FT134: “There will always be poor and oppressed people because someone has to vote for liberal Democrats.” —Old Pithy

Posted by PITHOCRATES - September 7th, 2012

Fundamental Truth

Liberal Democrats would Not Like an America without Poor and Oppressed People

In the anti-nuclear power movie The China Syndrome Jack Lemmon’s character wanted to warn everyone about his dangerous nuclear power plant.  He was a control room operator at the plant.  During one event there was a vibration.  The reactor shut down (SCRAM) safely.  But Lemmon’s character did some investigating and found that some safety reports had been falsified.  And in his quest to publicize this fact people died.  So he did the only thing he could.  He locked himself inside the control room at the nuclear power plant.  Requested that the characters played by Michael Douglas and Jane Fonda come down to put him on the air live.  And threatened to create a nuclear catastrophe himself if that didn’t happen.  That’s right, as dangerous as that reactor was he did NOT shut it down.

Odd, really.  He threatened to cause what he was trying to prevent.  Why?  Well, consider what would have happened if he did everything he did with one change.  Instead of threatening his own nuclear catastrophe he shut down that reactor.  So it was safe and could not harm anyone.  If he did that what do you think would have happened?  No one would have brought that news crew (Douglas and Fonda) to the plant.  And plant security would have just broken into the control room and subdued Lemmon.  But because he left the reactor hot and dangerous they didn’t break in and subdue him.  And they brought in that news crew.  Because his threat of causing a nuclear catastrophe gave him power.  While a safe and shutdown reactor gave him no power.

So what do we learn from this?  Sometimes the thing you’re fighting against is the very thing that gives you power.  A purpose.  A reason for getting out of bed in the morning.  Something that gives you a job.  Something that pays the bills.  And it’s just not disgruntled nuclear power plant operators.  Imagine a world with no crime.  If there was no crime we wouldn’t need any police officers.  Something police officers wouldn’t like.  Just as firefighters wouldn’t like a world without fires or accidents.  Just as cardiologists would not like a world without heart disease.  Just as environmentalists would not like a world without global warming.  Just as advocates of affirmative action would not like a world without discrimination.  Just as liberal Democrats would not like an America without poor and oppressed people.

The Poor and Oppressed are a Favorite Constituency of the Federal Government

The more horrible the things people are fighting against the greater are the need for these people.  The Left makes use of this strategy all of the time.  Falling test scores means we need to spend more on education.  As in hiring more teachers.  And paying them more.  This works the other way, too.  When municipalities are running budget deficits because of costly public sector contracts calling for high pay and generous benefits they place a new millage on the ballot.  And warn the people that if they don’t vote ‘yes’ for these higher taxes they will have no choice but to increase the number of rapes, murders and assaults.  As well as increase the number of deaths from fires, heart attacks in the home and car accidents.  Because if the people vote ‘no’ they will lay off police officers and firefighters.  Instead of renegotiating those contracts that are causing their financial problems.  No.  It’s never cutting back on the things that are bankrupting their cities.  It’s always putting the fear of God into their electorate.  So the public sector workers can maintain their generous pay and benefits.

Of course some will say that our teachers, police officers and firefighters don’t get paid that much.  If that’s true then they belong to some real crappy unions.  Because you join a union to get better pay and better benefits.  And you pay union dues for the union’s help in getting better pay and better benefits.  Also, if we didn’t already pay them very well you would know what their pay and benefits were during these millage requests.  For it sure would help their argument for higher pay if most people made more than they did.  Because, let’s face it, we need good teachers, police officers and firefighters.  If we paid them less than most other people everyone would feel guilty and vote ‘yes’ without hesitation.  But during these millage requests they don’t make public their current pay and benefit schedule.  And it’s hard to find this information online.  Because that’s ‘personal’.  Even though we pay them with public money.  Which should tell you something.  They’re paid better than most people.  Because they’re asking for more without telling us how much they currently make.  For it is hard to get sympathy for your pay level when you make more than most other people.

It’s no secret that government workers get better pay and benefit packages than people in the private sector.  Especially in the federal government.  Where federal employment grows by leaps and bounds every year.  And they create ever new programs to fight against something.  So they can keep hiring more people into the federal bureaucracy.  To reward friends and cronies.  And to endear a growing federal government to ever more people.  So they will continuously help to support and promote that sprawling bureaucracy.  Through their votes.  And by making as many people as possible dependent on the government.  Making the poor and oppressed a favorite constituency of the federal government.  As it has been for a very long time.  Despite the numerous battles to end poverty and oppression.

The Liberal Democrat Answer to Poverty is Not a Job but a Government Entitlement

JFK was a tax-cutter.  Just like Ronald Reagan.  They both believed that you had to create a business-friendly environment to create jobs.  Because if a business did well it grew and hired more people.  That’s why both JFK and Ronald Reagan had strong economic growth and low unemployment during their presidencies.  And they each brought in a lot of tax revenue into Washington.  Even with their low tax rates.  So low tax rates are good.  They help businesses grow.  They help people get jobs.  They lower the price of consumer goods so people can buy more for less.  And they bring in more revenue to the government to help those who need help.  Of course liberal Democrats hate this.  Because if everyone is doing well there is no need for all their agencies and programs.  Or them.

Shortly after the assassination of JFK things changed.  LBJ became president.  Who was a big liberal Democrat.  Who declared unconditional war on poverty.  This was in 1964.  The plan was to explode the size of the federal government.  Which is what he did when he gave us the Great Society.  The war on poverty would become one of America’s longest war.  Longer than the wars in Iraq and Afghanistan.  Longer than the Vietnam War.  Even longer than the Cold War.  The war on poverty continues to this day.  Requiring ever more government agencies.  And programs.  Yet they’ve all failed to end poverty.  Proven by the fact that every generation of liberal Democrats running for office is an advocate for the poor and oppressed who have no voice but theirs.

The liberal Democrat answer to poverty is not a job but a government entitlement.  Because jobs lead to lower unemployment.  And less purpose for a liberal Democrat.  Liberals don’t want jobs and low unemployment.  They want high taxes and high unemployment.  So they can matter.  And make a difference.  So they can have a cushy job with high pay and generous benefits.  So they attack tax cuts.  They attack any lowering of regulatory costs.  And anything else that would help businesses create jobs.  Which would take the poor and oppressed away from them.  They don’t want people to be rugged and independent.  They want them needy and dependent.  And they want as many people as possible to be needy and dependent.  Even if it leads to a little rioting.  Especially if it leads to a little rioting.  For a little level of danger can be useful.  As it can be in a nuclear power plant in an anti-nuclear power movie.  Because it’s very hard to get taxpayers to vote for people that want to increase your taxes and make your lives more costly.  While some liberals genuinely care about making people’s lives better many more are like Jack Lemmon in The China Syndrome.  Who understand that they must maintain a certain level of poverty and oppression in the nation.  Or they will have no power.  As no one will vote for them.  Because if you’re in the business of ending poverty and oppression you need a certain level of poverty and oppression to fight against.  Always.

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FT112: “You can have liberty or equality but you can’t have both.” -Old Pithy

Posted by PITHOCRATES - April 6th, 2012

Fundamental Truth

Higher Taxes were Okay when it was Someone Else’s Money but they’re Just Plain Unfair when it’s your Money

People throw around the word ‘equality’ a lot.  Especially politicians.  To make life fair.  More egalitarian.  Where they make the rich pay their fair share.  For they won’t just voluntarily pay their fair share, will they?  Sounds fair, yes?  And just.  For no one should be ‘too rich’ when others have ‘so little’.  Of course the only people who agree with this are the ones who have ‘so little’.  Those who are ‘too rich’ are not all that supportive of using their wealth to help others be more equal.  Especially when the scale that measures what is ‘too rich’ is a sliding scale.  For someone believes a person is ‘too rich’ when they have more than he or she does.  And that holds true even if they win the lotto.

It’s open season on rich people.  Everyone attacks them.  For they are easy prey.  There are few of them.  So angering them won’t have a huge impact at the polls.  Which is why politicians whip up a fury of hate against them.  Which the people who have ‘so little’ are eager to join them in that hate.  Because they hate rich people.  They hate them a lot.  And there just isn’t anything good they can say about them.  They hate them so much that they buy lotto tickets in hopes of becoming rich people themselves.  Because that’s the only thing that can assuage their hate of rich people.  Becoming rich people.

People who have ‘so little’ will define anyone as having ‘too much’ if they have more than they do.  But if they win the lotto it’s a different story.  For rich people like them don’t have ‘too much’ then.  In fact they become downright greedy.  And become everything they once hated.  They don’t want to share their winnings.  (Even some in lotto groups who bought a winning ticket will try to keep that ticket for themselves, saying they bought THAT ticket with his or her own money and not the group’s money and therefore they don’t have to share THOSE winnings.)  And they sure don’t want to pay half of their winnings in taxes.  Higher taxes were okay when it was someone else’s money.  But they’re just plain unfair when it’s your money.  It’s just a fact of life.  People are greedy.  Even those with ‘so little’.

If there is No Incentive to Choose the Hard Jobs then Someone will have to Coerce People to ‘Choose’ Them

Consider this.  How hard would you work if you had to deposit your entire paycheck into a general fund?  Let’s call the fund the Equality Fund.  All workers everywhere on payday take their checks to the bank and deposit them into the Equality Fund.  And then they get their ‘equal share’ from that fund to live on.  So doctors and janitors earn different incomes.  But their distributions from the Equality Fund are the same.  NFL franchise players and workers in fast food earn different incomes.  But their distributions from the Equality Fund are the same.  Ditto for movie stars, rock stars, pop stars and lotto winners.  They all deposit their income into the General Fund.  And live on the same money as do hair stylists, Wal-Mart greeters, busboys and gardeners.  Even the people who don’t work.  Who love the Equality Fund.  Because with equality they don’t have to work.  Pretty sweet.  Don’t work.  And get paid the same as those who do work.  So they have no incentive ever to go to work.  And some of those who do work start asking themselves, “Why am I still working?” 

If there was an Equality Fund how hard would you work at your job?  Would you even work?  Would you choose a difficult career field that took a lot of costly education?  Would you work that hard to earn more money only to deposit those high earnings into the Equality Fund?  Instead of using those high earnings to buy a nice house?  In a nice neighborhood?  With nice schools for your kids?  Probably not.  Let’s say everyone is paid $50,000 from the Equality Fund.  Regardless of what you paid into it.  Either nothing.  Or millions of dollars.  Everyone lives on $50,000 per year.  Not too shabby.  Especially for low-income people or the unemployed.  They’re going to love the Equality Fund.  But those paying in millions will not be living in million dollar mansions.  Buying expensive cars.  Big boats.  Fly in their private jets.  Or even fly first-class.  No one will wear a Rolex watch.  Or other expensive jewelry.  Or high fashion.  No one will have these things.  Not when you’re raising a family on $50,000 per year.  Even if your work skills bring in the kind of high earnings that could afford them.  Because all of your pay will go into the Equality Fund.  Is that fair?  It’s equality.  But is it fair?

Let’s take this a little further.  Say everyone wises up and quits working.  Because they get the same amount to live on whether they work or not.  So why work?  Those who would like to tell the boss off and quit working are no doubt saying, “Sounds good to me.”  But this would cause a problem.  For what would you buy with your $50,000 annual allotment if no one worked?  For you need people to work if you want to buy a house.  A car.  A boat.  Fly.  Wear a watch.  Jewelry.  Clothing.  Sure, some will say we can just buy old homes.  And buy imported cars, boats, planes, watches, jewelry and clothing.   Sure, you could.  But you can’t import everything.  You can’t import road maintenance.  You can’t import port facilities and railroad infrastructure.  Or the people to operate them.  You can’t import restaurants complete with chefs, servers and busboys.  You can’t import emergency trauma care.  Maternity care.  Cardiac care.  A college education.  You just can’t import everything.  Someone has to work these jobs.  Even though they won’t get paid any more for working than they would for sitting at home collecting their allotment from the Equality Fund.  And when no one chooses to work at the jobs we can’t replace with imports someone will have to ‘help’ them change their mind.  To make them choose to work.  Even if it’s against their will. 

This is the problem with equality.  If we pay everyone equally no one will choose the hard jobs.  They’ll choose the easy jobs.  Worse, if we pay them equally whether they work or not they’ll simply choose not to work.  And if there is no incentive to choose the hard jobs then someone will have to coerce people to ‘choose’ them.

You can have Liberty or Equality but You can’t have Both

To choose your career you need liberty.  To choose to go to school to learn a high-paying skill you need liberty.  To work in a high-paying job you need liberty.  To keep your high-pay earnings you need liberty.  To work hard and to advance yourself to reach your personal goals you need liberty.  To play in the NFL you need liberty.  To be a movie star or rock star or pop star you need liberty.  To play the lotto and keep your winnings you need liberty.  To do all of these things you need liberty.  And one other thing that makes all of these things possible.  Inequality.

People working in fast food can’t earn the same as neurosurgeons.  Because if they paid their workers that much the cost of fast food would be prohibitive.  And no one would be neurosurgeons because it’s a lot less stressful working in fast food.  It doesn’t take years of training.  Or expensive malpractice insurance.  You don’t have to live with accidents that permanently disable or kill people.  Or deal with their aggrieved family members.  So that’s why we pay neurosurgeons so much.  It’s a very difficult profession that few choose.  Because so few choose this profession those that do are very valuable resources.  Demanding high pay.  And because they demand such high salaries it attracts the few who are willing to deal with all the things that come with being a neurosurgeon.  The high pay helps people choose this valued career despite the high personal costs.  So inequality is a good thing.  It provides incentive to choose the hard jobs.  Which is a good thing.  For who wants a low-paid person forced to be a neurosurgeon operating on his or her brain?

Everyone who has ever bought a lotto ticket agrees that inequality is a good thing.  They wouldn’t buy a ticket otherwise.  Because they buy those tickets to become rich.  To have more than other people.  That is, to be unequal.  Because everyone is greedy.  Just like football players, movie stars, rock stars, pop stars and, of course, lotto winners.  And not a one of them is going to work hard to develop their unique earning potential just to put the fruits of their labor into the Equality Fund.  They may talk the talk.  Support Democrats.  But they do that just so the people who have ‘so little’ leave them alone.  For they all still live in their million dollar mansions.  Because they like being unequal.  The more unequal the better.  They adore their pampered lives.  And when it comes to choosing liberty or equality they choose liberty.  As their comfortable lives clearly show.  For you can have liberty.  Or you can have equality.  But you can’t have both.  And that’s okay with them.

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FT106: “You can’t have high paying jobs with generous benefits and low consumer prices.” -Old Pithy

Posted by PITHOCRATES - February 24th, 2012

Fundamental Truth

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.

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