ex•tor•tion [ik-stawr-shuh n] –noun
1. An act or instance of extorting.
2. The crime of obtaining money or some other thing of value by the abuse of one’s office or authority.
3. Oppressive or illegal exaction, as of excessive price or interest: the extortions of usurers.
4. Anything extorted.

Early in our industrial infancy, the cheapest labor was often recent immigrants, indentured for their trip from the old world. Like many nubies, they were mocked as unsophisticated or slow witted by some in pop culture for their low socio-economic standing and lack of understanding of local norms. They were employed at a slower rate than assimilated workers. Unscrupulous business owners, and I might add, political parties, took unfair advantage of their ignorance. Workers were hired under misleading arrangements specifically worded to entice these workers into unfair contracts. The workers did what all workers in a free market do when treated dishonestly, the walked out. This wiped the gotcha-smile right off the bosses faces. The bosses could not infringe upon one’s right to life, liberty, and the pursuit of happiness. One of the principles essential to the right to pursue happiness is the ability to keep the fruits of one’s pursuits, the protection of private property. The bosses wanted to get the production from the worker, and keep much of the remuneration as well.

To infringe upon this right required collusion with government.

Fraudulent employers got bigger, helped elect business friendly politicians who then enacted laws allowing employment contract skippers to be arrested and to allow local police to enforce the terms of the contracts. Railroads, coal mines, steel, were industries notorious for taking advantage of workers, enforced with the help of local and state police. They paid in script only accepted at the over priced company store. This is the part of the story we have all heard. The employees banded together and stopped working. Without production, the bosses could not buy the government they needed to keep the employees working. Such collusion only works to the advantage of the privileged few. We elect our government and the majority of Americans do not appreciate fraud and corruption, even now. Once the lights were turned on, the roaches scurried.

For most of the rest of our country’s history, unions could strike and business owners could fold. Pay and benefits were negotiated somewhere in the middle. All agreements were subject to either party simply walking away, at least temporarily. If the business folded, no amount of picketing would create money from thin air. If the employees walked, no amount of retained profit would produce. Soon equilibrium was reached whereby the employees felt favorably compensated, the business owner had labor he could count on and little changed year to year. Employees questioned the relevancy of the unions and hesitated to pay the dues for no change year to year. But politicians, as they are prone to do, followed the politically expedient source of money and grew to be on the “side” of unions, for a price. The unions used the means at their disposal to enact favorable legislation of their own. So was born the closed shop. If you wanted a job in a union shop, you had to join the union, often before applying for the job. Anyone who was not pro-union would not be allowed to join and therefore could not get the job. Friends and family were the only ones allowed to join and dissention in union matters was scarce. Even with this arrangement, employees were less and less interested in joining unions and paying the extorted dues. Non-union shops could pay less and charge less and fire people more easily, at the same time, they hired more easily and sometimes the take home pay was higher as no one was supporting a union infrastructure. This was especially true for other countries. Soon, a new generation of workers grew up only hearing stories of the labor movement. Their union loyalty faded as the union looked less and less like the savior of mistreated employees, and more and more like the bloated bureaucracies that had enslaved their grandfathers. Unions needed a better way of growing members in order to survive.

One option, the hard way, was to insist on minimum standards for members for training, ethics, dependability, etc. They could insist on eliminating poor performers from their ranks. This would give unions a reputation for the best employees for the money and guarantee a steady supply of employees wanting to join and a steady supply of employers wanting to hire them. The downside, the dues would have to be really low to keep newly employed members from leaving once they got the job. And, there is the downside of having to produce something in return for the dues after years of getting closed shop dues for relatively little. But if they could find another option, a new steel industry or a new coal industry, where the businesses hardly had any competition for employees, it would be much easier. Such a business would be staffed by employees with little choice but to work for the union. What would be even better is if they could do so in an industry with considerable profit margin from which to negotiate. The search was on for an industry with unlimited funds, relatively high tolerance of favoritism and nepotism, and a favorable political climate.

The perfect industry exists. However it was illegal to organize until the late 1950’s. Then a New York City mayor wanted to secure a few city worker votes and the public sector union was born. Democrat politicians across the country rushed to add public sector union members to their roster of campaign contributors. The unions could push the entitlement form of pay and benefits, and get the government to pull their closed shop union dues straight from the employee’s paychecks. The union could then use those dues to help elect pro-union politicians with which to negotiate those entitlements. The position normally held by the business that could go out of business was now filled by the tax payer. The tax paying public can not cease to exist due to unprofitable employment arrangements. Moreover, the union employee gets to vote for their representative on the government side of the table, same as any other tax payer. They then also get to send a second negotiator on the union side. The first places to adopt such laws were those states where a large portion of the state’s employees worked for big, heavy industries which were already union supporters. The rust belt fell first along with steel and dockworkers heavy states. More would follow as right-to-work states had uprisings to get the “right” to extort higher pay from their taxpayers as well. All went as planned, at first.

The arrangement in Wisconsin threatens the golden egg laying goose for two simple reasons: Greed and incompetence. Pay is peanuts; the big money is in pensions. A public sector worker can work for 30 years as a teacher, from 25 to 55 years old, retire with a pension, live to be 85 years old, and draw more in pension in those 30 years than they were paid to actually work 30 years. Each time a teacher in Wisconsin retires, the cost of their replacement is double, one for the replacement, one for the pensioner. In a private sector business, where pensions have long gone the way of the dinosaur, the money for the pension would be set aside each year the teacher worked. The cost would be obvious as the $52,000 teacher also had $52,000 set aside for her pension in hopes that she only lived 30 years following retirement. Retired teachers who live to be 90 could see 5 years when the cost is triple. The number of retirees, who do so, increases every generation, as does the base pay, all of which is renegotiated each year. The public sector union employee in Wisconsin grew up seeing their parents get this pension, without paying into it themselves, and now expect the same. They see it as a right. They feel entitled. Public sector pay and benefits outweigh the private sector employee packages from which the public sector pensions are paid, and the private sector employee also paid for a significant portion of their own retirement. Private sector pensions are all but nonexistent because no one can predict how long a new 25 year old employee will live after retirement. No business decision can be made 30 years in advance with any security. Private sector employees must live off of the retirement they helped pay for as well as continuing to pay for the public sector pension for a retiree who did not. The cost of a public sector union employee far exceeds that of the private sector employee’s pay and benefits. Which would be OK, if the electorate feels they are getting their money’s worth. The downside of favoritism and nepotism in an environment of employees motivated by belief in entitlement to the job, is that performance will always be lackluster at best, and never approach the performance where continued employment and promotion require it. Indeed, the union can be counted on to talk higher performers into slowing down or performing less to prevent bringing undue attention to the overall lackluster performance. But the internet allows parents to realize that their students are more likely than other similar students to perform poorly, despite spending much more per capita on education. As teacher pay increased, public school student performance decreased. We understand child learning better now than in previous generations, we have computers and other teaching tools available to us like never before, and a large portion of Wisconsin public school 8th graders cannot read proficiently.

But the death knell for the public sector unions in Wisconsin and the rest of the U. S. sounded when they took a stand on the ability to renegotiate their position, on the promise of accepting pay and benefit cuts now. They got the nation’s attention when they stated flatly, that cutting pay and benefits for union members instead of raising taxes on everyone was solving a money mismanagement problem on the backs of the unions.

Really? The collective scowl from the country was palpable.

Although they were correct about the mismanagement, it was at the hands of the union-elected miss-managers. Taxes had already been raised 60% to pay for the existing packages as businesses left the state. Fewer students to educate could not be accepted as a sound reason to lay off unneeded teachers. The teacher’s union wants everyone to pay even higher taxes, following an election upset run and won on the promise of cutting spending and taxes,  The union promises that union members will take a small hit now, so long as they get the opportunity to negotiate themselves raises and increases in the future, (when they can get more union friendly politicians elected). What I heard was, “We will keep the roaches out of the kitchen so long as the light is on.” Such negotiations in the past have often been accompanied with back pay for those cut years. In other words, “Write us an IOU for the “pay cuts” we are borrowing from the next generation of workers we are under-educating, or we will shut down the underperforming school system we took an oath not to abandon. Really, we promise.” To put it in terms some of you might appreciate, they said, “Nice school system you have here. Be a shame if something bad were to happen to it. A threat?!! Heavens no, it is illegal for teachers in Wisconsin to strike! I’m just sayin’ if something were to happen, organically without our community organizers community-organizing it . . .”

We are at a crossroads in this country on so many levels, but this is ground zero for the entitlement culture war. (Wisconsin is also seen by many as the beginning, ground zero, for union solidarity of past unions. I find this ironic, but perhaps fitting that the attempt to skew the political processes in favor of the privileged few, on the backs of the many, would be exposed there and defeated there.) If Wisconsin folds, so folds the country.

I call for the formation of a new union, one representing the over 80% of all workers who are not currently represented. I suggest that membership be open to all taxpayers not belonging to a union and that membership can be begun and ended year by year, with a prorated refund of dues anytime a politician you don’t want to support is supported. I suggest that we vote ourselves the “right” to bargain and the “right” to have union members pay OUR retirement and healthcare. In fairness, the unions will likely loose the ability to negotiate pension and healthcare soon either way. Perhaps we should only reserve the one right we truly do have; the right to the pursuit of happiness; the right to keep our property. I suggest we organize a taxpayers union and strike to end the extortion of our property on the threat of public employee sickouts. I want the right to strike and put the golden egg laying goose out of the egg laying business. I want to strike to end the practice of borrowing from our children without their informed consent, to send from balanced-budget/right-to-work states like Virginia, to states like Wisconsin.

We can survive without public sector unions. They cannot survive without us.

Eventually, the unions put up candidates of their own for government positions and the practice of government enforcement of unfair labor practices was replaced with regulatory protections against them. However, just as business used this influence to their advantage, unions worked to enact legislation favorable to themselves through their elected officials. Eventually, all truly unfair business/employment practices were eliminated by legislation. Unions were no longer relevant in matters of fairness. To remain relevant, they negotiated from a position of solidarity for better than fair pay and benefits. Pay to union employees rose above non-union pay and unions could not persist. Businesses resisted hiring union employees, knowing pay and benefits would be extorted above market price. In some areas of the country, unions were influential enough to successfully support a sufficient number of elected officials to make it legal to force businesses of a certain size to only hire union employees. The concept of a closed shop was born. Join the union, or don’t bother applying for a job. Favoritism and nepotism replaced merit and production.

Businesses that could not survive the new burdens of employee strikes and unfair legislation, did not survive. They either moved to more business friendly environments following the paths of looms past, or businesses formed by others in such friendlier locals put them out of business. This cycle of business start up, unionization of the successful ones, and their eventual demise continued until all but the large industrial employers with factories and plants too large to move easily were gone. Now, a business opens in a union state and makes a profit long enough to get the attention of a union. The union convinces the employees that they deserve a larger portion of the difference between their current pay, and the profit retained by the owner, real or imagined. This is an easy sell in union states as it is common knowledge in such states that union jobs can pay several times what non-union work pays. The owner is told that the union will supply well trained employees and the increased pay will be an advantage as the unions will not tolerate non-union shops which might open to compete with the union shop. This is an easy sell as well, since the owners often grew up in the union rich society of the union state. The owner tolerates the union and can sometimes negotiate help from the union elected government officials in the form of competition limiting regulation in return for better pay and benefits for the employees. Over time, the negotiated arrangement is re-visited and changes in favor of the employees creep in. Rarely does an economically weak company gain relief with newly negotiated employee contracts, as the union continually attempts to get as much of the profits for employees and the union as is possible, while threatening to interfere with commerce if any reduction is requested. Often, concessions in good economic periods render the business unprofitable in another. High labor costs in high skill, labor intensive fields encourage automation in competitors where such automation would prove too costly without the union bolstered pay scales. Eventually, unionized industries fail more often in union states and less often in non-union states or countries. Unions fail and disappear in direct relation to the death of the host organism they helped starve. As profits shrink in favor of high pay, even the large industrial employers are replaced by foreign competitors. Unions could have educated and trained their members to be more competitive than non-union workers, instead they worked for conditions where they would not have to compete.

There is one industry however, which can never be outsourced. There is one industry which has almost no connection between the existence of the employer and the financial feasibility of the employee pay package. There is one industry where competition for survival has no connection to the production of the workers. This industry is government. Union organized public employees can pay dues to support the election of union compliant officials, and then “negotiate” a “fair” pay and benefits package with those same officials. Since unfair business practices or unfair pay and benefits are no longer left to fight, the union must fabricate such in order to remain relevant. This is exactly what happened in Wisconsin. The “union busting” legislation proposed in the Wisconsin legislature, if passed, would only make Wisconsin state teachers’ bargaining abilities equal to those for unionized Federal employees. The proposed legislation would not however bring the teacher’s union employee’s pension or health insurance contributions in line with either non-union Wisconsin residents or in many cases, other union employees. So why would the unions and their members take an extremely hard stance on an incremental loss in abilities which are out of line with most other employees’ abilities? They are not fighting for safe working conditions. They are fighting to be able to re-negotiate when the electoral pendulum swings back in their favor and they once again choose the government negotiator. They are fighting to continue to negotiate from both sides of the table. They are trying to make the voters, their employers, regret challenging the status quo.

The unions have drawn the line in the sand. The risk is that voters will not regret challenging the unions, but regret allowing them to exist at all. If the proposed Wisconsin legislation passes, I believe this will be the first time that public sector employee unions have lost any significant gains for their employees. There have been some temporary decreases in benefits, or temporary freezes on pay raises, or temporary freezes in hiring. I assert that this is the first permanent setback in the slow progression of pay and benefit improvements. I assert that this is the first setback that will not be re-negotiated with the elected official of their construction. If this legislation passes, the unions will have to negotiate in the open venue of public elections directly with their employer, the voters, instead of behind closed doors with someone who owes them for their job. They will have to stand in the public square and convince them that union members are entitled to pay raises when everyone else is taking cuts. They will have to convince the public that higher union pay will lead to better educated students, . . . this time. They will have to convince the voting public that tax increases best balance a bloated education budget, coincident with rising teacher pay. If the proposed legislation passes it could indicate a realization by the public that unions are obsolete, to be replaced by automation or at least, lower paid labor. I first suspected they recognize this too when I noticed the unprecedented pressure being brought to bare on Madison Wisconsin by the union friendly, union elected power players outside of Wisconsin. The unions are calling in their chips and the union elected officials are doing what they promised to do, knowing this will not go unnoticed by the voting public. President Obama publically put his support behind the unions. I assert that he does this as a knee jerk reaction resulting from his coming through the union rich political machinery of Chicago somewhat oblivious that his actions caused most of the rest of the country to pause at their own jobs and look up to see what he has done. The DNC sent their chairman, Tim Kaine to help with organizing protests, knowing(?) the people in the right to work state of Virginia will not understand his support for a union fight against negotiating directly with the tax payer over tax payer supplied pensions, and may not vote him into office again. President Obama put his left-over campaign resources into the fight via his campaign organization, Organizing for America. Solidarity. President Obama’s oath is to the Constitution. He is an employee of the very tax payers he has sided against. It seems lost on him that the fact he cannot represent “US” and “THEM” at the same time and that he chose to move to this side of the table. It seems lost on him that the fact the taxpayers have realized this is the very basis for the November upset in Wisconsin, and the new support for union restraint there. Is it more likely that such support for a union is because teachers are barely being fairly compensated in union negotiated contracts, or that the union contracts are so lucrative that the union members will pay dearly to keep them?

Consider this: If the school system took bids for teaching jobs, union and otherwise, would the low bids from out of work teachers be the same as the current teacher pay? Or, could current teachers be replaced from the free market for a price much lower?

So long as there are out of work teachers, the pay is too high. We expect the highest moral character in our teachers. We want them to be attracted to teaching because of a heartfelt desire to be in the profession. We want teachers driven with a desire to encourage such character in our children through example. What I see in Madison are teachers apparently attracted to teaching by a strong union, lying to their employers the taxpayers, saying they are sick and cannot work. I see them doing so in public, in front of their students, in front of an electorate not stupid enough to believe them. I see them doing so, knowing that no one believes the obvious lie, yet they persist. I see doctors lying on camera, writing notes to the very teachers who would not accept a bogus doctor’s note from their students. I see the kind of lying and cheating that money buys. I see teachers claiming that an education is a right while interfering with said education. I see them causing a stop to education activities and claiming without the union, education of the children will cease. I see teachers willing to teach children that lying for money is acceptable. I see teachers deliberately confusing the difference between rights and privileges, for their personal monetary gain. I see teachers using school yard bully tactics against legitimately elected officials with whom they disagree, for the purpose of interfering with the sworn duties of teacher and Congressman alike. I am not alone when I plainly see what an entrenched union will do when challenged.

What the union members do not realize is that much of the country is watching. Most of us did not grow up believing that such poor behavior is acceptable in the protection of the union interest. What they do not realize is how disgusted I am with the thought of my personal friends who are teachers, being forced to support and pay dues to such an organization as a condition of their being allowed to teach my children. I find it particularly unsavory that one of my teacher friends would be required to pay to support the election of a particular candidate as a condition of employment. I am not alone. The line has been drawn. Tremendous force is being applied in Madison in the protection of the unions. I find it a little ironic that their “fight for the freedom to negotiate” as unions could lead to Wisconsin’s freedom from them. All that stands between union survival and union oblivion is freedom to work without paying the union for the privilege. Simply allowing a teacher to work as a non-union teacher for the same pay as a union teacher will mark the end of teacher’s unions. The teacher’s union could have simply allowed this proposed bill to pass, quietly, then wait a couple of years and have the union supported Congress that would one day return, “fix it,” and get back to negotiating ever increasing benefits. Instead, they want to end challenges to public employee unions by their employers, and punish those who dare to do so. I wholeheartedly hope they succeed in doing just that. I hope that freedom ends this debate once and for all. What a fitting place for the progressive movement to have gained an early foothold, and ultimately the place where it shot itself in the foot, marking the end of the belief in the long term sustainability of socialist tenants. What a fitting end to public sector union conflict-of-interest, at the hands of voter solidarity.

I was surfing for some news this evening on my Sirius Radio while driving in my car. The dreaded drive hours, more advertising than music. Today reminded me of those days, I was flipping through my news channel presets and thankfully the BBC doesn’t care as much when we are in our cars. But eventually I stumbled onto Stuart Varney filling in for Neil Cavuto on his business news program Your World. He was doing an acceptable job in being politely cynical of the assertions of Dennis Kucinich, (D-Representative of Ohio’s 10th). I feel no need to be impolite, but ration is neither polite nor rude so I feel no desire to ignore the truth in the name of being polite. Nor do I feel the need to be disrespectful of Mr. Kucinich, he is willing to put his feelings out here for the likes of me to challenge, which is more than I can say for many of his 535 or so Congressional colleagues. But fallacy deserves no respect, as misleading people, no matter if inadvertent or well intended is to be eliminated whenever it is discovered. You be the judge of my reasoning.

The discussion that caught my attention, (in addition to not being another advertisement extolling the virtues of buying physical gold or online data backups), was about President Obama’s stated intent to “invest” in, among other things, an expansion of the Smithsonian Library to the tune of $100 million. Small change compared to the high speed rail President Obama wants to replace the mostly empty slow speed rail the government currently “invests” in every year. Mr. Varney asked how the conversation could be about lowering the deficit in the same breath as suggesting that we borrow more money to build infrastructure. Mr. Kucinich said several incorrect things but I will only challenge one of them, “We need to have good paying jobs in America, and when the private sector isn’t creating the jobs, the public sector has a moral responsibility to do that.” His assertion was that government spending on infrastructure creates jobs for people who then pay taxes and tax revenue will go up, reducing the deficit. Sounds good, a kind of Government-Reagan-Trickle-Down on steroids, investment for short.

First think back to high school (I know, it hurts), do some math using the Smithsonian expansion as an example since the round $100 million price tag makes it somewhat simple. I am a simple man, I need simple explanations. If all the money went to pay people doing these new jobs, none for materials etc., and all the new employees make more than the magical $250K, and do not take advantage of any of the myriad deductions like employer provided health insurance, so they all pay the maximum 35% back in the form of income taxes, the tax revenue would be $350,000. Tax revenues cannot be increased with the spending of tax revenues, as this is not an “investment” but rather an expenditure. Even if we grant poetic license to the use of the word investment, spending $100 million in hopes of getting a maximum $350,000 return is a terrible investment. But, I can cut the guy some slack since he blurted out his financial rationale in the middle of making the bigger point that this is a moral imperative.

I looked on Mr. Kucinich’s website where he claims to be “America’s Congressman,” and “America’s most courageous Congressman.” He also asks that visitors sign a petition to make healthcare a “civil right”. I know from such that he is drawing on people’s feelings more than their logic. If health care is a right, a person could infringe on someone else’s rights simply by choosing to become something other than a doctor or a nurse, or an orderly. The government could put people in jail for such infringement on people’s right to their health service. It seems obvious to me that Mr. Kucinich turns to his sense of morality for guidance instead of his sense of reason. It does not take courage to do what feels right. Courage is doing the right thing when people like Kucinich want you to feel like it is wrong or immoral. I contend there is no contradiction and that logic will give you the morally superior direction. People who do not turn to logic first, often disagree with me. I could be wrong. This is such an instant.

If you want to put more people to work, do you borrow money to hire them and then tax the pay to pay it back, with interest? Or do you let them keep the money to start with and save the overhead and interest? Logically, you choose the most efficient method which is the one without the interest. The one who would get the money now, and be taxed later may not like it, but in the end, some wealth is consumed in the borrow-spend arrangement. If your answer requires some leap of faith and ignorance of logic with an explanation that sounds something like, “the prosperity if creates will employ more people and amplify the effect,” then I suggest your answer is based on hope not reason. Los Vegas was built and thrives on people waging their own money on hope and a roll of the dice. Consider how powerful such hope is with other people’s money and a belief in “moral responsibility. If people hired by government investment would be able to pay back the loan with interest in the form of taxes, then government subsidy would not be needed. They would be able to borrow the money themselves, which is an investment by the lender in the worker. They would pay it back themselves, right? This is the logic behind school loans, borrow now and pay it back via the job you get later. The benefit of teaching a man to fish far outlasts the original investment. But where will the job be for the person working on the Smithsonian expansion once it is finished? This is the fallacy of all government “investment.” They all rely on a ponzi scheme of some sort where more and more people pay more and more into the scheme to keep it going. The Smithsonian job is an example of a Government bubble; take away the subsidy and the job is gone. The private sector is not investing in the project because there is no economic return. To keep the job, more borrowing or taxation and subsidy will be required. This is not creation, but consumption. But this spending is not about investing, or even getting a larger Smithsonian, or putting people to work or any other morally admirable goal. It is about getting money from some people, namely those of the future, and giving it to others, namely those of the now. You can try to assign any number of motivations to this desire, for example now people vote now, and future people vote later. Maybe Mr. Kucinich prefers to entice people to vote for him now as apposed to hoping they will vote for him later. But I don’t need to question his motivation, I can simply point out that his logic is flawed.

As I have pointed out, government infrastructure spending, although tolerable in some circumstances, is a form of consumption. But I assert his main failing in logic, which prompted this post, is that Mr. Kucinich suffers from selective morality. Albeit well intentioned, he is a hypocrite, although I suspect he is not aware of it. He is like the person who insists that the rich pay their share of income taxes, and then do not disclose all their income on their own tax return. Mr. Kucinich took a solemn oath to defend the Constitution of the U.S. He did this freely as a condition of the job of U.S. Representative. There is no provision in the U.S. Constitution confirming Mr. Kucinich’s assertion that the Federal Government has any authority to provide American jobs because he is unhappy with how the private sector does so. This does not change for good paying or otherwise. It does not change because Mr. Kucinich would choose industries different from that of the private sector. Further, there is no provision in the U.S. Constitution with which moral responsibility is implied. Mr. Kucinich is attempting to use the office which he holds for personal motives of morality, as he defines it. Mr. Kucinich took an oath to defend the Constitution from all enemies and then ignores that oath and the Constitution or assumes the Constitution is flexible to fit his own morality. Even if he were attempting to persuade me to donate to his cause of my own free will, I must be skeptical of his description of moral responsibility when he has turned his back on his freely accepted responsibility to the Constitution. His oath did not stipulate enemies who would attack the Constitution, or break it, or bend it to their will. His oath stipulates ALL enemies. He is the domestic enemy he is sworn to defend against.

I think the answer to the first one is simple. No, it is not the answer Lisa Jackson, EPA Administrator gave. Her reason was the agreed upon, previously released response, the evidence is overwhelming, the EPA is obligated to do something about it. My answer is that carbon is the most dangerous “pollutant” left to regulate, and public opinion has not swayed to the liking of the warming lobby, Congress has refused to pass Cap & Trade because the electorate kicks those Congressmen who threaten to do so, out of office. Just like the cleanup of the Gulf Coast beaches, lots of people are needed early on. As the worst of it is cleaned, fewer people are needed until eventually, only a few are “needed” to check out reports of places that are not cleaned. The EPA, like all government agencies, will not send the early cleaners home, and their ranks continue to grow. Their budget grew 35% since President Obama took office. There are too many people. They are obligated to clean something up. The EPA only remains relevant so long as there is an environmental pollutant not being cleaned up.

The second is simple as well, if you simply apply poli-logic, the logical assessment of a policy’s outcome. The EPA asserts it is obligated to regulate carbon, for the purpose of reducing the amount of carbon in the atmosphere, for the purpose of relieving the earth’s fever. Assume for a second that the earth has Al Gore’s fever, and that reducing carbon will accomplish this cooling. The question is reduced to the simple form: Will carbon in the atmosphere be reduced as a result of EPA limits on it? I suggest it will not. Simply, global warming suggests a global phenomenon. The air we clean (or don’t pollute) circles the globe. The EPA does not. When it costs too much to operate a factory here, because the electricity costs too much, the factory will move to China, or close and be replaced by one opened there. The Chinese electrical generation is not as clean as ours was then the EPA was formed, much less EPA obligation “clean.” The end result is more carbon in the atmosphere than there is now, and more of other pollutants like sulfur that are all but eliminated in U.S. electricity production. If the EPA, or anyone for that matter, wants to reduce air pollution, they should do everything possible to bring as much industry to the U.S. as possible. The dirtier, the better.

While we are at it, lets look at another assumption that must be true in order for the EPA assertions to hold water, ( . . . um . . . air?), specifically that the science is settled. I can remember when floppy drives came on the scene. I can remember the news talking about global cooling in the ‘70’s and the impending next ice age. One thing I have noticed, scientists talk about the current understanding, or the current theories, not settled science. If Lisa Jackson had testified that tests have produced results consistent with the current theories, raising confidence that the theories accurately describe the natural phenomenon, I could check her assertion. I could concur, or at least find people who had done so and concurred. If she had said what scientists say, that the theory is not perfect and new refinements are being discovered each time the tests are repeated, I would have more respect for her opinion. But she did not. She said what politicians say, the subject is settled, because the Supreme Court ruled that the Clean Air Act could allow the EPA to ignore public will and the will of Congress and act on their beliefs as apposed to mine. To paraphrase one comment made during the hearing: The Supreme Court said the Clean Air Act COULD be used to regulate airborne carbon, the EPA staff thinks it SHOULD be so used, the Congress will decide if it WILL be so used.

Scientists do not claim to know all of the consequences of a political scheme and would generally not offer what should be, one would simply state what is known, and what the predicted outcome will be. A scientist knows that she will one day be proven wrong concerning some “settled” scientific truth, and would not want to be held responsible for spending billions of dollars and sending away millions of jobs and increasing the pollution in the air. So even if Lisa Jackson is not the climate activist she seems, and is correct in her assertion about the science, how long are we going to allow the EPA to increase the carbon in the atmosphere via China et. al.?

The EPA must be stopped to save the planet!!

Much political discussion involves terms and phrases used in ways contrary to their definition. The cynical call it spin. President Obama says he wants to “invest” in research, education, and infrastructure. In part, his motivation for this “investment” is to get ahead of the Chinese in the green technologies race and fabricate a “sputnik” moment. He wants us to “Win the Future.” On the surface, this sounds great, after all who would not want to “Win The Future”, which I will abbreviate WTF. Would I be a loon if I wanted to loose the future green race to the Chinese? After all, they are so interested in being green in China, they have a head start, right? They have demonstrated some technological advance on par with the Russians beating us into space to prompt a Sputnik moment, right? So what could the President possibly mean? As an attorney, he understands that words have meaning, and that reasonable people turn to the dictionary to determine the common accepted definition, so let’s start there. He obviously did not intend for us to understand a meaning different from the common accepted definition. Did he? He would not count on us reacting to our feelings about the word instead of critically checking to see if he used it properly. Would he?

I have to believe his intentions are pure, that he thinks he is doing this for our own good. But his perspective, and belief in economic salvation through government fiat makes me skeptical that he has the usual understanding of the word investment. So consider the following, recognizing my skepticism, and decide. For example, an office manager might invest in training for the staff, invest in education. But buying everyone beer one evening after a training session is spending on a consumable expense. The training should lead to improved production, team cohesion, etc., payback in excess of the costs. The beer, leads to trips to the bathroom. Similarly, truthful investment in research would be in technologies with potential for a return on that investment. Spending on research in thousand year old technology with physical or chemical limitations that limit financial feasibility, would not be investment. Do you agree? We would not, for instance invest in research in windmills or ethanol. If we are to invest in education, like the office manager, we should choose those areas in which we expect the greatest, financial, return on our investment. Such investment might be in the form of incentives to attract medical students to increase medical professionals and lessen the shortage, especially in anticipation of all the new people expected to be on Medicaid in 2014. Investment in education would not be in subjects with no practical use, except to produce future professors. Investment in education would be in science, economics, and business management. There would be no investment in educating people in trades with no market demand as there would be no return on that investment. And any investment in infrastructure would be along the lines of the Panama Canal. We would invest in infrastructure with proven economic advantage over our current methods. We certainly would not invest in more government operated railway, for instance, high speed or otherwise. It would be easy to see the evidence of sincerity and understanding of the word investment. We should not see a line waiting outside the men’s room, or hear talk of free beer.

Simple investment is made in assets which are expected to go up in value with time. This can be raw materials which are tooled or modified so as to add value to them, or it can be real estate which can be improved to add value. Investment can be in people, by increasing their ability to do such things. In other words, investment is the act of taking wealth (capital) and using its ability to produce work to create more wealth. A factory owner might invest in more efficient tools and in the education of the workers to operate them, only if it allowed that owner to increase production value and therefore see a return on that investment. Without a return, spending is consumption, or charity, not investing. A factory owner could find busy work for his employees and call it investment, for a while. But just as beer is a fools investment, his capital would soon be flushed down the proverbial toilet, and he would not long be a factory owner.

“Green” is not relevant to this discussion.. When we spend tax money on research on such limited use technology as solar panels or windmills, we are duplicating research conducted for generations by the private sector. The areas where this method of power generation is preferable to other methods is well understood and found unfeasible outside of limited, remote situations. My family uses solar powered devises and I have seen solar powered wells provide water where it was not feasible to bring power lines. For as long as there has been written record, windmills have lifted water into elevated tanks for later use. But, whenever we must rely on such devices, we must have an alternative for days when the wind does not blow or clouds persist. Any savings in the “free’ energy is lost in redundant spending on duplicate structure. When we can tolerate intermittent failure, we put up with the inefficiency and losses for the savings. But, make no mistake, energy companies have thoroughly tested known material and aerodynamic technology and continue to do so secretly. Each is desperate to be the marketer of the next nuclear fusion plant or any other fossil fuel replacing technology. Are we likely to get that kind of fanatical zeal for discovery through government-grant-investment research? Perhaps, but will the zeal be to find something economically feasible, or something popular, or the answers which bring more congressional funding?

We know how much energy reaches the earth from the sun. There is not enough energy in sunlight to power our country if we could capture it all, with 100% efficiency. Solar panels and windmills will never be 100% efficient, nor will the energy storage arrangements they charge. Anyone who suggests we could have a breakthrough to change our understanding of physics sufficiently to overcome this fact is praying, not planning. Such a person is praying for a change in the natural, physical world, not planning for an improvement in our understanding of it. They are banking on an answer existing in the realm of what we do not know, no in the overall expansion of what we know. A cynical person might attribute such folly to spin as well.

I suggest we let the private sector spend its own money when something new is to be gleaned, instead of spending the money confiscated from all of us because we wish it were so. Following the real Sputnik moment, we didn’t beat the Russians to the moon, we ran there alone. No one was following us. The world was more than willing to let us spend the resources, and watch for the occasional discovery when we stumbled onto one. The world is doing the same now that we are in the “green race”. We performed a technological feat with no financially viable use for it. The world knew it could be done, but only government would do it without answering the question of why would we. I think it is really neat that we have been to the moon, and love the romantic images of doing so with a slide rule. But I would never condone outpacing the Russians if it meant borrowing the money from the Chinese, giving our discoveries to them, and mothballing the program a generation later to rely on Russian rockets to get our satellites into orbit and our astronauts to a space station we share with them. We went to the moon to prove that American ingenuity can solve any problem, the Russians went into space to prove to the Russian people that the Russian government was the solution to any problem. Which more closely resembles the arguments President Obama makes for, “investment”? Let us not spend money we borrow from our kids to mothball another technology without financial feasibility when we can do it now for free.

When we have invested (spent) tax money on education, we got more expensive education. Don’t believe me? Why would anyone spend the tax money to educate their kids in a public school, and also spend the tuition money to educate them in a private school, (as all private school parents do), if one were not better than the other? As education spending doubled in this country, our student’s performance relative to the rest of the world did not change appreciably. When we spent tax money to help students pay for college tuition, we got a corresponding increase in tuition costs. When we use government loan guarantees, we get students studying subjects and pursuing degrees they never would on their own dime, much less if a private bank had to be convinced that demand for workers with those degrees was sufficiently high to empower the graduate to repay the loan. Only the idle rich would pay their own money for degrees in un-marketable subjects. A musician of moderate skill and disadvantaged background can get a loan and earn a music degree with no hope of being employed as such upon graduation. This is not investment, it is entitlement. We believe that this mediocre musician has a right to pursue this career path and some believe he is entitled to have the rest of us pay for it. But more importantly, is such a young musician well served in being led to believe that a music degree and loan payments provide a better future than being a brick mason, for instance?

When we spend tax money on our “crumbling infrastructure”, we are doing maintenance, not investing. Such maintenance is a consumable, not an investment. This is not to say that maintenance is not necessary, but it is not investment. I suggest a restructuring instead. I suggest that we go back to the funding scheme that built much of our crumbling infrastructure. I suggest that we use the gasoline tax for road construction and maintenance as it was originally sold to us. I suggest that we end the practice of raiding that tax to subsidize public transportation like Amtrak and city buses.

I challenge you to find any area where the government operates in even tangential competition with the private sector where the government efficiency is on the same order of magnitude as the private sector. Find any activity where the government keeps its promise of controlling costs and continuously improving customer satisfaction. There is no private concern which can survive any substantial length of time without doing just that, and paying a return on investment. There are legitimate uses for government, such as refereeing and national defense. But anytime government spending is recommended as an investment, or to control costs, or as a way to provide for those who cannot provide for themselves, there has been and by the very nature of it will be, an ever increasing collection of resources and liberties in an attempt to react to the cascade of disappointments and demands. Spending tax money on beer leads to well used toilets, not return on investment. Unfortunately, it also assures votes from the brewer’s union, big toilet manufactures, and drunks.

I heard an exasperated congressman say that people on unemployment spend 100% of the money they get in the economy, and therefore this is the best place money could be spent to stimulate growth, certainly better than extending tax cuts for those making more than $250,000. (For the record, I think it is better than building interstate off ramps to nowhere as individuals can make decisions about how to spend the unemployment benefit.) On the surface, this wealth redistribution argument sounds great, put money in the hands of people eager to spend it, instead of letting the wealthy hoard it, right? The devil is in the details. What they are suggesting is that setting money aside while paying someone to collect the tax and review the tax return, pay someone to account for it, pay someone to distribute it to the relevant agency, pay someone to distribute it to the state employment agencies, pay them to account for it, pay them to distribute it to relevant case account, and pay to distribute it to people who are not working, puts more people to work than the high income earner spending it themselves, or investing it or anything else they might do with it. The argument is that paying people to manage a government program produces more wealth than turning raw materials into finished products.

What’s my problem with this? I have a problem with the assumptions insinuated within the premise that the government pulling leaky buckets buckets of water from one end of the economy pool and dumping them in the other somehow lowers the level on one end and raises the level on the other. (Consider they are sucking water from the water-multiplying end of the pool.) The first assumption is that high income earners are less efficient at spending money in the economy than low income earners. Second, the assumption that paying for unemployment generates less unemployment. Third, the assumption that giving capital to consumers generates more capital than investing in production generates, so much so that it can cover the interest paid to borrow it. Finally, I take exception with the assumption that individual’s situations can be improved by applying a single solution to the group as a whole.

First, why do high income earners make the big bucks? Pick a reason. Half of you will say something like tenure, or favoritism, or just plain luck. Although the luck argument probably exists, it cannot be sustained, Chelsea Clinton asside; indeed none of them can, without one truth. Sustained employment exists when an employee produces more than they cost the employer for a sustained length of time. A private endeavor goes out of business if they pay more than they earn. The simple truth is that high income earners produce higher returns on their employer’s pay investment in them than does someone doing a minimum wage job could make for them. Otherwise, there would be no sustained high income earners. When faced with the decision of whether to hire a $300,000 employee or 2 employees making $150,000, the decision comes down to which situation makes it more likely that the company will survive. In short, that option which produces the most money in return. Raise the cost of having a $300,000 employee, via tax increases on those making more than $250,000, and you skew the decision slightly and get fewer $300,000 employees. In some cases, that means hiring more $150,000 employees which is good for out of work $150,000 employees. In some cases, the $150,000 option is not profitable. (The $300,000 employee may have been more profitable than the lower paid option by an amount which straddles the break even point.) Those businesses will stop conducting business, or move this business to another country to survive, firing all other American employees in both cases. This produces a net decrease in all jobs at all income levels, clustered near the tax break level of $250,000.

My next problem is with the idea that paying people to sit at home, or unsuccessfully look for work, keeps their money going in the economy even though they are not producing anything. Remember the bucketing of the pool water idea? Taking money out of the economy, or promising to do so by borrowing it, and then putting it back via the hands of entitlement recipients, does not create anything. Simply, there is no return on the investment. Just like friction in an engine, there are parasitic losses in doing this, and there is a time lag between when the taxes are known, and the payments put them back in circulation. Also, when you increase the cost of some activity, you get less of it, when you lower the cost of some activity, you get more of it. We tax tobacco and subsidize GM’s Volt with this conviction. Raising the cost of employing people, via taxes or future taxes via borrowing, reduces hiring, and eliminates the marginal businesses from the American economy. The marginal companies go under, or move away to survive, taking the remaining jobs with them. Concurrently, when you make it less costly to be unemployed, you get less effort to change that condition by the only person who can affect it, the unemployed. Of course some take any job as soon as they can, and some feel like they hit the lottery and would not take a high paying job until all the “free” money stops. Those people who did not need to work, or who were barely breaking even after paying the costs of getting to work and dressing for work, will stay home and take the unemployment payment. They are not immoral, in my opinion, they can simply add. Why get up each morning, come up with gas money ahead of the paycheck, and give up your day to spend time on the road, hire daycare, and loose an 8 hour day, when you can stay home for anything in the ball park of the same net income? Shame you say? Perhaps, but some of those working out of a feeling of obligation, not need, such as those whose spouses are able to pay the essential family expenses, will not work with the “unemployed” badge of honor shielding them from feeling shame. Encourage businesses to not hire people with promises of increased unemployment taxes while encouraging people to put off searching for a job with promises of benefit extensions, increases unemployment. Do a little research and see just how close to the end of unemployment payments people get, ON AVERAGE, when they miraculously find an acceptable lower paying job. People turn down lower paying jobs than they lost in hopes of finding a higher paying job than exists in their market, for as long as they are being paid to do so. When you make future job creation cost more, and current joblessness cost less, you get higher current unemployment and higher future unemployment in a downward spiral.

The next is one of my favorite pro-government-program arguments to dispute: the idea that low income people spend their money in such a way which creates more jobs than more affluent spenders do. In other words, 5 people who only make $20,000 a year do more to create jobs than a single person making $100,000 does. Ask yourself this, is a “poor” person more likely to buy things that are mass produced by machines, (pop tarts), or custom things that are handmade, (omelets)? Is a “rich” person more likely to buy cheaply produced food from a factory, (tater tots for home), or hire local kitchen staff to prepare more labor intensive, expensive food, (baked potato in a restaurant)? Come on, be honest. “Poor” people buy flour and make bread; “rich” people buy bread, and pay the baker. The affluent also invest in bakeries and bakery company stock. Another obvious question, which is more likely to have cash stashed in a shoebox under the bed, and which is more likely to have it in a bank account or invested in stocks? In other words, in preparation for the proverbial rainy day, who is more likely to have their available money in the economy and which is more likely to have it hoarded? Know anyone who thinks they will start saving and investing once they make a little more money? That is me. I can’t wait to make enough to hoard, all the while flexing my spending up and down to match my income. I doubt that this is a “poor only” phenomenon. I suspect that promising future tax increases by borrowing against future taxes, actually encourages the higher earners to hoard their money instead of spending it or investing and paying capital gains. Those who barely think now’s the time to invest, will switch over to the buy-gold-and-hoard side, removing their money from the economy. This money stays out of the economy until the capital gains tax rate is low enough. It has to be low enough to pay the double tax of cashing in gold and paying the tax, and investing in stocks and paying the tax again each year. Even if gold goes down, but by a lower percentage than the tax, it may not be sold. Which do you think makes gold rise, government spending or government frugality? See the catch 22 of raising taxes on the rich to “create or save” jobs?

The last assumption is at the core of the government spending v.s. private spending debate. The idea is that everyone on unemployment gets extended payments because someone will have a worse time if they don’t. My belief is that the national government should steer the national efforts, those which will benefit the most people, not those that will benefit any single person. Those who want to raise unemployment benefits agree with me, otherwise they would not suggest we extend every unemployed person’s benefit time. If they wanted to help individual situations, they would encourage and empower the people familiar with the individual. At a minimum they would leave the money in the states to pay out and eliminate several middle men. They would suggest local control of unemployment programs instead of single-location control from Washington DC. I question whether votes for extension is about helping a person or about looking like they want to help. Helping people can get you re-elected, so can looking like you are, and the two can only be contrasted in light of fact and principle and rejection of feelings and emotion. We will limit job growth for everyone via the promise of high taxes to cover debt service which produces nothing. We are willing to allow millions of new workers to suffer without a job, in order to believe that one previously employed person will not suffer having lost one. Why is a new employment ready person not important but one who held an over paid position, no longer needed, worthy of borrowing money from the Chinese?

More philosophically, consider this story. A man has $20 and stops at an intersection with 5 men sitting next to, “Will-work-4-food” signs. He rolls down his window and gives each $4. A dozen people driving by notice this act and applaud it. The 5 men buy burgers and eat. Next day, another man, also with $20, stops and asks if any are truly willing to go home with him and help him rake his leaves. 3 stand up and get in the car. He goes home with $20 worth of groceries and rakes leaves. A dozen neighbors notice and applaud the second man. The second man and the workers eat their share of the groceries, the three men remaining at the intersection get nothing.

The next day, both men collide with each other and die and can no longer offer up $20. Now that there is no longer either man to offer help, which dozen applauders is more likely to respond to signs of Will-work-4-food? Which of the men are more credible in the argument that they would work for food for what work there exists? In other words, which situation actually gave them opportunity to improve their lives and which situation actually encouraged others to employ the men? Most of us would agree that it is better to make a man a fisherman than to simply feed him fish.

So how can we claim to produce more fish when the fisherman supplies a government fish collector to give non-fishermen free fish?

The company in China that produces many of the parts found in today’s Apple iPod and other electronics felt enough pressure from it’s employees that it needs to start paying a decent salary.  Recent events at Foxconn‘s   Shenzhen, China plant have forced some changes.  A second pay raise has been given to it’s employees after numerous suicides at the plant.

While this raise amounts to a 70% increase in salary for some, I would be interested to find out whether this really amounts to a hill of beans for the average Foxconn employee.

This article on CNet gives more details. And the Voice of America has an interesting write-up as well.

I can’t help but think that the tide may be turning for China being the obvious choice for cheap labor. Actually, I realize that this is a pipe dream, but for the sake of us, I hope that pendulum is swinging back towards the US. I t will be nice to see more items with the “Made in the USA” tag.

I can dream, can’t I?

http://nationaljuggernaut.blogspot.com/2009/09/this-cartoon-seemed-far-fetched-in-1948.html

We were promised that Social Security taxes were the property of the person paying them, that they would be available with interest once one retired, and that they could be passed on to one’s heirs should one die before drawing the funds out. How does that resemble what we actually have?

We were promised that if we only gave people who needed it a Welfare hand up, we could assist most in moving back into the working main stream. Now, more people are on Welfare as a percentage of population, the programs were extended to less and less willing to accept a hand up over a hand out, and who find a gap between what the government will pay them to stay home and what working people are paid (after the taxes are paid).

We were promised that the 4 cent per gallon gas tax would only be used to fund highway construction and maintenance. It did just that, until Congress voted to use the funds to support public transportation like Amtrak, city busses, subways, etc. Now, transportation funds are scarce, Amtrak looses $39 per passenger (despite promises that it would be returned to the private sector, at a profit for taxpayers, once it is profitable), and gas taxes are many times the 4 cents per gallon that originally worked.

In Virginia, we were promised that if we allowed a state lottery, the money would be used for public education. Although the amount spent on education does come from the left over lottery money, the left over money equaled the previous budget. The original money was used for other desires. Now, the Virginia lottery participates in the Mega Millions ring that includes several states, the payouts have risen in dollar amounts, the chances of a Virginian winning have gone down, and the school systems are still peddling cans of Virginia Diner peanuts to help supply classrooms.

In June, a District of Columbia Metro crash killed 9 people. Accidents happen, and the causes must be identified and corrected, regardless of who is in charge. In an unrelated line of thinking, the NTSB and others exclaim this as an example of the need for more federal oversight of locally operated systems. They say that there needs to be more uniform rules among States and within localities. Why is this related to the “Trust me, I’m with the government” charade of the previous examples?

The District of Columbia is the exclusive purview of Congress. The DC Metro is completely within federal control. How can the NTSB then claim that the accident indicates the need for more federal oversight? They do so same way that they say that the deficit in highway spending is the result of anything other than Congressional raiding of the funds for other desires. They do so in when talking about the deficit in funds for Social Security after allowing people to get benefits without being citizens, much less contributors to the system. They talk about amendments to the current health care “bills” to forbid the use of Medicare money for other programs, even though the “trust fund” has long been dissolved and the money spent for other desires and Medicare funds do not cover Medicare expenses now, much less other desires.

In the words of Ronald Reagan, “Government is not the solution, Government is the problem.”

Are we more interested in doing the most good with the available resources? Or are we more interested in having equal good for all, even if it is, on average less good?

The “poor” are now a powerful electorate demographic, our children are less educated despite the spending, Amtrak is still bankrupt, people are still “denied” health care, and the list goes on. And the statist wrings his hands and points to these facts as proof that the original takeovers of these things didn’t go far enough.

I ask a simple question: Is there any cause for which our public servants solved the problem in their charge, where the program and its offices were then closed, and where the taxes collected for that purpose stopped?