Wednesday, July 16, 2014


As I noted in the last post, our friends on the conservative side of things seem to believe a lot of stuff that can't pass the smell test of logic. That is to say, if it doesn't walk, quack or fly like a duck... it's not a duck, no matter how much you believe it is one.

Our second myth, then, is simply the entire right wing economic plan and answer to the endlessly repeated question, "Where are the jobs?" But don't worry about it being a long, dry list of policies. Here's the whole thing from a USAToday piece by Cal Thomas.

"Cutting taxes, lowering government spending and reducing the size of the federal bureaucracy would improve the economy... "
Ya, that's all of it. The conservative answer to all that is wrong with the Greatest Nation to Ever Grace the Face of the Earth. That, by the way, is yet more right wing clap trap. Here's the logic problem. If the statement is true then how could there be so much wrong with the country? Just sayin'

So let's dig a little deeper into the Great Plan (GP) and see how it would work to solve all of our economic problems. Cutting taxes. I assume that the idea is that leaving more money in the hands of them that earned it will translate into more investment in private sector businesses which will then produce more hiring and greater economic activity. That's the theory, anyway. Let's look at those ever so bothersome facts.

American businesses are, and have been, sitting on over 2 Trillion Dollars of cash. Not capital, not infrastructure, not warehouses full of product. Cash! There is a glut of mergers going on at the highest levels. And notice how often the deal is presented in terms of cash not just stock and other equity. We also have many large companies doing stock buybacks as a way to offer stockholders short term gain and get rid of even more of that pesky cash. What we don't have is hiring of new employees or raises for existing staff. So please, if you can, explain how giving a business even more cash money in the form of a tax cut will induce, encourage or maybe trick those companies into spending that money by creating jobs?

Businesses do not hire people because they have excess cash laying around the boardroom. They hire to satisfy a need brought on by increased demand for whatever it is that they are selling. Look at the last 6 years. Businesses have lots of money but are not hiring. Or look even farther back to 2001 and 2003. The massive Bush tax cuts, directed mostly toward the top 10% of earners did not result in increased hiring as had been predicted... by conservatives. Here's a chart of the unemployment rate since 2000.

Notice how after the 2001 tax cuts the unemployment rate went up, not down. Also notice that after the 2003 tax cuts the rate did start down, but very slowly and barely reached the level of unemployment recorded on the day George W. Bush took office. Oh, and you might want to notice that the huge upward spike starting in 2007 and ending in the first quarter of 2009 was all on Bush's watch.

So, two huge tax cuts... no effect on hiring. Tell me how this works!

Well, surely lowering government spending will do something positive for the economy. Maybe not. As I alluded to in the first myth post, government spending puts money into the economy. The logical extension of that statement is that reducing government spending removes money from the economy. But the conservative theory says that that money will still me spent and invested by the private sector which knows much better than bad old government where to pour that cash. Okay, but there may be a few problems. For example, it may be unstated but the conservative assumption is that money not spent by government will be returned to the taxpayers in the form of tax cuts (see above). This, of course, ignores the other unmentioned part of the right wing GP, the debt and deficit. I would think that any savings of tax dollars brought on by spending cuts should first go to reduce the deficit (the amount of money we borrow and then spend) and then to reduce the debt (the amount of money that we owe to those entities which lent us the money to excessively spend). They, conservatives, wale and moan about the D and D almost as often as they mention Obama's War on Coal. Which is to say, all the time. So I only think it would be fair to use spending reductions for those purposes. Want to bet on that one?

More importantly for our busting of myths (see how I avoided problems with the copyright laws), how would cutting spending, regardless of were any savings is redirected, "... Improve the economy?" I don't think it would. And I'm in agreement with the majority of economists. I'll say it again, government spending puts money into the economy. And, by the way, it also increases the moneys coming in from taxes. No, this is not some perpetual motion machine that runs forever on its own output energy. It is the simple fact that the federal government taxes transactions.

We pretty much only think of the government taxing income, but income, and in the case of businesses, profit, can also be viewed as transactions. Your part of transaction is to put in your 40 hours of working for your employer and your employers part is to give you money for your work. The same, of course, holds true for businesses. Buy 100 widgets from Widget World and they send you widgets and you pay them money. So really, all of what we call economic activity is just one transaction after another. And they're all taxable.

Those who haven't been there might be surprised to learn that unemployment payments are... taxable. Yep, all of those lazy takers receiving unemployment benefits so that they can lay around and play video games all day on the taxpayers dime are, in fact, required to pay taxes on the money they receive. One member of the household working while the other is disabled or retired? Social Security payments are also taxable under certain circumstances.

Grants from the government are generally not taxable, every transaction from that point on, is. So a science grant of say $500,000 to study hens teeth may seem like a half million dollar waste, but just remember that the half million dollars is now buying lab equipment (taxable) lab coats (taxable) paper, pens, computers, cell phones, lab assistants, etc. (all taxable). And the people who are paid for their work or their products take that money and buy bread and milk and shoes and diapers and more lab coats and stuff to sell AND IT'S ALL TAXABLE.

This basic fact is why Europe, which chose spending cutting as their way to recover from the Great Recession, is suffering under double digit unemployment and why the USA, which, by way of the FED, chose stimulus rather than austerity, has an unemployment rate of 6.1%. Facts are facts.

Okay, that's enough for now. The part about reducing the size of the federal bureaucracy is really just reduce spending said in a different way and is, as we've seen, just as meaningless. This stuff sounds good, in a kitchen table, checkbook balancing, kind of way, but the federal budget is not your checking account. The general economy doesn't work like that and believing that it does is a very big part of the problem.

Monday, July 7, 2014


Every so often I read or hear something said by a politician or political pundits that just sets my teeth on edge. Why? because I know that what is being said is not true. And I'm not talking about Presidential birth certificates or other such bull crap that is passed off as true in certain circles. No, I'm talking about things that are false on their face by real evidence or logical deduction. For example:

In an op/ed piece from our local, very right wing, newspaper a Republican Congressman and committee chairman expressed the thought that he didn't think that the American people wanted any higher taxes since that just took more money out of the economy. And there it is. The myth of the black hole of government taxation.

First, the obvious question should be, "Where does the money go?" I can't for the life of me figure that one out. Is there a super computer out in the desert somewhere that adds up all of the tax dollars that, because they've been collected, now must disappear from view. Of course given the government's fine record of efficiency I figure that super computer is a couple of Apple II's and a dial up modem.

This little myth, which has and is repeated regularly on the right, flies directly in the face of the other side of the conservative mantra; out of control government spending! What do these folks think is being spent? Let's see, the government taxes people and corporations, who are really just people too, haven't you heard, takes that money and hides it somewhere so that it is no longer in and usable in the regular economy and then, I guess, borrows money from China to spend on all of the worthless programs that the government over spends on. Or something like that. See what I mean. This whole concept fails a simple test of logic.

No, the government does not remove money from the economy when it collects taxes. It might remove money from your economy or from your businesses economy and that could certainly piss you off, but if you step back and look at the bigger picture it's clear that redistribution of money by the government may stick in your craw, it's what governments at all levels do.

We can clearly see that the Congressman's statement is false. Is this a deliberate lie on his part? I have no way of knowing. More troubling is the thought that he actually believes this nonsense. That would be the result of decades of ideology being endlessly repeated and never challenged by our dog whipped main stream media. They, the media, are so afraid of charges of bias from the right that they'ed find someone to express an opposing position after a guest states that the earth is round. What scares me is that this guy writes laws that I have to then follow. He doesn't know how the economy works. That's not a good mix.

Okay, that's all for now. Think about this a little, please. Myth number two coming up.

Friday, April 4, 2014


How dare the Government mandate that we must have insurance. And mandate what the minimum coverage must be. And penalize us if we don't buy the insurance from a private company approved to sell that insurance. How dare they!

Of course, I'm not talking about the ACA or as it has come to be called, Obamacare. I'm talking about Auto Insurance. That's right, good old auto insurance. I can't for the life of me understand why the folks on the political right can get blue in the face over the ACA's individual mandate. You know, the government forcing us to buy a product and penalizing us if we don't, since that is exactly what happens with your auto insurance.

Let's compare, shall we. Government sets the minimum coverage required under both. Check. Government must approve which companies can sell both. Check. Government mandates that you buy both types of insurance. Check. Government penalizes those who don't buy both types of insurance in the form of a monetary fine under the ACA and by taking away ones vehicle registration under the auto insurance statutes. Check. The only difference that I can see is that the ACA is federal and auto insurance is regulated by the states. Oh ya, and that the ACA is a program passed by the Democrats under a Democrat President. (Using ideas first proposed by the very conservative Heritage Foundation, by the way.)

They're the SAME, people! No difference at all. The auto insurance mandates were put into place so as to product the public from uninsured, and unable to pay, drivers who cause accidents and damage to those who do take personal responsibility and buy insurance. It's a way to mandate that personal responsibility and the states feel that it's in the best interest of the public that all vehicles are covered by insurance. The ACA is a way to make the uninsured health care consuming public also take the same personal responsibility that those who have purchased health insurance have taken. That way the responsible people don't have to pay to make up for health care services used by the uninsured and then not paid for. Each form of insurance satisfies a compelling public interest. There is no difference.

So, please, someone tell me why one is okay the the other is not? Please. Anyone?

Friday, March 14, 2014


I've been working on our taxes this week and if anything can send me into a rant, that's it. Now, I figure that everybody hates paying taxes, but if you listen to conservatives you'd think that the tax man ranks right up there with Hitler, Stalin and Jack the Ripper.

You've heard them, I'm sure. "The government wants to confiscate your hard earned money," or "That government just wants to steal my money." Of course this is usually followed by the words, "And give it to some poor folks," or words to that effect. This echos back to the 2012 Presidential race and the talk of Makers and Takers. But maybe we need to get a bit real.

When you try to define who falls into which camp, either the Makers or the Takers, you run into several, shall we say, problem areas. For example, the fact that the Federal Government pays out huge amounts to subsidize the oil industry. And Agribusiness gets in on their share, as does the renewable fuels industry, including solar, wind, hydro and geothermal. And let's not forget the auto industry, the airline industry and pretty much any other transportation industry you can think of other than the Amish buggy industry. And these and many more are so called Makers!

On the Taker side of the coin one is faced with the uncomfortable truth that both Social Security payments and unemployment benefits are taxable. That's right, every year I have to pay taxes on the Social Security Disability payments which I received during the year. So, does that make me a Taker... or a Maker? Let's see, I earned enough money as a business owner who created and helped to create a couple hundred jobs, and paid into the Social Security and Medicare systems the required taxes so that now, when I need it, I can get a check from Social Security for my disability and receive health insurance by way of Medicare. I guess I went from being a Maker to a Taker. But since I still pay taxes on what I receive I should still be a Maker, right?

And that right there is the part that makes my head explode. People are always changing their status in our mobile and ageing society. It's one of the things that makes this a great country. We just shouldn't label folks with names like Makers and Takers and then try to make those labels a justification for certain policies. It's not fair and it can come back and bite you later in life. Even conservatives get old you know.

Thursday, March 6, 2014


The recent trial of Micheal Dunn in Florida got me to thinking. Dunn is the guy who fired 10 times into an SUV because the music was too loud. Three shots hit and killed 17 year old Jordan Davis and the other 7 missed his three friends who were also in the car. Dunn ended up with a mistrial on the charge of murder, but was convicted on three counts of attempted murder. This somewhat goofy outcome I'll save for another time. What I find interesting are the charges he was convicted on.

It would seem that the prosecution choose to file only three attempted murder charges because there were three potential victims, not counting Mr. Davis who he actually hit. The Florida statute doesn't make that distinction, so I can only assume that this was a decision made by the prosecutor.

So, here's my idea and I would think that both the liberal gun control types and the NRA would be all for this. If you fire a gun intentionally in the direction of another human being each and every bullet fired counts as an attempted murder. Now, there could be mitigating circumstances that the defense could argue, such as, "I shot at the ground to scare them off," or some such, but in general if the bullet flies toward people that's attempted murder. In the Dunn case that would mean 7 counts carrying up to 20 years each.

But even better, this would be a way to discourage the use of giant magazines by criminals. Conservatives are always telling us that criminal punishment acts as a deterrent to future crime. The entire death penalty system is built upon that foundation. Mandatory minimum sentences are supposed to act as a deterrent to others contemplating selling drugs, etc. So there you go. If Mr. Criminal loads up his AK-47 with a banana clip of 30 rounds and fires away at some other gang bangers, he should face 30 charges of attempted murder. Put in that new barrel clip that holds 100. Oh ya, he's going to prison for a long time!

Gun control advocates have been wanting to ban high capacity magazines, but this could, over time, produce the same result. NRA types want the laws enforced and would never be in favor of shooting at people who didn't already threaten them. You want to load up your MAC-10 with 30 rounds at the gun range, have at it. One could also use monster clips for hunting, but I suspect that a little peer pressure from other hunters might put a stop to that.

So, there you go. If you like the idea spread it around. If not, tell me why in the comments. I promise to check them.

Thursday, January 30, 2014


First, a little housekeeping. Yes, I'm back. Like a bad penny I have returned from an almost year long battle with a rather persistent, but not life threatening, infection. The main problem was that the combination of the infection, and the antibiotics to fight it, knocked me for an energy loop. As in, I didn't have the energy to sit at this computer and write. But I miss it, so I'm back. Now on to the topic.

As the President said in the State of the Union speech Tuesday night, we need to raise the Federal Minimum Wage to $10.10/hour and we need to do it soon. This, of course, produced the usual screams from Republicans that raising the minimum wage will cost jobs and do great harm to the economy and, I think, cause dandruff to break out across the land. As one law maker lectured a TV reporter this morning, it's just simple Econ 101: The Law of Supply and Demand. If you have a higher cost for something, in this case labor, you will use less of it by either not hiring new workers or by laying off workers that you have now.

I'm guessing from that position that, first, the Congressman never actually took Econ 101 and, second, that he never owned a small business with employees. Here's what the Congressman, and the Republicans, pretty much to a man, fail to understand about what actually happens when the minimum wage goes up. Businesses raise prices! It would seem, if you listen to the GOP that the idea of raising the price of a good or service in our economy is right up there with the Seven Deadly Sins. They don't like and they won't stand for such a thing. Oh, they don't actually hate prices increasing if it throws off more profit for the company and increases the wealth of the stockholders. But thou shall not cause prices to increase to pay for increased cost of labor. I'm sorry, that is just nuts.

Now, here's what actually happens when the minimum wage, either State or Federal is raised. I know these things from first hand experience. My darling wife and I owned and operated two locations of a certain fast food franchise. We employed 120 people between the two restaurants and we had to deal with a minimum wage increase during that time.

The first thing that blows up the logic of the Republican position is that labor follows need. No good small business person employs unneeded staff. But by the same token, your employees have value to the business because they make you money. Maybe not every day. Maybe not every hour. But over all, a business will operate at close to the correct number of employees for the amount of business expected. In fast food we had the ability to add staff for certain parts of the day (you know, meal times) and have fewer people on the clock during slow times. This is because there are many possible part time positions available in the fast food business. Students who work after (or before) school, workers with other full or part time jobs, and older folks who don't wish to work a full time schedule. But remember, labor follows need. When the minimum wage went up the very last thing we thought about doing was laying people off so that our labor costs didn't go up. If we were doing the job right, we had the number of people we needed for the business which we anticipated. If we were over staffed because business was slow we should have laid people off sooner. If we were understaffed because business was growing, we needed to add employees whether or not they would be paid more under an increased minimum wage. The way we dealt with the increased cost of labor was to raise prices a little. Not across the board and not by a huge percentage. What was the result?

Our business increased and we needed to add staff! And that's not an unexpected result. There are scores of studies and surveys which agree. Raising the minimum wage doesn't cost jobs, it helps in the creation of jobs. Why, you ask? Because that Econ 101 idea of supply and demand does work when dealing with actual products or services being sold. More money in the hands of your staff, and in the hands of every other minimum wage businesses' staff, means more demand which leads to more staff. This idea is not new. Henry Ford was soundly criticized by the business community of his day when he took the outrageous step of paying the workers building Model Ts on the assemble line the unheard of wage of $5.00/day. His reasoning was simple. If I pay them that high wage they will be better able to buy the cars that they are building. Which will mean I'll sell even more cars and, of course, make more money. It worked.

The second thing the GOP doesn't seem to get is what I mentioned above: everybody is in the same boat. We could raise prices because every other fast food restaurant also had to pay a higher wage and, thus, also needed to raise prices. If my competitors could gain no advantage, in the long term, they either raised their prices too, or ate the increased cost. In the fast food world, and in fact in most minimum wage businesses, you can only do that for a little while. The profit margins are too tight.

So, as you go about your business, when you hear Congressman so and so or pundit such and such go all Rambo on the very idea of raising the minimum wage, ask yourself if the Congressman or pundit is smarter than Henry Ford. I bet I know the answer.

Tuesday, March 5, 2013


I just finished reading a very informative article in last weeks Time magazine about the health care costs that we, insurance companies and the government pay. One can certainly be outraged at being charged $1.50 for a single Tylonal  tablet that cost the hospital 1.5 cents. But maybe this is pointing to an even bigger outrage; that fact that middle class earnings have declined since the 1970s while the price of health care has only increased. At what point do we find that people just can't afford to get sick? And have we already reached that point?

I think that we're there and have been for a while. The single biggest driver of personal bankruptcy are medical bills. pretty much everybody can name a friend or relative (or themselves) who were charged huge sums for simple procedures and short hospital stays. The usual response from the political class is that greater competition and more transparency will make people better consumers of health care and thus drive costs down. It just never seems to happen. People aren't all that excited about asking the price of a needed health procedure. They're either insured in some way, so that they never actually deal with the price, or they are in no condition to haggle. "Gee, I'm going to have to check that other hospitals price to repair my broken leg." "I'll get back to you." We're not buying washing machines here.

That concept, that health care is not like other goods and services, is at the heart of the problem. When you need medical attention, you need it. In many cases, if you don't get that attention, you will die. Or suffer disabling after effects. Or disabling after effects until you die. None of these is a good outcome for the consumer. But, as the Time article lays out, this produces some very good outcomes for the medical industry. They make loads and loads of money.

Now, it's pretty clear that suggesting that maybe doctors and hospitals and drug companies charge less is seen by some to be... un-American. It brings into question the entire capitalist system that we have created and defend. But, I think that if we can look at it from a slightly different angle, or two, we might just see some light at the end of the tunnel that isn't a train.

As I asked at the start, has the health care industry reached the tipping point beyond which people just can't afford to pay any more? If your health insurance goes up 20% and your paycheck hasn't gone up in three or four years, you may have to do without the insurance. The same is true of increasing co-pays and deductibles. And for the uninsured medical bills can be just devastating. If things don't change, each year will see fewer and fewer consumers of health services. From a business standpoint that would be a very bad thing for the health care industry.

But we don't ever seem to get to that point because health care is a necessity of life. So maybe we need one of those different angles to solve this.

As a society we have determined that for certain things necessary for life we don't want to leave outcomes to the free market economy. The water that comes into your home, even if it's from a private, for profit, company, is heavily regulated. Joe's Water Service can't really compete on price or service because Joe has to meet the same quality level as the city water department. The same is true for sewage collection. We assume that these services will be provided by our city or town, or by a public service district. It wasn't always like that.

In the days before the urbanization brought about by the Industrial Revolution fresh, potable water was hard to come by. Rain barrels and hand pumped wells in the towns and, sometimes, water collected from creeks or streams out in the country. If you were lucky, or your ancestors were smart in selecting their homestead, you had a nice fresh spring bubbling out of the hillside behind the house. Whatever the source, your water needs were pretty much your own problem to solve. And, again, the same is true for sewage and other waste. In the country it was dig a hole and put a shed over it and in the cities, well you really don't want to know about the cities. After the age of throwing "slop" out of the window into the street came the age of cess pools in the back yard and a wagon with a tank, and a hand operated pump, used to empty the nasty pit that your grandpa told you to never play near. (Not a problem. The smell took care of protection just fine) These services were provided by private companies which started with two guys and a wagon and grew to rather large firms with dozens of trucks. Notice, though, you were still on your own. You had to contact the company so have them come and pump out the pit.

After the Industrial Revolution caused cities to explode in size and density, and the old model of taking care of your own needs fell under the weight of too many people need too much food and producing way too much waste. In order to protect the public, as a whole, from water borne and waste borne diseases the cities and towns took over these services. They became public utilities.

The same thing happened with natural gas and electricity. Even though we may be supplied by a private, for profit, company, they and their price structure are regulated by public utility commissions. We really don't want price competition on natural gas services. The safety of the population trumps capitalism in these cases. Electricity and natural gas are just too dangerous for price wars and such. Interestingly, heating oil, and propane have not followed this trend. The reason has to do more with infrastructure (pipelines and wire) than with any other economic or public safety issues. You just can't pump heating oil to individual homes by way of a network of pipes. Particularly in the winter. With respect to electricity the problem is economy of scale. It doesn't make economic sense to generate power all over the map when that power is going to be generated with the burning of coal. Or the damming of a river. Or nuclear power. Those are big business and government projects.

So, we see that certain necessities of life are better distributed to citizens by either their government or companies regulated by their government. And then there's health care.

In the case of health care we have turned the whole on its head. We have huge companies, making huge profits, providing the needs of the citizens with lots and lots of outlets for their "products," with some government regulation, but mostly with the attitude that any other system is socialized medicine and a very bad thing. I just don't get it.

We have a necessity of life, health care, that we purposely leave in the hands of private enterprise, and we wonder why the cost keeps going up. Please note that, even though Medicare and Medicaid are government programs, they're designed as a way to pay private health care providers. Not to provide health care. And that is the heart of the matter. We didn't dream up "sewage-aid" or "water-care" to help pay for those necessities of life. No, governments stepped up and took the burden on themselves. Your public utility provides the water or the sewage removal.

I'm afraid that only such a public utility model can cure the health care mess that we find ourselves in. I think we have to look at what the rest of the industrialized world has done and pick out the best practices and adopt Universal Public Health Care for all. Not some patched together Frankenstein monster like we have today, but a real national health care provider. The doctors would work for the government and nonprofit hospitals would actually not make huge profits. The government would fund drug research directly and the consumer would reap the benefit of cancer drugs that don't cost $15,000 a dose. We could, in fact, become civilized. Oh, who am I kidding. Civilized doesn't buy politicians. The health care industry sure does!