES - March 30th, 2013

Week in Review

Something the American left really wants is a carbon trading system.  For this in conjunction with a national health care system would give the government great control over the private sector.  Because health care is one-sixth of the U.S. economy.  And everything takes energy.  So everything would be subject to the government’s carbon oversight.

A carbon trading system would basically turn carbon emissions (i.e., polluting greenhouse gases) into a commodity.  If you want to pollute you must pay to pollute.  By buying carbon permits to pollute.  Or paying carbon taxes.  Those who pollute heavily must buy more permits/pay more taxes.  Those who pollute less buy fewer permits/pay fewer taxes.  The idea is to take money from the polluters to give to others to reduce their carbon emissions.  Thus giving everyone an incentive not to pollute.  And a net zero carbon emission.  But in reality it’s just another way for government to pull more wealth out of the private economy so they can spend it how they want to spend it.  Rewarding their campaign contributors.  And providing businesses access to unneeded subsidies (see Auditor general delivers damning report on B.C.’s carbon trading system, Crown corporation that managed funds by Gordon Hoekstra posted 3/27/2013 on The Vancouver Sun).

B.C. auditor general John Doyle delivered a damning report Wednesday on the province’s controversial carbon trading system and the Crown corporation Pacific Carbon Trust.

The report concludes the government did not reach its goal of carbon neutrality in 2010, the year under examination, because the carbon offsets it purchased that year were not credible…

…NDP environment critic Rob Fleming said it’s time to look at changes to the PCT, including ending transfers of public money for emission-reduction projects.

He was referring to the fact that the carbon trading system involves transferring public money from institutions like hospitals and universities to the private sector so the government can declare the public sector is carbon-neutral…

Under the carbon system, public institutions such as hospitals and universities have so far paid more than $50 million for their carbon emissions. That money has been used to fund greenhouse gas reductions projects at private sector pulp mills, sawmills, gas drilling rigs, hotels and greenhouses.

The idea is the reduction projects in the private sector offset emissions in the public sector to zero, allowing the B.C. Liberal government to claim it is carbon neutral.

That’s a first.  Transfer money from sick people to give to businesses in the private sector.  So hospitals can pollute.  Kind of a strange thing for a government to do that puts profits before people.

Of course the big question is who measures the change in carbon emissions?  And how?  For you can’t put a carbon meter on your business.  It takes math.  And some assumptions.  You can tie it to one’s electrical consumption.  But if the user is attached to a section of grid powered by both a coal-fired power plant and a nuclear power plant that’s more math.  And more assumptions.  Did your power come from the polluting coal-fired power plant?  Or the emissions-free nuclear power plant?  And what about burning fossil fuels?  Did the fuel someone burn come from a refinery that processes a high-sulfur oil (sour crude)?  Or a low-sulfur oil (sweet crude)?  More math.  More assumptions.

When it comes to carbon emissions you can’t really measure emissions.  You have to measure inputs.  Such as electric power.  Consuming a lot of electric power could put a lot of carbon emissions into the air.  But not where the consumer uses that electric power.  But back at the power station that produced that electric power.  So who pays those carbon permits/taxes.  The user?  Such as a hospital?  Or the power plant?  Or both?

Anything so complicated makes it easier for people to game the system.  Which is what is happening in Canada.  And why despite spending C$50 million of public money the B.C. Liberal government is not carbon-neutral.

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Cyprus and the Eurozone Crisis shows why we’d be better off with a Gold Standard

Posted by PITHOCRATES - March 30th, 2013

Week in Review

Debtors love inflation.  They love to borrow cheap dollars.  And love even more to repay their loans with even cheaper dollars.  Creditors, on the other hand, hate inflation.  Because they are on the other side of that borrowing equation from the debtor.  And when a debtor repays a loan with depreciated dollars the creditor who loaned that money loses purchasing power.  Causing the creditor to lose money.  Just because they had the kindness to loan money to someone who needed it.  Which is a strong disincentive for making future loans.

This has long been at the heart of all banking wars.  And banking crises.  The fight between paper money and hard money.  Printed dollars versus specie (gold and silver).  People who want to borrow money love paper.  Because banks could make a lot of it to lend.  Something they can’t do with gold and silver.  Because it takes a lot more effort and costs to bring new gold into the economy.  Those who want to borrow money argue that hard money hinders economic activity.  Because there is a shortage of money.  And because governments are always interested in boosting economic activity they are always in favor of expanding the paper money supply.  This generous expansion of credit is currently miring the Eurozone in a sovereign debt crisis.  And launched a confiscation of wealth in Cyprus.  Greatly threatening the banking system there.  As few depositors trust their money will be safe in their bank.  Causing people to return to specie (see Cypriot bank crisis boosts demand for gold by Ian Cowie posted 3/27/2013 on The Telegraph).

The Cypriot banking crisis reminds even the most trusting savers that not all banks or jurisdictions are safe – and is boosting demand for gold, bullion dealers claim.

As if to prove the old adage that it’s an ill wind that blows no good, enthusiasts for the precious metal argue that financial shocks in the eurozone are reminding savers of gold’s attractions…

[Daniel Marburger, a director of Jewellers Trade Services Partners (JTS)] said: “The situation in Cyprus has reignited the wider Eurozone sovereign-debt crisis. At a time like this, people are attracted to gold because it is the ultimate crisis commodity.

“The proposed levy on deposits of Cyprus’s savers has not only shaken confidence in the single-currency Eurozone, it illustrates the fragility of savings held within the banking system. In our experience, clients are attracted to gold because it offers insurance against extreme movements in the value of other assets. Unlike paper currency, it will never lose its intrinsic value…”

“The events in Cyprus prove once again that bank customers do face risks as creditors who are owed money…”

When you deposit your money into a bank you become a creditor.  You are loaning your money to the bank.  Who pays you interest to loan your money to others.  If the inflation rate is greater than the interest you earn your money actually shrinks in value.  And the more they print money the more it shrinks in value.  That’s why as a creditor you won’t like the harmful effects of inflation.  Even if it makes the people happy who borrow your money from the bank.  Because they get a real cheap loan at your expense.

Which is why people are drawn to gold.  Because they can’t print gold.  So it holds value better than paper.  And the government can’t just confiscate a percentage of your savings if it isn’t in the bank.  Another reason why people are drawn to gold.  If the banking system collapses, or if the government seizes people’s retirement savings to ward off a banking system collapse, people can take their gold and move somewhere else that isn’t having a financial meltdown.  And not lose any of their wealth.

Which is, of course, the last thing you want to happen in a country.  For a sound banking system is essential for a prospering middle class (if it weren’t for banks only rich people would own homes, cars, go to college, etc.).  Which is why a responsible monetary policy, and responsible people in government, is a prerequisite for a sound banking system.  Which few nations in the Eurozone have.  As few nations throughout the world have.  For they all want to buy votes by giving away free stuff.  And having the power to print money allows them to give away a lot of free stuff.  Pensions.  Health care.  College educations.  Lots and lots of government jobs.  Etc.  But there comes a point when you give away too much.  And you have sovereign debt crises.  As well as confiscations of wealth.

This was the advantage of a gold standard.  Like when we coupled the value of our world’s currencies to the price of gold.  It did not allow any nation to inflate their currency.  For if they did people would exchange that devalued currency for the fully-valued gold.  A strong incentive not to devalue your currency.  Which was nothing more than a promise to pay in gold.  The gold standard kept governments responsible.  But because it made it so difficult to buy votes everyone cheered when President Nixon decoupled the dollar from gold.  Putting an end to the last vestiges of a gold standard.  Allowing governments everywhere to be irresponsible.  Bringing on financial crises.  And the confiscation of wealth.  As we see happening in Cyprus.  And will no doubt see elsewhere.

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