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.
Tags: Big Government, Georgetown, Great Falls, lobbyists, McLean, Mitt Romney, poor get poorer, President Obama, rich, rich get richer, rich guy, Wall Street
The Civil War feminized Men and gave us the Nanny State and the Progressive Movement
In all some 2-3 million men left their homes to fight in the Civil War. Leaving mothers to raise their children on their own. With Christian love and nurturing. Especially the boys. Whose fathers their mothers dearly missed. And lived in fear that they would fall in battle. So they smothered these boys with love and affection. Made them feel special. The center of the world. The Civil War would claim some 630,000 lives. A lot of them young fathers. Who left their sons no father. Only a loving and doting mother to raise them. A mother who hated war. And despised manly displays of aggression that led to that god-awful war. Something they would protect their boys from. Instead filling them with kindness and sensitivity. Teaching them not to meet aggression with aggression. But with understanding. Empathy. Kindness. And if someone strikes them to simply turn the other cheek. Like the good Christians they were. Because manly displays of behavior led to nothing but trouble. And war.
The Republicans won the Civil War. And freed the slaves from their Democrat masters. Giving them the franchise to vote. And they, of course, voted for their liberators. The Republican Party. Anxious to keep this vast new Republican voting bloc voting for them the Republicans quickly passed the Fifteenth Amendment (1869), giving the freed slaves the Constitutional right to vote. Forever. And they did. While the Union Army was still in the South after the Civil War to enforce the peace. And protect the newly freed black population. But after Custer’s Last Stand where the Sioux and Cheyenne decimated Custer’s army, that army was needed out West. And when it left the South so did the security of black Republican voters. So they stopped voting. And the Democrats restored things the way they were before the war. Only without the institution of slavery.
So the Civil War provided a couple of powerful lessons. First of all, if a war kills enough men their sons will grow up feminized. Taking on some characteristics of the fairer sex. And shunning their more masculine traits. Also, enfranchising a large group of the population can help you win elections. These two lessons came together in the Progressive movement the late 19th and early 20th century. When these fatherless sons grew up and entered politics. And changed the nature of government. No longer the limited government of our Founding Fathers. But a larger and more active government to mother us. A lesson Woodward Wilson was slow to learn. As he opposed women’s suffrage until protesters made him change his mind. Which may have played a part in the Progressives losing the 1920 election. The Nineteenth Amendment being ratified just months before the elections. Lucky for us he was slow in changing his mind. For had he embraced women’s suffrage his party may have been rewarded at the polls by a lot of happy women. Instead they voted for a Return to Normalcy with Warren G. Harding. Who followed the advice of Andrew Mellon and cut taxes. Igniting economic activity. Giving us one of the greatest decades in U.S. history. The Roaring Twenties. Where limited government and free market capitalism modernized the world. But it wouldn’t last. For the heavy hand of government interfered with those free markets by the end of the decade. Giving us the Great Depression.
As Women Empowered themselves with the Birth Control Pill they made Men Very, Very Happy
FDR exploded the size of government with his New Deal. It was not JFK’s “Ask not what your country can do for you – ask what you can do for your country.” Instead it was what can our new big-ass government do for you? How can we now mother you? And how can we get you to vote for us? So we can continue our orgy of spending. And the women’s vote no doubt helped. Many of who were mothers. With mothering instincts. Who wanted to help and take care of people. Who endorsed FDR’s policies. The product of those feminized Progressive men. Who worked diligently to change limited government into the nanny state. To fill government with understanding. Empathy. And kindness. Creating a new aristocratic class in the process. Allowing these feminized men to achieve great levels of power and wealth. Doing whatever they want. Because they felt special. The center of the world. And superior.
The New Deal programs failed to pull the country out of the Great Depression. World War II came around to do that. Causing another generation to suffer through another horrible war. This time putting some 13 million Americans into uniform. Leaving a lot of mothers to raise their children. Alone. Raising them with a nurturing Christian love. Especially their sons. Whose fathers their mothers dearly missed. And lived in fear that they would fall in battle. So they smothered their sons with love and affection. Made them feel special. The center of the world. To ease the fear and dread of the war. Which killed some 400,000. And wounded a million more. A lot of them young fathers. Leaving more sons with no father in their lives. Only a mother who hated war. And would raise their sons to hate war, too. To love, instead, peace. To be filled with feelings of kindness and sensitivity. And to resist their manly urges. Feminizing another generation of men.
These men came of age in the Sixties. Who said “Make love, not war.” And did. Like their mothers taught them. Well, sort of. It was the age of free love. The sexual revolution. Where men had a lot of sex with lots of different women. And when they weren’t having sex they were attacking the establishment. Protesting the Vietnam War. Capitalism. Old white men. Rich people. Religion. Pretty much anyone. And anything. Filled with rage because they grew up without a daddy. Blaming the world for that. (Don’t think so? Listen to Pink Floyd’s The Wall for a real life example as Roger Waters wrote about growing up without a daddy). Filled with hate. Unable to love. So they just had sex. Lots and lots of sex. With a lot of ready and willing sex partners. Because women in those days weren’t getting married anymore to raise a family. They were empowering themselves. Using the new birth control pill to plan when they were going to have a family. Making these men they were having sex with very, very happy.
Liberals encourage Women to Empower themselves and Explore their Sexuality as long as these Women are not their Daughters
The radicals of the Sixties went on to become university professors in the Seventies. Continuing their antiestablishment and anti-capitalism ways. Putting up pictures of Che Guevara up in their classrooms. Preaching socialism. And communism. Teaching political science and journalism and prelaw students how horrible America was. Itemizing every sin. But glossing over every achievement. Attacking religion and morality. Saying, “Who’s to say what’s right or wrong?” Encouraging more government spending. And more government control of the private sector. To make America the socialist paradise they sang about in the Sixties. While high. And to legalize the drugs they used to get high in the Sixties. Attacking men for marrying women. Making them nothing more than cooks and housekeepers. And whores in the bedroom. Encouraging women to burn their bras and have more consequence-free sex. Which these university professors enjoyed during the Seventies. Getting high and having sex with their students. Doing whatever they want. Because they felt special. The center of the world. And superior.
Life was a party in the Seventies. And we paid dearly for it. All our major cites became crime ridden. Drug use soared. Violent crime increased. Including assaults on women. For we were honoring and cherishing women far less in the Seventies than we used to. Casual sex was in. Making women just sex partners. Again, something the men were really enjoying. Especially those feminized men that went on into politics. Who became liberal Democrats. And feminists. Protectors of women. A handy title. For it made the women look the other way every time these men cheated on their wives. Or were caught in some sex scandal. They were really enjoying life. These men. Running the government in the Seventies. And controlling the news networks. The old-boys club was never better. But then the economy had to go into the toilet. And the people finally said enough. They voted for Ronald Reagan. A conservative. Who represented about 40% of the population. And declared the nanny-state of liberalism a failure. An ideology held by only 20% (approximately) of the population002E
Of course, the liberals weren’t just going to give up their privileged life. Controlling all of that tax money. And having whatever they wanted. Including all that fun with young women. They had to come up with some way to get a lot of people who did not agree with their ideology to vote for them. Or who simply didn’t understand their ideology. So they courted the youth vote. Whose interests rarely went beyond the satisfying of their selfish desires. Those they could so enamor in college. By being cool. What with these liberals being so unlike these kids’ parents. Who said that there is nothing wrong with using drugs. Or having casual sex with someone’s daughter. The two things college students can really enjoy. Especially the sex. Which the liberals provided for them. By exploiting these young women. Showering them with birth control. Even access to abortion. Making a woman’s self-worth based on her attractiveness to men. Or on her ability to sexually satisfy men. They encourage women to think the sexier they were the better and more popular they would be. And the happier they would be. Encouraging them to have fun on spring break. So what if they end up on some DVD having sexually explicit fun? As long as they had fun. And vote Democrat. Because it’s the Democrats who make sure these young women can have fun. And feel good about themselves. By encouraging them to be sex objects for men to enjoy. Especially those old men in politics. The feminists. Who say things like they admire the women’s movement. Especially from behind. They encourage these women to ’empower’ themselves and explore their sexuality. With them. For fun. Their self-worth. And their vote. And these men don’t care what happens to them once they do. As long as, of course, they’re not their own daughters.
Tags: Big Government, birth control, birth control pill, boys, casual sex, children, Civil War, consequence-free sex, Daddy, daughter, Democrat, doting mother, elections, empathy, exploited women, father, fatherless sons, FDR, feminists, feminized, franchise to vote, Great Depression, hate war, kindness, liberal, Liberal Democrats, love and affection, mother, nanny state, New Deal, political elite, politics, Progressive, Progressive men, Progressive movement, Republican, sensitivity, Seventies, sex partners, sixties, socialism, sons, understanding, using drugs, vote, women, women's vote
To give Workers High Wages and Generous Benefits a Business has to sell their Goods at High Prices
The problem with politics is that voters don’t understand economics. And they demonstrate this by demanding mutually exclusive things all of the time. Where having one thing makes it impossible to have the other thing. Like that old saying that goes like this. You can’t have your cake and eat it, too. You can have cake. Or you can eat cake. But you can’t have cake after eating it. Because once you eat your cake it is gone. And there is nothing to have. These things, then, are mutually exclusive. You can have one or the other. But you can’t have both.
Now let’s transfer this train of thought to economics. And to its most fundamental element. The demand curve. Which represents people in the economy. Consumers. And the stuff that they buy. And at what prices they will buy the stuff that they buy. Let’s take large flat-screen televisions. The big ones. Over 60 inches in size. If they cost the price of a luxury car few consumers will buy them. But if they only cost the price of a pack of gum consumers will buy them until they have one for every room in their house. And consumers will buy various amounts at the prices in between. But in general this one truth holds true. People will buy more televisions as their prices fall. And they will buy fewer televisions as their prices rise. When we show this graphically by plotting how many televisions they sell at various prices we get a demand curve.
Well, you think, why can’t we just sell televisions at the price of a pack of gum? More people will have televisions. That’s good. Because people just love watching television. And television makers will make more televisions. Creating more jobs. And jobs are good. Everyone says so. So why not just sell televisions for the price of a pack of gum. Well, I suppose if we pay the people who make these televisions a wage and benefit package closer to the price of a pack of gum, we could. But who wants to work for a paycheck that can only buy a pack of gum? Which brings us back to wanting mutually exclusive things. To give workers high wages and generous benefits we have to sell goods at high prices. Which is mutually exclusive to the low prices consumers demand.
Big Oil’s Exxon Mobil was not as profitable as GE and Apple in 2010
Yes, you can’t have low consumer prices and high pay and generous benefits. Because, per the demand curve, higher prices mean fewer things sold. And fewer things sold mean lower sales revenue. And sales revenue pays for everything in a business. Including wages and benefits. Which means lower sales revenue means less money available to pay wages and benefits. And any company that tries to pay high wages and provide generous benefits has to do one of two things. Have a product they can sell a lot of at high prices. Or go bankrupt. Two of the Big Three Detroit automakers tried to do the former and failed. So they went bankrupt. And the government bailed them out.
So to pay employees well these companies need to be profitable. Unlike the Big Three. And to be profitable you have to have sales revenue large enough AND prices high enough to generate profits. Profits so large that they can provide high wages and generous benefits. Unlike the Big Three. Because they couldn’t sell enough cars at high enough prices to pay those high union wages and generous union benefits. But some companies have been profitable. Including one corporation liberal Democrats love to hate. Exxon Mobil (a member of a group liberal Democrats derisively call Big Oil). One company that the current liberal Democrat administration loves and partners with in green energy technology. General Electric. And one corporation liberal Democrats just love period. Until Steve Jobs died, at least. Apple.
In the fourth quarter of 2010, the profits for Exxon Mobil, GE and Apple were, respectively, $9.25 billion, $4.46 billion and $4.31 billion. The first thing that jumps out at you is that Big Oil is making twice as much money as the corporations liberal Democrats love. Which is why they hate them. And why they love to bitch about high prices at the gas pump. While at the same time they are rejoicing about those high prices. Because those high gasoline prices help push their green energy agenda. But these profit numbers are misleading. Because they don’t factor in the cost of producing those profits. And the most common way we do that is by dividing these profits by the sales revenue that generated them. Giving us net profit margin. When we do this for Exxon Mobil, GE and Apple we find their net profit margins on those profits were, respectively, 8.79%, 10.8% and 21.2%. Of the three Big Oil is the least profitable. And Apple is the most profitable. In fact, nearly 2.5 times more profitable than Exxon Mobil. But no one is demanding that the government step in and lower the price of Apple’s products. Unlike they do with Big Oil.
The Government’s Regulatory and Compliance Costs increase the Price of Gasoline at the Pump
So why is Big Oil less profitable than those other businesses? Well, for one, you can’t drill for American oil in China. Like GE and Apple can build products in China. And by working in the United States Big Oil is subject to massive regulatory and compliance costs. And government regulates few things more than the oil industry. The permitting process alone just to drill an exploratory well can take years for approval. And millions of dollars. It wasn’t like this when gas was cheap in America. Before all of this regulation. In the days when John D. Rockefeller was refining petroleum no one was complaining about high prices. In fact, his competition complained about his low prices. Prices they couldn’t match. Asking for the government to investigate them for antitrust violations. Which they did. And busted up Standard Oil. So they could sell their products at higher prices. But when you can manufacture goods in China you can escape all of these regulatory and compliance costs. And governmental insanity of protecting consumers by raising consumer prices.
Some may counter that the net profit percentage isn’t the important number. But the dollar amount of their profits. The same people who say we shouldn’t look at the dollar amount rich people pay in taxes. But what they pay as a percentage of their income. Which is an example of a double standard. Determining how much profit is too much by one standard for Big Oil (dollars). But determining by another standard how much rich people should pay in taxes (percentage). It doesn’t make good sense. But it makes good politics. Especially when you have nothing but class warfare to rely on to win an election.
The attack on Big Oil is also irrational. For Big Oil can do one thing that even GE and Apple can’t do. Provide high wages and generous benefits to American workers. Because American oil deposits can only be extracted in America. By American workers. If only government will cease their attack on Big Oil. And allow people to drive gas guzzlers if they want to. Let them fill up those tanks. Increase the demand for gasoline. If they did and we got rid of the anti-gasoline policies Big Oil will go after that oil and bring it to market to meet that demand. Making it inexpensive and plentiful just like John D. Rockefeller did. Before government stepped in to ‘protect’ consumers. And added so many regulatory and compliance costs that has since jacked up the price at the pump so much that it is eating away an ever larger share of a family’s budget. And ultimately reducing their standard of living. Without even getting any high paying jobs with generous benefits in the bargain. And if you ask me that’s a pretty sad job of protecting consumers.
Tags: America, American, Apple, bankrupt, benefits, Big Government, Big Oil, Big Three, China, consumer prices, Consumers, demand, demand curve, Economics, economy, employees, Exxon Mobil, gas pump, gasoline, gasoline prices, General Electric, generous benefits, green energy, high pay, high pay and generous benefits, high paying jobs, high prices, high wages, high wages and generous benefits, jobs, John D. Rockefeller, Liberal Democrats, low prices, mutually exclusive, net profit, net profits, oil, petroleum, prices, profitable, profits, refining, refining petroleum, regulatory and compliance costs, sales revenue, wage and benefit package, wages and benefits
Week in Review
Germany is the strongest nation in the Eurozone. While they retain their triple-A credit rating other countries face credit rating downgrades. Or warnings about future downgrades. Which puts the Germans in the Euro driver seat. Because they’re shouldering the biggest share of this Eurozone financial burden. One would almost say they are doing the other Eurozone members a favor. But the Greeks sure don’t feel this way (see Greeks brand Germans ‘Nazis’ for driving through painful cuts and ‘taking control of their economy’ posted 2/15/2012 on the Daily Mail).
Greek anger with the way they believe Germany has taken over their economy is boiling over on the country’s streets.
In recent days, protesters have burned German flags and defaced the Bank of Greece’s headquarters to make it look like the Bank of Berlin.
German chancellor Angela Merkel has also been depicted in Nazi uniform on the front page of right-wing newspaper Democracy above a headline alluding to Auschwitz.
Granted, Hitler did conquer Greece. And he did so ruthlessly. But not because he wanted to. Mussolini attacked Greece. And was humiliated. This blunder threatened Barbarossa. The Nazi invasion of the Soviet Union. Hitler had to save Mussolini to keep the British (in and around the Mediterranean) off their southern flank. While preparing the Greek invasion Yugoslavia threw a wrench into the plans with a military coup. Shut down his free passage through Yugoslavia. Threw Hitler in a rage. So he was going to teach them a lesson. And did. He ruthlessly attacked Yugoslavia. And kept his army rolling all the way through Greece. But to do this he had to delay Barbarossa by about a month. Which stalled his armies in the god-awful Russian winter at the gates of Moscow. The same god-awful winter that destroyed Napoleon’s Grande Armée. And sent the Nazis in retreat. For the very first time. Had it not been for the Greece ‘problem’ Hitler may have conquered the Soviet Union. And won World War II. So Hitler had little love for Greece. Which may have made the Greece occupation a cruel one.
High levels of government spending in Greece to support a very comfortable and growing public sector created large deficits. They had to finance these growing deficits with growing government debt. Soon their debt grew so large they could no longer sell new debt to retire old debt. Because few believed that they would be able to repay this new debt. Which brought them to this crisis where they needed help from others to finance their debt. Because they could no longer take care of themselves.
So there’s a bit of difference between the current debt crisis and 1941 Greece. In 1941 the Greeks were victims of Nazi oppression. In the current debt crisis Greece’s troubles are self-inflicted. So comparing Merkel’s Germany to Nazi Germany is a bit unfair to say the least. And unjust.
The Eurozone was an ill-conceived plan to begin with. A currency unity with no political unity? What did they expect? No nation wants to take orders from another nation. Any who tries may be called, well, a Nazi. And this is why the Eurozone was ill-conceived. Because no nation wants to take orders from another nation. They just want to keep on doing their own thing. Like the Greeks did. And now Greece’s problem is everyone’s problem in the Eurozone. Because of that common currency.
Tags: Big Government, debt, debt crisis, deficits, Euro, Eurozone, Germany, Greece, Greeks, Hitler, Merkel, Nazis
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.
Tags: battery, Beacon, Big Government, bureaucracy, charge, electric cars, electric sedan, Energy Department, Fisker, oversight, range, Solyndra, taxpayer
Week in Review
Big Government liberals in the U.S. say state capitalism is the way to go. And high-speed rail. Just like the Chinese. In fact, they can’t get enough of what the Chinese are doing. Because they say the Chinese get capitalism right. By putting ‘state’ in front of it. Instead of what we normally see in front of it. Free market. But their big state funded rail system is far from perfect. Far, far from perfect (see China’s push for rail reform could be dead in its tracks by Michael Martina posted 2/2/2012 on Reuters).
The ministry’s touted web-based ticket booking system was supposed to replace the antiquated ordeal of waiting in long queues. It didn’t. The system crashed minutes after its launch before the annual holiday migration of 200 million people by rail, and proved as frustrating as any line-up at a station…
The online fiasco — which spurred a barrage of criticism — was the latest in a litany of troubles for the ministry, which has been plagued by scandals and missteps. Some of those problems have been deadly, including a July crash of a new high-speed train that killed 40 people.
But for decades the Ministry of Railways has proven impervious to reform efforts, fending off attempts by leaders to merge it with other ministries or close a separate court system run by the 2.1 million-employee ministry…
The current reform drive could also stumble, said Zhao Jian, a rail expert at Beijing Jiaotong University who has criticized China’s expensive bullet train expansion. For one, the ministry’s $2.2 billion debt load could deter any splitting of its business and regulatory arms.
“If you separate the government function from the business function, the transportation enterprise must take on the debt. But if the debt is so great that the enterprise will immediately become bankrupt, then who will take it on?” Zhao said.
The problems of state capitalism are plain to see. You have a 2.1 million public sector bureaucracy. Who speak with a loud and unified voice and could play havoc with the system if they don’t get their way. And public spending so great that nothing in the private sector can manage the accompanying debt. No amount of ticket revenue can fund current operations and service this debt. It’s just impossible. Which means it can’t be spun off from the government. Because only government funding (taxes, borrowing and the printing press) can support this behemoth. Because large-scale rail like this is just not a viable economic model. Which means it will never be reformed. And it will always remain a fiasco. Until it and the state finally collapse. Sort of like in Greece. Only without anyone large enough to bail them out.
And this is exactly what the Big Government liberals in the U.S. want. Of course, when they start running things everything will be perfect. So they won’t make the same mistakes the Chinese have made. Or the Greeks have, for that matter. Even though they can’t point to a single success story in the history of Big Government liberalism. For sharing the wealth and growing government has never increased economic activity. But only led to growing bureaucracies and out of control spending. Like the Chinese. Only without their booming manufacturing sector powered by cheap labor to help pay for some of these costs.
No, China’s state capitalism is not the economic model to follow. If you want robust economic activity you need to get the state out of the economy. And let free market capitalism do its magic. Like it did for the British during the Industrial Revolution in the 19th century. And like it did for the Americans in the late 19th century and early 20th century. Before the growth of government in both countries grew. And sucked the life out of their economies.
Tags: Big Government, big-government liberals, bloated bureaucracy, bureaucracy, capitalism, China, China's Ministry of Railways, Chinese, debt, economic activity, free market, free-market capitalism, high-speed rail, liberals, Ministry of Railways, private sector, public spending, rail, state capitalism
Week in Review
Is the cost of government too much? Are the taxes, licensing, regulations, legislation, etc., proving so costly that it’s pushing the economy underground? Yes (see World Black Market Booms by Christiane Amanpour, Matthew Drake & David Miller posted 2/1/2012 on Yahoo! News).
We all know black market goods are available all over the world, but what you may not know is that if you add up all revenue generated from un-taxed business it would equal the second largest economy of the world, behind only the United States.
Free market capitalism favors people over the state. It allows people to come together and make mutually beneficial economic exchanges. That they enter into voluntarily. And when the state becomes to invasive in our lives, we apparently take our economic exchanges underground. To escape confiscatory taxes. And punishing regulations. If that isn’t an indictment of the failure of Big Government I don’t know what is. For when people are left to their own devices, they want to engage in economic exchanges without the heavy hand of government raising prices and/or influencing their decisions. The prefer the liberty of the free market. Not the coercion of the state.
Tags: Big Government, black market, capitalism, economic exchanges, economy, free market, regulations, taxes, underground
Week in Review
Big corporations are evil. That’s all you hear from those on the Left. These people hate corporations. Capitalism. And the private sector in general. Where people pursue profits. Instead of the wellbeing of our fellow citizens. Like they do in China. Where state capitalism rules supreme. And the government puts people ahead of profits (see Poisonous gift posted 1/28/2012 on The Economist).
China’s tobacco industry is both owned and regulated by the government. It makes and sells more than two-fifths of the world’s cigarettes—2.4 trillion in 2011, 3% more than in 2010. The government says the industry took in profits and tax receipts of 753 billion yuan ($119 billion) in 2011, an annual increase of over a fifth. Production, sales and tax receipts are likely to increase for years to come.
Yes, the economic model that those on the Left want us to adopt is worse than Big Tobacco. For the tobacco companies in China not only kill people in pursuit of big profits. They’re owned by the government. So it’s the government killing people in pursuit of profits. Funny. Because state capitalism isn’t supposed to work that way. At least, that’s what those on the Left would tell us. Government is good. Corporations are bad. Yet here is government being worse than the corporations.
Perhaps state capitalism is not all it’s cracked up to be. Perhaps government can be just as bad as corporations. Or even worse. For corporations clearly state that they protect the interests of their stockholders. Government is supposed to protect the interests of the people. So who is worse when people get hurt by smoking? The government, of course.
So why do they do it? For the same reason the U.S. government won’t criminalize cigarettes. They want people to smoke for the same reason the Chinese government wants their people to smoke. The tax receipts. Addiction is good. It fills the government coffers. And as long as it does people will be smoking. Governments everywhere will make sure of it.
Tags: Big Government, Big Tobacco, capitalism, China, corporations, Left, profits, smoking, state capitalism, tax receipts
Week in Review
Even the heavy hand of state capitalism of the Chinese communists can’t prevent toxic pollution (see Seven detained over China river cadmium spill posted 1/30/2012 on the BBC China).
Seven chemical company officials have been detained over industrial waste that polluted a river in China’s Guangxi region, state media said.
Cadmium pollutants were detected in the Longjiang River on 15 January after tests were carried out on dead fish.
The level then was 80 times the official limit, regional environment protection official Feng Zhennian said…
Cadmium, commonly found in industrial usage such as the production of batteries, is a carcinogen which can damage the kidneys, bones and respiratory system.
People hate corporations everywhere. And only when government regulates the bejesus out of capitalism will they feel safe from the horrors of capitalism. Well, in China, you can’t get much further away from free market capitalism. For government is there. Everywhere. And even there they have a horrible industrial accident.
Accidents happen. Because people aren’t perfect. And as it turns out, neither is government.
Tags: Big Government, cadmium, capitalism, Chinese, Guangxi region, Longjiang River, state capitalism
Government Induced Inflation caused the Panic of 1893 and caused the Worst Depression until the Great Depression
Britain kicked off the Industrial Revolution. Then handed off the baton to the United States in the latter half of the 19th century. As American industry roared. Great industrialists modernize America. And the world. Andrew Carnegie made steel inexpensive and plentiful. He built railroad track and bridges. And the steel-skeleton buildings of U.S. cities. Including the skyscrapers. John D. Rockefeller saved the whales. By producing less expensive kerosene to burn in lamps instead of the more expensive whale oil. He refined oil and brought it to market cheaper and more efficiently than anyone else. Fueling industrial activity and expansion. J.P. Morgan developed and financed railroads. Made them more efficient. Profitable. And moved goods and people more efficiently than ever before. Raising the standard of living to heights never seen before.
The industrial economy was surging along. And all of this without a central bank. Credit was available. So much so that it unleashed unprecedented economic growth. That would have kept on going had government not stopped it. With the Interstate Commerce Act in 1887 and the Sherman Antitrust Act of 1890. Used by competitors who could not compete against the economy of scales of Carnegie, Rockefeller and Morgan and sell at their low prices. So they used their friends in government to raise prices so they didn’t have to be as competitive and efficient as Carnegie, Rockefeller and Morgan. This legislation restrained the great industrialists. Which began the era of complying with great regulatory compliance costs. And expending great effort to get around those great regulatory compliance costs.
Also during the late 19th century there was a silver boom. This dumped so much silver on the market that miners soon were spending more in mining it than they were selling it for. Also, farmers were using the latest in technology to mechanize their farms. They put more land under cultivation and increased farm yields. So much so that prices fell. They fell so far that farmers were struggling to pay their debts. So the silver miners used their friends in government to solve the problems of both miners and farmers. The government passed the Sherman Silver Purchase Act which increased the amount of silver the government purchased. Issuing new treasury notes. Redeemable in both gold and silver. The idea was to create inflation to raise prices and help those farmers. By allowing them to repay old debt easier with a depreciated currency. And how did that work? Investors took those new bank notes and exchanged them for gold. And caused a run on U.S. gold reserves that nearly destroyed the banking system. Plunging the nation in crisis. The Panic of 1893. The worst depression until the Great Depression.
Richard Nixon Decoupled the Dollar from Gold and the Keynesians Cheered
J.P. Morgan stepped in and loaned the government gold to stabilize the banking system. He would do it again in the Panic of 1907. The great industrialists created unprecedented economic activity during the latter half of the 19th century. Only to see poor government policies bring on the worst depression until the Great Depression. A crisis one of the great industrialists, J.P. Morgan, rescued the country from. But great capitalists like Morgan wouldn’t always be there to save the country. Especially the way new legislation was attacking them. So the U.S. created a central bank. The Federal Reserve System. Which was in place and ready to respond to the banking crisis following the stock market crash of 1929. And did such a horrible job that they gave us the worst depression since the Panic of 1893. The Great Depression. Where we saw the greatest bank failures in U.S. history. Failures the Federal Reserve was specifically set up to prevent.
The 1930s was a lost decade thanks to even more bad government policy. FDR’s New Deal programs did nothing to end the Great Depression. Only capitalism did. And a new bunch of great industrialists. Who were allowed to tool up and make their factories hum again. Without having to deal with costly regulatory compliance. Thanks to Adolf Hitler. And the war he started. World War II. The urgency of the times repealed governmental nonsense. And the industrialists responded. Building the planes, tanks and trucks that defeated Hitler. The Arsenal of Democracy. And following the war with the world’s industrial centers devastated by war, these industrialists rebuilt the devastated countries. The fifties boomed thanks to a booming export economy. But it wouldn’t last. Eventually those war-torn countries rebuilt themselves. And LBJ would become president.
The Sixties saw a surge in government spending. The U.S. space program was trying to put a man on the moon. The Vietnam War escalated. And LBJ introduced us to massive new government spending. The Great Society. The war to end poverty. And racial injustice. It failed. At least, based on ever more federal spending and legislation to end poverty and racial injustice. But that government spending was good. At least the Keynesians thought so. Richard Nixon, too. Because he was inflating the currency to keep that spending going. But the U.S. dollar was pegged to gold. And this devaluation of the dollar was causing another run on U.S. gold reserves. But Nixon responded like a true Keynesian. And broke free from the shackles of gold. By decoupling the dollar from gold. And the Keynesians cheered. Because the government could now use the full power of monetary policy to make recessions and unemployment a thing of the past.
Activist, Interventionist Government have brought Great Economic Booms to Collapse
The Seventies was a decade of pure Keynesian economics. It was also the decade that gave us double digit interest rates. And double digit inflation rates. It was the decade that gave us the misery index (the inflation rate plus the unemployment rate). And stagflation. The combination of a high inflation rate you normally only saw in boom times coupled with a high unemployment rate you only saw during recessionary times. Something that just doesn’t happen. But it did. Thanks to Keynesian economics. And bad monetary policy.
Ronald Reagan was no Keynesian. He was an Austrian school supply-sider. He and his treasury secretary, Paul Volcker, attacked inflation. The hard way. The only way. Through a painful recession. They stopped depreciating the dollar. And after killing the inflation monster they lowered interest rates. Cut tax rates. And made the business climate business-friendly. Capitalists took notice. New entrepreneurs rose. Innovated. Created new technologies. The Eighties was the decade of Silicon Valley. And the electronics boom. Powering new computers. Electronic devices. And software. Businesses computerized and became more efficient. Machine tools became computer-controlled. The economy went high-tech. Efficient. And cool. Music videos, CD players, VCRs, cable TV, satellite TV, cell phones, etc. It was a brave new world. Driven by technology. And a business-friendly environment. Where risk takers took risks. And created great things.
History has shown that capitalists bring great things to market when government doesn’t get in the way. With their punishing fiscal policies. And inept monetary policies. Activist, interventionist government have brought great economic booms to collapse. Who meddle and turn robust economic activity into recessions. And recessions into depressions. The central bank being one of their greatest tools of destruction. Because policy is too often driven by Big Government idealism. And not the proven track record of capitalism. As proven by the great industrialists. And high-tech entrepreneurs. Time and time again.
Tags: Andrew Carnegie, banking, banking system, Big Government, Business, business friendly, business-friendly climate, capitalism, capitalists, Carnegie, central bank, competitive, computer, debt, depression, dollar, economic growth, economy, efficient, electronic, entrepreneur, farmers, Federal Reserve, gold, gold reserves, government spending, Great Depression, industrial economy, industrialists, inflation, inflation rate, interest rates, Interstate Commerce Act, J.P. Morgan, John D. Rockefeller, Keynesian, Keynesian economics, Keynesians, LBJ, miners, monetary policy, Morgan, Nixon, prices, Reagan, recession, regulatory compliance costs, Rockefeller, Ronald Reagan, run on U.S. gold reserves, Sherman Antitrust Act, Sherman Silver Purchase Act, silver, spending, technology, unemployment, unemployment rate
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