The Government Bureaucracy will make Health Care as Abysmal as the Obamacare Rollout

Posted by PITHOCRATES - March 16th, 2014

Week in Review

Government wants to run everything.  And they think they can fix anything.  But few people want to deal with the government.  No one enjoys renewing their driver’s license.  Or dealing with any other government bureaucracy.   Because they know it will not be a quick or an enjoyable experience.  They’d much rather go to a store or a restaurant.  Any place in the private sector where the customer is king.  This is what people prefer.  And yet here we are.  Turing over our health care to the people we least like having to deal with.  But really now, how bad can it be (see HHS official resigns with scathing letter, rips ‘dysfunctional’ bureaucracy by Kellan Howell posted 3/15/2014 on The Washington Times)?

A top Department of Health and Human Services (HHS) official resigned, accusing the agency of fostering a “dysfunctional” environment on the way out…

Mr. Wright wrote that his research was rewarding but that it only accounted for 35 percent of his job. The rest of his time was spent “navigating the remarkably dysfunctional HHS bureaucracy.”

According to Mr. Wright’s letter, tasks that took a couple of days at a university research center, required weeks or months and that the budget was micromanaged by senior officials.

If you ever wondered why the rollout of Obamacare was so abysmal this is why.  Because HHS is abysmal.  As all government bureaucracies are.  A bunch of career bureaucrats who are more interested in maintaining their beloved bureaucracy than making the customer king.  For the more complex and convoluted their bureaucracy is the more their jobs are secured.  And the bigger they grow the more funding they can get.  Bureaucrats love that.  Because there will always be a place for them in the government.  So they will never have to get a job in the private sector.  Where people hire based on merit.  Where they only keep people who have value.  And fire anyone doing a horrible job.  Like the kind of job the people who rolled our Obamacare did.  Which is why they want nothing to do with the private sector.  Preferring to stay snug and warm in the cocoon of their bureaucracy.  Comforted by the fact they can remain there no matter how incompetent or irrelevant they are.

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Lee Harvey Oswald is the Godfather of Today’s American Left

Posted by PITHOCRATES - November 24th, 2013

Week in Review

The assassination of JFK ruined this country.  Because it gave us LBJ and his liberal agenda (see If Kennedy lived: Imagining a different fate for JFK (and Johnson) 50 years later by Jeff Zeleny, Richard Coolidge and Jordyn Phelps posted 11/20/2013 on Yahoo! News).

Historian Jeff Greenfield imagines how history would have changed if Lee Harvey Oswald hadn’t been successful in firing a fatal shot to Kennedy 50 years ago. It’s the latest alternative history from Greenfield in his new book, “If Kennedy Lived: The First and Second Terms of President John F. Kennedy.”

Greenfield, who re-examined the political realities that were present prior to the assassination, told “The Fine Print” he believes that Kennedy’s survival would have likely meant the demise of then-Vice President Lyndon Johnson’s political career.

“The moment John Kennedy was shot, quite literally, LIFE Magazine — a very important medium back then — was launching a huge investigation into how this public servant had accumulated a $14 million net worth, and the answer wasn’t pretty,” Greenfield said of Johnson. “It had to do with radio and TV licenses, and something close to extortion.”

The investigation was halted once Kennedy died, Greenfield said, “Because it would’ve been too much of a shock to the system.” But in Greenfield’s alternate history, the investigation grows into a scandal for Johnson, and Kennedy ultimately replaces him in his second term.

So who gained the most with JFK’s assassination?  Liberals.  For in JFK’s December 14, 1962 speech to the Economic Club of New York he sounded more like Ronald Reagan than LBJ.  Where he championed private spending, not government spending.  He favored tax cuts over tax credits to stimulate the economy.  He talked about increasing consumer spending via personal tax cuts.  And using corporate and personal tax cuts to increase investment and profits.  Yes, he talked about businesses making more profits.  So they would hire more.  Something no liberal would say.

Instead of the Ronald Reagan-like JFK we got one of the most corrupt politicians ever to become president.  LBJ.  According to LIFE Magazine.  And the greatest explosion of the welfare state since the New Deal.  The Great Society.  Turning the U.S. away from capitalism and towards European-style social democracy.

This is the great tragedy of the JFK assassination.  Thanks to that anti-capitalist, Cuba-loving, America-hating assassin who had once defected to the Soviet Union.  A nation long admired by liberals since the day of Joseph Stalin.  This is the great tragedy the leftist communist Lee Harvey Oswald gave us.  Lee Harvey Oswald gave us LBJ, the Great Society and the rise of state-capitalism in the United States.  Everything liberals want.  And conservatives eschew.  Making Lee Harvey Oswald the godfather of today’s American left.

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Big Brother is Watching You…Pee in China

Posted by PITHOCRATES - August 24th, 2013

Week in Review

The problem with big government bureaucracies is that they’re always looking at ways to create new public sector jobs.  It’s why the U.S. federal government grows with each passing year.  And why the Chinese are considering this (see Miss your mark in the toilet? Pay $16 fine by AFP posted 5/20/2013 on The Times of India).

People with a poor aim are to be fined if they miss their mark when using public toilets in a Chinese city, officials said — [sic] provoking online derision over how the rule will be enforced.

The penalty will apply to those who urinate outside the bowl of facilities in Shenzhen, the southern boom town neighbouring Hong Kong, although draft regulations seen by AFP did not specify a minimum quantity of spillage required to be classed as a violation…

Users of China’s rumbustious weibo social networks poured scorn on the measures, raising the prospect of hordes of toilet inspectors being deployed to inspect performance.

“A number of new civil servant positions will be created. There will be a supervisor behind every urinating person to see whether the pee is straight,” wrote one poster.

Another added: “Very good measures. I expect they can create 20 jobs on average for every public toilet…”

Chinese toilet discipline can be notoriously wayward, with pictures of people defecating in public sometimes appearing on weibo.

No surprise, really.  Dirt-poor peasants who have nothing of the basic comforts of life—such as indoor plumbing and flush toilets—are moving to the big cities into a world they’ve never known.  But the public defecation is not the outrageous part of this story.  That thing about the potty police is.  And I feel sorry for the nervous pee-er who can’t go when someone is watching them.  Waiting to observe his urine stream.  So the potty police can give them a slap on the buttocks and say, “Nice pee pee.”  Or go Sergeant Hartman all over them.  (That’s a reference to the drill sergeant in the movie Full Metal Jacket.  We’d link to a YouTube clip of one of his many R-rated tirades but decided not to.  Those who are familiar with the movie will understand the reference.  And those who aren’t probably won’t enjoy hearing his abusive potty mouth.  On a side note, I met him once at an air show.  Active duty Marines waited in line to have him insult them and make them drop and do pushups.  Just so they could say he did.  People love R. Lee Ermey that much.  He’s a great American.  A Vietnam veteran who served in combat.  And was a real-life drill instructor.  But I digress.)

Can this happen in the United States?  Well, if anyone had said the federal government would force you to buy something against your will a decade ago no one would have believed it.  But here we are with Obamacare.  And the individual mandate.  So, men, enjoy your urinations in public restrooms while you can.  For it may not be long before you have a federal bureaucrat observing your urine stream.  For Big Brother may be watching you…go pee pee.

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If you’re Rich you’re doing well during the Obama Presidency

Posted by PITHOCRATES - June 9th, 2013

Week in Review

The rich continue to get richer in the worst economic recovery since that following the Great Depression.  And it’s a Democrat in the White House.  Who said he was the champion of the middle class.  But the facts sure don’t bear that out (see Tim Carney: Conservative reformers should fix the rigged game by Timothy P. Carney posted 6/4/2013 on The Examiner).

The game is rigged against the regular guy in America today. And it’s rigged in favor of big business, the politically connected, and the wealthy…

Corporate profits soared to a record $1.73 trillion annualized rate in the first quarter of 2013, more than triple what they were in 2001, according to data from the Bureau of Economic Analysis.

Banks made a record $40.1 billion in profits in the first quarter, 16 percent higher than a year before, according to FDIC data…

And how’s the regular guy doing?

New business formation continues to fall to record lows. In 1980, nearly half of all firms were less than five years old. The latest data from the Kaufmann Foundation puts that number at about one-third.

And the working man isn’t faring better. Unemployment, while improving, is still high. Maybe worse is the collapse of median household income — down more than 7 percent since 2008, and it is not noticeably climbing.

Wait a minute, did I miss something?  I thought President Obama won the 2012 election.  Not that rich guy with Wall Street friends.  Mitt Romney.  For this is exactly what President Obama warned us would happen if we elected Mitt Romney.  The rich would get richer.  And the poor would get poorer.  And here that is happening under the Obama presidency.  Guess Mitt Romney isn’t the only rich guy with friends on Wall Street.

Meanwhile, federal spending hit a record 26.9 percent of GDP in 2010. While it dropped a bit to 24.8 percent in 2012, that is still higher than any year between World War II and 2009 and 18 percent higher than the average year from the previous five decades.

So it’s no surprise that seven of the 10 richest counties in the United States are in the Washington, D.C., area. Revolving-door lobbyists and government contractors are living the high life in McLean, Georgetown, and Great Falls.

The game is rigged, and conservatives can point out that the chief game rigger is government. The tax code is convoluted, regulations are terrifying, big businesses that fail get bailed out while small entrepreneurs get crushed by bureaucracy…

Republicans ought to abolish corporate welfare, including subsidies for exports and green-energy projects. Break up the big banks. Get rid of corporate tax credits.

Politically, these policies checkmate Democrats because corporatism is at the heart of President Obama’s economic agenda. Subsidies for Boeing, Chrysler and General Electric are the building blocks of Obama’s “New Economic Patriotism.” Obamacare was built in collusion with drugmakers and the hospital lobby.

So big government policies help, surprise, surprise, big government.  Where we are but pawns in their game of ruthless power acquisition (as in the IRS harassing those Tea Party members).  And accumulation of wealth.  For it’s all about them.  Those in government.  And those connected to those in government.  Sure, they’ll throw a few alms out to the poor.  Some free birth control to young voters.  Not enough of anything to improve their lives.  But enough to keep them happy.  And voting Democrat.  While they laugh.  All the way to the bank.  And then back to their plush estates in McLean, Georgetown, and Great Falls.

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The Solution to the Bungling Bureaucracy that gave us Solyndra is to add more Bureaucracy

Posted by PITHOCRATES - February 11th, 2012

Week in Review

Big Government has failed.  So to fix Big Government those in government say the solution is to make government bigger (see Energy Loan Oversight Is Needed, Audit Finds by JOHN M. BRODER posted 2/10/2012 on The New York Times).

The Department of Energy’s loan guarantee program for alternative energy projects, which produced the ill-fated loan to the solar panel maker Solyndra, needs more rigorous financial oversight and stricter performance standards for recipients to reduce the chance of future defaults, according to an audit conducted by the White House and released Friday.

So the way to fix this bureaucratic mess is to add more bureaucracy.  Grow the size of government.  Spend more taxpayer money to provide more oversight on worthless taxpayer-financed investments.  Interesting.  Only in government.  Where they fix failures by doing even more of the same.

But it doesn’t end with Solyndra.

Solyndra and Beacon are not the only loan recipients to find themselves in trouble. Fisker Automotive, an electric car maker in Irvine, Calif., has missed some milestones that were written into its loan agreement, so the Energy Department has cut off credit. As a result, Fisker has stopped work on the conversion of an old General Motors factory in Wilmington, Del., that is supposed to produce an electric sedan, and laid off more than 60 employees and contractors.

Spokesmen for Fisker and the Energy Department both said that the terms of the loan were confidential and they would not say precisely what milestones were missed, but Roger Ormisher, a spokesman for the company, said, “We admitted very openly we were late to market with the Karma,” the company’s $102,000 sporty sedan. Fifteen hundred have been built and “a few hundred” sold, he said. Progress was slowed by a safety recall.

It wasn’t just an electric sedan.  But a sporty sedan.  And a fairly luxurious one at that coming in at $102,000.  But will people buy it?  Probably not.  You see, the biggest problem electric cars have that prevents the masses from buying them is range.  They just don’t go far on a single charge.  Especially if you use the headlights or heater.  And you can’t recharge them quickly.  Which means if you run out of charge you can’t have a friend drive out a gas can full of charge to pour into the tank.  You run out of charge on the road and you’re paying for a tow home. 

And making any car ‘sporty’ just compounds the problem.  Because if you’re accelerating quickly you drain the battery faster.  And this is the car the government is subsidizing.  Of course this is going to be another Solyndra.  No one’s going to buy this car.  Unless the government subsidizes the bejesus out of it to bring that $102,000 down to something closer to $15,000.  Where people may put up with the inconvenience of driving nothing but one short trip a day.  At least, until they get their electric bill.  Because electricity isn’t free.  And if you’re charging up a battery than can make are car zoom sportily along, it’s going to have some big batteries.  And long charge times.  Making big electric bills.

If they are going to add oversight they need to add it at the level where they decide to back these losers.  Before the money goes out.  Or, better yet, they should just stop investing in these losers.  If a company can’t get investment capital there’s a reason.  They don’t have a good idea.  At least, not one anyone will risk their own money on.

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Workers Protest Poor Working Conditions and Low Wages in China’s State Capitalism

Posted by PITHOCRATES - January 29th, 2012

Week in Review

Big Government types everywhere look to China and say that’s how business should be done.  State capitalism.  Where the state can make sure that capitalism is a kinder more caring kind of capitalism.  Like it is in China (see Thousands Strike in China in First Month of 2012 posted 1/28/2012 on The Epoch Times).

The first month of the year in China has seen tens of thousands of people strike and protest against poor working conditions, overdue wages, or insufficient pay levels. By Jan. 22 there had been reports of at least 10 strikes and large-scale protests across China since the beginning of the year—almost one every two days. Many of the incidents involved thousands of people—in one case up to 8,000.

It’s not the goodness of government making China rich.  It’s not cutting edge technology increasing productivity.  It’s not a love of government that spurs their workers on to work harder and ask for less.  No.  It’s low wages.  And the heavy hand of government settling labor disputes in the favor of the state.

In China there are no labor unions.  The Big Government types always seem to leave that out when they fawn over the Chinese government and their brand of state capitalism.  Cheap labor is the key to state capitalism.  Unlike in free market capitalism.  Where market forces set the price of labor.  Not the state.  Using force to keep wages low.

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Gallop Poll says Big Government is the Threat, not Big Business

Posted by PITHOCRATES - December 24th, 2011

Week in Review

Apparently the people aren’t buying the lie anymore (see Gallup: Under Obama, Growing Percentage See Big Government as ‘Biggest Threat’ by Terence P. Jeffrey posted 12/18/2011 on cnsnews.com).

While President Barack Obama has focused his rhetoric in recent weeks on depicting a reckless Wall Street and insufficiently taxed “millionaires and billionaires” as threats to the American middle class, a newly released Gallup poll indicates that Americans apparently have been coming to a different conclusion during Obama’s presidency, with fewer people now seeing big business as the “biggest threat” to the country in the future and more seeing big government as the “biggest threat.”

The people see Big Government as the biggest threat.  Because it’s been the Obama policies that have been strangling the economic recovery.  So much so that there is no economic recovery.  Regulatory and tax policy are just so anti-business.  Obamacare being the big one.  Putting a hold on hiring and expansion across the board.  Because businesses just don’t know the full cost of compliance yet.

The Obama administration has made million Americans safe from the oppressive employment policies of businesses, though.  Simply by extending their unemployment.  As nice as that may be to some most of the American people would prefer gainful employment.  They dream of returning to the days when there was gainful employment.  And less government interfering with the economy.  Far less government.

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In another Example of how well Government Runs Things, the U.S. Postal Service lost another $5.1 Billion

Posted by PITHOCRATES - November 19th, 2011

Week in Review

More dismal news from the U.S. Postal Service (see Postal Service Logs Loss in Billions by JENNIFER LEVITZ posted 11/16/2011 on The Wall Street Journal).

The Postal Service said it lost $5.1 billion through Sept. 30 and that the loss would have hit $10.6 billion without recent legislation allowing it to delay a required annual $5.5 billion payment into a fund for future retiree health benefits. But the payment postponed by Congress is now due by Nov. 18, and the agency repeated that it could run out of cash by the end of fiscal 2012 without congressional action.

The Postal Service is an independent government agency whose operating budget isn’t funded by taxpayers, other than a subsidy to serve overseas voters and the disabled.

Postal Service heads said the agency could regain its financial footing by cutting annual costs by $20 billion by the end of 2015. The service “can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” Postmaster General Patrick Donahoe said in a statement.

In other words, this government agency could become profitable again if it quits being a government agency.  For one thing we’ve learned is that the government can’t run anything well.

But everyone is sure that the government should get more involved in regulating business.  And taking over health care.  Because…, well, I’m not sure why.  Because everything they run ends up like the Postal Service.

Total mail volumes fell by three billion pieces, or 1.7%, from 2010. First-class mail, the agency’s most profitable product, continued its steady decline as consumers continued to pay bills online and communicate digitally. The postal service lost more than $8 billion in fiscal year 2010. It has already begun closing post offices and some 300 mail-sorting facilities.

If you’re getting all nostalgic over losing some postal services don’t demand another government bailout.  If you want this dinosaur so badly pay a bill through the mail.  Or write a letter to a friend instead of texting.  If you can’t do these things than just admit it.  This is the march of technology.  And progress.  And you don’t need the Postal Service as it currently is.

Instead of bailing out the Postal Service we need to reinvent it.  Get a little free market capitalism in it.  For capitalism can fix anything.  If we let it.  It’s given us better ways to pay our bills.  And to communicate with our friends.  Just think what the Postal Service could do if that kind of thinking happened there.

But that will never happen if we keep trying to save the thing fewer and fewer want to use anymore.  It’s like insisting we maintain video cassette recorders (VCRs – I spelled it out the long way so the young people knew what those letters meant) in the world of video streaming.  There is just a better way to do things these days.  And people are choosing the better way.

 

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FUNDAMENTAL TRUTH #84: “The bigger and more complex government gets the more unintended the consequences.” -Old Pithy

Posted by PITHOCRATES - September 20th, 2011

Filthy, Stinking Hippies never Liked Income Disparity.  Or Real Work.

Say you’re a server at a nice restaurant.  And you’re really good.  People ask to sit in your section.  For your prompt and courteous service.  And they show their appreciation.  With big tips.  And frequent trips to the restaurant.  Good food.  And great service.  It’s what makes a restaurant successful.

Now let’s say the restaurant owners retire and turn over the business to their children.  And let’s say they’re liberal Democrats.  Children of the Sixties.  Hippies.  Filthy, stinking hippies.  And still are.  Though they may bathe more these days.  Anyway, they take over the exploitation of the working class in this bourgeois restaurant.  (They see all business in these terms.)  And they’re going to make some changes.

They never liked the income disparity they saw between the servers.  (Or real work for that matter.)  And they don’t like you.  Because you’re getting more in tips than the other servers.  And that just isn’t fair.  You’re just lucky to get better tables.  As if you won some lottery in life.  It’s only blind, dumb luck that makes you the high earner in the restaurant.  So they’re going to level the playing field.  Make it fair for everyone.  Not just for the rich.  You.  But for everyone.  From now on all tips go into a jar.  And at the end of the day they will divide those tips evenly between all servers.  Everything fair.  And everyone happy.

People don’t Approve of Slavery and Prefer to Keep the Fruits of Their Labor

Or so they would believe.  Because you’re not going to be happy, are you?  I mean, you know why you made more in tips.  You provided exceptional service.  And your reward for your hard work?  A punitive tax.  They’re going to share part of your tips with the less exceptional servers.  So what will you do?

I’m guessing that you’re not going to say, “Vive la revolución.”  And work even harder.  Instead I’m betting that you will be looking for a new job.  At a restaurant that rewards hard work.  And if there are no other food service jobs available?  Because liberal Democrats are in power?  And they’ve killed the economy?  Well, then, you just won’t work as hard.  Because you don’t approve of slavery.  Having the fruits of your labors given to others.

So the new owners, the filthy, stinking hippies, will lose their best server.  And soon will notice a steady decline in the quality of service.  For their servers quickly learn that working harder doesn’t mean any more pay.  So they don’t.  Work harder.  Food sits in the kitchen longer.  By the time they serve it to the customers it’s lukewarm.  They don’t refill drinks.  Customers begin to complain.  Even about the quality of the lukewarm food.  The executive chef quits.  Business drops off.  The business goes into debt.  Losing some $10,000 each month.  And things get so bad under the new owners that not even Robert Irvine could save this restaurant.

The new owners thought their way was going to make a better work environment for their employees.  But the only workers who liked the new policies and stayed were their worst employees.  All the good ones quit.  And those who remained lost their jobs eventually as the business finally went under.  So everyone in the end lost.  Because these hippies thought they knew what was best for everyone.

Accidents Sometimes Happen when Men Control Complex Machines

So bad ideology has unintended consequences.  But complex systems to simplify complex things also have unintended consequences.

The modern jetliner is a complex machine.  They can literally take off, fly and land themselves.  But don’t.  Pilots still take off.  And land.  But the other 99% of the time these aircraft fly themselves.  Pilots input data into the flight computers.  And the computers fly the aircraft.

So pilots don’t fly as much as they used to.  They log a lot of hours in the cockpit.  But they’re not really flying.  They’re operating computers.  Pushing buttons.  Turning dials.  And communicating with air traffic controllers.  They’re not ‘connected’ to the aircraft like in the old days.  Fly-by-wire technology insulates the pilot from the flight controls.  The days of stick and rudder are gone.  When a pilot was one with the aircraft.  Through constant feedback via the senses.  Flying by the seat of the pants.  When a hand on the steering column told a pilot how the plane was flying.  Even while on autopilot.  While having a conversation with a flight attendant standing in the cockpit door.

Back then you needed far more piloting skills than you do today.  Because there were no flight computers.  Like they have today.  That’s why a lot of pilots came out of the military.  Because the military pushed pilots in their training.  Taught them to fly through anything that can happen while flying.  Including recovering from a stall.  Something that just doesn’t typically happen in a modern jetliner these days.

Pilot error has accounted for the majority of accidents.  So removing the pilot from the ‘flying part’ of flying an airplane made sense.  And it would make aviation safer.  And it has.  This is not to criticize pilots.  It just shows that accidents sometimes happen when men control complex machines.  So reducing the amount of time the pilot is in control of the aircraft makes them safer.  That is, as long as the computers have good data.

The Safer You Make Flying by Removing the Pilot from the Flying the less Skilled Pilots Become

And that’s a problem.  Sometimes the computers don’t have good data.  For various reasons.  Such as iced up airspeed sensing pitot probes.  Which has happened a few times.  Giving false airspeed data.  Or sometimes conflicting airspeed data.  There’s more than one probe.  And different flight computers get their airspeed from different probes.  One could show a dangerous high airspeed.  Another can show the actual airspeed.  Giving a pilot a bit of a problem.  Which is compounded if that pilot spent more time inputting data to a computer than flying.  Because when computers get bad data they often disengage.  And the modern pilot will spend most of his or her time trying to reengage it.  Instead of flying the airplane.  As they are trained to do.  Because it’s safer.

A dangerous high airspeed indicates that the plane may be accelerating.  Past its maximum airspeed rating.  Which could make the plane break up in flight.  So a pilot may pull back the engine throttles.  To slow the plane.  To keep it from breaking up in flight.  Of course, if that was an erroneous airspeed, the pilot will only slow the plane down.  And perhaps cause it to stall.  And that has happened, too.

A plane has a ‘stick shaker‘ to warn the pilot of a potential stall.  Normally after you get a stick shake you push the yoke forward to lower the nose and pick up speed.  Of course, if you just got an over-speed warning you might not do this.  And you may interpret that stick-shake as buffeting from the plane just before it breaks up in flight.  So you may raise the nose.  And pull the throttle levers back. To slow the plane down.  And that’s exactly what you will do.  Slow the plane down.  Right into a stall.  Which is flying too slowly to create lift with the wings.  And once the plane stalls it will just fall out of the sky.

There’s a tradeoff in aviation.  The safer you make flying by removing the pilot from the flying the less skilled pilots become.  So when something happens, such as an erroneous airspeed indication, their initial reaction is to fix the computer.  Not fly the airplane.  And planes have fallen out of the sky because of this.  Because even the simple problems don’t have a lot of time to fix.  An old-school pilot who flew B-52s, on the other hand, would probably say something like this.  “Hot damn.  The idiot box is broken.  Now I get to fly this son-a-bitch.”

When Legislation goes Wrong those in Government Simply Say they had Nothing but the Best Intentions

Every time you try to make something too complex.  Or try to change human behavior.  You are going to get unintended consequences.  Always.  Because complex things are complex.  And people are like snowflakes.  No two are alike.  And it is the height of arrogance to believe that you know an individual better than they know themselves.  Or that ‘one size’ fits all when it comes to solutions.

But that’s government.  Complex.  And where the few think for the many.  And decide what’s best for them.  This is a recipe for unintended consequences.  Which is why so much of their legislation goes wrong.  And when it does they simply say they had nothing but the best intentions.

Of course, you see what good intentions can do in a restaurant.  Or in a jetliner at 30,000 feet.

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LESSONS LEARNED #82: “Too much debt is always a bad thing.” – Old Pithy

Posted by PITHOCRATES - September 8th, 2011

Thomas Jefferson hated Alexander Hamilton for his Assumption and Funding Plans 

Thomas Jefferson hated Alexander Hamilton.  For a variety of reasons.  He thought he was too cozy with the British.  And too anti-French.  He also thought Hamilton was too cozy with the merchant class and bankers.  Jefferson hated them, too.  For he thought honest Americans farmed.  Not buy and sell things other people made.  Or loaned money.

But Hamilton was not a bad guy.  And he was right.  George Washington, too.  America’s future was tied to the British.  Trade within their empire benefited the fledging American economy.  And the Royal Navy protected that trade.  For they ruled the seas.  They couldn’t get that from France.  Especially with a France waging war against everyone.

But there was something especially that Jefferson hated Hamilton for.  Assumption.  And funding.  The new nation’s finances were a mess.  No one could figure them out.  There was pre-war debt.  And war debt.  State debt.  And national debt.  The Americans owed their allies.  Neutral nations.  And the former enemy they just won their independence from.  Getting their hands around what they owed was difficult.  But important.  Because they needed to borrow more.  And without getting their finances in order, that wasn’t going to happen.

Thomas Jefferson Understood that a Permanent Debt gave a Government Power 

Hamilton was good with numbers.  And he put America’s financial house in order.  A little too well for Jefferson.  The new federal government assumed the states’ debts (assumption).  And serviced it (funding).  Giving great money and power to the federal government.  Far more than Jefferson believed the Constitution granted.  And this really stuck in his craw.  Because this was the source of all the mischief in the Old World.  Money and power.  The Old World capitals were both the seats of political power.  And the centers of commerce and banking.

Jefferson understood that a permanent debt gave a government a lot of power.  Because debt had to be serviced.  And you serviced debt with taxes.  The bigger the debt the greater the taxes.  Which didn’t sit well with this revolutionary.  I mean, excessive taxation was the cause for rebellion.  Taxes are bad.  And lead to political corruption.  Because the more taxes the government collects the more it can spend on political favors.  Patronage (good paying government jobs for political allies).  Giving rise to a politically-connected ruling class.  Like the Old World aristocracies.  Government grows.  As does their control over the private sector economy.

It’s a process that once started moves in only one direction.  Greater and greater debts.  Paid for by greater and greater taxes.  Until the debt becomes unsustainable.  Like in Revolutionary France.  In present day Greece.  And even in the United States.  Who, in 2011, saw its sovereign debt rating downgraded for the first time in American history.  Because of record deficits.  And record debt.  Caused by excessive spending.  Everything that Jefferson feared would happen.  If government had a permanent debt.

Baseline Budgeting guarantees Permanent Growth in Government Spending

Big Government spending took off in America in the Sixties.  Historically government receipts averaged 17.8% of GDP.  During the Fifties and the Sixties, GDP grew while debt remained flat.  Of course, if GDP grew then so did tax dollars coming into Washington.  For 17.8% of an expanding GDP produced an expanding pile of cash in the government’s coffers.

Liking the taste of this money, government kept spending.  So much so that they adopted baseline budgeting in 1974.  Where current spending is automatically added to for next year’s spending.  Guaranteeing permanent growth in government spending.  To pay for LBJ‘s Great Society.  The Vietnam WarApollo.  And other spending programs.  The spending was so out of control that the debt started to creep up.  And what they didn’t borrow they printed.  Leading to the Nixon Shock.

The Nixon Shock (ending the quasi gold standard) unleashed inflation.  Which Paul Volcker and Ronald Reagan defeated.  With inflation tamed and the Reagan tax cuts, the Eighties saw solid GDP growth.  And record deficits.  The Democrats liked all that cash coming into Washington.  And they spent it faster than it came in.  But to reduce the deficit they made a deal.  For each dollar in new taxes the Democrats would cut three dollars in spending.  Of course they lied.  Because Democrats don’t cut taxes.  They got their new taxes.  But Reagan didn’t get any spending cuts.  In fact, the deal went the other way.  For every dollar in new taxes there were three dollars in new spending.  The deficit grew bigger.  And for the first time the debt grew at a greater rate than GDP.  As shown here:

(Source:  GDP, Debt, Receipts)

The Obama Stimulus gave us Record Deficits and Record Debt

After the 1994 midterm elections, Bill Clinton and the new Republican House compromised.  They reined in spending.  Implemented welfare reform.  And rode the dot-com bubble on the good side.  Before it burst.  It was capital gains galore.  Put all of this together and GDP rose and flooded Washington with tax receipts.  While debt remained flat.  In fact, there were budget surpluses forecast.  But then that dot-com bubble burst.

George W. Bush started his presidency with recession.  A couple of tax cuts later and GDP was tracking up again.  But 9/11 changed things.  And gave us two costly wars (Iraq and Afghanistan).  On top of an expensive Medicare drug program.  Record deficits took debt to new heights.  Then the Housing Bubble burst.  Followed by the subprime mortgage crisis.  And President Obama used this crisis to advance a dormant Democrat agenda.

It was an $800 billion stimulus.  Something he promised would have no pork or earmarks.  Nothing but shovel-ready projects.  Of course, it was nothing but pork and earmarks.  And those shovel-ready projects?  There’s no such thing.  So the stimulus didn’t stimulate anything.  Other than record deficits (surpassing Bush’s).  And record debt.  Debt increasing at a greater rate than GDP.  And equal to or greater than GDP in dollars.  Not seen since World War II.

Hamilton and Jefferson would have United in Opposition against Barack Obama

Debt fell as a percentage of GDP following World War II.  It fell from above 90% to below 40% around the end of the Sixties.  GDP was rising during this period while debt remained flat.  So the flat debt became a smaller and smaller percentage of a growing GDP.  The ‘growing your way out of debt’ phenomenon.  But that process stopped and reversed itself during the Seventies.  When Congress spent with a fury.  As noted above.  Debt grew.  Back to the level of GDP it was during a world war.  Only now there is no world war.  And we’re not spending to save democracy.  We’re spending to end democracy.

(Source:  GDP, Debt $, Debt %)

It is what Jefferson feared most.  Out of control government spending.  Racking up massive debt.  The kind that is impossible to pay off.  And is permanent.  And it was being done not for a war to save democracy from fascism.  But to change America.  To make it a different kind of nation.  No longer one of limited government.  But Big Government.  One with a ruling class.  A ruling class that now has a claim on 100% of GDP.  To pay for everything they gave us.  Where there is no choice but fair-share sacrifice.  Where everyone pays their ‘fair share’ of taxes.  Which is government-speak for raising taxes on everyone.  To flood government coffers with more private sector wealth.

The country is not what it was.  And it will never be what it once was again.  Not with this level of spending.   This is the kind of spending nations see in their decline.  It’s what toppled Louis XVI.  It’s what roiled Greece in riots.  It’s what downgraded U.S. sovereign debt.  For the first time.  Even Alexander Hamilton wouldn’t approve of this.  For his Big Government idea was all about making the nation an economic superpower.  Not bringing back feudalism.

So if you’re not a fan of Barack Obama, here’s something you can credit him for.  His policies would have reconciled two of our most beloved Founding Fathers.  For Hamilton and Jefferson may have hated each other.  But they would have united in opposition against Barack Obama.

 www.PITHOCRATES.com

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