Commentary by James Shott
As the economic non-recovery crawls into 2014, the “good news” on the jobs front – that the unemployment rate dropped .3 percent in December to 6.7 percent – is far less impressive when you look beneath the surface.
The reason the unemployment rate dropped was not that a strengthening economy produced a sharply higher number of new jobs, as should be expected in a true recovery. December showed only a puny 74,000 new payroll jobs were added. Data from the Bureau of Labor Statistics (BLS) indicates that the drop resulted because five times that many people – 374,000 – became discouraged that they couldn’t find work and dropped out of the labor force.
Adding even a small number like 74,000 to a smaller labor force misleads us into thinking things have improved.
The BLS identifies June of 2009 as the official end of the recession, at which time the labor force participation rate was 65.7 percent (162 million workers). At the end of December, the rate stood at a pitiful 62.8 percent (155 million workers).
Using the size of the labor force in 2009 and the adding back into the equation the 7 million who have dropped out, the unemployment rate is just under 11 percent.
We should not celebrate a drop in the unemployment rate to 6.7 percent when 7 million Americans have given up looking for work because the economy still has not produced jobs for them.
Hopefully, the New Year will bring an infection of fiscal responsibility to our national leaders. It is interesting how liberals see global warming/climate change – a widely popular but unproven theory – as a true crisis, but don’t see years of budget deficits near and above a trillion dollars, and a national debt of nearly $17 trillion, as a problem.
President Barack Obama’s first year in office, 2009, saw a deficit of $1.4 trillion, which gets credited to George W. Bush, but contained the contribution of nearly $200 billion from the Obama stimulus. But over the next four years Mr. Obama racked up more than $4.2 trillion in deficits – FY 2010: $1,294 billion; FY 2011: $1,300 billion; FY 2012: $1,087 billion; FY 2013: $680 billion. This fiscal year the projection is a deficit of $744 billion, and the FY2015 deficit is projected at $577 billion.
To help put this in perspective, The Weekly Standard noted back in November of 2012 that, “According to the White House OMB, we ran up $1.8 trillion in real (inflation-adjusted) deficit spending during fiscal years 1942-45,” and that “we’ve now run up $3.4 trillion in real (inflation-adjusted) deficit spending under Obama — in less time than it took us to fight World War II.”
If there is good news in Obama deficit numbers it is that the deficits are coming down, but real good news would be Congress and the president taking concrete steps to get spending under control.
That seems unlikely, given Rep. Nancy Pelosi’s (D-CA) opinion that “The cupboard is bare. There’s no more cuts to make,” a position gleefully adopted by most, if not all, Congressional Democrats.
In her view there is no waste, fraud or abuse, despite more than ample evidence to the contrary, and there’s no unnecessary spending, either.
Senator Tom Coburn (R-OK) issues an annual report on government waste, and in “Wastebook 2013,” he lists 100 examples totaling $30 billion. Heaven only knows the total of all the wasteful spending of the federal government.
* The military has destroyed more than 170 million pounds of useable vehicles and other military equipment, approximately 20 percent of the total U.S. war material in Afghanistan, totaling $7 billion, rather than sell it or ship it home.
* The SuperStop is a $1 million bus stop complete with heated benches and sidewalks, and wireless zones for personal computers. Yet its roof doesn’t protect from the rain, snow, wind or blazing sun.
* One of NASA’s next research missions won’t be exploring an alien planet or distant galaxy. Instead, it is spending $3 million to go to Washington, D.C. and study one of the greatest mysteries in the universe — how Congress works.
* When officials at the Manchester Boston Regional Airport in New Hampshire installed new solar panels costing $3.5 million, they did not anticipate one quarter of them would not be used 18 months later because the reflection from the panels blinds pilots and controllers.
* The Treasury Department’s Inspector General for Tax Administration discovered the IRS paid up to $13.6 billion in false Earned Income Tax Credits in 2012.
* While millions of Americans continue to pay taxes on their hard earned wages, many federal employees are tax cheats, to the tune of $3.6 billion.
* The feds keep the lights on in empty and little used federal buildings, costing $1.5 billion.
* Out of the $33.5 billion in Pell Grants the federal government doled out last year, individuals posing as students took off with $1.2 billion.
When an elected public servant believes there can be no spending cuts in the face of such wanton waste, it speaks volumes about the integrity and motivation of that individual.
Federal spending is a giant problem that we had better address soon.
Cross-posted from Observations
Tampilkan postingan dengan label Capitalism. Tampilkan semua postingan
Tampilkan postingan dengan label Capitalism. Tampilkan semua postingan
Random thoughts on the passing scene
Some of those who think the American health care system needed to be trashed and reformed in the image of the Canadian system might be interested in the opinion of Bacchus Barua, a senior economist with Canada's Fraser Institute.
"Healthcare in Canada is anything but free," he states, noting that the average family of four pays more than $11,000 a year in taxes for hospital and physician care. However, he explains in an article for The American "surely such expenditure is justified if Canadians receive a stellar healthcare system in return for their tax dollars. Unfortunately, that simply isn't the case."
Specifically, he lists some problems with his country’s system:
** Canada has fewer physicians, hospital beds, and diagnostic imaging scanners, and performs fewer medical interventions than its American and European counterparts.
** Canada has one of the lowest physician-to-population ratios in the developed world.
** A recent survey found that Canadians must wait an average of about 4 1/2 months for medically necessary elective procedures after referral from a general practitioner.
** The wait for diagnostic imaging technologies like MRIs is over two months on average.
** Patients in Canada are likely to wait two months or more to see a specialist, six days or more to see a doctor when sick or needing care, and four hours or more in the emergency room.
** Due to the lengthy waits, about 40,000 Canadians leave the country for treatment elsewhere each year [like the U.S.].
** Public drug plans covered only about a quarter of the new drugs approved for sale in Canada between 2004 and 2010.
He concludes: "These realities serve to dismiss the mythical notion that a Canadian-style healthcare system" is highly desirable.
We are headed in that direction.
*****
During the mortgage banking crisis the federal government pressured large banks like JPMorgan Chase to take over the bad mortgage loans sold by failing banks Washington Mutual and Bear Stearns. Now the government is fining JPMorgan $13 billion for helping the feds deal with the crisis. Can you say “shakedown?”
*****
Planned Parenthood involves itself with topics other than planning parenthood on its Facebook page, discussing topics like why some types of sexual activity are painful, transgender issues, and promoting Obamacare. Not exactly family planning.
An article on the Internet site bighealthreport.com reports that on Planned Parenthood’s Facebook page for teens it answers the question: “Is promiscuity a bad thing?” and that the organization defended doing so with the statement, “there’s nothing bad or unhealthy about having a big number of sexual partners.”
Isn’t this the mentality that has led to 40 percent of our babies being born out of wedlock, and males with multiple children from multiple “baby mamas?”
This “advice,” such as it is, increases the likelihood of HPV and cervical cancer among females, in addition to STDs. “Even the Guttmacher Institute, the former research arm of Planned Parenthood, considered ‘a person to be at direct risk for STDs if he or she had had two or more partners during the 12 months preceding the interview’ during one of their research studies,” Big Health Report said.
The article notes “a person with low self-esteem has been shown to engage in sexual relations earlier, and engage in riskier, unprotected sex with multiple partners.” Does that sound like “nothing bad or unhealthy” to you?
Seriously? This is what we get for $542 million in federal subsidies?
*****
The “government shut down” really amounted to about 17 percent of the government being “shut down,” and that is somewhat like going to a mall that has 100 stores and finding only 83 that are open for business. So, while things were uncomfortable for some folks, it bore no resemblance whatsoever to the government actually shutting down.
Of course, if the mall management blocked off stores that otherwise would be open, things would be more uncomfortable. No sensible businessperson would do that, but a petty, politics-dominated administration would, and did.
*****
The emotional push to raise the minimum wage to $15 dollars an hour for those working the least skilled jobs in the fast food industry puts the spotlight on a fundamental misunderstanding of basic economics.
Advocates think the wage ought to be based upon concerns totally unrelated to the job and the business the job is a part of. “I flip burgers at Burger King, and can’t support my family on what I make, so raise the minimum wage,” is the mentality behind this ill-advised movement. In their mind, if a PhD. in English, mathematics, biochemistry, or any other field somehow ended up ringing up Happy Meals at MacDonald’s, the wage ought to be based upon his/her training, or some arbitrary “living wage” concept.
A job is worth whatever the employer says it is worth. Anyone who doesn’t like the wage is free to not take the job, or to look for a better one. If the employer can’t find people to work at the selected wage, he or she will have to raise it. Anyone who tries to find a better job, but can’t, needs to pipe down and do the job the employer allowed them to have until they can find a better one.
"Living wage" mentality reflects misunderstanding of business reality
Fast food workers in seven cities were on strike last week demanding a "living wage" of $15 an hour, more than twice the $7.25 they currently make. Empathy aside, this expectation is a fantasy.
Every job has a value, but it is based not on what the person who has the job thinks it should be worth, or what sympathetic observers think it should be worth, but on its role in the business.
How important is the job to the business, compared to other jobs? Are other people who can do the job a scarce commodity, or are there thousands of them? Some jobs require substantial training, while others do not, and individuals with the required training deserve higher pay than those without training. Minimum wage jobs in the fast food industry require no formal training; the worker can learn on the job, and while the worker is learning to do the job satisfactorily, the boss endures lower-than-necessary productivity.
Who exactly works for the minimum wage? These jobs are entry-level work intended for people just getting started in the workaday world, like students trying to earn a little money while pursuing their education, or people with little or no skills or experience looking to get some skill and experience. About half of the 1.6 million minimum wage workers are under 25 years of age. The minimum wage is not intended to be, and cannot be, a “living wage.”
The minimum wage is, indeed, a low wage, but most of those workers get a raise in less than a year, and there are fewer of them today than in the past. The number of people making at or under the minimum wage today is 28 per 1,000 wage and salary workers, while in 1976 there were 79 per 1,000 wage and salary workers.
Most employers want the best workers they can find, so if most workers produce 10 of something an hour and Joe can produce 12 an hour, or if Mary’s work is of higher quality than other employees, the boss is likely to give them a raise to keep them on staff.
For people in minimum wage jobs with few or no skills, demanding their salary be doubled to a "living wage" is somewhat akin to high school students demanding they be given a college diploma. And anyone earning minimum wage that is unhappy with it can go look for a better-paying job. If they can't find one, do their best at the current job, and get some training that will qualify them for something better.
An organization calling itself Socialist Alternative illustrates graphically the failure of a “living wage" minimum wage in an article titled "Profit is The Unpaid Labor of Workers."
"Hypothetically, lets assume that our job pays $7.50 an hour and our boss wants us to work for twenty hours," the article says. "At $7.50 an hour for twenty hours, that’s a total of $150. In that same period of time, however, the work we do will probably make $300, $400, or $1000 worth of pizza."
And here's where it gets good: "What does this mean? Just for arguments sake, lets assume we only create $300 worth of pizza. After our boss gives us $150 for our week’s worth of work – meaning our own labor essentially pays our wage – he is left with an additional $150 that he did not work for."
There’s a brilliant bit of insight hidden in that paragraph: "our own labor essentially pays our wage." To the socialist mentality, the only cost of running the pizza parlor is what the boss pays the pizza maker. Everything else – flour, sauce, pepperoni, cheese, insurance, rent/mortgage, electricity, water, sewage, trash pickup, taxes, fees, etc. – the boss apparently gets for nothing, and the money collected for the pizza that is not paid to the pizza maker is ill-gotten gains.
The "living wage" strikers similarly do not understand business, and what happens when wages go up. Raising the minimum wage requires a commensurate raise in all wages, to avoid causing strife among the other workers, and that means price increases that make the business less competitive. That could lead to staff cutbacks or ultimately closing the business.
The strikers and the socialists fail to understand and appreciate the investments of the owner(s), who may have mortgaged their home to finance the business, and managers of larger businesses, who usually have spent years in training and working to get where they are, perhaps starting as a minimum wage employee themselves.
Owners get whatever is left over after everyone else – employees, venders, lenders, taxes, etc. – have been paid. Often, particularly in the beginning or during hard economic times, that is little or nothing. And, few employees work as hard as the owner of a small business, and particularly a new business, yet the Socialist Alternative begrudges them making a decent return on their investment of capital and time.
It’s easy to criticize the boss from the sidelines. The best course for these critics would be their forced entry into the business owner’s world. At their own expense, of course. They would undoubtedly see things differently in short order.
Obamacare’s serious weaknesses driving even strong supporters away
Commentary by James H. Shott
Although Sen. Max Baucus (D-Mont.) only recently acknowledged that the health care reform bill he helped create – the Patient Protection and Affordable Care Act (ACA), also known as Obamacare – is a “train wreck,” most Americans suspected that at its creation.
Things are so bad that President Barack Obama, trying to prevent some of the disastrous results, did something he is not allowed by the U.S. Constitution to do: postpone implementation of part of the law by suspending the employer mandate until 2015 and leaving the rest of the law intact. The Executive Branch of our government is obligated to enforce the laws – all of them, and all of each of them – and does not have the power to choose which ones, or parts thereof, it will enforce.
The House of Representatives passed two measures delaying the employer and individual mandates for one year, with 35 and 22 Democrats respectively joining in those efforts, which Mr. Obama has curiously threatened to veto.
And more recently, one of Obamacare’s most devoted groups of supporters has jumped ship. In a letter to Democrat Congressional leaders, Teamsters union president James Hoffa, and the presidents of two other unions, said this: “Right now, unless you and the Obama Administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”
The law has already encouraged some employers to trim their staffs to fewer than 50 full-time employees to avoid the expense of the mandate, and in other cases to decide against providing insurance altogether, and pay a much cheaper fine.
Nevertheless, Mr. Obama declared last week that "the law is working the way it was supposed to for middle-class Americans,” and criticized House Republicans for trying to dismantle it.
Polling data from five different polling organizations from mid-May through July 13 shows continuing disfavor among Americans, with the disparity of opposition-to-support running from as little as 5 points to as much as 15 points, and the Real Clear Politics average of the five polls at 10.2 points.
According to the Gallup poll from late last month, 42 percent say that in the long run the law will make their family's healthcare situation worse, and only 22 percent say it will make it better. And 47 percent believe the law will make the healthcare situation in the U.S. worse, while only 34 percent say it will make it better.
Republicans also are criticized for offering no alternatives while trying to dismantle the measure. “Three years after campaigning on a vow to ‘repeal and replace’ President Barack Obama’s health care law, House Republicans have yet to advance an alternative for the system they have voted more than three dozen times to abolish in whole or in part,” Sunday’s editorial in The Washington Post complained. That ignores, however, H.R. 3400 - Empowering Patients First Act, introduced in 2009 before Republicans campaigned for and won control of the House.
And now there is another, H.R. 2300 – the Empowering Patients First Act of 2013. Its principal sponsor is Rep. Tom Price (R-Ga.), who sponsored H.R. 3400, and he has credentials for health care issues matched by few in the Congress. Rep. Price is also Dr. Price, a physician who actually delivered and understands patient care.
This measure allows patients, families and doctors to make medical decisions, not Washington, DC. That is an excellent place to begin improving health care. What a shame that wasn’t the driving factor behind the ACA.
“You can get folks covered, you can solve the insurance challenges, and you can save hundreds of billions of dollars in this health care system,” said the physician/Congressman, “all without putting Washington or health insurance companies in charge of those decisions that ought to be between patients, and families and doctors.”
How can H.R. 2300 – a bill of only 249 pages, less than a tenth the length of the monstrous Obamacare bill – accomplish this?
Rep. Price describes it as comprehensive legislation under which “every single American has the financial feasibility to purchase the coverage they want, either through tax deductions, or credits, or advanceable credits or refundable advanceable credits so that they can purchase the coverage they want for themselves or their families, not what the government forces them to buy.”
He says further that everyone owns their own coverage, like a 401k plan, so if they change their job or lose their job, they take their coverage with them, and it allows all of those with pre-existing conditions to pool together, giving them the purchasing power of millions so that no one person’s adverse health status will change the cost for anyone else, including that one person.
While H.R. 2300 has the great advantage of being properly focused on patients and physicians, trying to straighten out the voluminous failures of the ACA in one bill is a Herculean feat. Obamacare needs to be repealed in total, and as soon as possible, and then Congress must undertake a sensible approach to correcting the problems of the health care system without turning it over to the government.
Cross-posted from Observations
Cross-posted from Observations
by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny
Adam Smith -vs- Ayn Rand. Capitalism was their common goal, the justification for achieving the ends of capitalism was their difference.
Based on pure logic and objectiveness Smith would have to concede to Rand.
Looking beyond the 18th, 19th, and 20th centuries, and post Soviet/Chinese/Southeast Asian communism, the debate is once again forefront and center.
Given the changing realities of modern western society how would you characterize capitalism today and what specifically would you suggest we ought modify or do differently?
For a insightful yet brief analysis of Smith and how his views might relate to the present please see taospeaks as you consider the foregoing.
There remains one thing abundantly clear. We as humans have yet to agree on the ultimate right solution. This is as it should be. Knowledge, growth, and ultimately achievement is NOT made by everyone always agreeing. Wouldn't you agree?
Cross posted at Left Coast Rebel
Rational Nation USA
Liberty -vs- Tyranny
Adam Smith -vs- Ayn Rand. Capitalism was their common goal, the justification for achieving the ends of capitalism was their difference.
Based on pure logic and objectiveness Smith would have to concede to Rand.
Looking beyond the 18th, 19th, and 20th centuries, and post Soviet/Chinese/Southeast Asian communism, the debate is once again forefront and center.
Given the changing realities of modern western society how would you characterize capitalism today and what specifically would you suggest we ought modify or do differently?
For a insightful yet brief analysis of Smith and how his views might relate to the present please see taospeaks as you consider the foregoing.
There remains one thing abundantly clear. We as humans have yet to agree on the ultimate right solution. This is as it should be. Knowledge, growth, and ultimately achievement is NOT made by everyone always agreeing. Wouldn't you agree?
Cross posted at Left Coast Rebel
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