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“Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve . . . a budget surplus.” John F. Kennedy

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May 26 2012

What Is It that Our President Actually Does Know?

C.M. Phippen

The greatest economy the world has ever seen, the one responsible for the majority of the medical and technological innovation of the past century and for leading the way in eradicating 80 percent of the world’s worst poverty in the past 40 years, is being run by a man who claims himself a victim at every turn.

With each succeeding policy failure, President Obama can’t help but claim he just didn’t understand or for some reason he just had no power to overcome the obstacles in his way.

While holding the most powerful office in the world, he is paralyzed by events outside of his control. He blames Pres. Bush, natural disasters, Pres. Bush, Arab Spring, Pres. Bush, bad luck, Pres. Bush. In one of his most astounding excuses yet, he blamed a lack of job creation on greater efficiency (“structural issues”) in the economy.

The difficulties faced by our president are simply a part of the realities of life. Does Obama truly believe that no man before him has ever dealt with a financial crisis, a predecessor whose policies he didn’t agree with, bad luck, a shifting labor market or natural disasters? What if every man before him chose to make the same excuses or to walk away from the real solutions because they weren’t a part of his political strategy?

In every past recession over the previous 100 years, entrepreneurship has led us out and placed us back on the path to greater prosperity. For the first time ever, this is not occurring. Does President Obama even stop to ask why?

Over 4,000 new federal regulations are in the pipeline and “pending major regulations – those costing the economy $100 million or more – have increased 60 percent since 2005.” Recently, “20 percent of small-business owners said ‘government regulations and red tape’ was the single most important problem facing their business,” ranking ahead of anything else, including poor sales.

According to President Obama, because of these structural changes, “. . . what we have to do now . . . is identify[ing] where the jobs for the future are going to be; how do we make sure that there’s a match between what people are getting trained for and the jobs that exist; how do we make sure that capital is flowing into those places with the greatest opportunity.”

Entrepreneurs just figure those things out on their own. They don’t need a government program so that a bureaucrat who’s never run a company, met a payroll or put his life’s savings on the line to start a company can make decisions as to the proper allocation of resources within the economy; let alone rely on that individual to determine where those resources will be most needed at some point in the future. In a dynamic economy, where growth is encouraged, someone will always step up and take a risk as long as that risk has the potential for a commensurate reward in the end.

When has a centrally planned economy, or any variation of it, actually worked?

Here’s a guy who’s admitted that when he entered office his administration had no idea how bad this downturn was, despite the fact that he claimed it was the worst economic crisis since the Great Depression and called it a crisis of historic proportions. Yet he wants us to trust that he and his administration have the expertise to know how to allocate the various resources administered through the federal government in order to adequately train the unemployed to be prepared for the jobs of the future? He doesn’t even understand what the jobs and businesses of the future are.

This is the guy who told us that Solyndra was a model for economic growth, one of those companies of the future. As I wrote in an earlier post, while Obama was touting the “ingenuity and dynamism” of Solyndra, T.J. Rodgers, founder of Cypress Semiconductor, former Chairman of Sunpower and a man who apparently knows what real ingenuity and job creation look like, had a very different take. He has said that on the day of President Obama’s visit to Solyndra in 2010 a secretary asked him what it meant that the President was there, visiting their competitor. His response apparently was, “Set your watch. That company will be out of business in one year.” So much for Obama’s ability to judge the future.

This is the same guy who told us that if his massive stimulus of nearly $1 trillion were passed, we wouldn’t see unemployment rise above 8 percent. What we haven’t seen is it actually come down below 8 percent at any point since.

This is the man who told us that recovery summer was two years ago. Most of us are still waiting, as are the many businesses that are choosing to sit on the sidelines with record amounts of cash and not hire new workers in such an uncertain environment. Those threats to tax the rich and blame corporations may actually have a downside.

This is the same guy who said that the healthcare bill “will help reduce our deficit by as much as $1.3 trillion in the coming decades, making it the largest deficit-reduction plan in over a decade.” Updated CBO estimates now project cost increases over 10 years from $938 billion to $1.76 trillion, and that’s before we’ve had to actually start paying. If history is any indication, the cost is likely to be many times greater than even the new estimates.

Yes, still the same guy, the one who said that with his new healthcare bill, “Families will save on their premiums.” Unfortunately, though the CBO initially projected per family premium savings of over $2,500, more recent studies show increases of over $1,500 above what premiums would have been without the legislation.

Exactly what is it this guy actually does know? Maybe this, “We can’t doom another generation of Americans to soaring costs . . . and exploding deficits.” Yep, same guy.


May 19 2012

Income Equality v. Economic Stability

C.M. Phippen

Income inequality has always been a part of the human condition. When men hunted for food for their families, the families of the best hunters always had more to eat than their neighbors. Under dictators and kings, friends and family have comprised the wealthy while most of the rest of humanity under their rule have been peasants, paupers and slaves.

While living in the Czech Republic in the early 1990s, the inequality of Communism was quite clear. When entering a neighborhood of party officials it was obviously different, and erased any confusion over the myth of equality in a system where a few ruled the rest by force.

Today is no different. Individual ability, motivation, education and access to power, especially government power, often differentiate the top strata from the bottom in any society. The question is which of these factors we want most prevalent in our society when success is determined – those indicating merit or those indicating the right government connections, i.e. corruption.

When government is allowed to determine who succeeds and who fails, not only are the least competent often elevated to the top, but the incentives for producing the best product, offering the best service, and meeting the needs of the customer or client become warped. For those who think they already are, I would argue that not only is government already too involved in picking economic winners and losers today, but that the alternative to what we have is substantially worse.

According to a report by the OECD released in 2008, the three countries that have bucked the trend of growing inequality from the mid-1980s through the mid-2000s are Greece, France and Spain. None of these countries are exactly models of fiscal sustainability, and none have been able to create an environment where businesses are encouraged to hire for any reasonable period of time.

In all three countries during the period beginning in the mid-1980s, the rate of unemployment has ranged anywhere from 8 percent all the way up to 25 percent with few exceptions. Crisis rates of unemployment in the US are the norm for these countries.

Greece has generally hovered around 10 percent, while enjoying a multi-year spike now over 20 percent. France has historically been in the 8 – 10 percent range with a few dips below for short periods. Spain has seldom fallen below 10 percent, generally in the 12 – 17 percent range, and has had three climbs to nearly 20 percent within that period.

The report also pointed out that the increased differential in incomes isn’t because the poor and middle-class are becoming poorer, rather it is because the upper class are becoming richer. This would seem to indicate that those societies that are decreasing the gap between rich and poor are generally doing so because the rich aren’t becoming richer and suggests a lack of dynamism, creativity, and vibrancy in those economies, at least when compared to other developed nations.

Beyond the idea of income inequality it is interesting to note that, “the difference between income and wealth disparities is largest in countries with relatively equal distribution of incomes, such as Germany and Sweden.” In countries where the government provides more services and benefits for the lower-income population, while at the same time potentially disincentivizing growth for top wage earners, there remain the largest differences in wealth accumulation.

In other words, those who earn their own money, even while being forced to support large percentages of the population with that money, are still substantially better at saving and investing it than those who are simply given benefits. This has led to a greater disparity in income “from capital: dividends, interest, rent, capital gains and so on.”

Two factors significantly improve one’s chances of living above the poverty line. The first is marriage before children; single-parent households are three times as likely to be poor. This means that other workers in society take the place, financially, of the missing parent, which takes money out of the pockets of families often already struggling to make ends meet. The second is work; households with at least one working adult have very low rates of poverty.

The greater the dependence on government for support and subsidies, the greater will become the gulf between the rich and the poor, as well it should be. It is a consequence of comparing relatively stagnant wealth transfers meant for short-term use to keep people from starving to death with what ought to be dynamic, innovative economic transactions.

The alternative is a quasi-socialist economy that closes the gap between rich and poor just before the whole structure crashes and burns or the government is forced to do what socialist Spanish Prime Minister Jose Luis Rodriguez Zapatero has been doing: drastically cutting spending in order to “avoid bankruptcy.”

Let’s not play the game of the Greeks, 75% of whom want to stay in the Eurozone while at the same time casting 70% of their votes for anti-austerity parties, but rather face what is rather than imagine what can never be.


May 12 2012

The One-Way Street of (In)Tolerance

C.M. Phippen

The furor over the legal definition of marriage as between one man and one woman has escalated this week with the passage of a constitutional amendment to that effect in North Carolina, even as our President came out in support of states being allowed to define it as such or not, while personally supporting such a change in the historical definition. Huh?

I just have one question: Just when is tolerance and acceptance going to become a two-way street?

One of the primary drivers of resistance to changing the definition of marriage, and therefore offering government endorsement of any variation on marriage a person may prefer, is that under federal civil rights legislation, the rest of us have already become obligated to change our behavior and speech in order to suit the whims of those who reject societal norms. At what point will our freedoms be protected – freedom of association, freedom of speech, freedom to live our religion without government interference?

I find it fascinating that when a state passes civil rights protection legislation based on sexual orientation, there must be exemptions put into these laws for churches. Without such exemptions, churches could (and most definitely would) be sued for refusing to perform same-sex marriages or unions. Oh no, already happened, even with those legislature-granted exemptions.

Based on President Obama’s recent pronouncement declaring that religious organizations must provide contraceptive coverage in their insurance plans, despite the fact that religious exemptions were promised during the passage of the Obama healthcare law (seriously, you believed a politician?), the maxim that what government has the power to give, government certainly has the power to take away could not have been proven more true. Our founders declared that those rights came from God. And no, Barack, they didn’t mean you.

So if a law must have exemptions for churches written into it, doesn’t that tell us that the law itself is probably already overstepping its bounds with regard to our individual freedoms? While “Congress shall make no law respecting an establishment of religion” probably has to do with the operation of the churches themselves, the part about “or prohibiting the free exercise thereof” certainly applies to us as individuals exercising our own rights to apply the principles of our religion in our daily lives as we see fit.

That personal application of religion could include, for some, not being willing to participate in activities or ceremonies that they find offensive or blasphemous. Who could balk at that in this great nation of diversity? Oh, the same people pushing for you to accept and celebrate everything about their lives while at the same time attempting to undermine and disparage anything they don’t agree with or like about yours.

A few cases in point:

EHarmony was sued for not providing gay dating services. According to a settlement, EHarmony will need to “do more to welcome gays and lesbians to its site.” Just makes you feel so good, doesn’t it? An entirely new company was formed under the settlement, just to accomodate gays.

Ever think of starting your own company if the businesses out there aren’t meeting your needs or desires? That’s what many of the rest of us would do, but no, not the open-minded, non-judgmental crowd. According to them, you not only have to accomodate whatever they want, but you ought to be required by law to provide it personally, and on a silver platter, thank you very much. Oh, and by the way, $500,000 was set aside in the settlement for those who were harmed by EHarmony not providing this service prior to the settlement. I’m wondering if I can sue because they weren’t providing services at all before I was married, and I wasted a lot of time dating and getting to know people on my own!

A Methodist church that refused to allow same-sex weddings in its religious buildings (they had offered use of their property, just not buildings where religious meetings were held), lost its case when a lesbian couple sued them and lost their tax exempt status on the building in question. All because this couple wanted use of these privately-owned facilities and it mattered not to them what the owners of the facility wanted. Yeah, it’s all about compromise. (Is legal coercion while one side stomps its feet and throws a fit, then gets its way thanks to nanny-state courts, the same as compromise? If so, then yes, this is compromise.)

A photographer was sued by a lesbian couple whose wedding she didn’t want to shoot. The photographer was found to have violated the Human Rights Act and fined $7,000. One of the women who sued her was actually an EEO Compliance Representative with the Office of Equal Opportunity and a member of the Diversity Committee at the University of New Mexico. Apparently diversity means that you accept me and my feelings while I reject you and yours.

As a Mormon, I wouldn’t really want an anti-Mormon who didn’t have respect for the sanctity of my marriage taking pictures at my wedding; just might affect the quality. Do you think they really wanted this photographer that badly, or they just wanted to “re-educate” her? Hmmm, I could swear I’ve seen this somewhere before . . . maybe somewhere where “freedom” wasn’t much of a priority?

A Christian baker who politely informed a lesbian couple she wouldn’t feel comfortable making their wedding cake is not only facing a boycott and harassment, but could potentially be facing a civil rights suit.

So hey, I’m all for you doing your thing, just wondering when you all are going to come out in support of me doing mine?