FT124: “Liberals use the courts to give them what the people won’t.” -Old Pithy

Posted by PITHOCRATES - June 29th, 2012

Fundamental Truth

Magna Carta led to Constitutional Monarchy and Representative Government

Medieval kings liked doing as they pleased.  From living well.  To expanding their kingdoms by force.  Or trying to.  As kingdoms got larger, though, this was more difficult to do.  Because the larger the kingdom got the more food they had to produce.  And kings didn’t feed their kingdoms from their castle vegetable gardens.  They needed the wealthy and powerful landowners.  Who owned the land.  Grew the food.  And provided the kingdom’s wealth.

These landowners made land valuable.  By growing food on it.  As famine was no stranger during the Middle Ages there was nothing more important than growing food.  Those who did became wealthy.  And their estates became mini kingdoms.  With lots of peasants working the fields.  And lots of soldiers to defend their land.  And to fight for their king in times of war.  Kings needed to maintain good relationships with these wealthy landowners.  To keep them supporting their kingdoms.  And to prevent any one of them from rising up and challenging the king for his throne.

King John of England was hurting his relationships with the wealthy landowners.  He fought a lot of expensive wars across the English Channel in France.  Which required high taxes on the English landowners.  The barons.  Worse, King John lost a lot of his battles in France.  Losing the barons some of their Normandy lands.  So the barons were becoming a little disgruntled with their king.  And they rebelled.  Eventually forcing the king to place his Great Seal on Magna Carta.  Limiting his powers.  It didn’t change things much at the time.  But it would lead to constitutional monarchy.  And representative government.

The Patriots of 1776 were none too keen on Creating a New Central Power

Kings don’t like limits on their power.  King John would go on to renounce Magna Carta.  And got the Pope’s approval to not honor the promises he made with the barons.  But these barons sowed the seeds of representative government in England.  And the Western World.  Greatly influencing the Founding Fathers in America.  Whose Constitution placed great limits on the government’s power.

The Americans were having some problems with their Articles of Confederation.  The sovereign states were taking care of themselves.  Sometimes at the expense of the other states.  Or the new nation.  And the new nation wasn’t making much progress in the international community.  A bit of a laughing stock to other nations.  Who were all sure it was only a matter of time before the American colonies would be British again.  For once the war was over there was little united about the states anymore.  So James Madison urged a meeting of the several states to revise the Articles of Confederation.  To help make a more perfect union.  And to move the new nation forward.  They met in Philadelphia in 1787.  And caused a firestorm.  For they didn’t revise the Articles.  They threw them away.  And wrote a brand new Constitution.

This inflamed a lot of the Patriots of 1776.  Who had voted to sever the bonds from a distant central power about a decade earlier.  And they were none too keen on creating a new central power to replace the one they just banished.  It took awhile but with the presence of George Washington and some words from Benjamin Franklin, two of the most trusted and experienced Americans who sacrificed a lot in securing their independence, they completed their task.  It wasn’t a perfect document.  But it was the best they were ever going to produce considering the sectional differences in the country.  And they sent it to the states for ratification.  James Madison, Alexander Hamilton and John Jay helped to secure ratification by writing a series of articles that we know today as the Federalist Papers.  Some of the finest Constitutional scholarship ever written.

As Few as Five People in Black Robes can Fundamentally Change the Nation

Key to the Constitution was the separation of powers that restricted the power of the new federal government that no one trusted.  There was a legislature to write law.  An executive branch to enforce law.  And a judicial branch to interpret law.  To make sure that the other two branches did not violate the Constitution.  Such a system would have really crimped King John’s style.  For the law was above all the people.  Including the executive.  He could only do the things the laws allowed him to do.  And the things the laws allowed him to do he could only do if the legislature agreed to pay for them.  It was a system of checks and balances that helped the nation to grow while maintaining personal liberty.

King John would have been particularly irked by the legislature.  Made up by representatives of the people.  Who enacted legislation that was in the best interest of the people.  Not him.  Fast forward to modern times and you find history littered with people who wanted to expand their power only to have that representative body of the people foil them.  Ruling elites.  Modern aristocrats.  Those who feel an entitlement due to a superior education.  A superior bloodline.  Or simply like-minded people who would rather have the days of unlimited power like they had in Medieval Europe.  Before the barons had to muck up the works with Magna Carta.

Over time they learned how to bring back some of the old ways.  The easiest way was just to get people to vote for them.  And they did this by giving them a lot of free stuff.  But there were some things that they just couldn’t bribe out of the people.  So they turned to the courts.  And did a little legislating with activist judges.  Sometimes bringing a suit all the way to the Supreme Court to create a law where there was no law.  Abortion is now legal even though there was never any federal legislation addressing it.  While there was plenty of state legislation forbidding it.  Until seven men in black robes overruled the will of the people in those states.

The Supreme Court is powerful.  For as few as five people in black robes can fundamentally change the nation.  Which is why presidential elections are so important.  Because presidents nominate judges to the Supreme Court.  And those on the Left depend on the timely deaths and/or retirements of Supreme Court judges so they can nominate activist judges.  To get a majority on the high court to rule in their favor on bad law.  Such as Obamacare.  An unpopular law.  A law the majority of the people want repealed.  A law that became law only with subterfuge (the mandate is not a tax).  A law that clearly violated the Constitution (forcing people to buy something).  Yet five people in black robes just fundamentally changed the nation by voting that Obamacare was Constitutional (the mandate is a tax).  Which just goes to show you that where there is a will there is a way.  A way to rule like a king.  Against the will of the people.

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LESSONS LEARNED #78: “It’s a dishonest politician that sneaks sneaky legislation into a bill.” -Old Pithy

Posted by PITHOCRATES - August 11th, 2011

The Obama Stimulus Bill was mostly Democrat Pork and Earmarks

The American Recovery and Reinvestment Act of 2009 was a huge stimulus bill to create jobs.  And put people back to work.  It cost about $800 billion.  And it didn’t work.  Some say it didn’t work because it wasn’t big enough.  Others say it didn’t work because it wasn’t stimulus but rather a 40-year Democrat wish list of pet projects.  Which the Democrats could finally enact having control of the House, the Senate and the White House for the first time in a long time.  And they took control of this bill.  As Nancy Pelosi said, “We won the election. We wrote the bill.”

So what’s in the bill?  Well, President Obama said it would contain no pork.  No earmarks.  Just spending that would create ‘or save’ jobs.  Like infrastructure projects.  Rebuilding America’s roads and bridges.  But according to the Wall Street Journal, “Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects.”  They further note that of all the spending in the bill little would actually create jobs.  About “12 cents of every $1…even many of these projects aren’t likely to help the economy immediately.”

Take high-speed rail, for example.  The Washington Post noted the bill included “$8 billion for high-speed rail projects, for example, including money that could benefit a controversial proposal for a magnetic-levitation rail line between Disneyland, in California, and Las Vegas…”  One thing about big rail projects, they don’t stimulate.  Building railroads takes a long, long time.  The higher the speed, the longer the time.  Because high-speed trains have more costly infrastructure.  And dedicated track.  With no grade crossings.  And before you build anything you have to do environmental impact studies.  Then survey the entire route.  Then, once you have a proposed route, you can begin the engineering.  It could be years before any ground is broken. 

If any ground is broken.  Because currently high-speed rail is all pie in the sky.  Only two lines to date operate at a profit.  One in Japan (Tokyo to Osaka line).  The other in France (Paris to Lyon line).  All others require government subsidies in one form or another.  Because these are costly to build.  And costly to maintain.  So this is stimulus that won’t stimulate.  But it will set the stage for greater future government spending.  Making it more pork than stimulus.  Snuck into the bill by the Senate.  When the House bill went to the Senate.  For their turn to steal from the treasury.

Only Schools with Union Teachers did well in Stimulus Bill

The stimulus bill also included $90 billion for the Department of Education.  But language in the bill restricted the use of that money.  Quoting from the Wall Street Journal, “the House declares on page 257 that “No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.””

In other words, only schools with union teachers may use this money.  Dues-paying union teachers.  And the teachers unions support Democrat candidates.  Which makes this not quite stimulus.  But politics.  Profitable politics at that.  As some of this stimulus money will make it back to Democrat coffers thanks to those union dues.

According to Certification Map, education received some $90 billion in stimulus money.  And their website breaks down the spending:

  • $44.5 billion in aid to local school districts to prevent layoffs and cutbacks, with flexibility to use the funds for school modernization and repair (State Equalization Fund)
  • $15.6 billion to increase Pell Grants from $4,731 to $5,350
  • $13 billion for low-income public school children
  • $12.2 billion for IDEA special education
  • $2.1 billion for Head Start
  • $2 billion for childcare services
  • $650 million for educational technology
  • $300 million for increased teacher salaries
  • $250 million for states to analyze student performance
  • $200 million to support working college students
  • $70 million for the education of homeless children

For a bill not containing any pork or earmarks these look a lot like pork and earmarks.  I mean, they sure ain’t ‘shovel-ready let’s rebuild the infrastructure jobs’ like we were led to believe.  Sure, they may ‘invest in our future’ so we may ‘win the future’, but it doesn’t create jobs like a stimulus bill is supposed to do. 

This isn’t stimulus.  These are just Democrat pet projects.  Added to the bill in a moment of crisis.  To take advantage of the crisis.  To get the things they’ve been unable to get during the normal legislative process.

Never let a Serious Crisis go to Waste when Writing a Stimulus Bill

When you look at the bill this is what most of it is.  Just a bunch of Democrat pet projects.  Passed when they still had control of both houses of Congress and the White House.  And a delicious crisis.  For as Rahm Emanuel said, “Never let a serious crisis go to waste.  What I mean by that is it’s an opportunity to do things you couldn’t do before.” 

Sure, they’ve always hidden things in bills before.  But rarely does $800 billion of free spending come along.  They weren’t going to attach this pork to a bill.  This pork was the bill.  And it included a little bit of everything.  Including green energy.  Green Chip Stocks list this spending on their website:

  • $2.5 billion for energy efficiency and renewable energy research
  • $1 billion energy efficiency programs including energy-efficient appliances and trucks and buses that run on alternative fuel
  • $4.5 billion to boost the energy efficiency of federal buildings
  • $6.3 billion for energy efficiency and conservation grants
  • $5 billion to weatherize old buildings
  • $2.3 billion in tax credits for energy efficiency technology manufacturers

Last time I looked ‘research’ was not a ‘shovel ready’ project.  Neither are alternative fuel programs.  Or federal renovation projects.  Or the government granting process.  (It takes forever and a day for construction projects to start when there is federal money involved.)  And tax credits only help a few people work so they can build things that won’t sell at market prices.

Again, not stimulus.  But pork.  Earmarks.  Despite everything they told us. They weren’t going to create jobs and fix the economy.  They were settling their political accounts.

Democrats took Advantage of a Crisis to sneak Pet Projects into Law

This shameless Democrat spending spree (remember what Nancy Pelosi said – “We won the election. We wrote the bill”) helped to push the deficit into record territory.  Which caused S&P to downgrade our credit.  All because the Democrats took advantage of a crisis to sneak a lot of their pet projects into law.

It just goes to show you that you shouldn’t trust politicians.  And, based on the American Recovery and Reinvestment Act of 2009, you should especially not trust Democrats.  For they are quite sneaky.  And often don’t do as they say.  For the stimulus bill wasn’t going to have any pork or earmarks.  But in reality about 88% of the bill was nothing but pork and earmarks.  Which is a lot more than none.

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FUNDAMENTAL TRUTH #78: “It’s a dishonest politician that sneaks sneaky legislation into a bill.” -Old Pithy

Posted by PITHOCRATES - August 9th, 2011

The Devil is in the Details and the Sneakiness is in the Fine Print

You know what they say.  Buyer beware.  Because they’re out to get you with their sneaky advertising.  Which you need to read closely.  Because the devil is in the details.  And the sneakiness is in the fine print.  That print that no one reads.  Like credit cards that send you those checks. 

They may offer 0% interest for six months when you write yourself a check for $5,000.  Wow.  Sounds great.  But if you don’t pay that off in that 6 month period look out.  Through the miracle of compound interest, that $5,000 debt will grow.  And that growing starts the moment you cash that check.  Because in the fine print the credit card company notes that after the 6-month period they will begin charging interest at 27.24% APR.  Starting on day one of the 6-month period.

People may wonder how credit cards can make any money if they don’t charge interest.  Well that’s the secret of the zero-interest offers.  They don’t expect you to pay it off within in that 6-month period.  And the second that 6-month period ends they book $720.84 of interest income on that $5,000 they loaned you.  That’s a short-term loan that yields 14.42%.  And there ain’t any 6-month investment out there that can match this yield.  But it doesn’t end there.  The yields on the credit card loan will continue to grow.  If you owe that $5,000 for 1 year, that yield rises to 30.91%.  And instead of owing $5,000 you now owe $6,545.59.

A zero-interest offer seems to be good to be true.  That’s because they are too good to be true.  Which you’ll see when you read the fine print.  If you read the fine print.

You have to be Sneaky to get People to Agree to Things that will Hurt Them in the Long Run

Now it’s obvious why they do this.  Be sneaky.  Because they can make a lot of money by doing this.  And the more people that take them up on these zero-interest offers the more money they can make.  So they put the things that would sour most people on using these checks in the fine print.   In hopes few will read it.  And few do.

You see, you have to be sneaky to get people to agree to things that will hurt them in the long run.  You just can’t be honest.  They can’t tell you that this loan will cost you nothing at 11:59 PM on the last day of the 6-month period.  And that it will cost you $720.84 one minute later.  Worse, your minimum monthly payment will jump about $125 as they calculate this loan into your payment.  And compound interest will make that credit card balance swell like a beached whale to the point that you’ll never be able to pay it off. 

You’ll lose sleep as your minimum monthly payments grow.  You’ll struggle to get that balance to go down.  Of course it never will.  And the more those minimum payments grow the less money you have for groceries and gas.  So then you’ll start paying less than the minimum due so you can put food on the table and drive to work.  Then the collection calls start.  It’ll get to the point that your stomach turns every time you hear the phone ring.

So you can see why they put this kind of stuff into the fine print.  I mean, if they advertise that they are going to ruin your life, are you going to use one of those checks?  Probably not.

The Founding Fathers hated Democracy with a Passion

So you really have to be sneaky and devious to get people to voluntarily destroy their lives.  And speaking of politics, politicians are the worst.  For a credit card company may try to get as much money from you as possible.  But that’s just business.  And they don’t swear oaths to protect you.

Thomas Jefferson hated bankers and merchants.  Partly because he was forever in debt.  But mostly because they can buy themselves favors.  And the seller of favors is, of course, government.  Jefferson was a well read man.  He knew history.  And he saw how combining money and government led to bad things.  Corruption.  Patronage.  Privilege.  War.  Money gave government power to do its worse.  And allowed a ruling minority to oppress the people for personal gain.  Now even though America was founded on the principle that all men are created equal, Jefferson knew that money could, and would, change that.  This is one of the reasons why the nation’s capital was located on a swamp a long, long way from the nation’s financial center.  New York.

This is also a reason why the nation is a republic.  And not a democracy.  We have representative government.  Not direct participation.  For the Founding Fathers hated democracy with a passion.  Why?  Because all democracies fail.  Once the people learn they can vote themselves whatever they want.  That’s why the Founding Fathers put enlightened/educated representatives between the treasury and the people.  Who will be rational and logical.  And not give in to base desires.

But the Founding Fathers were a special breed.  Who came along at just the right time and place.  And they created something perfect as far as governments go.  But as they passed from memory, the ways of the Old World became hard to resist. 

You have to let Others Steal from the Treasury if You want to Steal from the Treasury

As the nation grew so did its tax base.  More people meant more tax revenue.  First through import tariffs.  Then the income tax.  And other various taxes.  A little bit of tax from a huge population meant a lot of money for politicians to play with.  And play they did.  With the power to control these vast sums of money, they played God.  Just as Jefferson warned.  Money and government created a ruling minority.  Or a Ruling Class.  Much like the Founding Fathers fought so long and hard to end in the New World.

Of course, people won’t willingly support a Ruling Class that oppresses them.  So they have to be sneaky.  And hide much of what they do from the general public.  By burying it deep in pages of legislation.  Pork barrel spending we call it.  To get a part of the population to support you by promising them free stuff.  Then you honor that pledge by attaching a rider to a bill to house and feed orphans, for example.  When the final bill gets passed into law not only do we house and feed orphans (which everyone supports), but we also shower select constituencies with federal dollars for their help in getting out the vote during the last election (which only those select constituencies support).

Of course you know how this plays out.  If you oppose the excess spending in this bill you hate orphans.  And who wants to be labeled an orphan hater?  Probably not many.  But chances are few will oppose it.  Because to get pork you have to give pork.  You have to let others steal from the treasury if you want to steal from the treasury.  And this is why representatives and senators vote to pass thousand page bills without reading them.  They know they’re full of shameless pork barrel spending.   But as long as they include their pork they don’t care.

Short-Term Gratification with Long-Term Consequences

Politicians are a lot like those credit card companies.  Promising great short-term gratification.  With long-term consequences that will be a bitch.  They both want our money.  The credit card companies want us to go on a spending orgy so they can book fat profits on the interest they charge us.  Politicians just want to go on a spending orgy with our money.

So who’s worse?  The politicians, of course.  They’re supposed to be looking out for us.  Besides, when the credit card companies are screwing us, at least we get to enjoy the ride before the crash.  Taxpayers don’t.  Because their money typically goes to people who don’t pay income taxes.  So they don’t get to enjoy the ride.  They just suffer the crash.

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As Usual, the Democrats are Trying to Deceive the Voters to Get Reelected

Posted by PITHOCRATES - October 24th, 2010

Yes, I Voted for Obamacare.  But I’m Really a Reagan Democrat.

America is a center-right country.  That’s why liberals don’t run as liberals during elections.  They lie.  And deceive.  They morph into something the people actually want.  Which isn’t who they are.  They move to the center.  They sound like conservatives.  Even invoke Ronald Reagan’s name during the election.  The leftist of liberals are all Reagan Democrats at election time.  Once the polls close, though, they go right back to castigating Reagan and his policies.  And scold us that we can’t return to the failed policies of the past.

Bill Clinton ran as a New Democrat.  But once in office he governed so far to the left that he lost both houses of Congresses at the midterm elections.  Barack Obama, too.  Well, is about to.  Lose super majorities in the House and the Senate.  Why?  Because he campaigned as a centrist.  And has governed as the most liberal president to date.

Obama did not run on the platform of nationalizing our health care.  But that’s the path we’re on.   Obamacare is forcing insurance companies to raise their premiums to comply, setting the stage for further attacks against these greedy corporations.  Some are dropping children-only policies because of the mandate to insure those with preexisting conditions.  With that mandate, no parent will spend money for insurance until their child needs health care.  Obamacare is full of such legislation that has but one purpose.  To kill the private health insurance industry.  To make way for the public option.  And, eventually, nationalize health care.  But he didn’t campaign that way.  Because the voting public clearly didn’t want this.

Don’t Look at My Liberal Legislative Accomplishments.  I’m Actually Against Everything I Voted For.

You see, liberals cannot be honest during campaigns.  They can’t say that their economic policies will make the recession worse.  And prolong it.  Which they have.  They can’t say they are going to raise everyone’s taxes.  Which they will after their commission reports after the election.  They will say that there is no choice but to raise taxes on everyone to reign in the out of control deficit spending.  And they can’t say that we will lose our doctors or the health insurance we like and want to keep under Obamacare.  Which we will.  They can’t be honest about these things and still win elections.  So they lie.  And they deceive.

And now here we are.  At the midterm elections.  If you have been following the campaigns across the country, you’ve no doubt noticed something.  Or, rather, noticed something that’s not there.  That is conspicuous by its absence.   Obama and his Democrat controlled Congress passed an enormous amount of liberal legislation in not quite two years.  And nary a Democrat is running on their impressive liberal legislative accomplishments.  In fact, some are now campaigning against their own legislative record.  Why?  Because they governed against the will of their constituents.  And it’s election time.  So now it’s time, once again, to lie.  To deceive.  And they found a new game this year.  Thanks to the Tea Party.

Oh, these people hate the Tea Party.  They came up with that pejorative ‘tea bagger’ to describe these people.  They did everything they could to mock and belittle these people.  Because these people scare them.  They’re educated.  They understand the issues.  And they know who these liberals are and see through all their lies.  So what’s the logical thing for these liberals to do during this election season?  Why, support Tea Party 3rd party candidates. 

Hello, I’m Devious.  Democrat Candidate for Office.  And I want to Deceive You

The Democrats are heading for a shellacking this November.  They’re desperate.  Especially poor old Harry Reid.  The consummate professional being beaten by some Tea Party hack.  Well, that’s how the Left views it.  So they’re turning up the devious this election.  The following quote comes from an article by Jim Rutenberg published 10/22/2010 at The New York Times on line (see Democrats Back Third Parties to Siphon Votes).

Democrats are working behind the scenes in a number of tight races to bolster long-shot third-party candidates who have platforms at odds with the Democratic agenda but hold the promise of siphoning Republican votes.

And, you’ve guessed it, these 3rd party candidates are balloted as ‘Tea Party’ candidates.  They’re competing against the Democrat candidate.  And the Tea Party endorsed Republican candidate.  That’s right, the actual Tea Party, the grassroots movement with that name, doesn’t endorse these ‘Tea Party’ candidates.

Democrat operatives are actually calling people, identifying themselves as registered Republicans, to promote these 3rd party candidates.  They’re trying to deceive registered Republicans into voting for the more conservative ‘Tea Party’ candidate in lieu of the ‘liberal’ Republican candidate.  If they deceive enough registered Republicans with this trick, they may just be able to Ross Perot their election (Perot was the 3rd party candidate that swept Bill Clinton into office).

Whether they do or not it sure says a lot about the Left.  They just can’t win elections honestly.

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FUNDAMENTAL TRUTH #20: “It is never a consumer that complains about ‘predatory’ pricing.” -Old Pithy

Posted by PITHOCRATES - June 29th, 2010

LOW PRICES.  GOD help me, I do hate them so.  I hate them with every fiber of my body.

Who says this?  Do you?  I don’t.  Of all the times I’ve spent shopping, I have never heard anyone bitch about low prices.  I’ve heard people bitch about high prices.  But never about low prices.  When gas approached $3/gallon, people bitched about that being too high and drove 10 miles to find ‘cheap’ gas to save a few pennies per gallon.  Let it approach $4/gallon and they’ll want Congress to take action.  To attack Big Oil.  To seize their oil and their profits and give us cheap gasoline in return.  But when gas was cheap, no one ever bitched about it being ‘too’ cheap.  It just doesn’t happen that way.  People bitch about high prices.  Not low prices.

So who bitches about low prices?  Competitors.  There’s a saying that competition makes everything better.  And it does.  It lowers prices.  And raises quality.  And who is looking for lower prices and higher quality?  Consumers.  Who isn’t?  Competitors.  Especially competitors with political connections.

WHEN THE BIG 3 were putting out crap in the 1970s, they did so because they could.  I mean, who else were you going to buy a car from?  So what if your car breaks down and the fenders and quarter panels rust away?  That just means you gotta buy another car sooner rather than later.  A pretty sweet deal.  Especially when there are only three places to go to buy a car.  And each of the Big 3 is selling the same crap.

Then the Japanese had to go and ruin a good thing.  They started selling cars in America.  These cars were smaller than your typical American car.  But there were other differences.  They didn’t rust like the American cars.  They didn’t break down as much.  And the imports were cheaper than the American cars.  Lower price and higher quality.  More bang for the buck.  Exactly what consumers were demanding.

So what was the response of the Big 3?  Did they rise to the level of their new competitors and deliver what the consumer wanted?  No.  They ran to government for help.  For protection.  And they got it.  Voluntary Export Restraints (VER).  The government negotiated with the Japanese to ‘voluntarily’ limit the number of cars they exported to the United States.  Or else.  So they did.  To avoid worse protectionist policies.  Problem solved.  Competition was limited.  And the Big 3 were very profitable in the short run.  Everyone lived happily ever after.  Until the Japanese refused to play nice.

The problem was what the Big 3 did with those profits.  Or, rather, what they didn’t do with them.  They didn’t reinvest them to raise themselves up to the level of the Japanese.  Protected, they saw no incentive to change.  Not when you have Big Government on your side.  And how did that work for them?  Not good. 

So look, the Japanese said, the Americans like our cars.  If the American manufacturers won’t give them what they want, we will.  While honoring the VER.  We won’t export more cars.  We’ll just build bigger and better cars to export.  And they did.  The Big 3 were no longer up against inexpensive, higher quality subcompacts on the fringe of their market share.  Now their mid-size and large-size cars had competition.  And this wasn’t on the fringe of their market share.  This was their bread and butter.  What to do?  Build better cars and give Americans more bang for their buck?  Or run to government again?  What do you think?

The Big 3 assaulted the Japanese under the guise of ‘fair trade’.  The cry went out that unless the Japanese opened up their markets to American imports (in particular auto parts), we should restrict Japanese imports.  To protect American jobs.  To protect the American worker.  To protect the children.  This was code for please make the Japanese cars more unattractive to purchasers so they will settle for the more costly and lower quality cars we’re making.  (Let’s not forget the reason Americans were buying the Japanese cars in the first place).

The Japanese response?  They took it up a notch.  They entered the luxury markets.  They launched Acura, Lexus and Infiniti.  They competed against Cadillac and Lincoln.  And well.  The quality was so good they even affected the European luxury imports.  More attacks followed.  Americans were losing their jobs.  Soon there would be no more American manufacturing left in the country.  So the Japanese built plants in America.  And Americans were now building the Japanese cars.  The Japanese actually created American jobs.

SON OF A BITCH!  So much for the loss of American jobs.  The Japanese threw a wrench in that argument.  So now the argument became about the loss of ‘high paying’ American jobs.  For the Japanese plants were non-union.  Didn’t matter that their workers were making better pay and benefits than many in their region.  No.  What mattered was that they were building a better product.  And they didn’t want THESE jobs in America.  But if they couldn’t get rid of these new workers, they should at least unionize them so their cars cost more.  To make them a little less appealing to the American consumer.  So far they have been unsuccessful in this endeavor.  The workers are happy as they are.

Well, these cars just weren’t going away.  So the Americans surrendered car manufacturing to the Japanese.  They couldn’t beat them.  (Of course, it’s hard to do that when you don’t even try).  They, instead, focused on the higher profit truck and SUV markets.  Then the Japanese entered those markets.  And at every level they competed with the Americans, the Japanese gave more bang for the buck.  And the consumers responded.  With their hard-earned wages.  It just wasn’t fair.  The Japanese kept giving the American consumer a better product.  No matter what political action the Big 3 took or demanded.

And there’s the problem.  They sought their answers from government.  Instead of making a better car.  They wanted to stop the Japanese from giving the American consumer what they wanted so they could force Americans to pay more for less.  All the while the economy was forcing the majority of consumers to get by on less (the majority of consumers do not have the wage and benefit package the ‘select’ few had in the Big 3). 

Fast forward to 2008 and we see the ultimate consequence of their actions.  Bankruptcy.  GM and Chrysler had to grovel for a federal bailout and in the process become Washington’s bitch.  Ford survived on her own.  As did the Japanese.  You can bitch all you want about costs, but if you have the revenue you can pay your costs.  And the Americans just couldn’t sell enough cars to maintain the revenue they needed for their cost structure.  By refusing to address the core problem (they weren’t making cars Americans wanted to buy), they only made their competition stronger and more entrenched in the U.S. market.

IT’S ALL POLITICS.  Political cronyism.  And crony capitalism.  It all comes down to political spoils and patronage.  That’s what happens when politics enter capitalism.  Big Business partners with Big Government and they enter into relationships.  You scratch my back and I’ll scratch your back.  But when government protects a business for political expediency, the industry suffers in the long run.  As the U.S. automobile industry has.  Ditto for the U.S. textile industry.  And the U.S. steel industry.

So what goes wrong?  When you protect an industry you insulate it from market forces.  You can build crap.  The problem is, consumers don’t buy crap.  So, for awhile, politics intervene and makes the crap more favorable.  Whether it’s predatory pricing, monopolistic pricing or collusion, business can’t win.  Big Government is there.  If your prices are too low, government will intervene.  If prices are too high, government will intervene.  If prices are too similar, government will intervene.  To make things ‘fair’.  And by fair they mean to reward those who play the game and to punish those who don’t.  And the spoils go to those large voting blocs they need.  And in return for their votes, they can count on patronage.  Government jobs.  Political positions.  Favorable legislation and regulation.  If you got the vote out, you were rewarded quite nicely. 

And consumers be damned. .

www.PITHOCRATES.com

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