Spend, Tax, Cut, Save, or Give Up?

Not OutragedI was thinking yesterday about the statement made to me that I needed to understand Keynes and his macro-economic model in order to understand why spending is what the government must do in order to get us out of trouble. I have always whole-heartedly disagreed with that statement. As I often have acknowledged, I am not an economic guru, but I think I am a pretty smart fellar. I am well educated (as far as formal schooling) and well read (my friends all say I spend too much time with my head in a book). I try to take a realistic look at the situation and see where it makes the most sense to make a move. Now, our invited guest, who yesterday for some reason did not come and reply back to what I had written, obviously thinks this makes me dumb. But I think on a “macro” level, we might all benefit from having this conversation. I am not going to research out the wazoo for this, I am going to simply say what is on my mind, and let everyone have at it.

First Came for Free MarketsBefore I go down the two paths that the two major parties seem to believe, allow me to say up front that in an ideal world I would not have government doing anything. We all know that I am no fan of government intrusion into the free market. A free market without government intrusion runs itself perfectly. Every time. It self corrects. It has good times and bad times. But it always works. Without fail. I am willing to argue that point if someone wants to argue it, but I don’t think anyone can show anything that refutes that argument.

The problem is that we have not had a free market for a very, very long time. Somewhere way back when, some politicians saw something happening to the economy that wasn’t good (a market correction, which while not profitable is always good). Bush FC Drunk SailorThey didn’t want a bad economic situation happening on their watch and thus being blamed on them. So they found a way to manipulate the market so that the “bad” situation could be pushed out to the future, where some other politician would have to deal with it and thus take the blame. Thus the idea of manipulating the market was born, and has thrived ever since. In the hundreds of years since that time, politicians and economists have realized that manipulation of the free market can provide many things… increased control over the population, control over what is produced and who produces it, and partisan image control.

I covered in detail in the “March Towards Socialism” series the major culprits who began using control of the market for political gain and social change in US history. Each successive administration has continued the trend, each adding more levels of manipulation and control, countered with breaks and allowances, to maintain control and push off the inevitable “crashes” like the one we find ourselves in right now. This isn’t about partisan politics. I have always maintained that both parties do it, albeit in different ways (while oddly each doing the exact same thing). It is a broken system that has resulted in a government far too large, too intrusive, and too corrupt. It has resulted in an economy with so many levels of bullshit that it becomes impossible for anyone to even fathom the idea of going back to a truly free market.

ObamanomicsIn that way the politicians have already won. Over two hundred years, they have constructed a system that is far too complex to eliminate in one fell swoop without completely upsetting the apple cart and causing chaos. One of two things must happen in order to get back to “free”. Either we will 1) take another 100 years of concerted effort to slowly dial back the intrusions, working our way backward from where the market intrusion began, or 2) manipulation will continue until it can no longer be sustained and the collapse will be massive and sudden and horrible. I wish for #1 but I honestly fear that #2 is what we will see happen. I don’t think it will be nearly as soon as some, such as BlackFlag, see it happening, but I do believe it is the course of the future on some timeline, be it in a year or a hundred years.

Fiscal Conservatives CartoonSo there is no question where I stand on what I would LIKE the market to be. But that is not the situation that we find ourselves in, my friends. If the collapse ever happens, we can then apply that thinking, but for now we have to deal with what we’ve got. And what we’ve got is a system that has massive complexity and layers upon layers upon layers of controls. The government has us, pardon the expression, by the balls. So the question then becomes, if we have no choice but to have the government take some sort of action that will be best for economic growth in our current reality, which philosophy is the right one to make things work? The Republican party has one philosophy, while the Democrats employ the opposite philosophy.

Heritage 2009 Proj Deficit ChartThe Republican plan looks something like this: In order to stimulate the economy, the right move is to take care of the wealthy, the producers and industries, and then allow that money to work its way down in the system. The upper levels use their money to create jobs, which filters the money down to the lower levels. To do this, they often use the message of tax cuts for the businesses and wealthy. A basic principle, put the money in the hands of the upper economic brackets and allow it to “trickle down.” They usually claim tax cuts for everyone, although that isn’t what happens. Their rallying cry seems to be that the best thing to do is put the money in the hands of the people, who will use it more wisely than the government will use it.

The Democrat plan looks something like this: In order to stimulate the economy, the right move is to take care of the lower income people, the workers and the consumers, and then allow that money to work its way up in the system. The lower levels will spend their money on products and services, which filters its way up to the higher levels. To do this they often look to increase taxes for the businesses and wealthy. A basic principle, put the money in the hands of the lower economic brackets and allow it to “trickle up.” They usually claim tax increases on the wealthy, although that isn’t what happens. Their rallying cry seems to be that the best thing to do is put the money in the hands of the people, because the wealthy are too evil to trust to do the right thing.

Party in Corporate PocketsThe Problem is that they are both full of shit. Big business and the wealthy are in complete control of Washington DC, both the Democrats and the Republicans. Republicans, despite their claims (Read My Lips… No New Taxes, Bush the 1st), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks. They have no choice, of course, because getting re-elected costs money, and the poor can’t pay it. The Democrats, despite their claims (95% of Americans will not see one dime of tax increase, Obama the Messiah (He Lies!… zip it Wilson)), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks. They have no choice, same damn reason. We saw those big tax increases for all of us under George HW, and we have already seen more legislation that will increase the tax burden on all Americans from the Obama administration in 9 months than we saw in the last 8 years.

Mr. BurnsIt seems to me to make sense that the wise thing to do is not punish the wealthy. The wealthy have the means to fight back against an over-reaching government. And by fight back, I mean they can hide their money, move their businesses overseas, and simply avoid the trap that government has laid for them. And if all else fails, they can simply pay off government officials at the highest levels (the 535 most corrupt people in government are the most paid off) to get a break one way or another and retain the wealth that they have. Despite the claims of “caring about the people” from Democrats, we have seen again and again that they don’t care one bit. Despite the claims of the same from Republicans we see the same thing. We watch the stories again and again from both sides of the aisle. Corrupt politicians getting caught being corrupt. The only difference is that they rarely have to pay a penalty.

Democrat Trick or TreatIt also seems to me that if the government is going to give someone a break it should be the working Americans, as they need it the most. The bottom half of the economic spectrum is barely surviving (Because of government, NOT because of corrupt business practices, it should be noted). And the least the government that completely screwed them can do is help them out. The problem is that government has them right where they want them… dependent. So as long as they do survive, government is going to do nothing that will help them to actually decrease the dependency on government. Despite the claims of “giving people a hand up” from Republicans, we have seen again and again that the plight of everyday Americans only worsens. Despite the claims from Democrats of the same we see the same thing. We watch the campaigns again and again from both sides. Each claims that this time they are going to change the fortunes of those on the low end of the economic spectrum. Sadly that has been the campaign promise EVERY election for the last 50 years.

Babies Crying Stimulus BillSo let’s forget for a second that the two parties in power are both full of crap. Let’s forget that the Republicans are a corrupt bunch of yahoos who use fear to make Americans feel that we need them to protect us from abroad and from those evil, redistributing Democrats. Let’s forget that the Democrats are a corrupt bunch of yahoos that use class warfare to gain power so that they can then ignore any issue that will actually solve a problem and who will protect us from those evil, money loving Republicans. Both parties are full of crap. That is a given.

What is the path forward for economic prosperity, in a nutshell. I know we will get down to some real minute details. But on a macro level, is it better to take care of the wealthy and have the wealth trickle down, or to take care of the poor and have the wealth trickle up? I look forward to the discussions on this. But be prepared. I will be lurking and will challenge both sides. As a disclaimer, for any who aren’t aware. I am a fiscal conservative at heart, so we know where I lean, but I lean there more for less taxes collected from EVERYONE than because I want to see the wealthy “taken care of.” What I would like everyone to do on this exercise is take off your partisan hat, and talk on regular people level. Which is the right way, and why?

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Comments

  1. posting for comments

  2. CWO2USNRet says:

    I lean toward ‘trickle-down’ but recognize there is some truth to the ‘trickle-up’ theory as well. What we need to do is transfer power away from the politicians and back to the people and make government finances more transparent. The politicians biggest tool for power grabbing and obfuscation is the tax code. If we can take that tool away from them then money can be injected into the economy at all levels. We would benefit from ‘trickle-down’ and ‘-up’ simultaneously. The politicians would be forced to limit their power plays and special interest catering to the spending side of the government ledger as opposed to the revenue side. Then the people would more easily see and understand what the beltway boys are doing and would possibly pressure them to drive down spending.

    Those of you that are well read probably recognize these points as a few of the arguments supporting the FairTax. I too am a pretty sharp guy that is well educated and well read. After a year of studying the pros and cons of various tax proposals I have hitched my wagon to the FairTax movement. The points above are a few of the pros but are, to my Libertarian leaning self, among the strongest.

    When I initially checked out the FairTax I was skeptical and doubted an idea so simple could do so much. The more I got into the weeds of this and other proposals the better the FairTax looked. If you haven’t looked into it, please do. If you have looked into it and remain unsold then please look a little deeper. All of the cons that I have seen can be answered and typically result from incomplete understanding or are biased spin coming from the beltway power brokers that are invested in the status-quo and stand to lose so much power.

    Have a great day, John (Coming to you from inside the beltway. I can actually see the Capitol dome from my office window. Kinda cool but also frustrating)

  3. This is a great topic and the question at its heart is well put.

    First, let me challenge a basic assumption:
    USW Said:

    The bottom half of the economic spectrum is barely surviving (Because of government, NOT because of corrupt business practices, it should be noted).

    I do not believe this to be true. I know I have deputized the industrial revolution into my arguments before, but I must do so again. Corporations, absent government, have little incentive to pay above free-market value for employees. Obviously, to recruit high caliber employees, higher prices must be paid, but your McDonalds worker would not be making $5 an hour. He might be making $2, if that. Now, you can argue, that with lower taxes, that $2 would go further than the $5. There is a case to be made there. But he probably wouldn’t have any health benefits, vacation days, sick days, or a safe working environment either. Children would be put to work in sweat shops. You see this, time and again, in developing countries as well. (I seem to recall BF arguing that this is because of the government making this happen, but I’m hazy on his argument.. I’m sure he’ll refresh me). The overarching points is that the average corporation does not have the best interests of its workers at heart. Rather, they will take the course most profitable, and that is necessarily detrimental to the workers.

    That said, I agree whole-heartedly with your sentiments regarding Democrat/Republican implementation of their stated policies. I do subscribe to the believe that trickle up is the way to do for two reasons and with a caveat.

    1. Every dollar given to the poor will be spent. Not ever dollar given to the wealthy will be invested. Thus the money cycles at a higher rate into the economy.

    2. The poor need it more. Yes, I know, this doesn’t work for many here, but all else being equal I’d rather ensure that the poor can buy clothes than that the wealthy can buy a sports car.

    Caveat. This should not be done 100% against the wealthy. There needs to be balance. This is why I like the progressive tax code.

    I’m sure we’ll get into this more, but I’ll leave it there for now.

    • IMO, the balance should be across the board…meaning tax cuts. It has been proven that tax cuts actually increase Federal revenue over time. If that cannot be done, then I am on the Fair Tax bandwagon as well…

      • Please provide citation to back up that claim.

        • The Reagan tax cuts
          Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

        • ( MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

          SENATOR OBAMA: Well, that might happen or it might not.)

          MR. GIBSON: All right.

          You have however said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton, which was 28 percent.”

          It’s now 15 percent. That’s almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent.

          SENATOR OBAMA: Right.

          MR. GIBSON: And George Bush has taken it down to 15 percent.

          SENATOR OBAMA: Right.

          MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

          SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year — $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair.

          And what I want is not oppressive taxation. I want businesses to thrive and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don’t have it and that we’re able to invest in our infrastructure and invest in our schools.

          And you can’t do that for free, and you can’t take out a credit card from the Bank of China in the name of our children and our grandchildren and then say that you’re cutting taxes, which is essentially what John McCain has been talking about. And that is irresponsible.

          You know, I believe in the principle that you pay as you go, and you don’t propose tax cuts unless you are closing other tax breaks for individuals. And you don’t increase spending unless you’re eliminating some spending or you’re finding some new revenue. That’s how we got an additional $4 trillion worth of debt under George Bush. That is helping to undermine our economy, and it’s going to change when I’m president of the United States.

          MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

          SENATOR OBAMA: Well, that might happen or it might not. It depends on what’s happening on Wall Street and how business is going. I think the biggest problem that we’ve got on Wall Street right now is the fact that we’ve got a housing crisis that this president has not been attentive to and that it took John McCain three tries before he got it right.

          And if we can stabilize that market and we can get credit flowing again, then I think we’ll see stocks do well, and once again I think we can generate the revenue that we need to run this government and hopefully to pay down some of this debt.

          http://www.floppingaces.net/2008/04/17/obamas-plan-to-tax-capital-gains/

          • Gibson should have immediately called him out, by saying “so what you are proposing is an increase on all capital gains so that the secretary is punished with a higher tax rate because of those 50 jackasses that made 29 Billion. Punish everyone for the actions of 50 people. Senator Obama, you are talking out of both sides of your mouth”

            • But Gibson so wanted Obama to come out the winner, he couldn’t step up and do his job by calling him out.

    • Matt:

      First of all, “have little incentive to pay above free-market value for employees”. Why would anyone pay for anything above the “free-market value”? Whether it is employees, cars or sunglasses. I assume of course that “free-market value” is being used here as synonimous with “fair-market value”.

      The real question is whether they are paying “less” than FMV and if so, what allows any business to consistantly pay less than FMV for labor?

      Ahhh, the McDonalds example so often put out there by the leftists and which is absolutley FALSE. The starting wage for a McDonalds employee, during the height of the recent boom period, in north Idaho and Eastern Washington was close to $11.00 per hour. It was similar in south Idaho. If your statement is true then this could not have occured.

      “The overarching points is that the average corporation does not have the best interests of its workers at heart. Rather, they will take the course most profitable, and that is necessarily detrimental to the workers.”

      So if we remove the “corporate” label does that mean that the business will now have the employees best interest in mind?

      If a business does not take the most profitable course it will cease to exist.

      If a business no longer exists it no longer has employees. In your line of reasoning NO JOB is “necessarily beneficial” to the workers.

      “Every dollar given to the poor will be spent. Not ever dollar given to the wealthy will be invested. Thus the money cycles at a higher rate into the economy.”

      First part is true. If every dollar given to the rich is not invested then what happens to the rest?

      Once the poor spend “every dollar” where will those dollars reside?

      How will economic growth be sustained once the poor have spent “every dollar”?

      “but all else being equal I’d rather ensure that the poor can buy clothes than that the wealthy can buy a sports car.”

      So which will create more high paying jobs, making clothes or sports cars?

      “There needs to be balance. This is why I like the progressive tax code.”

      The “progressive” tax code is not “balanced”. By its very nature it is aimed at those who make more than those in the lower brackets. It is by its very design a penalty for increased production and/or productivity. Which in turn is the very thing we need to expand the economy.

      Giving money to either end, or the middle, of the machine creates the same problem and solves NONE. It plugs the safety valves needed to let off the steam which in turn keeps the machine from exploding.

      • Lets not forget that the starting wage – $11 / hr is only the start for the employer. Add FICA, unemployement, etc

      • First of all, “have little incentive to pay above free-market value for employees”. Why would anyone pay for anything above the “free-market value”?

        Precisely my point. If the labor pool will allow a company to pay its employees $1/day, then that is the free-market value. That is not, however, sufficient to live on. Companies must be forced to pay sufficient wages such that employees can subsist. A prospective worker would have no choice but to accept $1/day if they had no other options, because very little money is still better than no money.

        Ahhh, the McDonalds example so often put out there by the leftists and which is absolutley FALSE.

        Interesting. I did not know about higher than minimum wages being offered at McDonalds. I simply chose it as an example by default, not a researched finding. So, I retract the McDonalds example and substitute workers in the strawberry fields, gardeners, temporary employees, maids, retailers, etc. Surely many of these would be paid a bare minimum wage with no benefits.

        If a business does not take the most profitable course it will cease to exist.

        True. But if we handicap all businesses such that they must all pay minimum wages and provide certain minimum benefits and safe working environments to their employees, then competition is no longer able to undercut them. Yes, this is a perversion of the free market. I am ok with that.

        “Every dollar given to the poor will be spent. Not ever dollar given to the wealthy will be invested. Thus the money cycles at a higher rate into the economy.”
        First part is true. If every dollar given to the rich is not invested then what happens to the rest?

        Fair. To clarify. If I spend money and buy a shirt, that money goes to the company which produced the shirt, which then hires employees to make more shirts, who are then paid and buy more shirts, thus perpetuating the cycle. If I am wealthy and given the money, I may spend it (in which case, the above ensues), or I may hide it under my mattress (in which case, the buck stops there – worst case scenario), or I may put it in the bank. If I put it in the bank, the bank will hold a certain percentage of it as margin. The balance will be sent back out into the world as investment. This margin is dead money. It does nothing and helps no one. It sits there.

        Once the poor spend “every dollar” where will those dollars reside? How will economic growth be sustained once the poor have spent “every dollar”?

        See above. The money trickles up.

        “but all else being equal I’d rather ensure that the poor can buy clothes than that the wealthy can buy a sports car.”

        So which will create more high paying jobs, making clothes or sports cars?

        Neither is necessarily above the other. If I buy the shirt, then the company will have to deal with supply chain, inventory, procurement, accounting, production, factories, etc. Many of these are high paying jobs in exactly the same way as car manufacturing is. (Adding, what percentage of wealthy people buy American made cars? If they send their money overseas, does this help the economy in your view?

        “There needs to be balance. This is why I like the progressive tax code.”

        The “progressive” tax code is not “balanced”. By its very nature it is aimed at those who make more than those in the lower brackets. It is by its very design a penalty for increased production and/or productivity. Which in turn is the very thing we need to expand the economy.

        I had to try to answer this question a few times before I was satisfied with my answer. I think the conflict comes with your use of the term penalty. It does not cause people to stop seeking greater production and/or productivity. Despite the higher taxes that I pay, I continue to try to do more (thus why I am getting an MBA). This is something like a paredo (sp?) curve. Increased effort starts to net less and less and you eventually would choose to stop seeking higher wages because the increased effort does not warrant increased effort. But with the top federal rate the 35, you’re still receiving plenty of return on your investment. Being a CEO is a hard job but people still seek it out because the after-tax pay is still worth the effort.

        Giving money to either end, or the middle, of the machine creates the same problem and solves NONE.

        Without a redistribution of wealth, the wealthy will become wealthy and the poor poorer. Even if they were not poorer in absolute terms, the disparity would mean that they would eventually become powerless serfs to the owners of the means of production. It’s not a perfect system, but it’s far better than doing nothing.

        • What’s with the $1 an hour crap when your own Welfare system eclipses the Canadian system which itself is socially accepted in a country populated heavily with socialist-lite characters? There are piles of minimum wage jobs currently available in America and they are those same minimum wage jobs people didn’t want to work in 2006. As there is not mass starvation in the street, I ask you where those people are getting sustenance which affords them not taking jobs when they wish. What’s affording beggars to be choosers?

          Also protectionism isolates your own goods as well. Comprehend. You don’t have the natural resources to be completely self contained and even if you actually did (which you definitely do not) your current standard of living goes rapidly to Eastern Block circa 1980.

          Redistribution of Wealth is a liberal fantasy dreamed by those who wish something for nothing and used by those in positions of prominence who so far have themselves not parted with their own gold and silver as a threat to force coercion from their monetary peers.

    • Matt,

      “a safe working environment either. Children would be put to work in sweat shops. ”

      As an evil, capitalist, exploiting my workers, I must say, BULLDOOKEY! Raising minimum wage has had no real effect on our hiring. We have to compete with local businesses to find workers, and its damn hared to find people who want to work.

      There are laws that require a safe working environment. What does economic policy have to do with that?

      Child labor, sweat shops, again, laws=illegal.

      I think the term is “Chicken Little Prophesies”.

      The title of this article is “Spend, Tax, Cut, Save, or Give Up?”

      If you want to discuss why sweat shops or hazardous work environments are not profitable in the US, I would be happy to explore that, but that”s a totally different subject, or an attempt to change the subject by interjecting emotional talking points. Kinda the same as the Rep’s throwing “death panels” into the healthcare debate.

      • Fair, LOI, and my apologies. I was conflating the need to redistribute wealth and the need to regulate certain business practices.

        So, to return to the original subject, you claim that you have to pay above minimum wage to attract employees. Some followup questions:
        -Would you need to pay about minimum wage if the other companies did not? That is, if they paid less, you could probably pay less too, but still more than them, no?
        -If raising minimum wage has no affect on your hiring, why do some many people complain every time congress tries to raise it? That is, if it’s a meaninglessly low number, why do people object to making it a slightly higher meaninglessly low number?

        Adding, I don’t think you’re evil. I, too, am a capitalist (after a fashion). But I do think that most businesses would pay their employees less if they could get away with it. So this policy forces more money from the top of the pyramid to the bottom, where it can trickle back up.

        Also adding, a lack of a safe working environment with no medical benefits is essentially a tax on the worker. He must buy better insurance and/or be prepared to lose wages. So, either he has to lay out more money and thus earns less, or he risks catastrophe and thus loses x (where x = likelihood of injury * cost of being injured). So it’s not 100% off topic – it’s just a slight tangent.

        • PeterB in Indianapolis says:

          Mathius,

          Your arguments always seem to presuppose that no jobs have any qualifications required (i.e. they are all McDonalds jobs). Also, your arguments always seem to imply an infinite labor pool. Neither one of these is the case.

          Take for example right now in the midst of a huge recession with 10% unemployment. Many US firms cannot hire the workers which they need AT ANY PRICE because they simply cannot find workers that meet the qualifications necessary to get the job done! If workers existed with the right qualifications, they could largely dictate their own salaries and benefits to these companies right now, in spite of the crappy economy.

          You see, in the “real world” companies want to have labor that will actually do the job they are hired to do, and do it well. Also, in the “real world” the supply of labor is finite.

          Because of these factors, labor generally has a lot of power to negotiate for wages and benefits. You seem to believe that company owners can simply hire whomever they wish for whatever wage they wish to impose, and the laborer will simply be happy with it. That would only be the case if all jobs were completely unskilled and the labor supply was infinite.

        • Matt, apologies accepted. Have established you are a Fuddie. Beep, beep.

          “Would you need to pay about minimum wage if the other companies did not?”
          (supply and demand, if there were more people GENUINELY seeking employment, it would allow us to lower starting pay. Reality, our starting pay has never gone down, flat, yes, but not down. In the 90’s, I did the unthinkable, started hiring women for traditionally male jobs. That helped, but we still face daily labor shortages due to the quality of those seeking jobs. We hire those skilled in area’s that are of no benefit. Reasoning, we can teach skills, but they have to have desire to learn and improve their position.)

          “-If raising minimum wage has no affect on your hiring, why do some many people complain every time congress tries to raise it? That is, if it’s a meaninglessly low number, why do people object to making it a slightly higher meaninglessly low number?”
          (DIIK, some people complain when hung with a new rope. Raising minimum does affect hiring of unskilled and HS grad’s(current HS unemployment at all time high, good intentions still have consequences). We hire someone with any experience vs. none for same money. Used to, would hire some summer help for a few weeks of outside cleaning.
          If economy recovers, will go back to that practice in years to come.)

          “Also adding, a lack of a safe working environment with no medical benefits is essentially a tax on the worker.”
          (Need to separate those, safe working environment is necessary to me, for me to attract and keep good workers.
          Greed and self interest is the driving force, I treat my workers well, so they will do quality work, they allow me to stay in business. It is a cooperative relationship, I can fire anyone, anytime. Any or all can quit at anytime.
          If their self interest and my self interest coincide, we both profit. If I or they get greedy, we both fail. (have seen that in several businesses where union demands resulted in short term gains and business closing.)

          Medical benefits, sore subject. We do not offer, but want to, not to be nice, but to improve and maintain our workforce. Last time I ran the numbers, would cost us five dollars an hour for each employee, per hour, per week.
          5X40=$200 a week per employee, if I REQUIRE 100% participation. They can get individual coverage cheaper
          than our group rate. If I were to give them $400 a month for insurance, 85% would drop the insurance within six months(have tried some things in the past) and keep the money.

  4. USW:

    You ended with a question containing two options. Your choices are false and therefore neither is worthy of selection.

    However, you posed a different question at the beginning that is relevant. How do we get from here to there, with there being a “free market”.

    Let me pose the first idea.

    1. Eliminate all subsidies to everyone. These are govt funds actually given to others.

    2. Then do one of the following two things:

    a) Eliminate all tax breaks for everyone, or
    b) Retain only those tax breaks that can be the SAME for everyone (whether business or individual). All tax breaks that cannot be given to everyone will be eliminated.

    Now let the games really begin.

    Best to you and the family.
    Thinking about a nap along the river this weekend.
    JAC

    • Flat tax with ZERO write offs, lobbying is a criminal offense and taking bribes through lobbyist’s “jiggery pokery” treason. Look for accountants and lawyers to go crazy here.

  5. “A free market without government intrusion runs itself perfectly. Every time. It self corrects. It has good times and bad times. But it always works. Without fail. I am willing to argue that point if someone wants to argue it, but I don’t think anyone can show anything that refutes that argument.”

    I refute it. I’m unaware of it ever working, never mind “perfectly”, but this was already part of our debate (which I’m not sure I ever finished–let me know).

    But I’ll state this much again: While I prefer a more socialist type of paradigm, I’d give no government a try before ever voting for either of the two parties in power today.

    • Below is the (part of) text of a speech by President Vaclav Klaus of the Czech Republic

      The last topic I would like to mention here today is the current financial and economic crisis. The economic profession, the politicians, as well as the public did not expect it to come. They all accepted the validity of the so called “Great Moderation” hypothesis based on the belief in the omnipotence of central banks and governments to control the macroeconomy and in the feasibility, rationality and positiveness of microeconomic regulation, especially in financial and banking sectors. This hypothesis was, of course, wrong and the dream about the eternal removal of business fluctuations did not materialize.

      The current crisis is a consequence of a combination of government failures. On the macroeconomic side, it was the unprecedented build-up of imbalances in the world economy and the unusually long period of low real interest rates. On the microeconomic side, the existing partial and very imperfect regulation distorted the behavior of banks and financial institutions and motivated them to look for ways to escape it by means of various “financial innovations”. They found it relatively easy to move their activities outside the regulatory perimeter, the most known example of this is the securitization of subprime mortgage credit.

      I am convinced that the current crisis is not the result of a market failure or of any inherent deficiency of capitalism. It is a government failure, resulting from the immodest and unhumble ambitions to control such a complex system as society and economy.

      http://www.brusselsjournal.com/node/4070

      Hope all can take time to read the whole speech. Interesting how today, those who lived under communism/socialism are moving away from it as rapidly as possible, while those who are free, seem intent to chain themselves.

      • Let’s hear what the people have to say once big money takes control of their government (if it happens–Europeans aren’t as brainwashed as Americans on free markets–i.e., they won’t do away with with nationalized healthcare).

        • big money or big government, no its both. Big money is using big government today to gain advantages. Big Pharmacy
          made a deal with Obama. How many of his people are from big
          money? What was that promise he made about keeping lobbyist out? As bad as Bush was, this guy is worse on using/being used by big business.

          If a tree grows too tall, do you
          a) trim it
          b) kill it
          c) water an fertilize it
          d) pass a tree tax so you can do studies on it that include conferences in exotic places, keep studying and taxing until the tree dies anyway.

          • D.

            Because with the knowledge you have gleaned, you will be able to more effectively deal with the problem in the future.

            Though I might object the the exotic locales. And obviously, I am only really talking about more complicated subjects.

            There is a drug problem in the slums, do you
            a) Arrest everyone who uses drugs
            b) Arrest everyone who sells drugs
            c) A and B
            d) Commission a study to figure out the underlying cause of the problem so that you can address it more effectively without creating criminal records for poor people who already are disadvantaged

            • PeterB in Indianapolis says:

              Mathius,

              Our government attempts to do A, B, and D simultaneously… how’s that working out so far?

              • It’s doing A and B, but not C, which is defined as A and B? Wow.. only in Washington…

                I’d say it’s doing a pretty lousy job, Pete. Pretty lousy. I support B (only as a stopgap) and D.

              • But I don’t think they’re nearly invested enough in option D. The government treats drug abuse as a criminal matter when, at worst, it should be treated as a medical problem. If the government wanted to get serious about the “war on drugs,” the first thing they would have to do is wipe the slate clean for all non-violent casual drug users. Then get everyone else into treatment, legalize marijuana, and regulate everything else (subject to FDA approval).

                It will be interesting to see how things progress in California over the next few years..

            • Do E…legalize drugs, then none of them are criminals…

              • I’m with Terry

              • PeterB in Indianapolis says:

                I am going to agree with both Terry and Charlie on this one.

              • Peter, this is a cause for celebration. I’m buying … and if I get laid off and can’t afford the booze, I’ll hyjack it.

              • PeterB in Indianapolis says:

                Amen brother!

              • Terry, Charlie & Pete,

                Totally oppose. The problem is about health care. I like personal freedom, but that has to come with personal accountability.
                You want to smoke, do drugs, overeat or not wear a seat belt, that’s your business until I have to pay for that behavior. Get the government out of my wallet, we can all be mostly free. This even affects the current law on ER’s must treat anyone. So, moral dilemma. Heavy drug user is admitted for drug O.D., no insurance. Why do I end up paying a portion of his $10,000 to 30,000 suicide along with others with insurance or tax payers?

                Legalizing drugs only works if people are responsible for themselves. And willing to live, or die of the consequences.

              • LOI

                The problem with your argument is you have the cart before the horse.

                It is the belief you can overrule another person’s choices that establishes the Entitlement Society.

                If you believe you can overrule someone’s choice regarding their own body, it is automatic that the Entitlement Society will spring into life.

                One must resist meddling in the free, non-violent choices of others so not to give an excuse of someone else to meddle in your affairs.

            • Build a wall around it, mount cameras everywhere and televise the results to the rest of America. Just the government controlled betting alone could solve your debt and the poor getting decimated by their situation win the undying gratitude of society and the “greater good”.

  6. I agree with your ‘both parties are full of crap’, until now – ie Obama – there is a new level of out of control “control”. Csars, Alinsky attacks.. ..

    What bothers me time and time again, are the charts that show how ‘well’ things were under Clinton ! LOL — What BS – He was just lucky that there was the internet bubble. We (ex bbs’ers) all saw it and couldn’t believe what was happening. It was tulip time in America. But now – 20 years later – Amazon HAS made money ! Plus Newts group in congress back then did more for balanced budget – Let’s not forget that Clinton actually shut the GOVERNMENT down when he didn’t get his way !! Bush I – didn’t do that – he knew he was pres of all Americans, and by NOT shutting govt down he got the mis nomer of “no more taxes”. Another job of poor reporting well done ! Also the MSM let the dem spin go on and on that Bush I was cutting medicare – when his plan was just ‘reducing’ the growth of medicare with a few other options and today would be considered minimal cost.

    It was no secret back in the ’70 that soc sec and medicare would be broke – if something wasn’t done. We knew it (dems) I even briefly talked with Bill Bradley about it. He knew it.
    Oh well..

    • I agree that Clinton gets too much credit for the boom during his administration. I see much of it coming from the peace dividend created by Reagan’s success in lowering taxes and breaking the USSR. Add to that the telecom and dotcom booms and Newt’s control of spending and you get surpluses. What Clinton failed to do was warn people about the excesses of the dotcom and telecom markets. Their runaway nature led to the recession of 2000/2001 which was compounded by 9/11 and the Enron and other scandals/failures. Bush II did an ok job of weathering those storms for which he gets little credit. Bush II did warn about the housing problems but should have been louder and should have used the regulatory tools better to try to soften the blow. I do not think he could have stopped it without Congress overhauling the Freddies which they refused to do.

      Yes SS had been known to be a problem for decades. The biggest mistake in the “fix” institituted under Reagan was leaving the money in the general fund. Had they privatized SS then as Bush II wanted to do, we would have a solvent system today. They raised FICA taxes in ’84 to collect surpluses for us boomers, then spent all the money. Big mistake. Bush at least tried for a debate on SS. He got shouted down. O is ignoring the problem. We should be fixing it before we take on healthcare.

      • T-Ray,

        It should also be noted that Clinton made some moves that helped reduce federal spending. It is easy to dismiss some of his smart moves by only looking at what the bubble provided for him. For example he reduced welfare expenditures by enacting welfare reform. The new program worked and increased the productivity of single mothers massively. It reduced total spending on welfare.

        And unfortunately, it was among the first victims to the current administration, who immediately upon assuming command, eliminated the Clinton welfare reform that worked and replaced with with a stimulus plan that would get folks back to the dependent levels that government was more comfortable with.

        Isn’t it an interesting thing to look back and see that perhaps ol Bubba wasn’t as bad as people thought.

        • My poor recollection was that Clinton was “forced” into welfare reform as part of the contract with Gingrich etal.

          But clever enuf to take credit when it turned out it worked (or so they said)

        • Actually favored Dem President / Rep congress than the reverse – and as shown – neither should have both!

        • Lord knows I’m no fan of Clinton but I used him the same way you do today on my blog vs. Obama.

          He was too far to the right for me, but at this point pretty much anything would be better than what this stumbling administration is doing (which is nothing).

  7. Morning All

    Just doing some reading along for now.

    Hope you all will have a great day.

    Judy

  8. My first comments will be on the current stimulous plan. I have no problem with the governement stepping up in a recession and spending money on infrastructure that has long term benefits to the commerce. We all know that our roads, water, energy distribution, communications and such need improvement. Emergency legisalation for this should be for quick hit jobs that can be be done in the first 2 years of a recession. Beyond that it should stop. That said, about 80% of the current stimulous bill was waste. If those additional projects could be justified, they should have been justified outside of any emergency legislation.

    The other aspect of stimulous is tax reductions on industry to encourage job growth and production here rather than abroad. In fact I would do away with corporate taxes since they only pass it on to consumers anyway. The only negative I see in this is that some of the corporte taxes are paid by oversees consumers but since we are a net importer, this may balance out in the end.

    Beyond that, I would control government spending. If spending is controlled, then less tax revenues are required. The Federal government is involved in too many things it should not be involved in such as welfare, etc. These are state and local issues. Subsidies to coprorations would stop.

    I like the income tax because at the end of the year I see how much they are getting. You never know much they are collecting in excise taxes and hidden fees. It is substantial. I am ok with a moderately progressive income tax but would limit the upper bracket to something like 20-25%. All would pay something. Everybody should have skin in the game. Deductions would be limited to a simple few. Any money spent to generate income should be deductable. I am not sure how I would treat capital gains but my inclination is to do away with the distinction between earned and unearned income. All income should be treated equally. That said, interest on a home would be part of the investment cost and would be deductible when the home sells.

    Every tax has an administrative costs. Cut the number of taxes down to 2 or 3. Keep it simple. For decades the US government made money from land sales and customs duties. We ran out of land. But customs duties, individual income tax, and maybe a VAT should be sufficient to run the government. If we bring the cost of government down, all prices come down and the ecomomy will thrive.

    • Well stated, but for a major change to be implement as USW said, the only solution I see is implementation of the FairTax. It’s getting to the point of being a mandatory solution. It takes a while to assimilate how it would work and project the intended consequences and hope there’s no real negative unintended consequence.

      I actually had a glimmer of hope that Obama might have included this as part of a real change. But then that would go against his unstated non-transparency !! Really too bad.

      Plus – if you are a black person who has children and live in DC – how do you feel about Obama stabbing you in the back regarding the voucher program? I think it would push me over the edge! That was my other glimmer of hope for him ! I thought at least he’d be honest for the benefit of black kids !!! Whatta slimeball !! And all my lib friends think I’m a radical righty !! LOL

    • T-Ray if any of that cheddar made it to pavement, the stuff is too precious to drive upon.

  9. My view, the best thing done in the past was when the government “helped” small businesses, usually by getting out of the way. My reasoning for that is the FACT that small business is the largest employer in the US. What the current government is doing has no intent to help small business, the opposite in reality.

    The other key policy to stimulate jobs and the economy is energy. Make energy cheap and our economy will boom. Insist on green? Why haven’t they built those solar or wind farms? To hell with appeasing the tree huggers! Drill, baby drill!
    We need 50 nuclear power plants, fast track their construction

    • LOI:

      Sen. Lamar Alexander had an interesting piece on Fox News and also suggested Nuke Plants. If you want to create jobs AND reduce our dependence, this would be a good place to start.

      Oh, I forgot, we need to spend about $200M researching it first.

      And yes, DRILL BABY DRILL!!

      • The Chinese will beat you to it and Canadian directional drilling technology will play a big part in it. Sorry about that.

  10. Off topic but found this today:

    State launches boycott of ‘unconstitutional’ federal laws
    Urges 49 others to join in combating government’s ‘abuse of authority’

    http://www.wnd.com/index.php?fa=PAGE.view&pageId=113606

  11. Ooooh! Economics!

    (oh oh … here comes Ray’s nightmare – a 20,000 word post….!) 🙂

  12. PeterB in Indianapolis says:

    Mathius says, “Without a redistribution of wealth, the wealthy will become wealthy and the poor poorer.”

    Ah Mathius, it must be nice to live in a dream world. We have had a LOT of redistibution of wealth, supposedly from the rich to the poor in this country in the past 45 years already, and where has that gotten us? The gap between the rich and the poor keeps increasing anyway! Gee… I guess that that redistribution stuff just doesn’t work, now does it?

    I am sure that you will argue that we simply haven’t tried it on a grand enough scale yet. Here, let me clue you in on a little secret, if you try something on a moderate scale, and it has the opposite effect of what you envisioned, trying it on an even larger scale will cause it to have an even greater effect in the opposite direction which you are intending.

    The only way for a poor person to become rich is by working, earning, saving, investing, and becoming wealthy. There are many many examples of those who are supposedly “economically disadvantaged” becoming wealthy. The more “wealth redistribution” we engage in in this country, the more difficult it becomes for such success stories to actually happen.

    You yourself say that you are willing to further your own education and continue to work harder in order to make more money. That, my friend, is the ONLY way it is done. There is no other way.

    • I agree – if it happens they will come…. to figure out a way to get ahead !!

      The same as with the regulation of Wall St – they set up unacceptable criteria for loans , and then came derivatives which no one understood except for the ones making the money.

      Heck – the investment newsgroups were talking about crash for years – just the timing took a bit longer – I almost took a (for me) monster chunk of $$ to buy gold coins – pre and then post 9/11 – but was too cautious, waited and waited… then felt – that since I really didn’t understand derivatives etal that good not to gamble.. Well – I didn;t and now have lost what for me would be 10-15 years of retirement dollars – I apologize to my daughter since she’s my ONLY child. LOL

      • Frank

        Do not look back but forward.

        We cannot predict the future, and thus, can only do the best we can in the investments (or avoidance of investing).

        For example, if you invested in gold in 1980 – you would have suffered a loss of 80% and stagnation for 25 years while the stock market tripled.

        And you made a great decision – do not invest into something you do not understand. Do not regret that it may have made money – if you do not understand it, you have no business to invest in it.

        One must make a choice – you are either an investor or you are a speculator.

        Speculators do not need to know what they are buying in – they are gambling, not investing.

        I am an investor – in the marketplace and at the poker table.

    • Long but good article about the affects of government helping “the poor people”.

      http://www.andrewbernstein.net/articles/7_welfarestate.htm

    • If you are falling from a cliff and flap your arms, you may slow your descent, but only slightly. Does that mean that if you were falling and had a jet pack, you would crash harder? Small scale attempts to buck a larger trend that do not buck then trend do not prove that a larger (more effective) attempt would fail. I reject your logic.

      That said, to quote our host..
      USW Said:

      The Problem is that they [Democrats and Republicans] are both full of shit. Big business and the wealthy are in complete control of Washington DC, both the Democrats and the Republicans. Republicans, despite their claims (Read My Lips… No New Taxes, Bush the 1st), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks. […] The Democrats, despite their claims (95% of Americans will not see one dime of tax increase, Obama the Messiah (He Lies!… zip it Wilson)), raise taxes on everyone while quietly helping the wealthy and corporations take advantage of regular folks.

      So we haven’t really been redistributing wealth to the poor (at least not well) have we?

      And for the 200th time, I am not interested in making the poor wealthy, or the wealthy poor. I am interested in ensuring them a decent standard of living. No, I am not going to define that, but I think it would encompass having enough to eat, a roof over their head, heating, etc.

      The measure of a society is found in how they treat their weakest and most helpless citizens – The Peanut Farmer

      • PeterB in Indianapolis says:

        Mathius,

        I think that you will find that the vast majority of people receiving “assitance” from the government are neither weak nor helpless in reality.

        If the government had any means whatsoever of limiting its assitance to those who are truly weak and helpless, then you might convince me that government assistance is useful.

      • It maybe the measure, but if such a society resorts to using violence to ‘somehow’ improve the treatment of the poor, society will be destroyed.

      • SK Trynosky Sr. says:

        Guys, I’ve spent 35 years of my life working with the poor, all of it in the trenches. Unless you have been there, with eyes wide open, you do not know what the hell you are talking about.

        Back in ancient Rome there were these brothers, the Gracci brothers. They were all for more bread and better circuses. They wanted to control the plebs and thus control Rome. Fortunately, they were knocked off, however there were more and more like them who eventually accomplished the goal of reducing the majority of the population to dependent saps. Then, the lean, hungry barbarians from the East took over and we had a thousand years of darkness.

        I note that the issue of the end of welfare reform has been brought up again and again by the more conservative/libertarian writers here. It has been steadfastly ignored by the more liberal. Why, I ask myself, would someone not want to talk about the most successful government program (at least from NYC’s standpoint) in the last 50 years? If I dare answer my own question, it is the same as those Gracci boys, an issue of dumbing down and making the bulk of the population dependent on the effete, intellectual snobs that constitute modern day liberalism and progressivism.

        I am not and never have been happy with those who would justify “any means necessary” to accomplish what they perceive to be a noble goal. That goal is invariably perverted along the way by the short cuts used to get there. In the end the goal is no longer recognizable.

        Once more, just so you all get where I am coming from, why is it that there has not been a huge outcry from EVERYONE over the end of welfare reform?

        This administration is heading us down that long, long road to serfdom that we were warned about.

        Broadening this post to include the issue of those evil corporations taking advantage of the poor by paying them so little. As Walt Kelly used to say in the comic strip “Pogo”, “We have met the enemy and he is us”. Corporations are composed of and work for stockholders. Some of the largest institutional stockholders out there are religious denominations and universities with a strong liberal/humanist bent. When they don’t get the return they want, they dump the stock. QED as they used to say in geometry, the real, most greedy, sons of bitches out there are us, directly or indirectly. I personally hold no stock in any corporation nor would I hold any that, in my opinion abuses workers. I live the religion I was taught. Would that more of us would do so especially bishops and University Presidents.

    • We have had a LOT of redistibution of wealth, supposedly from the rich to the poor in this country in the past 45 years already,…

      You’re joking, right?

      We’ve had nothing but a consolidation of wealth in this country since its inception and now that it has gone global, the no longer necessary laborers are left holding the dookie-howser end of the stick.

      • PeterB in Indianapolis says:

        Charlie,

        Then please explain the “War on Poverty” that started in the 1960’s and has gone through more and more money each and every year to “help the poor”.

        In your reality, this never actually happened?

        Where did all the money go then? Did the government just “say” it was giving all this money to the poor and in reality it just sent it all to Goldman Sachs?

        • The War on Poverty was a bone big money tossed (through the Democratic Party) some (not close to all) genuinely needy people.

          I’m sure those with the gelt didn’t miss their lost tax dollars all that much. Besides, they got it back in spades through Reagan and then Bush II tax cuts for the wealthy.

          Capitalism is a war on the rich against the suckers (all of us). Or how is that 1% of this country’s rich have more than 95% of what’s left?

          • Charlie

            You fall to the fallacy of relativism.

            Your measure of “rich” is based on what you do not have vs. what some one else does have, today.

            Thus, you will perpetually be poor.

            However, if you compare what you have to what the richest kings had 400 years ago, you would never, ever, trade places.

            The poorest today are richer than the richest a few hundred years ago.

            Capitalism and the Free Market are the reason.

            • I hear what you’re saying, BF, but soon it will be 2010, not 1610. Those who are poor today suffer the same (by comparison) pains as 400 years ago unless you choose to relate 1610 to 2010.

              The poor today remain poor because of capitalism, except the disparity is even greater than 400 years ago.

              • PeterB in Indianapolis says:

                Charlie,

                This disparity is nowhere near as great as it was 400 years ago. To state that it is is patently false.

                400 years ago, very few people had any wealth whatsoever, and the vast majority of people had absolutely nothing at all.

                The same cannot be said today, at least in this country.

                Yes, there is still great disparity. There is still a small percentage of people that hold the majority of the wealth. However, the “poor” here have far more than absolutely nothing.

                Also, 400 years ago, the poor had no means whatsoever of improving their station in life. In this country, it is still possible for the lowest of the low to become extremely wealthy. It is not easy, but it can be done. That was never true 400 years ago.

                You do have a point, there is still a great disparity between rich and poor. However, to claim that the disparity is greater now than it was 400 years ago is highly questionable.

              • However, the “poor” here have far more than absolutely nothing.

                I speak of their chances to approve (which you dismiss to easily). It isn’t just hard, it’s damn near impossible. You can’t point to individual cases of the poor becoming rich because far more remain poor. It is a culture that is part and parcel of capitalism.

                What is lacking here is an equal playing field and so long as power/wealth remains consolidated, that playing field cannot be adjusted (certainly not through free markets).

              • sk trynosky sr says:

                I hate too say it but, crap.

                My grandparents were dirt poor, my p[arents did better and I have done well.

                My children I expect will do better. Get a life, We have the richest poor people in the world here and I was told that by some poor slob from the Caribbean who jumped through hoops (legally) to get here.

          • PeterB in Indianapolis says:

            “The War on Poverty was a bone big money tossed (through the Democratic Party) some (not close to all) genuinely needy people.”

            I do not know if I completely agree with that definition of the War on Poverty. It is an interesting definition, and one which might bear further investigation on my part.

            I have a question Charlie:

            If we assume that the War on Poverty was actually planned by the wealthy who (of course) control the government, do you think that the program was purposely designed to make single-parent families with illegitimate children and unemployed fathers or fathers who were not even present the most “rewarding” situation?

            Perhaps, by doing this the wealthy realized that they could make poverty “permanent” for a large percentage of the population, while at the same time convincing this segment of the population that they (the wealthy under the guise of the government) were the only ones interested in “helping” them.

            That makes for a great conspiracy theory! Convince millions of people that you are helping them, while you simultaneously destroy family values and personal initiative. Then if anyone tries to eliminate or even “reform” the “system”, claim that they are “evil”.

            In this way, you could keep a huge segment of the population under nearly perpetual control! Wow!

            • Why, Peter, I think you’ve got it.

              Yep, that is pretty much my theory, except I’m not so sure it was a planned conspiracy, but I don’t see how it could result otherwise (the result being perpetual poverty). I say religion has been replaced by what Madison Avenue decides (for us) is in necessary to keep us drugged (opium of the masses). Today, the technology that continues to brain deaden our kids seems to be what works. So long as a very spoiled society (us) get to play and watch tv, etc., we don’t seem to notice the screwing this government (Rep & Dem) is giving us.

              • PeterB in Indianapolis says:

                Charlie,

                I might have to buy us some cold ones or cocktails as well.

                We are starting to agree on what some of the problems are, as well at what some of the causes of those problems have been.

                Once we have identified the problem and the cause, we are well on our way to identifying potential solutions.

                We may not agree on what we think the best possible solution is, but I’d say we are finding out there is more that we agree on than either of us thought possible, which is great!

    • There is a radio commentator on Fox radio now that came out of Sacramento, Tom Sullivan. He is an ex-marine, ex-Oregon State Trooper, financial analyst, business news broadcaster and lastly a talk show host. He had a radio show here in Sacramento for many years before moving up to Fox. Tom did a show about 2 years ago on the mobility of people up and down the economic ladder. He is big into statistics so had the numbers at hand. The numbers show quite clearly that the lowest echelon (poor) move up one or two rungs on the ladder over a 10-20 year period. There is other movement of individuals from the middle classes to the upper middle and upper classes also. There was a significant number of individuals that fell from the upper class to middle class. In fact if I remember right, a high percentage of the upper class fell than of the middle class falling into poverty. So the class levels of individuals change significantly during their lifetimes. While the overall goupings may look static, the individuals in the groups are not. The conclusion was that a majority of individuals work their way out of poverty.

      • That is interesting (and makes sense) but I have to wonder what those statistics will look like after 10% unemployment continues (or grows). I suspect the damage done to the middle and lower classes from this corporate extortion will go on for a long time. I know labor wise, the take-backs of corporations (at least in NY) will take a generation to recoup. My firm had the nerve to ask for another self evaluation this year (no raise/bonus last year because of the financial crisis–not for the grunts–partners did just fine). A ton of perks were taken back but the ones that upset me the most are those bailed out companies took back (to include being allowed to continue to outsource–after taking OUR money, they give OUR jobs to some hole in the wall overseas). If that isn’t a free (to screw the worker) market, I don’t know what is.

        • No doubt Charlie, the overall wealth of the nation has declined and it may take a decade to fully recoup if no more significant damage is done. I know personally that my status has not improved in ten years and has actually decreased given inflation. With the market down turn, my IRA and 401K was hurt but not destroyed. Of course, my home is worth less but I never figured it was worth as much as they said anyway. As with all market upheavals there are winners and losers. The last one to sell before the crash wins.

          There has been a disparity in pay between the upper echelon and the middle and lower echelons. I am not sure what has driven this. I certainly do not begrudge Bill Gates or anyone of his kind that builds a business from nothing to staggering success. But I do have to wonder how corporate execs that are hired to do a job and then fail at that job get the pay and bonuses they do. I do not blame the execs. I blame the boards of directors. They are the ones agreeing to these pay scales. They are the ones who should be replaced.

          I would like to hear some comments on the recent pay czar plan to reduce corporate salaries at the seven companies named. I know this has been done by “agreement” but I definitely do not like any governement employee determining the pay private sector employees. That is not the role of government. It will be interesting to see if the affected execs abandon ship.

        • T-Ray

          Seems as the corps have grown, there’s been more and more distance between the stockholders and the board of directors, with the directors on several boards at the same time. I use dto recall that there would be one person who had 1 / 10 / 100 shares and would go to a corps annual meeting and actually be listened to. So it turns out like anything the responsibility reverts to us – the shareholders to complain or sell our share in corps that pay out of whack. Of course it’s probably been the advent of mutual funds, who ‘own’ such large segments that we lose the personal contact and influence.

  13. Want more income? Get some education and get a freakin’ JOB. Some people are too busy trying to figure out how to make their handout check bigger.

  14. PeterB in Indianapolis says:

    Most of this discussion is pointless, because almost all of you still hold the fallacious belief that taxation funds government operations and services, so “some amount of taxation is ok”.

    Until you are willing to let go of this complete fallacy, there really isn’t much point in further discussion.

    Get your heads around this fact, and then re-think everything you all have said so far today:

    TAXATION HAS NOTHING WHATSOEVER TO DO WITH FUNDING GOVERNMENT OPERATIONS AND SERVICES.

    This is critically important to realize.

    If the government were forced to run a balanced budget, and if the government were forced to use taxes as its only source of funding, then all of your arguments would have some validity.

    In light of the fact that this is not the case, I would suggest that those of you that think that “some taxation is ok” should be pushing for an amendment to force the federal government to run a balanced budget, and force the federal government to only use taxation as the source of its funding before you go any further.

    Right now, the government gets the majority of its money by borrowing it from the Fed or by borrowing it from other countries. Precious little of government funding comes from “taxation”. Taxation is a tool of control, not a means of funding government operations and services.

    • VDLG!!!!

    • With all due respect Peter… That was a silly comment.

      I am well aware that taxation doesn’t equal government funding. There are lots of realities that people need to face.

      However, the questions is…. given the current realities, which tactic is the smarter one, what the dems do or what the reps do. One of those two answers is going to happen. There is no way around that. So it is never a waste of time determining which of them is more effective.

      You should no better than to ever make a statement like “this discussion is pointless.” NO discussion is pointless if done with the thought of improving the system or finding its flaws.

      Would it be pointless to have discussions about how government should work given that we know government is not going to allow us to re-shape it in the image we know is more moral and ethical?

      • USWep

        I think Peter was simply demonstrating that whether it is “left” or “right” government policy, both will devastate the economy, because both sides believe government action can create an economic gain.

        Their debate is merely what government action they should do.

        Both sides are totally deaf to a belief that government action destroys the economy.

        • Although I generally agree, I think there are notable exceptions. In the 90’s (I love the 90’s even though I hated Clinton), Newt Gingrich was largely responsible for restraining government spending. As we discussed yesterday, that may have been the key ingredient in the boom (although other factors certainly played parts). Newt has since turned into just another statist, but his performance in the 90’s was remarkable.

          But, maybe these exceptions just delay the inevitable?

      • PeterB in Indianapolis says:

        USW,

        I was basically trying to point out that given the current system as it sits, the solution is highly unlikely to lie within the system itself, and that a lot of people seemed to have a BIG misconception about what taxation really is in this country currently. I know that YOU understood my point implicitly when I made it, but I felt that others here needed to have it spelled out for them, because their view on what taxation IS and what it DOES was, in my opinion, fundamentally flawed when compared to what taxation really is and what it really does in America today.

        I was not saying that the entire discussion was pointless, I was trying to say that discussing things like taxation when we did not have a consistent and (in my opinion) accurate definition of what taxation is and what it does was pointless.

        Make more sense?

    • I would support a balanced budget amendment. I think all governments should live within their means. In cases of emergency, I would give them temporary power to run a deficit. This authority would last only one year hence would require annual renewal. To run a deficit, I would require a declaration of emergency approved by both the President and Vice President, a 75% approval from each house of Congress and a signature by again both President and Vice President. Indebtedness incurred would need to be payed within 20 years. I would shut down the printing press.

      I also support the line item veto for budget items. Congress would retain their 2/3 override authority.

      • The thing, T-Ray is that it won’t make a difference.

        You forget that the Government prints money. Right now, they borrow from the FED, who prints the money, but the government would simply nationalize the FED and print it directly.

        There would be no ‘deficit’ – but inflation would explode.

        • As I understand it, the Government hands the Fed an IOU, the Fed prints the money and hands it back. If there is no IOU, there is no fresh money printed by the Fed. The Constitution gives the government and only the government the right to create currency. If we need to limit that power, then make it part of the amendment.

          • T-Ray

            You are correct on both things – the mechanics and the Constitution. Thus, the FED is unconstitutional.

            The mechanics, however, are manipulative. The Government can retract the ability to create currency by merely nationalizing the FED.

            The answer to money is end the monopoly on its creation.

            Money is merely another commodity – and should be handed over to the free market for optimum management.

            And like any monopoly under government, there lies the reason it is abused.

          • Moreover, the budget being balanced, in surplus, or in deficit is not as important as total government spending. High taxes and high government spending (with a balanced budget) would result in a poor economy.

            The real solution is to restrain or reduce government spending. Deficits can be important, but are secondary. If spending is restrained and taxes left unchanged, the deficit will disappear (as in the 90’s; then, taxes were raised then lowered). Revenues will grow so much due to the growing economy that tax rates will have to be lowered to avoid huge surplusses.

  15. Matt

    I do not believe this to be true. I know I have deputized the industrial revolution into my arguments before, but I must do so again.

    You use it, but it works against you.

    First, the Revolution represented the greatest increase in human prosperity in history – yet you bizarrely use it as a contrary example!

    Second, much of the complaints you have of that time was actually the transitions from mercantilism – that is, your complaints are actually targeted against government distortions of the market place, and not the free market at all!

    Corporations, absent government, have little incentive to pay above free-market value for employees.

    I will correct your wording.

    People have NO INCENTIVE to pay more for a good/service than the value they receive.

    Why would anyone pay MORE for a good/service then the value they receive from such a good/service???

    Do you regularily over-pay? When a clerk says “Pay $10.00” you toss them $20 and leave???

    The distortion of government force on the market place to force a high cost than the value received results in the withdrawal of trade – and hence, a degrading of prosperity and wealth in society!

    I will NOT trade with you if I have to by force give away more than I will receive.

    Would you?

    Obviously, to recruit high caliber employees, higher prices must be paid, but your McDonalds worker would not be making $5 an hour. He might be making $2, if that. Now, you can argue, that with lower taxes, that $2 would go further than the $5. There is a case to be made there. But he probably wouldn’t have any health benefits, vacation days, sick days, or a safe working environment either. Children would be put to work in sweat shops. You see this, time and again, in developing countries as well.

    Your argument is a fallacy of an appeal to pity.

    Because you pity someone, you believe destroying the wealth of other by warping economics will make it better.

    You cannot demonstrate that warping of economics can make it better – but because of pity, you’re willing to devastate everyone else to satisfy your pity.

    You are merely transferring the suffer, plus interest, onto other people.

    But you ignore that, because your focus is isolated to only those that, at this point in time, you pity.

    The devastation is behind you, out of sight.

    But at least you feel better.

    The overarching points is that the average corporation does not have the best interests of its workers at heart. Rather, they will take the course most profitable, and that is necessarily detrimental to the workers.

    Fallacy!

    Your argument pretends that voluntary trade of goods/services is detrimental!

    You statement demands that labor is somehow not an economic good, and is immune to the law of economics.

    Please provide your argument to prove this!

    A trade MUST BE profitable to the participants, or else the trade will not happen.

    If by violent force (government), you demand one side of the trade to accept a loss, the actor WILL NOT TRADE and leave the marketplace.

    The consequence will be your worker will have NO JOB -unemployment– which appears to me to be the desired consequence you want!

    1. Every dollar given to the poor will be spent. Not ever dollar given to the wealthy will be invested. Thus the money cycles at a higher rate into the economy.

    Pardon me?

    What do you think the wealthy do with their money?

    They either (1) spend it or (2) invest it.

    I do not believe you believe they stuff money into a mattress.

    Your argument here is merely opinionated.

    You believe that the poor spend their money BETTER than the rich.

    But, you have no economic theory to prove this.

    2. The poor need it more. Yes, I know, this doesn’t work for many here, but all else being equal I’d rather ensure that the poor can buy clothes than that the wealthy can buy a sports car.

    Again, your economic theory fails to account for the unseen.

    You believe that people who make clothes are worth more than those that make cars.

    So you, in your government economic model, divert wealth by force to making more clothes and less cars.

    But what you fail to see is the unemployment of the car making labor now because they no longer are making cars.

    You do not care about them.

    You improvised them – but they are unseen and outside your care ‘model’.

    When they appear later – as the mass of unemployed and poor – you will use the same distorted economic policy to ‘care’ for them now – and devastate another unseen group of labor – repeatedly – until your economy collapses.

  16. PeterB in Indianapolis says:

    Thing #2 that all of you have to realize prior to any useful discussion taking place.

    AMERICA HAS NOT HAD ANYTHING EVEN VAGUELY RESEMBLING FREE-MARKET CAPITALISM IN WELL OVER A CENTURY.

    Again, most of you fall into the trap of describing mega-corporation control of the government and the economy as “free-market capitalism” which it clearly by definition is not.

    Where I completely agree with Charlie Stella is that mega-banks and mega-corporations currently control both the government and the economy in the US. Totally agree with you there Charlie, 100%, no doubt about it.

    Where I completely disagree with Charlie is when he claims that control of the government and the economy by mega-banks and mega-corporations IS free-market capitalism. By definition, this is false.

    What Charlie and others need to realize is that mega-banks and mega-corporations ARE NOT A LOGICAL AND DIRECT RESULT OF A FREE-MARKET ECONOMY. In fact, such entities could not exist in a free-market. Such entities exist due to governmental interference in the economy, which allows oligarcy and monopoly to exist, and even promotes it. Government interference in an economy DOES NOT EQUAL free market capitalism. In fact, it is a direct contradiction to a free market.

    To claim that we currently have a free market, and then conclude that the free market does not work is a fun argument to make. All you have to do is base your premise upon a contradiction and then it sounds great on paper.

    I cannot tell USW or Charlie or anyone else that a free-market would be “perfectly” self regulating. I have seen no such economic animal in my lifetime, so I have no observational basis from which to hypothesize. I personally BELIEVE that a free-market provides the best model for opportunity and success, and past history has shown this to be the case, where you can find examples. However, the examples are very rare and hard to find, because as soon as you have government, the natural tendency of government is to interfere in the economy. Once that happens, free-market capitalism is already dead.

  17. Matt et al

    http://en.wikipedia.org/wiki/Laffer_curve

    You demanded proof from Terry regarding the increase in revenue by cutting taxes.

    It is called the Laffer Curve – above is the wiki about it.

    “More recently, in his General Theory of Employment, Interest, and Money, John Maynard Keynes described how past a certain point, increasing taxation would lower revenue and vice versa”

    • Oddly enough, my first exposure to the Laffer Curve came when Ben Stein was talking about in Farris Beuller’s Day Off. Great movie.

      I especially liked this part:

      Pecorino (1995) argued that the peak occurred at tax rates around 65%, and summarized the controversy as:

      Just about everyone can agree that if an increase in tax rates leads to a decrease in tax revenues, then taxes are too high. It is also generally agreed that at some level of taxation, revenues will turn down. Determining the level of taxation where revenues are maximized is more controversial.[12]

      According to Nobel prize laureate James Tobin, “[t]he ‘Laffer Curve’ idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981.”[13]

      • Re-reading that, I note that it’s not clear that I was talking about two things.. the first was the movie. Then I switched over to referencing the wikipedia article. I don’t think Ben Stein offered a critique of it in the movie..

      • Ben Stein: In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the… Anyone? Anyone?… the Great Depression, passed the… Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered?… raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? Class? Anyone? Anyone? Anyone seen this before? The Laffer Curve. Anyone know what this says? It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. “Voodoo” economics.

        • The ‘voodoo’ is the belief that by manipulating taxes, one can improve the economy.

          There is no rational economic theory that demonstrates this.

          Keynesian ‘General Theory’ is not rational, because its premise is that money is not an economic good. It treats money as an entity entirely unique. However, Keynes never could provide any rational to what type of ‘good’ money was, other than an economic good.

  18. I wish to take Matt’s point one by one in their own thread to help flush out his economic theory.

    Part One</b.

    Precisely my point. If the labor pool will allow a company to pay its employees $1/day, then that is the free-market value. That is not, however, sufficient to live on. Companies must be forced to pay sufficient wages such that employees can subsist. A prospective worker would have no choice but to accept $1/day if they had no other options, because very little money is still better than no money.

    Your economic theory, Matt, demands that it is the SUPPLIER that must dominate the marketplace, not the CONSUMER.

    In the Free Market System, the Consumer is King. He has the most valuable economic good -money- and all actors in the economy what that most valuable good.

    Thus, they will trade what they have in excess for that most valuable commodity.

    Hence, your requirement in your economic theory is to use force to open the consumer’s wallet to seize his wealth.

    This, of course, is Marxism.

    The consequence of Marxism is the withdrawal of commerce and economic failure.

    Actors in the economy will withdraw their goods, including the most valuable good of all, out of the economy to save it from being traded at a loss.

    In your example, you fail to see the laborer as an economic good and a supplier of that good.

    Thus, you force the consumer – the company in this case – to pay more than the value of the goods. You must force this.

    Then later, you will force the consumer – the public – to pay more for the companies produce, when now the company is a supplier, and the public is the consumer.

    Again, you need to force the consumer to pay more.

    Throughout your entire economic model, you need to use force.

    This is what Marx demanded in his treatise as no one would VOLUNTARILY pay more than the value they receive.

  19. Matt, Part Two

    If a business does not take the most profitable course it will cease to exist.

    True. But if we handicap all businesses such that they must all pay minimum wages and provide certain minimum benefits and safe working environments to their employees, then competition is no longer able to undercut them. Yes, this is a perversion of the free market. I am ok with that.

    Let’s extend your argument to reason out your economic theory.

    If everyone is forced to pay $10/hr., why not raise the minimum to $100/hr?

    If, as you contend, all would pay the same minimum level what would be the problem in the economy by increasing the minimum?

    Why not $1000/hr?

    $1 million/hr?

    Please explain.

  20. Matt, Part Three

    “Every dollar given to the poor will be spent. Not ever dollar given to the wealthy will be invested. Thus the money cycles at a higher rate into the economy.”
    First part is true. If every dollar given to the rich is not invested then what happens to the rest?

    Fair. To clarify. If I spend money and buy a shirt, that money goes to the company which produced the shirt, which then hires employees to make more shirts, who are then paid and buy more shirts, thus perpetuating the cycle. If I am wealthy and given the money, I may spend it (in which case, the above ensues), or I may hide it under my mattress (in which case, the buck stops there – worst case scenario), or I may put it in the bank. If I put it in the bank, the bank will hold a certain percentage of it as margin. The balance will be sent back out into the world as investment. This margin is dead money. It does nothing and helps no one. It sits there.

    You do not understand the fractional reserve system, the government banking system nor do you understand the free market capital system.

    Fraction Reserve System

    The “margin” that the bank must deposit with the Federal Reserve (or Central Bank) allows a bank to lend out 9 times that amount.

    Every hundred $100 deposited by a person creates $900 of new money, which the bank lends into the market place.

    Free Market Capitalist System
    In a free market system, every dollar saved is a dollar lent, on the same terms as it was borrowed from the depositor, plus a fee.

    There is no “margin”.

    Government Banking System

    The Government Banking system allows legal bank fraud perpetrated by the government – it allows a bank to lend “long” and borrow “short”.

    In the fraudulent government system, a bank takes a depositor’s money with the promise that it will repay him on demand.

    This is borrowing “short” – they can get their money back that they lent to the bank instantly on demand.

    The bank then takes that deposit and lends it to someone else “long” – a mortgage for 10 years, for example.

    The bank cannot demand repayment earlier than 10 years (or faster than the terms of the deal).

    If the depositor now goes to the bank, and demand their money, the bank cannot give it – it has been lent for 10 years.

    The bank has lied to the depositor. It cannot honor its “short” call.

    The government in this Federal System, however, prints a new batch of ‘money’ and uses its freshly minted money to repay the depositor.

    It has counterfeited the real money of the depositor. The depositor believes he is getting the same money he deposited originally – but he is not. The borrower still has it.

    But the depositor accepts it as if it was real, and spend it in the economy as if it was real.

    Now there is twice as much “money” then before – what was lent to the bank and then re-loaned (via the bank) and what the government has repaid (by printing it).

    This action destroys the money, and is an activity of fraud – promising what cannot be delivered, and counterfeiting money as a substitute for that promise.

    This fraud causes inflation – destroying the stored wealth of all the people, and the economy.

  21. Mathius

    Because with the knowledge you have gleaned, you will be able to more effectively deal with the problem in the future.

    Though I might object the the exotic locales. And obviously, I am only really talking about more complicated subjects.

    There is a drug problem in the slums, do you
    a) Arrest everyone who uses drugs
    b) Arrest everyone who sells drugs
    c) A and B
    d) Commission a study to figure out the underlying cause of the problem so that you can address it more effectively without creating criminal records for poor people who already are disadvantaged

    Or

    (e) It’s not your problem nor your business about other people choices for themselves.

  22. PeterB in Indianapolis says:

    As Black Flag has pointed out many, many times before… politics is not equal to economics. Political decisions and political manipulation can have an effect on economics, but virtually 100% of the time, the effect is negative.

    This is perhaps why USW supposes that a free-market would be self-regulating 100% of the time, because, absent political decisions and political manipulation, you would not have these outcomes which are negative virtually 100% of the time.

    I do not necessarily agree with USW that a free-market would flawlessly be self-regulating, but I do agree that a free market provides the best opportunity for economic success to the largest percentage of the population.

    No system can be devised which will eliminate human suffering. A free-market provides the best opportunity to MINIMIZE human suffering. According to the “greater good folks” the minimization of human suffering is the goal, no? The place where we end up having the biggest problems is that certain people believe that some sort of system can be devised which WILL eliminate human suffering entirely. They wish to impose greater and greater control over the populace, all in the name of the elimination of human suffering. Unfortunately, this is a goal which simply cannot be accomplished. All of the increased control simply leads to more and more suffering suffered by an ever INCREASING number of people.

    In a free market people fail, and then they suffer for a while, but most of them learn from their failure and then try again. Many times these people end up succeeding because of what they have learned from their failures and their suffering.

    In a controlled market, people fail, and then they are taught that it is ok to fail, because the government will provide them with what they need to “get by”. Some people will fight against this, pick themselves up, learn from their failures, and eventually succeed. Others will become comfortable in their failure, and simply learn to live off of what the government provides.

    Those that learn to live off of what the government provides will eventually become dissatisfied. Many will not blame their dissatisfaction on their own failure, so they will not learn, try again, and succeed. Instead, they will demand that the government INCREASE WHAT IT IS PROVIDING TO THEM so that they can have greater comfort.

    Eventually, if the class of people which is dependent enough upon government largess is a big enough class, they will use their power to continue to vote for ever-increasing benefits provided to them by the government. You see, by this time they have become entrenched in this lifestyle, and now they feel that they are “entitled” to all of these benefits provided by the government. Politicians will not have the political will to do anything other than acquiese to the demands for ever-increasing benefits.

    Finally, even those in the society that are reasonably well off will begin to demand more and more benefits be provided to them by the government as well. They will resent the “poor and disadvantaged” who are now seen as receiving a disproportionately large proportion of the government’s largesse. Because the “middle class” is still a huge and extremely powerful voting bloc that the politicians cannot ignore either, the politicians will cave to the middle-class demands that the government provide them with ever-increasing government “benefits” as well.

    At that point, you end up pretty much exactly where we are now, yes?

  23. PeterB in Indianapolis says:

    http://www.usgovernmentspending.com/us_welfare_spending_40.html

    Check this out… there is WAY too much information here to actually digest, but it is HIGHLY interesting.

  24. Good article, USW. Many of the thoughts expressed above seem valid to me, especially those condemning government as the cause of many of our problems. However, we are where we are and the prospects for radical change in the near future seem slight. So, is there anything we can do to make the economy at least a little better?

    I find the ’90’s instructive. It is true, as noted above, that there were many influences of the boom. One I have seen discussed only a little is the restraint of government spending. The theory is that government spends money so poorly, in terms of contributing to the economy, that the less it spends, the better the economy will perform. This theory holds that taxes and deficits matter some, but not as much as government spending. It is government spending that is the real measure of the resources government consumes.

    This theory makes sense to me regarding the economy. Starving the government would have other beneficial effects as well.

    • JayDick

      Go a step further and understand why government spends money ‘poorly’ – and it will also provide insight to a direction of improving the economy.

      • The reasons are no mystery to me. I spent 35 years auditing federal activities. The reasons are almost too numerous to list, but among them are:

        1. There is no incentive to do what works as there is in business.

        2. Politicians direct expenditures with no thought as to any effect other than their reelection.

        3. Employees don’t get rewarded or punished based on the wisdom of their actions, but rather on whether they follow the rules.

        4. The rules are written by lawyers (see 2, above).

        5. Employees can’t be fired for poor performance.

        These things won’t be changed, so the only solution is to starve the government of its mother’s milk, money. All other factors being equal, the less the government spends, the better the economy will perform, IMO.

  25. USW,
    Thank you for opening up this, imo, a very timely and critical discussion. I’ve got some people in mind, who should be reading this. Like everyone when one thinks about it! I like Peter B in Indianapolis basic thinking. Love learning that the whole huge government dilemna has both Parties to take note. Time up no doubt,,,cell-phone! 🙂

  26. To answer USWep’s original question.

    We must do a “Harding”.

    President Harding – to relieve the economic recession of 1920, with unemployment @ 12%, and a drop in the GNP by 17%, he:

    – cut taxes across the board
    – cut government spending by 1/2
    – cut government debt by 1/3

    The economy responded.

    By the Summer of 1921, the economy reversed and started to grow, and by 1923, unemployment was down to 2.4%.

    • More on Harding…

      In February 1920,he advocated a cut in government expenditures and stated that government ought to ‘strike the shackles from industry.’

      ‘We need vastly more freedom than we do regulation,’ he said.

      “To Harding, a profession, a newspaper, a grocery store, even a farm, was as much a ‘business’ as was a steel corporation.

      In a typical small-town manner Harding used the term ‘business’ to indicate a state of independence rather than to delimit a specific enterprise.

      One of Harding’s campaign slogans was “less government in business,” and it served him well.

      The highest taxes, on corporate revenues and “excess” profits, were to be cut.

      Personal income taxes were to be left as is, with a top rate of 8% of incomes above $4,000.

      Harding recognized the crucial importance of encouraging investment essential for growth and jobs, something that FDR never did.

      Powerful senators, however, favored giving bonuses to veterans, as 38 states had done.

      But such spending increases would have put upward pressure on taxes. On July 12, Harding went to the Senate and urged tax and spending cuts.

      He noted that a half-billion dollars in compensation and insurance claims were already being paid to 813,442 veterans, and 107,824 veterans were enrolled in government-sponsored vocational training programs, the total cost of which was estimated to involve another half-billion dollars.

      The senators were determined to push through this spending bill, and Senator Pat Harrison of Mississippi accused Harding of having “attacked the soldiers of America who fought and won the recent war.”

      Harding’s Budget and Accounting Act of 1921 provided a unified federal budget for the first time in American history.

      In the fall of 1921, Harding’s Secretary of Commerce Herbert Hoover prompted him to call a Conference on Unemployment.

      Hoover wanted government intervention in the economy, which as president he was to pursue when he faced the Great Depression a decade later, but Harding would have none of it.

      Harding said, “There will be depression after inflation, just as surely as the tides ebb and flow.” Harding insisted that relief measures were a local responsibility.

      In 1922, the House passed a veterans’ bonus bill 333–70, without saying how the bonuses would be funded.

      Harding let senators know that if they passed the bill, he would veto it.

      The senate passed it 35–17.

      Despite intense lobbying from the American Legion, Harding vetoed the bill on September 19 – just six weeks before congressional elections, when presidents generally throw goodies at voters.

      Harding said it was unfair to add to the burdens of 110 million taxpayers.

      Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922.

      Federal taxes were cut from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922.

      Harding’s policies started a trend. The low point for federal taxes was reached in 1924. For federal spending, in 1925.

      The federal government paid off debt, which had been $24.2 billion in 1920, and it continued to decline until 1930.

      With Harding’s tax cuts, spending cuts and relatively non-interventionist economic policy, the gross national product rebounded to $74.1 billion in 1922.

      The number of unemployed fell to 2.8 million – a reported 6.7% of the labor force – in 1922.

      So, just a year and a half after Harding became president, the Roaring 20s were underway!

      The unemployment rate continued to decline, reaching a low of 1.8% in 1926 – an extraordinary feat.

      Since then, the unemployment rate has been lower only once in wartime (1944), and never in peacetime.

      “The seven years from the autumn of 1922 to the autumn of 1929,” wrote Vedder and Gallaway, “were arguably the brightest period in the economic history of the United States.

      Virtually all the measures of economic well-being suggested that the economy had reached new heights in terms of prosperity and the achievement of improvements in human welfare.

      Real gross national product increased every year, consumer prices were stable (as measured by the consumer price index), real wages rose as a consequence of productivity advance, stock prices tripled.

      Automobile production in 1929 was almost precisely double the level of 1922.

      It was in the twenties that Americans bought their first car, their first radio, made their first long-distance telephone call, took their first out-of-state vacation.

      This was the decade when America entered ‘the age of mass consumption.’”

  27. Charlie

    You ignore the reason why the poor are rich today, because you are irritated that the rich are still rich today.

    I’m not sure what you want.

    There will always be rich and poor – you can never change this, because every one is individual – with different needs, wants, desires and choices.

    The only way every one will be the ‘same’ is by forcing no choice, forcing everyone to have the the same needs, wants and desires.

    You want humanity to be a machine – a robot.

  28. PeterB in Indianapolis says:

    An Epiphany of Sorts:

    Whether we like to admit it or not, this country indeed WAS founded on largely Christian principles.

    One of the principles of Christianity is that in order to obtain the Kingdom of Heaven, we must RENOUNCE OUR WORLDLY POSESSIONS AND FOLLOW CHRIST.

    In the New Testament, the rich are never pointed to as being virtuous. The rich are the Scribes, the Pharasies, and the money-changers in the Temple. They are pointed to as those who will never obtain the Kingdom of Heaven unless they renounce their worldly posessions and follow Christ.

    Ok, so based on Christian Principles, wealth is essentially evil.

    So, we are then given a society which is supposed to be based on freedom and liberty, and one of the central principles of this society is that the economy is to be based on a free market, which allows all the equal opportunity to succed and to better his station in life. The measure of success in this society is the accumulation of wealth.

    Anyone see the contradiction here? Many of us still to this day are raised in the Christian tradition. We are exposed to the Scribes, the Pharasies, the money-changers in the Temple. We are taught that wealth is the path to evil. Simultaneously, we are taught that success is defined (while we are living) by our accumulation of wealth.

    So, logically, we must believe that success is evil, and yet we must also strive to be successful. This causes the entire society to be internally conflicted.

    We see it here on this very site. People wish to be more successful. To have more physical assets. To protect the wealth that they have. At the same time, people on this site decry the evils of “mega-corporations” and “Big Oil” and “Big Banking” and “Big Carbon Trading (should it come to pass)”

    So which is it folks? Is material wealth a good thing which we should strive for while we are here on this planet, or is it evil?
    Until this society as a whole resolves this contradiction, it is clearly unsustainable.

    Those that have amassed wealth, even if it be by completely honest means, are made to feel guilty about their accomplishments. This feeling of guilt leads them to perpetuate evils in the society in the name of “the greater good”.

    Take for example the welfare system. The State will gladly support you, but you will only receive maximum benefit if you are a single woman, you have multiple children, and you do not work. So, in the name of “helping” the poor, we have designed a system which ensures that not only will the people in the system stay poor, but it is also highly likely that any children they have remain poor as well. In the name of “the greater good” we have created a poverty-trap.

    As Black Flag points out, if your premise is based on a contradiction, there is no hope for that premise. It seems to me that the whole society was founded on a contradiction, so the fact that we are in real trouble should come as no particular surprise.

    The contradiction must be resolved and eliminated before the society can move forward.

  29. Afternoon All!

    I know from experience that wealth does not “trickle up”. And I agree with Wasabi, they need to get off their dead butts and get an education instead of sitting around trying to figure out how to get more from the government.

    • Willo:

      I live in Louisiana, so I’m very familiar with the “free lunch” philosophy. A lot of people who lost their homes to Katrina FOUR YEARS AGO still want a free hotel room for life.

      My work has been slow, worked 4 weeks since July 10. Had to borrow $ from family but still paying the bills on time. The thought of applying for Govt assistance hasn’t occurred to me.

      Of course I make too much money for the “free cheese”, so I guess I better suck it up.

  30. Could our educational failures in the last 35 years be coming home to roost? Doesn’t a prosperous economy require an educated workforce?

    • PeterB in Indianapolis says:

      Yes and Yes.

    • Yes and No.

      • No, because prosperity is independent of education.

        A farmer can produce, yet only have a marginal formal education.

        • In fact, statistically speaking, one could make a good case that the more educated we have become the more stupid and thus less prosperous we have become.

          “College educated idiots” is what my Pa called them.

      • Yes, because the faulty education system has taught the children they can get something for nothing.

        • Not to mention too many lawyers. These folks know how to bend the law to their advantage without actually breaking it.

      • PeterB in Indianapolis says:

        BF,

        I disagree to an extent. I agree that it is possible to end up with a very high standard of living with only a basic REAL education.

        I also feel that a diverse workforce in a technologically advanced socitey requires that at least some portion of the populace have an advanced education.

        I do not think that any advanced society can be based on basic or advanced indoctrination, which is pretty much what we currently have.

  31. Mike M. Houston Texas says:

    What truly amazes me is that there are people that believe they have the right to forcefully take from me to give it to another. Help me understand why this is ok in your world.

    Is it because they have less than I do? If this is true then you must support burglary, theft, and robbery because those people clearly have less than i do or they would not be taking it.

    Where does the distinction in your mind make it ok to have the government forcefully take it from me where burglary is not?

    My social experiment on many sites has ended the same way. Lets see how it goes. Here it is. Those that believe the liberal way is corect follow the logic.

    The goverenment which we all kind of know. Takes from us. We really dont know them we have never had beers or a picnic with them. We see ads on TV and stories in the paper which are spun to promote a message for or against the person in question. We go to the polls and vote. So we really have no clue who they are but you want me to give them money and hope they do the right thing.

    Liberals – you really dont know me, you dont know the people in government either but you are ok with giving them money so its the same, but you must send me 5% of your income each month and I will spend it how I see fit. Please reply in this thread and I will give you the banking information to a deposit only account unless you show valid ID at the window. Only then can you gain access to the funds.

    Generally I find this is where liberals draw the line. My campaign is to do some good with the money and I am sure somewhere I will find some $800 toilet seats to buy (wink wink). You are not willing to send money to someone you dont know. I am not either but you want me to like it and be ok with it. Why is that?

    BTW I have not had one liberal send me a dime. They have these lofty ideals as long as someone else is paying.

    In tribute to the man running the blog. Unlike USW this “was a direct attack” on the liberal way of thinking about MY money.

    • Mike, Interesting question you ask of those who do not know the answer. The “Robin Hood” mentallity is clearly not a well thought out idea. I can’t understand why people think it’s OK to take from one and give to another, based on “perceived” wealth. This is one area that I can argue against, and do it well. I highly doubt you will get anyone to answer, much less them send you their money. See, it’s only OK if it’s someone else’s money, which I call very hypacritical at the minimum.

      Actually, when I read some of this share the wealth bullshit I want to scream, loudly. IMHO, we should stop all forms of welfare programs after a certain period of time, no exceptions, and no returning for a lenghthy period of time. This “entitlement mentallity” is out of control.

      PEACE!

      G!

      • G-Man

        But you see the Robin Hood story has even been corrupted over time.

        The Hood stole from those that used the coersive force/power of the govt to steal from the people.

        Thus cheating on your taxes and other such “anarchist” behavior is to trully be Robin Hood.

        Oh, and remember the Hood was just after a few bad characters that distorted the power of govt. In the end the benevolent and wonderful TRUE KING returns and everyone lives happily ever after.

        We have been conditioned for so long to accept these statist beliefs that I trully do wonder at times if freedom has any real chance of surviving.

        Peace back at you my friend.
        JAC

  32. At one time the Federal Govt sold land to pay off its debts.

    Someone here stated there is not enough land to pay off debts any more.

    There are 588,134,760 acres of federally owned land in the U.S.

    The BLM has 246,779,020 acres and the US Forest Service another 192,239,120 acres.

    Heres a more detailed breakdown of state and federal ownership.

    http://www.nrcm.org/documents/publiclandownership.pdf

    Note the heavy federal ownership in many western states. This is one reason that many of YOU support US with your tax dollars. These same states take in more federal tax funds (cookies) than are paid out in taxes.

  33. It is this simple folks:

    A FREE SOCIETY CAN ONLY EXIST UNDER A FREE MARKET CAPITALIST SYSTEM.

    So now you ALL must ask yourself this question:

    DO I REALLY WANT TO LIVE IN A FREE SOCIETY?

    If your answer is No, or I don’t think so, or I’m not willing to take the risk, then I respectfully ask that you move to some other place on the planet. The rest of us greedy SOB’s will stay here. In fact we will invite the other freedom loving greedy SOB’s in the world to join us.

    If you are correct in your claims it won’t take long for the USA to collapse upon itself and then you can all walk right on in and take it back.

    But if you are wrong……………………

    We will still issue Visitor Visas so you can come visit those of your friends and family that chose to stay.

    • JAC, I have’nt been called a SOB in a long time, thanks for the memories, it reminded me of how happy I am to have an ex-wife, LOL

      G!

      • Your welcome G-Man. I’ll keep the porch light on for ya.

        On second thougth, if my invite to the statists was accepted I expect that town you live in might become quite spacious. You would have your pick of places to live. So perhaps you could leave your porch light on. Wouldn’t mind another visit once the crowd left.

        • Sadly, the Statists think they own what’s theirs and what’s yours and what’s mine. The population in my town lowers each night, mostly by gunfire on the other side of town. My heart tells me no, but sometimes my mind tells me a revolution/civil war wouldn’t be all that bad of a thing. It would be one quick way to end welfare.

          G!

  34. Doug, we talked last week about getting assets out of your home country, especially the U.S., where to take them and what to do with them. In so doing, you touched on the inevitability of currency controls just ahead, especially for Americans. Can you tell us more about that?

    Doug: Yes, I’m quite serious about what I said about “the grim reality of impending currency controls.” As the global economy continues to deteriorate, governments will have to appear to be “doing something.” It’s going to become very fashionable to institute some sort of foreign exchange control.

    Why might that be? Because obviously, people who are taking their money out of the country are unpatriotic…

    L: Those bastards.

    Doug: That’s right. Jingoistic Americans naturally, but stupidly, see taking money out of the country as being unpatriotic. They don’t understand that it’s mainly those prudent people who will be able to supply the capital to rebuild a devastated economy later. Besides, getting money abroad is obviously something that only rich people would do… and of course, it’s time to eat the rich, as well. For those two reasons, there won’t be much resistance to controls. And the state gets to appear to be “doing something.”

    And when they do, more people – at least those with any sense – will get scared and really try to get their money out, which will exacerbate the run to the exits. The bottom line is that if you want to get your money out, the time to do it is now. Beat the last-minute rush.

    I don’t know what form the exchange controls are going to take, but there are two general possibilities: regulation and taxation.

    The regulations might take the form of a rule prohibiting you from taking more than X-thousands of dollars abroad per year without special permission. No expensive vacations, no foreign asset purchases without state approval.

    As for the taxation, if you want to, say, buy foreign stocks or real estate, you might have to pay an “Interest Equalization Tax” or some such. So, you could do it, but it’d cost you a lot of money to do it.

    Something like either of these, or both, is definitely in the cards.

    L: But aren’t FX controls something from the past? I mean, where do they exist today?

    Doug: Well, FX controls have been used since the days of the Roman Empire. A country debases its currency, raises taxes beyond a certain level, and makes regulations too onerous – and productive people naturally react by getting their capital, and then themselves, out of Dodge. But the government can’t have that, so it puts on FX controls. They’re almost inevitable at this point.

    Almost every country – except for the U.S., Canada, Switzerland, and a few others –had them until at least the ’70s. I remember leaving Britain once in the ’60s, and a border guy searched me to see if I had more than 50 pounds on me. In those days currency violations in the Soviet Bloc countries could get you the death penalty. Things liberalized around the world with Reagan and Thatcher, and then the collapse of the USSR. But you have to remember that that was in the context of the Long Boom. Now, during the Greater Depression, things will become much stricter again.

    Right now, the U.S. just has reporting requirements. But some places, like South Africa, make it very expensive and inconvenient to get money out. South Africa, perversely, may serve as a model for the U.S.

    L: Okay, so, we talked last week about Americans at least setting up a Canadian bank account and safe deposit box, and better yet going in person to Panama, Uruguay, Malaysia, or a similar place to do the same. And once there, you advised getting with a lawyer, either referred by someone you trust or found through an interview process, to set up a corporation that can handle your assets and investments for you. This all needs to be reported but it’s wise to do it in advance of the higher costs or other limitations to come.

    Doug: Yes. While U.S. persons must report foreign bank and brokerage accounts, safe deposit boxes are not – at least not yet – reportable. This leads me to the biggest and best “loophole” when it comes to potential foreign exchange controls, and that’s foreign real estate.

    I’m of the opinion that, broadly speaking, real estate as an asset class is going to be a poor performer for a long time to come – but that won’t be equally true across all countries. Real estate in countries that rely on mortgage debt to buy and sell will continue to be the worst hit.

    People don’t understand that buying property with a mortgage is just the same as buying stocks on margin. It’s caused speculative bubbles and malinvestment. Until the malinvestment in those countries is entirely liquidated, you don’t want to invest in real estate in them. But a lot of countries, especially in the third world, have no mortgage debt whatsoever. Zero mortgage debt. You want a piece of property, you pay for it in cash. That keeps prices down and the market much more stable. And it makes for more interesting speculations, because if a mortgage market develops in the future, it could light a fire under prices.

    But, from the viewpoint of FX controls, the nice thing about real estate is that there is no way they can make you repatriate it. Other than owning a business abroad, real estate is the only sure way to legally keep your capital offshore.

    L: I suppose it would be difficult for even Uncle Sam to seize your estancia in Argentina… not without starting a war.

    Doug: Yes. Although I don’t doubt he’ll be starting more wars as well… [Laughs]

    L: So, part of your thinking here isn’t just speculative. You’re talking about strategies for wealth preservation, not just in the face of foreign exchange controls, but more aggressive, predatory taxation and confiscation by the state – they can seize your assets, even real estate, in the U.S., but not abroad.

    Doug: Exactly. Argentina is excellent from that point of view; rights to real property are, if anything, better than those in the U.S. In many ways, Argentina is culturally and demographically more like Europe than Europe. Uruguay is also excellent, although culturally it’s like a backward province of Argentina. Paraguay is quite secure – but a bit weird as a place to live.

    I’m not currently up-to-date on the Chilean real estate market, but Chile is definitely now the richest and most advanced South American country, and an excellent choice. Brazil is fine. Colombia is improving greatly. Ecuador has a goofy president, but parts of it are very nice, and it’s about as cheap as Argentina. Eastern Bolivia is interesting, actually, despite Morales. Only Venezuela is out of the question in South America – but Chavez won’t last forever. It’s just a pity they have all that oil, which is always a corrupting influence.

    L: Well, then, what about Central America? I know you prefer South America for speculative purposes, but what if someone wants to park a lot of wealth by buying a couple miles of beautiful beachfront property in Costa Rica, or some place like that?

    Doug: I was a big fan of Costa Rica for many years… The first time I went down there was 35 years ago – but it’s a different place now. Then, it was very cheap, and now it’s very expensive. And it’s totally overrun with gringos. So, Costa Rica is not of that much interest to me at this point; it’s pleasant, but there’s limited upside.

    I think an excellent place to be in Central America is Belize. Although culturally and ethnically, it’s not really part of Central America; it’s part of the Caribbean.

    L: And they speak English there.

    Doug: They do indeed, though things are changing. The Guatemalan government has always regarded British Honduras, which is what Belize used to be called, as part of Guatemala. There have actually been confrontations between Britain and Guatemala over this. But that’s in the past; now there’s a different problem. Guatemalans are rolling over the border in much the same way that Mexicans are in Texas, New Mexico, Arizona, and California.

    So, the character of Belize is changing, but for the foreseeable future, it’s still going to be Belize, and I rather like it. Aside from Panama, Belize would be my first choice in Central America.

    The problem with Central America, however, is that it’s a bunch of small countries that have historically been very unstable. And culturally backward. Most are under the thumb of the United States… there’s a long history of U.S. invasions, most recently in Panama with Noriega. There are Frito Banditos running around these places…

    The most culturally advanced country in Central America, not counting Mexico, of course, since it’s in North America, is Guatemala. But Guatemala has had huge troubles with violence, which has only recently come to an end… I hate going through checkpoints at night, manned by jumpy, uneducated, heavily armed teenagers.

    Nicaragua is the low-cost alternative, but it’s relatively backward. Panama is probably the best choice. It’s very international, very urban (in Panama City), and it’s very sophisticated, infrastructure-wise.

    If I didn’t like Argentina and Uruguay so much, I would put Panama at the top of my shopping list.

    L: Got it. Back to the exchange controls themselves. Do you think people will have any warning at all? It seems to me that this is the sort of thing the Powers That Be would want to spring on people.

    Doug: I think it’s going to come out of left field. It always does, with at most an official denial just before it happens. In August 1971, Nixon devalued the dollar, which immediately dropped against gold and all foreign currencies. I think there’s a reasonable probability that the government will do that again. Gold may not be part of the equation, but they may decide to put in some sort of fixed exchange rate between the dollar and various foreign currencies.

    The reason for thinking this is simple: with all the dollars outside the United States devalued by that much, that much of a liability just vanishes into thin air. And in the short term – it’s never a long-term fix – U.S. exports would go up. This would “stimulate” the domestic economy. Imports to the U.S. would go down, which would make for fewer dollars leaving the U.S. and adding to the $7 trillion overhang the U.S. already has.

    L: I know you hate making predictions, but can you tell us if your “guru sense” is tingling on this so strongly that you think it could happen this year? Or is this more of a 2010 possibility? 2011?

    Doug: The timing on this is really unpredictable. These people don’t have a plan. They’re acting “ad hoc” to whatever seems most urgent. All the so-called “economists” around government today are really just political hacks. Their world views are totally unsound.

    If you don’t believe me, check out the YouTube video of the clueless chief inspector of the Fed that’s circulating on the Internet.

    L: With all the problems the U.S. has, do you think this could happen now? Could we be reading about new exchange controls on CNN.com this afternoon?

    Doug: Sure. Although they typically pull these stunts over a weekend. I expect something of this nature to happen any time between tomorrow morning and two years from now. If some form of currency controls are not instituted within two years, I’m going to be genuinely surprised.

    So, if you’re going to take action, you should start heading for the exits now. Not next month, and certainly not next year.

    L: For those who don’t take action until it’s too late, under the scenarios you mentioned, they’ll still be able to get money out. It’s just that it might be more difficult, time consuming, humiliating, and certainly more expensive to do. For every $100,000 they move, only $90,000, or $70,000, or whatever will get to where it’s supposed to go. Can you foresee a more Stalinesque alternative, where they simply can’t get anything out at all?

    Doug: Hopefully not. Anything is possible, and things can change so rapidly… but I’d hate to think of what conditions would be like if they ever became that draconian. It’d be so bad on other fronts that there would be all sorts of even more urgent things on your mind – Americans would get a very quick and unpleasant education in the real meaning of Maslow’s hierarchy.

    L: Like the Mad Max-style neobarbarians at the door with a battering ram.

    Doug: Exactly – that’s when you’ll definitely want to be in more pleasant climes. I’d want to be watching it on my wide-screen, in comfort, not out my front window.

    L: We’re talking about extremes here…

    Doug: You know, back in the 1970s there was a spate of books published on financial privacy. In those days, financial privacy was still possible. Now, it’s not only no longer truly possible, short of embracing a completely outlaw lifestyle, it’s very dangerous to write about it or even talk about it. I kid you not. These days, people who ask too many questions about privacy techniques may well be government stooges…

    There’s lots of handwriting on the wall. All those books on financial privacy were published in the ’70s – if you look on Amazon, you can still find them. But there’s nothing really worth reading that’s been written on the subject in 20 years. It’s actively discouraged by the government. I could name – but I won’t – at least two authors that got themselves into a real jackpot this way. Forget about the First Amendment.

    In fact, I even feel uncomfortable talking about it in this interview.

    So let me once again emphasize that I advise everyone to stay fully within the bounds of the law.

    That’s not for moral reasons, of course; there is no morality to the law. It’s strictly for reasons of practicality. Risk-reward ratio.

    L: Understood. Loud and clear. Any more investment implications, besides foreign real estate, that you want to draw attention to here?

    Doug: Yes – and it’s another reason for those so very clever boys in Washington to embrace currency controls. They will be disastrous for the U.S. economy, but there’s a very good chance that, in the short run, they’ll be very good for the stock market. That’s partly for the reasons I already mentioned about it temporarily boosting U.S. exports, and hence earnings of U.S. exporters, but also because all that money that can’t leave the U.S. will have to go into something.

    Investors will probably want to put it into equity, rather than debt, while the dollar is depreciating. Again, it’s disastrous over the long term, but as a short-term play, buying the blue chips the day the exchange controls are instituted could be a good move.

    L: You’d buy the Dow?

    Doug: I might, if I couldn’t think of anything more intelligent or original to do. We’ll just have to see what the situation is like.

    L: This will be a development we’ll have to keep an eye out for in The Casey Report, then.

    Doug: Yes, we will. The more politically controlled an environment, the more distortions are created. And the better it is for a speculator.

    L: Thanks again, Doug – you’ve given us a lot to think about.

    Doug: My pleasure.

    • Ha! My very blond (in hair color only) daughter is one of those Gringos in Costa Rica! She loves it there.

  35. I hope Matt is busy doing research so to respond to my 3-part breakdown of his position…. 😉

    • Pipe Dream my pirate friend.

      • v. Holland says:

        I don’t know JAC, gotta give Mathius props for taking on just about everyone on here.

        • Taking on and taking time to learn and develop rational concepts are two distinctly different things V.H.

          • v. Holland says:

            That’s true but one has to be convinced that the concepts they believe in are wrong first-obviously by being here and respectfully discussing today’s issues where his opinion is greatly outnumbered shows he believes pretty strongly that his position is right. Yet he seems very willing to listen and consider others opinions-can’t say he’s unwilling to learn just that so far he hasn’t been convinced he’s wrong. I have met people who’s minds are simply closed to any argument but Matt doesn’t hit me that way.

  36. http://wattsupwiththat.com/2009/10/21/nasa-giss-a-division-of-vandelay-industries/#more-11966

    Who knew??

    NASA GISS – the home of Jim Hanson and Gavin Schmidt -the High Priests of AGW dogma – have their offices right above the restaurant that was used for Seinfeld!

    Now we know where Seinfeld got their comedy ideas from!

    • BF, Steve Forbes and Christopher Ruddy are doing an internet broadcat called the Emercency Dollar Summit on November 5th. Would you recommend viewing this? I’m not up on who are the smart economists.

      G!

      • Yes, it would be worth watching (or reading the synopsis) of their chat.

        And No, they are not smart economists. They are Keynesian, too.

        They simply believe in spending government money somewhere else different than their political adversaries.

        • Here’s a link, for your further opinion, if you don’t mind.

          http://w3.newsmax.com/a/dollar/?s=al&promo_code=8F25-1

          Thanks for the info

          G!

        • Who is not a Keynesian?

        • In looking for some non-Keyensians just now, came across a blog and this was in the comment section:

          In the former German Democratc Republic, people had a nice rhyme:
          “Wir reissen auf und bauen nieder,
          so haben wir Arbeit immer wieder.”
          (We are tearing up und building down,
          that’s how we have employment always again.)
          That’ Keynesianism in short.

        • I know you are……

          Peter Schiff’s name was mentioned in one article.

          http://www.takimag.com/blogs/peterschiff/

          It seems the Universities teach the Keyensian way more???

          • Wow, just re-read that….way more?? Like, I’m so, like a valley girl…..

            • Well, Vally Girl 😉 You are right!

              98% of hired economists are Keynesian. One cannot obtain tenure in any Western University economics dept. without professing Keynesian philosophy.

              The government hires only Keynesians, primarily because these economists, by their theory, demand government intervention into the economy. The government feeds and pays these guys for these guys to confirm government interference is a good thing.

              Go to Mises.org for more Austrian School economic information.

              • Reminds me of the scientists who do studies for the government on global warming, I mean climate change. You can’t get a contract or grant if you’re a skeptic. And people wonder why so many scientists say we are going to fry?

  37. Obama says Repulicans are robots….

    “Democrats are an opinionated bunch.

    You know, the other side, they just kinda sometimes do what they’re told.

    Democrats, y’all thinkin’ for yourselves.”

  38. Just something interesting about the Healthcare debate. A small poll : If the Healthcare disaster is passed under reconciliation rules, do you feel Americans will start to heat up talk of revolution?

    I would say yes, I think we are getting pushed there!

    G!

  39. What the rest of the world would suffer if Charlie get his way….

    http://www.msnbc.msn.com/id/33433935/ns/world_news-africa/

    NAIROBI, Kenya – Ethiopia said Thursday it needs emergency food aid for 6.2 million people, an appeal that comes 25 years after a devastating famine compounded by communist policies killed 1 million and prompted one of the largest charity campaigns in history.

    ———-

    But interestingly, they had more than enough money and stuff to invade Somalia….

  40. Hello!

    What do you people think of this?

    HOW TRUE!!!!

    THE JOB – URINE TEST
    (Whoever wrote this one deserves a HUGE pat on the back!)
    Like most folks in this country, I have a job. I work, they pay me.
    I pay my taxes and the government distributes my taxes as it sees fit. In
    order to get that paycheck in my case, I am required to pass a random urine
    test (with which I have no problem). What I do have a problem with is the
    distribution of my taxes to people who don’t have to pass a urine test.

    So, here is my Question: Shouldn’t one have to pass a urine test to
    get a welfare check because I have to pass one to earn it for them?

    Please understand, I have no problem with helping people get back on
    their feet. I do, on the other hand, have a problem with helping someone
    sitting on their ass – doing drugs, while I work. . . Can you imagine how
    much money each state would save if people had to pass a urine test to get a
    public assistance check?
    I guess we could title that program, ‘Urine or You’re Out’.

    • The only problem is that people would figure out how to pass.

      I read an article of women in the workplace who use pot. One described using a herb that flushes out traces of pot in three days so that she could pass her health insurance.

      “Lazy” people are very good at working out how to bypass road blocks.

      • HI BF

        I heard that too. What kind of herb was it, do you know?

        • http://www.marieclaire.com/celebrity-lifestyle/articles/living/female-stoners

          “….Ready Clean, a 16-ounce fruit punch that claims to flush out the THC in urine if ingested within 48 hours of a drug test…”

          • Thanks, but I asked that because, my 18 year old great nephew had that problem,not to mention several others.

            When he was 17, he was into so many different drugs, it wasn’t funny. Got into many scrapes with the law, was accused of stealing from people, wouldn’t go to school, ended up in juvenile hall/rehab. He is now on 3 years probation, and if he gets into any more trouble he is looking at some jail time.

            He used to use some sort of concoction to help him pass his drug tests, and I was just wondering what it was.

            As far as I know, he hasn’t used since he’s been out, but he doesn’t do jack-shit either. Won’t go back to school, won’t get a job, won’t do anything, and he wants to join the military. Plus he has an attitude you wouldn’t believe. Always trying to be the tough guy, tried it a couple times with my son, the former Marine, and he ended up on the ground yelling for help. I told him, don’t mess with Matthew, because he will have you on the ground, he didn’t believe me until he was.

            Sorry for the lengthy answer there BF, just got carried away.

        • Golden Seal

          • Sad that I knew that. It should be noted that I do not drink or do drugs.

            USW

            • Glad to hear that, neither do I, drugs that is, but I do like to have a margarita once in a while.

              Hope all is well with you and yours USW

  41. G-Man:

    Are you still lurking about???

    I need some advice on living in the D.C. area. If you have time.

    JAC

  42. Here you go Matt:

    If you thought Zebra was offensive wait until you see this.

    http://sports.espn.go.com/ncaa/news/story?id=4586847

  43. v. Holland says:

    “The Lord’s Prayer is 66 words, the Gettysburg Address is 286 words, there are 1,322 words in the Declaration of Independence, but government regulations on the sale of cabbage total 26,911 words.”

    • Leave or I’ll shoot is 4 words, and quite effective!

      G!

      • v. Holland says:

        Could be 0 words-just point at them.

        I find the above quote nice because the cabbage part isn’t true, it’s forklore has been around since about 1940-so even though the exact quote isn’t true the point of the quote is true and has been felt by us humans for a long time.

      • These words are best used after you call 911 and ask for the coroner to come!

        • v. Holland says:

          Yea, I think that would be quite effective-although if I was the criminal my feet would be saying run but my mind would be scared to move. 🙂

          • Hi V

            I have to ask you this. Just how do you know how many words are in those? And what’s this about the sale of cabbage?

            Judy

            • v. Holland says:

              Actually Judy, I don’t, it’s just a quote that has been proved in be inaccurate but it has been around to the best of my knowledge since 1940-which shows that people have agreed with the sentiments of the quote for many years.

              • Well, thanks for the answer, I thought maybe you counted them all. BTW, How you doing?

              • v. Holland says:

                Actually, haven’t felt to good the last few days-not sick really just uncomfortable-back and stomach hurts-think I may have pulled something. Thank you for allowing we to whine a little 🙂

                Hope you and yours are doing well.

          • Had a neighbor accidently come in my house (drunk) sit in my recliner in 1986. I didn’t know him at the time, when I tapped him on the forehead with the barrel of a 30-30, the look on his face was priceless! As he apologized for walking in the wrong house (he just moved in next door) he shit himself as he walked out the door. I was in tears laughing so hard!

            G!

    • Just wanted to give tribute tonight to those who gave all, so we could be here together, to try and keep their legacy alive.

  44. Okay, I’m going for the night, getting tired. G, thanks for the song, and Hope you have fun on you vacation.

    Good night dear friend.

    Take care.

    Judy

    • Night Judy and VH, gettin ready to head there myself!

      Sweet dreams!

      G!

      • G_Man:

        Sorry for delay. Had to turn over computer to son for a few hours.

        I may be headed to DC.

        Recognizing that I was raised in the open spaces and I have son with Autism, any recommendations on where to look for housing and how much it might cost?

        I checked out Arlington and Alexadria. Great schools but your gonna live in an apt. or spend a small fortune for a house with a yard smaller than my den.

        I know I’m spoiled but was hoping there may be some viable options.

        Also need quick access to the metro if at all possible.

        Any Ideas??????

        JAC

        • Ouch!, I hate the thought of living near there. If your spoiled, look for a long commute. The traffic sucks, but if I had too I’d look West somewhere off of Route 270 heading towards Maryland/West Va. About 45 minutes on 270 the congestion seems reasonable. Don’t go to VA, too many stupid taxes, I would suggest just inside of Maryland, It’s a nice state and the peole are much more decent than those in VA, at least close to D.C. (don’t want to upset Richmond Spitfire!)

          South is VA, with way too many taxes (personnal property tax annually, which is on your car, boat, condoms ect). North is Baltimore, and the birds would rather live somewhere else, so that leads to West, out 495 to 270 (5 lanes wide at last trip) to leave D.C. I’ll be slow at work tomorrow and look into where the decent areas are and try to get back to you. I’m heading to the woods after work tomorrow, Here’s my email address, it will make it easier to do this, shoot me a note at gfrc2@aol.com

          G!

          • Thanks G…and if I don’t get back to you sooner, have a good time in the woods.

            I’ll be thinkin of ya.
            JAC

            • I’ll look into some things tomorrow, and I will be online at times in the evenings and have access to my mail. I’ll be enjoying nature, but not out of touch, feel free to contact me. I know alot about VA and their bullshit taxes.

              Sleep well tonight, I’m ready to get my 5 hours or so.

              PEACE!

              G!

          • G,

            Now you are talking about home for me. If you head out 270 and hit 70 at Frederick, I grew up about another half hour out. I also lived in DC, Annapolis, and Baltimore in Maryland. Went to University of Maryland after the military, Penn State before.

            • Traveled that path for many years, always hated the traffic problems, but learned to bypass them. I would not want to live there, too many people!

              Like my country livin to be close, 90 minutes and I’m in huntin land tomorrow, YEHAWW!!

              G!

              • There is a reason I moved to the South.

              • I like the South, as long as the coast isn’t involved I’m good. Lots of good nature away from the coast. Had a house in Hampton Va for 6 years, wasn’t there as much as i would have liked, but it wasn’t bad. Still too many people for me, hell I can’t wait to move from where I’m at, and we don’t have traffic problems! By the way, keep up the good work!

                G!

              • off to bed, night all!

            • Another Nittany Lion! Spent 7 years there in Osmond and Davey Labs. I hunted and fished in those hills.

              • Pennsylvania is home to me. I grew up on the Mason Dixon Line about two hours from State College. I am, and always will be, a Nittany Lion. I spent more time in the mountains of PA than anywhere else on earth. But I can spend time in any mountains and be happy. That is why they call it Happy Valley!

              • It was certainly an idyllic place to live. Mountains and trout just minutes away. We would leave before dawn get a couple hours of fishing in and get back in time for a 10:00 class. My wife is a Lion also. I was just looking at a map of campus and the area. It has changed a lot. I have not been back for almost 20 years. I used to drive from SC to Gaithersburg through the mountains to Hagerstown then to Gaithersburg. It was a nice drive. I lived in Gaithersburg for about 18 months while working at NBS. I loved touring the attractions in the DC area but otherwise hated the area. Too many people.

                I see Roy’s Place is still in Gaithersburg. Great place to eat if you have an hour just to read the menu.
                Ex:
                113. THE MISS NELLIE BEE (The Girl Who Killed Sex.)
                Grilled knockwurst, bacon, broiled American cheese, cole slaw, Russian dressing, tomatoes & raw onions on French bread

                http://www.roysplacerestaurant.com/menu.html

              • T-Ray,

                Waynesboro, which is 10 miles north of Hagerstown, is my hometown!

          • Maryland? Are you kidding? You haven’t seen taxes until you live in Maryland. I moved out of there because of the taxes; I worked in and around DC for over 40 years, living mostly in Maryland. I now live in Virginia, but not near DC. That was one of the advantages of retiring — I could move away from DC.

            Virginia nickels and dimes you with taxes, but the total is much less than Maryland. Maryland is a very liberal state, often referred to as the Peoples Republic of Maryland, only a slight exaggeration.

            The subway is OK if it goes where you want to go, but it’s very expensive and becoming less reliable as it ages and is not maintained properly. Costs are eating them up. Commuting from anywhere to anywhere near DC is a real pain. In fact, just moving around at all is a pain. Want to shop? You will have traffic at any time stores are open. Living far out doesn’t get you away from bad traffic either. Some of the more distant shopping districts have worse traffic than the closer in ones.

            All I can say is good luck. Are you sure you want to do this?

        • Just a Citizen,

          I can help you out there as well. I used to live in DC, and Annapolis, and Baltimore, and further out west. I can certainly tell you where to go in that area. Stay out of VA though.

  45. It’s so refreshing to see both parties called out on their abandonment of the public’s best interests. Unfortunately, the big players aren’t the only ones susceptible to temptation from the big business that help fund their (re)election campaigns. It’s just as rampant – perhaps more so – on the local level. Take, for instance, my hometown of La-La Land.

    Last year, the L.A. County Department of Public Social Services procured for vendor services to operate the county’s GAIN case management services (essentially a welfare to work program). Two bids came in from the incumbent company (Maximus, Inc.) and newcomer Policy Studies Inc. (PSI). Both were scored by a neutral third party, and PSI beat Maximus solidly in several categories, including performance and bid price. Maximus protested the results, but the findings were upheld on 3 levels and PSI was recommended by DPSS to receive the contract.

    The Board of Supervisors disagreed. They rejected the recommendation with 3 votes. They claimed the process of consensus scoring somehow concealed bias from the DPSS, though no specific evidence of this bias was ever presented. Furthermore, this scoring process was documented as a valid process which had been used for years prior to 2008, and the same process whereby the incumbent Maximus had been recommended and awarded. The BOS then directed the DPSS to extend Maximus’ contract for 6 months while they reissue the RFP and devise a new scoring method.

    The BOS also expressed some superficial concern that the cost of the contract may exceed county requirements (see County Prop A). Although language could’ve easily been built into the contract to ensure cost neutrality/savings, the BOS rejected that argument and asked DPSS to review their contract monitoring costs for possible reductions and eliminate or reduce pay for performance provisions that could drive up the overall contract cost should the vendor outperform expectations.

    The reissue of this RFP makes no fiscal sense whatsoever, particularly given the dire state of California’s economy. What’s more, the state faces federal penalties to the tune of approximately $185 million if they do not meet a preexisting federal threshold. Why is the BOS insisting on spending MORE of our tax dollars in an effort to maintain their business relationship with Maximus – a company whose performance was scored lower and contract priced higher than PSI? (The county has estimated the cost to reissue the RFP to be $250,000). If PSI had been chosen, their contract would save the county over one million dollars annually. What’s going on here?

    An LA Times article from last year exposed just how entangled Maximus is with the BOS. In the first half of 2008, Maximus spent over $124,000 on two lobbying firms, more than doubling what they spent on marketing in the past year. Perhaps even more troubling, Maximus donated $1,000 (the maximum allowed) to the campaigns to re-elect supervisors Don Knabe and Michael D. Antonovich. They even gave $1,000 to two members whose terms had 2 years left to run.

    In these lean times, something else must be motivating the board’s decisions, because it’s certainly not the bottom line. It appears to be just another case of politicians bowing to their campaign financiers and putting the county budget on the back burner.

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