Government Protection Racket

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Everywhere we turn these days, we find constant reminders of the lousy economic numbers in this country; and while economists refuse to talk about a 'double-dip recession' that hasn't yet met their strict definition, we all know it's here.  Many of us know the culprit as well.  It's not evil corporations or the wealthy 1%.  It's not even really the bankers, though they certainly haven't gone out of their way to help the situation. In fact, it's those in government telling us that something must be done for our protection, when the only thing that they're really trying to protect are the cushy jobs that most of them will have to attempt to keep, some 12 months from now.  

Government is something that we created in this country over 200 years ago to do for ourselves together what we could not do alone.  It was not instituted to do things we have apparently now become too lazy to do for ourselves. Look at the Government's latest answer to fixing the economy if you'd like an example, as the Senate passes legislation seeking tariffs against the Chinese for flooding the US with 'cheap goods', and preventing our own from being competitive.  Really?

Isn't that the same government that's telling us that the biggest problem is that consumer demand for goods is down?  Do they think that demand will improve if the costs of those goods are increased through tariffs on produced in China or the sale of more expensive goods from elsewhere (even the US)?  What will happen to a cost of living calculation that's already little more than pointless fiction, since it doesn't include the costs of food and energy, if we add to it what will now be the higher costs of imported goods?  

Politicians complain that the Chinese are pumping money into their own economy to artificially prop it up (which seems rather disingenuous of those who passed two different Stimulus plans and would like to see a third passed).  But so what?  What's wrong with taking advantage of China spending their money to makes its goods cheaper to buy until they can no longer afford to do so?  Aren't we glad that China is using this money to prop up their exported goods, rather than using it to build fleets of ships, squadrons of airplanes, and silos full of missiles?  If they think that the best use of their national treasure is an attempt to sustain something that cannot be sustained forever, let them.  In fact, let's applaud and encourage them to continue to do so while enjoying the fruits of ignorance that allow us to buy more and cheaper stuff with our own money. 

Of course placing tariffs on goods coming out of China will likely spur retaliatory ones on US goods being shipped to China and lead to a trade war, but what's wrong with that?  Well for one thing and like so many other times, Washington will be fighting the last war and not the one one we're facing.  We are no longer in a position of strength to bully other nations on the world stage.  The economy is a house of cards and the windbags in Washington are doing little more than seeking to blow it down.  For another, these are the same policies that proved a dismal failure during the Great Depression when they signed in 1930 the Smoot-Hawley Tariff Act into law.  Rather than helping the economy recover, this bit of odious political economic theory in fact extended the damage of the Depression far beyond what it should have.  Is repeating one of the poorer examples of legislative governance in this country's history the only way that we can prove its lunacy? 

Perhaps what we need to be asking ourselves more often is whether much of the very protection that the government is attempting to provide is what's stifling the economic recovery that it claims to be seeking.  Cheap energy is a necessary component to fueling a recovery for example, but the govt refuses to issue permits for drilling on land and sea in this country.  When Canada offers to ship us less expensive oil that it's choosing to recover from its own lands, we refuse to allow them permission to build a pipeline across the US for processing.  Such thinking not only ignores the necessity of obtaining such energy from a friendly source, but the large number of good paying jobs that will result from looking for it, getting it out of the ground, and building the pipeline across this country to move it to refineries.  What kind of protection is that?

The president demonizes the TEA party movement seeking a return to a limited government as defined by the Constitution that it was created under.  He finds sympathy however, for an Occupy movement that seeks not equality of opportunity but equality of result.  Doesn't this kind of equality stifle the very spark of potential genius this country was built on under a pile of stinking egalitarian mediocrity?  In the rush to seek some imagined progressive government utopia of uniform opportunity, are we instead getting a conformity mandated by the force of law?  In the seemingly constant incremental surrender of individual freedom, could we be dooming ourselves to stagnation instead?  Have we exchanged a true diversity of ideas for little more than a divergent set of paths to failure?  While decrying a lack of competitive edge in this country, has government itself instilled a placidity whose only goals are illusionary props to self-esteem?

This protection by legislation and regulation is not only doomed to failure by the faulty thinking it comes from, but by the imperfect assumptions it's based on and the defective methods involved in writing it.  What makes all of it even worse however, are the inevitable strong-arm tactics that will be used to enforce what are little more that crooked, flawed, and unsound policies for no other reason than that those in power believe that they know what's best for you.  Growing up in Chicago around the stories of mob influence during the days of another flawed government mandate, Prohibition, we knew what to call this kind of protection.  Used very effectively by criminal enterprises that often seemed far more organized that our government (then or now), we called them Protection Rackets.    


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Toledo Is #1 In Ohio

The numbers are in and Toledo is the #1 ... worst metropolitan area in creating and sustaining economic growth in Ohio, at least according to the Milken Institute / Greenstreet Real Estate Partners Best Performing Cities Index. 

Dropping four places in this list from last year's showing of 194, Toledo came in at 198 of the top 200 cities in the 2009 survey, surpassing other Ohio cities: Youngstown (193), Canton (190), Cleveland (186), Dayton (183), and Akron (167) in its failures; in a survey whose numbers were calculated based on job growth and wage and salary levels, as well as other criteria. No Ohio city was ranked in the top 100 in this survey (though Columbus came in at 108), and in fact only Detroit and Flint, MI ranked worse in the survey conducted nationally every year. (Something to aspire to perhaps?) 

Governor Strickland must be very proud to have so many of Ohio's cities near the bottom of the list on this survey. Perhaps the plan to delay the reduction of state income taxes will have an even greater impact on next year's effort and group Ohio cities closer together near the bottom. 

Locally one has to be thinking. Our current Mayor, Carlton S. Finkbeiner has been holding press conferences almost every day lately in the hopes of once and for all establishing his legacy of leadership in Toledo. With the release of these numbers, perhaps he has yet another reason to do so, and an accomplishment he can truly call his own ...

Obama Economic Plan - The Devil Is In The Details

As with most government plans, the devil is in the details. There appears to be no exception to the economic plan as modified in the president-elect's weekly radio address and supporting economic report given yesterday, and reported in today's Toledo Blade. This article, titled "Obama boosts job creation estimate", outlines that speech and report. Two things have struck me when going through this proposal. 

First, the numbers just keep going up, on both the amount of money required and the number of jobs that will be saved or created. We started out with a program at a little over $300,000,000,000. (Yes, it does look scarier when you print out all of those zeroes, doesn't it?) The program outlined in yesterday's address now stands at more than $775,000,000,000. Likewise the number of jobs that will be created or saved is up from the original 2-2.5 million to an estimate yesterday of over 5 million. 

Forgive me if this isn't starting to sound like an old John Lovitz routine from Saturday night live. I can just hear him saying: "I saved two, no it was three, three million jobs. No wait it was four million, no five, five million jobs I saved with my plan." ... and all of this before the president-elect even takes office. I know that there is an expectation of stretching the truth from all politicians, and I know that plans change as more information comes to light; but this taffy pull seems to be getting out of hand. 

Second and more importantly, the president-elect said in this most recent address that of this 5 million jobs, nearly 90 percent will be in the private sector. For those of you who didn't take as many math classes as I did, that means that over 10 percent of the jobs will be government jobs. 

Now adding to your respect for my mathematical abilities, I will further calculate that even 10 percent of 5 million jobs would mean 500,000 new government jobs. This is half a million government salaries, benefit packages, and pension contributions. For those of you who eyes are now widely staring at this page yes, that means that the taxpayers will have to pick up a pretty hefty check for this increase in bureaucracy at a time when our wallets are getting a little lighter already. 

I know that the incoming president has talked about the necessity for budget deficits to jump start the economy, but shouldn't be we looking closely at the burden we push onto our children and theirs. I know that the country needs more jobs. I merely question whether we need any more in a government containing an already bloated bureaucracy. 

The president-elect and I do agree on one other thing in the report released by his economic team in support of this plan as well: "There is a limit on how much government investment can be carried out efficiently in a short time frame." On this snowy Sunday morning I can only add, "Amen, Mr. Obama, amen." 

The New, New Deal

I was listening to the president elect outline the beginnings of his economic plan. This plan, for those of you who haven't been paying attention, proposes to create (or save) 2.5 million jobs by building roads, bridges, and schools; while also focusing on alternative energy and more efficient cars.  Now a couple of things seemed kind of funny about this to me, so being the kind of person that I am, I had to sit back to think about it.

My first concern was pretty obvious, and it was because of all the comparisons that the media made to this economic plan and FDR’s New Deal. For those of you who don’t spend far too much time reading history books (or watching the History Channel), the New Deal was a series of programs instituted by President Franklin Delano Roosevelt between 1933 and 1936 in an attempt to turn around the country during The Great Depression which began with the stock market crash of 1929. FDR’s programs provided jobs for many people who needed them at the time by massive infrastructure projects like building dams, roads, and bridges. 

Of course this New Deal also created the foundation of the welfare state, strengthened the union’s position in collective bargaining, and created Social Security (but that’s a topic for another day and posting). While these programs did provide jobs for many out of work Americans, they did not however end the Great Depression. Many historians in fact believe that these programs in fact delayed the recovery of the American economy through its interference; and that the Depression only ended when the country entered World War II and went into a wartime economy. 

The second part of this second New Deal is that the infrastructure jobs being proposed seem to me to be predominantly union jobs. Road and bridge repairs are usually done by unionized workers at each state’s respective Department of Transportation. School’s are usually built under government bids, which in non-right to work states like Ohio means that they must pay “prevailing wage” (union scale) and in some cases, must be performed by union workers. The money proposed for creation of fuel-efficient vehicles will undoubtedly go to the Big Three, and not overseas manufacturers like Toyota, Nissan, and KIA (who already make such vehicles). 

As a consequence, this money will make its way down to union auto workers. Quite frankly, the only part of this package that doesn’t seem to make its way directly into the hands of union employees is that being directed to alternative energy. I’m not an expert on the subject of alternative energy companies (or anything else for that matter), but based on the other programs I am forced to conclude that I have simply not figured out the union connection to this part of the program and not that there is none. 

I would like to see the president-elect and his economic team come up with some bold new economic initiatives. I would like to see this new administration successful in stimulating the economy, and ending the recent downward spiral. I would also like to see something come from government other than handing out taxpayer dollars in programs designed to benefit only a select type of worker (and I think you know what I mean). I would like our president-elect to show us some real change instead of trotting out tired "old" ideas that didn't work when tried under similar circumstances before I was even born.