An Elephant in Donkey Land

November 25, 2008

The difference between right and left economic theory

Filed under: Economy — conservativelawstudent @ 4:41 pm

Normally, when a conservative and a liberal start arguing about economic theory, it ends badly, and both sides are only more entrenched in their opinions than before.  This stems from the facts that they tend to argue the branches of their theories against each other, rather than go back to the place of common thought and argue the first place of divergent opinion.  For example:

If you have 10 people stranded on a desert island, each with $100 American in their pocket.  This means that there is a total of $1,000 on the island.  What is most money one person can make in one year?  A liberal would think that the answer is $900.  They already have $100, and they can only make what everybody else has in total.  A conservative knows this is wrong.  Money isn’t “made” by taking from one, but rather by the circulation of that money.  If Joe gives to Bob to build him a house, now Bob has more money.  Bob then gives to Jim to make him some food.  Jim then gives to Bill to protect his newly found restaurant, and so on and so forth.  The more money that is circulated around the island, the more money they all make, the more moeny they all spend, and each has a quality of life that gets exponentially better.  All of the things stated before can happen instantly, and there is no limit to what each can make.  In theory, each could make $3 Trillion every day!  This is a VERY simplistic way of showing how economics work, but it can be extrapolated to entire countries, like, say, oh, I don’t know, how about the US?  

What liberals want you to believe is that there is only so much money out there, and that to bring up the lower class, one must take from the upper classes and give it to them.  Where they go wrong is that an economy can grow and bring everybody up, including the lower classes, while not arbitrarily lowering another class down.  This is why conservatives are constantly clamoring for lower taxes.  In the hypo above, if there was on Senator on the island, who didn’t produce anything but offered valuable services to the others, the others would have to pay him, most likely in the form of taxes.  Well, if those taxes are too high, nobody has the power to purchase any goods or services from the others, and the economy of the island grinds to a standstill.  It is similar to the US economy — if the government takes too much of the producers money, they cannot purchase any goods or services from others, and everybody suffers.  

Where too many of the arguments that happen go wrong, is that the arguments stem from the higher taxes part of the theory, not the basic divergent theories about wealth creation.  This leads to two people arguing two different points in two different theories, and makes each mad until they just drop the conversation.

I will post more on how the island can teach us about the securities meltdown in a later post.


November 24, 2008

Big Three denied bailout. . . for time being

Filed under: Economy — conservativelawstudent @ 10:27 pm
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As far as I’m concerned, having worked in the auto industry for the better part of a decade, the Big Three can just be allowed to fail. And they will. Even with a “bailout,” their management schemes and processes are so backwards and horribly executed, that a bailout will only delay the inevitable. Not to mention the union effect, which makes vehicles built in non-union shops upwards of $3,000 less for Joe Public to purchase.

Let’s take a better look at some of the arguments I have been hearing lately:

Argument 1
“They wouldn’t be in this situation if they made a quality product.”
This is not true. They have been making quality products, at times, in certain vehicles, and they still do not sell. Why not? Because you can get a comparable product, with the same quality, for less money built in a non-union shop. Why? Because you are not paying for the newspaper reader on the line making $90,000 a year. You are not paying for literally millions of unbelievably great pensions out there for these guys that worked on the line. You are not paying for the best of the best health care for these guys working 8-5, punching the clock on the way in, going out of their way to not go out of their way to help anyone else, and you are not paying for companies paying for workers who are not working.
From the management side, well, those of us on the ground floor have seen this coming for a long, long time. We have tried to make decisions based on what would be best for the long term, only to be shot down because some cell in some spreadsheet would all of the sudden not be green. And some manager in charge of that cell in that spreadsheet, who was not going to be the manager of that cell past another six months did not want to have to explain why, even though that cell is no longer green, it was good for the company long term.

Argument 2
“If they can just get through this, they’ll be all right.”
This is just wrong on so many levels. For the reasons stated above, nothing would change. The companies would take the money, continue business as usual, and we would be in the exact same position 3 years down the road, if it even took that long.

Argument 3
“They bailed out Wall Street because it is so integral to the economy, so is the auto industry.”
False. Wall Street is the backbone of all industry. Without the ability to borrow money, no industry can survive. The entire chain of product and process breaks down, no work gets done, nothing gets built and nothing gets purchased. The auto industry is a cog in the machine of US economy, but so was the railroad at one point. Not to say that we have reached a point where cars are obsolete, but just because a certain industry is a large part of the economy, most certainly does not mean that the economy cannot go on without it. It will fail, and it will be rebuilt, from the ground up.

What needs to happen

If they decide to go ahead with another crap sandwich for the auto industry, it needs to be with serious conditions. The first is to either dump or re-negotiate with the UAW. I would say dump it, scrap it, let them strike and be proud to say nasty things to people going into plants, making decent money and building quality product. UAW Ron Gettelfinger already has stated that his union workers will not negotiate pay or benefit cuts, so send them out. The next is to take the management of all three companies and fire them. One by one, all at once, whatever. Go find some smart managers from outside the auto industry, from companies that have succeeded, that know how to succeed, and install them in place. Then watch the fun as OEM/supplier relationships are restored, costs of doing everything go down as decisions are made with long term success in mind, rather than just looking good tomorrow, and parts are built better and more efficiently, driving up quality in the end product as well. I would rather my tax money did not go to these idiots, because this kind of good thinking would go unheralded, and we will be talking about this again in the near future, but it is a necessary step if the Big Three are to survive.

November 7, 2008

Before we predict the end of the world. . .

Filed under: Uncategorized — conservativelawstudent @ 7:01 pm
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Let’s all just take a big, deep, breath, and realize that Obama is not going to socialize the USA. At least not without the Republicans help. Some facts:

– The Democrats have 55 seats in the Senate. This is a majority, but not the 60 needed for a filibuster-proof freeway to socialism. For Obama and Congress to get anything through, they need the help of the Republicans, and for that they will either have to come to the center, or give something up. Having said that, the Republicans should come out and say right now that card-check and the mandatory community service for high school and college students are not bargaining chips. They are off the table. Completely. Say it now, and never revisit it.

– The Supreme Court is not likely to shift left during Obama’s reign. The two Justices most likely to scoot are both lefties, and the mix will remain as is. There are four lefties, four righties, and Anthony Kennedy, a guy in the middle who gets called a leftist from the right and a rightist from the left. Obama may think he is the most powerful man in America, but Justice Kennedy could probably win that argument.

Obama will dip his fingers into foreign policy and will move the country left, and the recession will deepen. But we must keep in contact with our representatives, constantly letting them know where we stand on certain agenda items, and which are absolutely non-negotiable. Get out the message that it was the Democrats that got us into this mess. I have never got into an discussion with a liberal that didn’t devolve into an ad hominem attack on me, but have never returned in kind. Keep up the diligence, and in 2010, get the House majority back, and dip into the Senate majority.

We are stuck with Obama for four years, get over it. But we can relieve Nancy Pelosi and Harry Reid of their posts in two years. We need to get to work.

UPDATE: Sounds like he needs no help instituting the “fairness doctrine.” The FCC can do that unilaterally, and by June 2009, he will have the three out of five votes needed to “flip the switch” back on. Not good.

What if Obama sinks his hands into sports?

Filed under: Uncategorized — conservativelawstudent @ 3:36 am
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Courtesy Chicago Tribune, October 28, 2009.
After 101 years of waiting, the Cubs finally have their World Series trophy!

After finishing in a tie with all other 29 teams for first place at 0-0-162, the Cubs can finally celebrate a World’s Championship!

“I just can’t tell you how good it feels to finally have a championship and to bring here to the North Side of Chicago,” said manager Lou Pinella. “We really didn’t play all that well, or even that hard, but we didn’t need to because the President told us he would give us all a chance to win!”

What Lou was referring to is the Fairness in Athletics Doctrine, or FAD. Earlier this year, President Obama pushed through legislation that forbade any official scorer from declaring any winners or losers in any athletic event. All 30 teams finished with the same record, and in the future, the trophy will be passed from team to team. Chicago gets it in 2009. Detroit and Cincinnati are vying for the trophy next year, with the congressional hearings scheduled to start early February. But the good money is on Cincinnati, because the Lions are scheduled to lift the Lombardi trophy around that time.

“It is finally time, uh, that all fans of every team, uh, not just those of the teams most talented, or hardest working, should get to have their day to raise the trophy,” said President Obama. “We pushed this through because the failed policies of the Bush administration are hurting the middle class because when they go to the bar sporting their colors, they get ridiculed and leave the bar, and this hurts the economy.”

It was scenes like these that prompted the president to approach senate majority leader Harry Reid to begin talks about eliminating the bad feelings that come from a person’s team suffering defeat. “We saw the joy in people’s eyes when the Patriots were beaten two years ago in the Super Bowl, and we wanted that all the time,” said Reid. “It’s not enough to strive to be excellent. Those of us in Washington need to make it reality for everyone!”

Conservative talk show host Rush Limbaugh calls this a travesty, citing his Pittsburgh Steelers (9-0 currently, 0-0-9 officially) chances at winning this year. “The disparity between the haves and the have nots has been widening ever since Bush stole the election in 2000,” said Reid, “and Washington was broken. We needed to step in and make sure everybody gets a fair shake. The Lions have won exactly one playoff game in 52 years, and those fans deserve to see their team win it.”

As an offshoot of the doctrine, Michigan resident and Detroit Red Wing fan Dan Blakeslee’s lawsuit against the Red Wings has gone all the way to the Supreme Court. “It isn’t fair that GM Ken Holland should keep me off of the Red Wings. Just because I’m slow, can’t shoot, and have no endurance to even skate up and down the ice one time shouldn’t mean that I get left off the team.” Blakeslee won his lawsuit, but the judgment was stayed while the Red Wings appeal. Originally, the judgment forced all NHL players to wear weights around their legs and arms, thus making an even playing field, or ice in this case, for everyone who wants to play. The Sixth Circuit upheld the ruling, citing FAD specifically. When asked how Blakeslee is preparing for the games to come, he said, “why prepare? If I get slower, they have to, too. So I am playing video games in the meantime.” The NHL is preparing a “hockey skills czar,” to oversee the lowest skilled player to play, and bring down the rest of the league to their level. MLB, the NFL, and the NBA are preparing for the onslaught as well, creating positions for similar duties.

The Toronto Maple Leafs are scheduled to skate with the Stanley Cup next June, despite not being an American team and thus, exempt from FAD. The Utah Jazz are slated to take the NBA’s top prize, as well.

First Post

Filed under: Uncategorized — conservativelawstudent @ 3:24 am
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I am starting this blog to put my political thought “on paper,” so to speak, as much to get them out as to allow me to compare and contrast my beliefs with the data that support them. As these ideas roll around in my head, they make perfect sense. On paper, I will be able to scrutinize them on another level, and strengthen or update my positions.

With that, a word from one of my personal heroes, compliments of The American Conservative Union.

Since our last meeting we have been through a disastrous election. It is easy for us to be discouraged, as pundits hail that election as a repudiation of our philosophy and even as a mandate of some kind or other. But the significance of the election was not registered by those who voted, but by those who stayed home. If there was anything like a mandate it will be found among almost two-thirds of the citizens who refused to participate.

Bitter as it is to accept the results of the November election, we should have reason for some optimism. For many years now we have preached “the gospel,” in opposition to the philosophy of so-called liberalism which was, in truth, a call to collectivism.

Now, it is possible we have been persuasive to a greater degree than we had ever realized. Few, if any, Democratic party candidates in the last election ran as liberals. Listening to them I had the eerie feeling we were hearing reruns of Goldwater speeches. I even thought I heard a few of my own.

Bureaucracy was assailed and fiscal responsibility hailed. Even George McGovern donned sackcloth and ashes and did penance for the good people of South Dakota.

But let’s not be so naive as to think we are witnessing a mass conversion to the principles of conservatism. Once sworn into office, the victors reverted to type. In their view, apparently, the ends justified the means.

The “Young Turks” had campaigned against “evil politicians.” They turned against committee chairmen of their own party, displaying a taste and talent as cutthroat power politicians quite in contrast to their campaign rhetoric and idealism. Still, we must not forget that they molded their campaigning to fit what even they recognized was the mood of the majority.

And we must see to it that the people are reminded of this as they now pursue their ideological goals—and pursue them they will.

I know you are aware of the national polls which show that a greater (and increasing) number of Americans—Republicans, Democrats and independents—classify themselves as “conservatives” than ever before. And a poll of rank-and-file union members reveals dissatisfaction with the amount of power their own leaders have assumed, and a resentment of their use of that power for partisan politics. Would it shock you to know that in that poll 68 percent of rank-and-file union members of this country came out endorsing right-to-work legislation?

These polls give cause for some optimism, but at the same time reveal a confusion that exists and the need for a continued effort to “spread the word.”

In another recent survey, of 35,000 college and university students polled, three-fourths blame American business and industry for all of our economic and social ills. The same three-fourths think the answer is more (and virtually complete) regimentation and government control of all phases of business—including the imposition of wage and price controls. Yet, 80 percent in the same poll want less government interference in their own lives!

In 1972 the people of this country had a clear-cut choice, based on the issues—to a greater extent than any election in half a century. In overwhelming numbers they ignored party labels, not so much to vote for a man or even a policy as to repudiate a philosophy. In doing so they repudiated that final step into the welfare state—that call for the confiscation and redistribution of their earnings on a scale far greater than what we now have. They repudiated the abandonment of national honor and a weakening of this nation’s ability to protect itself.

A study has been made that is so revealing that I’m not surprised it has been ignored by a certain number of political commentators and columnists. The political science department of Georgetown University researched the mandate of the 1972 election and recently presented its findings at a seminar.

Taking several major issues which, incidentally, are still the issues of the day, they polled rank-and-file members of the Democratic party on their approach to these problems. Then they polled the delegates to the two major national conventions—the leaders of the parties.

They found the delegates to the Republican convention almost identical in their responses to those of the rank-and-file Republicans. Yet, the delegates to the Democratic convention were miles apart from the thinking of their own party members.

The mandate of 1972 still exists. The people of America have been confused and disturbed by events since that election, but they hold an unchanged philosophy.

Our task is to make them see that what we represent is identical to their own hopes and dreams of what America can and should be. If there are questions as to whether the principles of conservatism hold up in practice, we have the answers to them. Where conservative principles have been tried, they have worked. Gov. Meldrim Thomson is making them work in New Hampshire; so is Arch Moore in West Virginia and Mills Godwin in Virginia. Jack Williams made them work in Arizona and I’m sure Jim Edwards will in South Carolina.

If you will permit me, I can recount my own experience in California.

When I went to Sacramento eight years ago, I had the belief that government was no deep, dark mystery, that it could be operated efficiently by using the same common sense practiced in our everyday life, in our homes, in business and private affairs.

The “lab test” of my theory – California—was pretty messed up after eight years of a road show version of the Great Society. Our first and only briefing came from the outgoing director of finance, who said: “We’re spending $1 million more a day than we’re taking in. I have a golf date. Good luck!” That was the most cheerful news we were to hear for quite some time.

California state government was increasing by about 5,000 new employees a year. We were the welfare capital of the world with 16 percent of the nation’s caseload. Soon, California’s caseload was increasing by 40,000 a month.

We turned to the people themselves for help. Two hundred and fifty experts in the various fields volunteered to serve on task forces at no cost to the taxpayers. They went into every department of state government and came back with 1,800 recommendations on how modern business practices could be used to make government more efficient. We adopted 1,600 of them.

We instituted a policy of “cut, squeeze and trim” and froze the hiring of employees as replacements for retiring employees or others leaving state service.

After a few years of struggling with the professional welfarists, we again turned to the people. First, we obtained another task force and, when the legislature refused to help implement its recommendations, we presented the recommendations to the electorate.

It still took some doing. The legislature insisted our reforms would not work; that the needy would starve in the streets; that the workload would be dumped on the counties; that property taxes would go up and that we’d run up a deficit the first year of $750 million.

That was four years ago. Today, the needy have had an average increase of 43 percent in welfare grants in California, but the taxpayers have saved $2 billion by the caseload not increasing that 40,000 a month. Instead, there are some 400,000 fewer on welfare today

than then.

Forty of the state’s 58 counties have reduced property taxes for two years in a row (some for three). That $750-million deficit turned into an $850-million surplus which we returned to the people in a one-time tax rebate. That wasn’t easy. One state senator described that rebate as “an unnecessary expenditure of public funds.”

For more than two decades governments—federal, state, local—have been increasing in size two-and-a-half times faster than the population increase. In the last 10 years they have increased the cost in payroll seven times as fast as the increase in numbers.

We have just turned over to a new administration in Sacramento a government virtually the same size it was eight years ago. With the state’s growth rate, this means that government absorbed a workload increase, in some departments as much as 66 percent.

We also turned over—for the first time in almost a quarter of a century—a balanced budget and a surplus of $500 million. In these eight years just passed, we returned to the people in rebates, tax reductions and bridge toll reductions $5.7 billion. All of this is contrary to the will of those who deplore conservatism and profess to be liberals, yet all of it is pleasing to its citizenry.

Make no mistake, the leadership of the Democratic party is still out of step with the majority of Americans.

Speaker Carl Albert recently was quoted as saying that our problem is “60 percent recession, 30 percent inflation and 10 percent energy.” That makes as much sense as saying two and two make 22.

Without inflation there would be no recession. And unless we curb inflation we can see the end of our society and economic system. The painful fact is we can only halt inflation by undergoing a period of economic dislocation—a recession, if you will.

We can take steps to ease the suffering of some who will be hurt more than others, but if we turn from fighting inflation and adopt a program only to fight recession we are on the road to disaster.

In his first address to Congress, the president asked Congress to join him in an all-out effort to balance the budget. I think all of us wish that he had re-issued that speech instead of this year’s budget message.

What side can be taken in a debate over whether the deficit should be $52 billion or $70 billion or $80 billion preferred by the profligate Congress?

Inflation has one cause and one cause only: government spending more than government takes in. And the cure to inflation is a balanced budget. We know, of course, that after 40 years of social tinkering and Keynesian experimentation that we can’t do this all at once, but it can be achieved. Balancing the budget is like protecting your virtue: you have to learn to say “no.”

This is no time to repeat the shopworn panaceas of the New Deal, the Fair Deal and the Great Society. John Kenneth Galbraith, who, in my opinion, is living proof that economics is an inexact science, has written a new book. It is called “Economics and the Public Purpose.” In it, he asserts that market arrangements in our economy have given us inadequate housing, terrible mass transit, poor health care and a host of other miseries. And then, for the first time to my knowledge, he advances socialism as the answer to our problems.

Shorn of all side issues and extraneous matter, the problem underlying all others is the worldwide contest for the hearts and minds of mankind. Do we find the answers to human misery in freedom as it is known, or do we sink into the deadly dullness of the Socialist ant heap?

Those who suggest that the latter is some kind of solution are, I think, open to challenge. Let’s have no more theorizing when actual comparison is possible. There is in the world a great nation, larger than ours in territory and populated with 250 million capable people. It is rich in resources and has had more than 50 uninterrupted years to practice socialism without opposition.

We could match them, but it would take a little doing on our part. We’d have to cut our paychecks back by 75 percent; move 60 million workers back to the farm; abandon two-thirds of our steel-making capacity; destroy 40 million television sets; tear up 14 of every 15 miles of highway; junk 19 of every 20 automobiles; tear up two-thirds of our railroad track; knock down 70 percent of our houses; and rip out nine out of every 10 telephones. Then, all we have to do is find a capitalist country to sell us wheat on credit to keep us from starving!

Our people are in a time of discontent. Our vital energy supplies are threatened by possibly the most powerful cartel in human history. Our traditional allies in Western Europe are experiencing political and economic instability bordering on chaos.

We seem to be increasingly alone in a world grown more hostile, but we let our defenses shrink to pre-Pearl Harbor levels. And we are conscious that in Moscow the crash build-up of arms continues. The SALT II agreement in Vladivostok, if not re-negotiated, guarantees the Soviets a clear missile superiority sufficient to make a “first strike” possible, with little fear of reprisal. Yet, too many congressmen demand further cuts in our own defenses, including delay if not cancellation of the B-1 bomber.

I realize that millions of Americans are sick of hearing about Indochina, and perhaps it is politically unwise to talk of our obligation to Cambodia and South Vietnam. But we pledged—in an agreement that brought our men home and freed our prisoners—to give our allies arms and ammunition to replace on a one-for-one basis what they expend in resisting the aggression of the Communists who are violating the cease-fire and are fully aided by their Soviet and Red Chinese allies. Congress has already reduced the appropriation to half of what they need and threatens to reduce it even more.

Can we live with ourselves if we, as a nation, betray our friends and ignore our pledged word? And, if we do, who would ever trust us again? To consider committing such an act so contrary to our deepest ideals is symptomatic of the erosion of standards and values. And this adds to our discontent.

We did not seek world leadership; it was thrust upon us. It has been our destiny almost from the first moment this land was settled. If we fail to keep our rendezvous with destiny or, as John Winthrop said in 1630, “Deal falsely with our God,” we shall be made “a story and byword throughout the world.”

Americans are hungry to feel once again a sense of mission and greatness.

I don ‘t know about you, but I am impatient with those Republicans who after the last election rushed into print saying, “We must broaden the base of our party”—when what they meant was to fuzz up and blur even more the differences between ourselves and our opponents.

It was a feeling that there was not a sufficient difference now between the parties that kept a majority of the voters away from the polls. When have we ever advocated a closed-door policy? Who has ever been barred from participating?

Our people look for a cause to believe in. Is it a third party we need, or is it a new and revitalized second party, raising a banner of no pale pastels, but bold colors which make it unmistakably clear where we stand on all of the issues troubling the people?

Let us show that we stand for fiscal integrity and sound money and above all for an end to deficit spending, with ultimate retirement of the national debt.

Let us also include a permanent limit on the percentage of the people’s earnings government can take without their consent.

Let our banner proclaim a genuine tax reform that will begin by simplifying the income tax so that workers can compute their obligation without having to employ legal help.

And let it provide indexing—adjusting the brackets to the cost of living—so that an increase in salary merely to keep pace with inflation does not move the taxpayer into a surtax bracket. Failure to provide this means an increase in government’s share and would make the worker worse off than he was before he got the raise.

Let our banner proclaim our belief in a free market as the greatest provider for the people.

Let us also call for an end to the nit-picking, the harassment and over-regulation of business and industry which restricts expansion and our ability to compete in world markets.

Let us explore ways to ward off socialism, not by increasing government’s coercive power, but by increasing participation by the people in the ownership of our industrial machine.

Our banner must recognize the responsibility of government to protect the law-abiding, holding those who commit misdeeds personally accountable.

And we must make it plain to international adventurers that our love of peace stops short of “peace at any price.”

We will maintain whatever level of strength is necessary to preserve our free way of life.

A political party cannot be all things to all people. It must represent certain fundamental beliefs which must not be compromised to political expediency, or simply to swell its numbers.

I do not believe I have proposed anything that is contrary to what has been considered Republican principle. It is at the same time the very basis of conservatism. It is time to reassert that principle and raise it to full view. And if there are those who cannot subscribe to these principles, then let them go their way.

Governor Ronald Reagan (R-CA)

Conservative Political Action Conference

Washington, DC

March 1, 1975

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