ECONOMY

December 17, 2014

In a way, Hillary was right in saying that businesses don’t create jobs

My article as originally published in American Thinker: 

Hillary Clinton may be an economic ignoramus for saying, “Don’t let anybody tell you its corporations and businesses that create jobs.”  In fact, Daniel Greenfield does a wonderful job dismembering her so-called wisdom in his piece at Frontpage Mag.  But I’m not thoroughly convinced anyone could be so dim-witted as to truly believe such malarkey (except for maybe Elizabeth Warren), so perhaps the “world’s smartest woman” deserves the benefit of the doubt on this one?

I know she’s now attempting to walk back her remarks but I just don’t buy it.  So could it be that the woman who had her presidency stolen from her in 2008 was instead just taking a subtle jab at President Obama’s economic policy?  After all, given six years of Obama’s “fundamental change,” there are clearly some elements of truth to her claim.

As is the case with the multitude of half-truths the Left presents as facts, proper context is required here too.  And within the context of the following, Hillary is absolutely correct in her assertion:

Corporations and businesses don’t create jobs when they see companies nationalized or contract law thrown out as was done during the whole GM and Chrysler debacle.

Corporations and businesses don’t create jobs when they are burdened with the highest corporate tax rates in the world.

Corporations and businesses don’t create jobs when government unleashes thousands of pages of costly new regulations upon a stagnant overregulated economy.

Corporations and businesses don’t create jobs when they witness a President use his pen and his phone as a Constitution-killing weapon of mass destruction.

Corporations and businesses don’t create jobs when they learn that an administration was willing to use the IRS to punish its political enemies.

Corporations and businesses don’t create jobs when a President threatens to put an industry (such as the coal industry) out of business.

Corporations and businesses don’t create jobs when money is extracted from them and given to crony companies such as Solyndra.

Corporations and businesses don’t create jobs when they watch the government take control of 1/6th of the U.S. economy via the healthcare industry and then can’t even build a simple website.

Corporations and businesses didn’t create jobs just because a President arbitrarily decided that 2010 was to be the summer of recovery.

Corporations and businesses clearly aren’t creating jobs which may explain why the labor participation rate is at a 36-year low in spite of government’s historically massive “stimulus” and money-printing programs — the vary things that Hillary thinks create jobs.

Businesses do however create jobs in a free market protected by the stable rule of law under a more limited government, like they did during the “era of big government is over” economy that Bill Clinton inherited from President Ronald Reagan.

Corporations and businesses most certainly do create the jobs.  They just don’t do it when they’re terrified by an anti-business tyrant such as President Obama.  I wonder what Hillary Clinton would do to make sure “corporations and businesses don’t create jobs” if elected President in 2016?

 


How to Sell a Corporate Tax Cut

My article as originally published in American Thinker:

Finding a way to prevent the next Burger King from fleeing the U.S. (to avoid paying the highest corporate tax rates in the world) appears to rank fairly high on the priority list for both Republicans and Democrats. But the two parties couldn’t be farther apart on the appropriate policy to end these so-called “unpatriotic” tax inversions.

No strangers to coercion, the Obama administration via Treasury Secretary Jack Lew recently announced that through the use of executive action, “the agency would change several tax rules to stop companies from buying smaller, foreign firms and then moving out of the U.S.” These types of “solutions” will only serve to further slow down an already stagnant economy.

Alternatively, Republicans support free market solutions (at least some still do) and believe that a lowering of the corporate income tax rate would put an end to these tax inversions and help revive the economy. Better yet, as John C. Goodman asks in a recent Forbes piece: “Why do we have a corporate income tax in the first place? Economists know that corporations don’t pay taxes. People pay taxes.” Good question.

But given the Republican Party’s messaging problem, how could they get a majority of the public to support any kind of meaningful corporate tax reform let alone abolition?  Although Americans would clearly benefit from the resulting combination of higher wages, new business creation, higher dividends, and lower product and service prices, the mainstream media instead focuses on one thing — corporate greed.

Unlike Republicans, if the Democrat Party were to suddenly be in support of eliminating the corporate income tax (I know, stay with me here), they would sell it in a way that would excite the electorate and have the American people marching in the streets demanding it.

Perhaps Republicans could attain that very same outcome by proposing a corporate tax reform plan that includes profit-sharing with employees — one that cuts the corporate tax rate by 50% and effectively abolishes it at the same time?

First, eliminate all loopholes that help enrich politicians, squander company resources on (legal) tax avoidance and give crony corporations an unfair advantage in the marketplace. Then allow businesses to either “patriotically” pay the full 35% rate on profits (we could call this the Buffett option) or instead keep 50% of the taxes due, and then distribute the remaining 50% equally among all employees. This would have the effect of a 50% tax rate cut for corporations, an immediate income increase for workers and — perhaps most importantly — keep the bulk of this supply-side money out of the mismanaging, economy-killing hands of the elites in Washington, D.C.

But what about corporations that employ large numbers of non U.S. workers? Should they be rewarded for shipping jobs overseas? In a piece over at Breitbart, Rick Manning calls for a reduction of the corporate tax based upon the number of U.S. employees the firm employs: “Eliminate all corporate tax breaks, and replace the current code with a tiered tax system based upon how many of your workers are employed in the United States.”

The same concept could be easily applied to a profit-sharing tax plan. Corporations with zero foreign workers could pay zero in taxes while businesses with seventy percent of their workforce in the U.S. would have to pay thirty percent of the taxes due and the remaining seventy percent could be kept with half of it distributed to their American employees.

While some politicians are scheming for ways to bring home the 1.4 trillion or more in corporate profits parked overseas (which would only further line their pockets as well as those of their cronies), this profit-sharing tax plan could provide for a tax holiday under the same terms and help bring back some of this money in a way that would actually stimulate the economy.

Democrats claim that they want the economy to grow; that they want to see more money in the pockets of American workers and that they want to keep American jobs from being shipped overseas. This plan would certainly move us towards accomplishing all three of those goals. 

With the labor participation rate at a record low, isn’t it time for Republicans to start being creative and — at the very least — call their bluff?  

 

 

 

 


We Already Have ‘Super Trucks,’ Mr. Obama

My article as originally published (math corrected) in American Thinker:   

President Obama just threw another wrench into the economy with his new heavy-duty truck efficiency standards. While it may be desirable to see more efficient trucks on the road, as Kevin Williamson at NRO pointed out — this technology isn’t free.

President Barack Obama is a masterly practitioner of the occult art of single-entry bookkeeping. Consider his speech today, in which he praised the fuel economy of a new “super truck,” making the point that, since most U.S. freight moves in trucks, lower operating costs for freight operators should in theory mean lower costs for consumers. And he would have a point — if that fuel-economy technology were free. It is not. It costs money to develop. It costs money to deploy. Where it adds to the price of a vehicle, it also adds to ownership costs such as insurance and taxation.

And as truckers, especially single operators (AKA small businessmen), have found out in California, free it is not.

So just how inefficient are these evil heavy-duty gas hogs? The White House “fact sheet” claims that in 2010, heavy-duty vehicles accounted for only four percent of the vehicles on the road, but consumed twenty-five percent of the fuel. While this sounds pretty bad on the surface, perhaps we should take a look under the hood given the source?

I think it’s important to keep in mind that vehicles contribute to the economy by doing work, be it carrying people to and from the office, or transporting thousands of pounds of goods across state lines. But is it really fair to compare giant cargo haulers with passenger cars simply as a percentage of the vehicles on the road? Shouldn’t the efficiency of doing actual work be what is instead considered?

If heavy-duty vehicles account for only four percent of what is traveling the road, this means that out of every one-hundred vehicles only four would be heavy-duty, and ninety-six would be standard autos. I understand there is a large variance of vehicular size and weight, but for simplicity, let’s take just one group and compare ninety-six passenger vehicles having a total loaded weight of 4,000 lbs each with four semi-trucks with a total legal loaded weight of 80,000 lbs each. The ninety-six cars would weigh a total of 384,000 lbs and the four heavy-duty trucks would weigh a total of 320,000 lbs. When looked at this way, four percent of these vehicles are doing almost as much economic work as the other ninety-six percent. Put another way, the heavy-duty trucks do about forty-five percent of the total work while representing only four percent of the ‘workers’ in this case. Further comparison using actual payload capacity would only serve to make these monstrous trucks look even better.

But what about comparing fuel consumption with work done? Using the same vehicle specifications as above, a truck with a total legal weight of 80,000 lbs can travel about (again keeping it simple) five miles using one gallon of fuel. A passenger car that gets 20 MPG uses .25 gallons of fuel during that same five mile trip but only hauls a total load of 4000 lbs. In order to do the same work (move 80,000 lbs) as the heavy-duty trucks, twenty of these cars would be needed. But in order for those twenty cars to move the same amount of weight over the same five miles, they would instead consume five gallons of fuel. That is a 400% increase if my math is correct.

I won’t get into it here, but couldn’t we also factor in the energy used to produce these vehicles as well? A semi truck engine can last over one million miles while a standard auto engine will last only one or two hundred thousand miles.

It looks to me like we already have “super trucks,” Mr. President. And I have faith that over time, the market will improve upon what we already have, and do so in an efficient manner.

Left alone, the free market has no problem efficiently pulling its own weight. But when the dead-weight of politicians and their “brilliant” ideas are piled upon it, the economy slows down to a crawl.

 


Barry’s Comet

My article as originally published in American Thinker:  

The  so-called “comet of the century,” a sungrazer named ISON, reached perihelion on Thanksgiving Day,  but didn’t live up to its expectations to wow the masses and just  fizzled out. Perhaps ISON’s name should be changed to ‘Barry’s  Comet’ as it appears to be the perfect metaphor for the Obama Administration’s  rise and fall.

While  comets put on a dazzling show with their brilliant comas and alluring tails that  extend for many thousands of miles, solar radiation slowly strips away most of  their mass (largely a loose conglomerate of dust, ice, rocks, and gases), eventually leaving just a dull, tiny, often misshapen  core. While the illusion from a distance can be quite spectacular, when exposed  to sunlight, comets are in reality just objects that are falling apart before  our eyes.

Instead  of maintaining the United States on solid, stable, constitutional ground, President Barack Obama is the latest  “politician of the century” to tempt us with a dazzling “progressive” display —  a loose conglomerate of hope, change, economic egalitarianism and “fairness” for  all, yet hiding a thinly veiled dull, misshapen, statist central planning core.  Despite years of media filtering, the recent exposure of ObamaCare,  NSA, Benghazi, IRS and other Obama scandals to intense ‘sunlight’ are finally  causing his Presidency to fizzle-out as the public can now see a portion of what  lies beneath the unsustainable promises surrounding the core of his  ideology.

Not  only did America fall for Obama’s awe-inspiring tale of “hope and change” and  twice elect him to the office of president, but Obama himself seemed even more  self-assured than the mythical Icarus as he delivered his nomination  victory speech back in 2008:

America,  this is our moment. This is our time. Our time to turn the page on the policies  of the past. Our time to bring new energy and new ideas to the challenges we face. Our time to offer a new direction for  the country we love.

The  journey will be difficult. The road will be long. I face this challenge with  profound humility, and knowledge of my own limitations. But I also face it with  limitless faith in the capacity of the American people… I am absolutely  certain that generations from now, we will be able to look back and tell our  children that this was the moment when we began to provide care for the sick and  good jobs to the jobless; this was the moment when the rise of the oceans began  to slow and our planet began to heal; this was the moment when we ended a war  and secured our nation and restored our image as the last, best hope on  Earth…

Not  all scientists were fully convinced of ISON’s “comet of the  century” hype:

Some  reporters have started calling ISON the “Comet of the Century,” but Don Yeomans  of NASA Near-Earth Object Program thinks that’s premature.

“I’m  old enough to remember the last ‘Comet of the Century’,” he says. In 1973, a  distant comet named Kohoutek looked like it would put on a great show, much like  ISON. The actual apparition was such a let-down that Johnny Carson made jokes  about it on the Tonight Show. “It fizzled,” says Yeomans. “Comets are  notoriously unpredictable.”

Many were of course skeptical of the promise of Obama  too, especially those old enough to remember another “politician of the century”  from the late 1970’s by the name of Jimmy Carter, and we shouldn’t need to be  reminded of how that dud of an event turned out for America. ‘Barry’s Comet,’ is  merely the same old statist core surrounded by a repackaged conglomerate of  utopian promises that history proves (as do the jokes on late night TV) has zero  chance of delivering on any of the hype.

While  it remains to be seen if President Obama will endure the same fate as Icarus,  just like Comet ISON, his “progressive” world view is predictably unable to  withstand the intense ‘sunlight’ of truth, and is rapidly falling apart. The only remaining question is whether or not the  United States will suffer the same fate.

 


Just a Few of the Reasons ObamaCare will Fail

Steven Plaut lays it out in Frontpage Mag:

There is a fundamental difference between economists and lawyers (or legal scholars) when it comes to resolving complex social and economic problems.  Economists believe that human behavior and the functioning of institutions are based upon incentives.  Lawyers and legal types believe that one can resolve complex problems by passing laws and imposing regulations.  The latter think one can legislate away the problem.

I like to describe the approach by lawyer-types to such problems as “rain laws.” They are like trying to resolve the problem of flooding from heavy rainfall by means of a law making it illegal for it to rain.

Read the ten reasons at Frontpage Mag    


Nothing ‘New’ About ObamaCare

Dr.  Thomas Sowell once again makes it real easy for us:

Like so many things that seem new, ObamaCare is in many ways old wine in new bottles.

For example, when confronted with the fact that millions of Americans stand to lose their existing medical insurance, as a result of ObamaCare, defenders of ObamaCare say that this is true only when those people have “substandard” insurance.

Who decides what is “substandard”? What is older than the idea that some exalted elite know what is good for us better than we know ourselves? Obama uses the rhetoric of going “forward,” but he is in fact going backward to an age when despots told everybody what they had better do and better not do.

Read the rest at Townhall


ObamaCare’s 93 Million Lies

From Frontpage Mag:

 

“The Obama administration has known for three years that when the employer mandate is enforced in 2015 up to 93 million Americans will be forced out of their employer-sponsored health insurance plans”

 

Read the rest at Frontpage Mag

 


The Edification of the Low-Information Voter

My article as originally published in American Thinker:           

The  predictably disastrous rollout of ObamaCare has given conservatives a rare  opportunity — a perfect storm, if you will — to just sit back and observe  while low-information voters discover firsthand that President  Obama’s lofty rhetoric in no way matches the actual effects of his signature  law.  It’s as if these shell-shocked low-information voters are being  thrust into a once-in-a-lifetime crash-course on the failures of big government  — before the law even gets off the ground.  ObamaCare’s  implementation is different because previous expansions of the federal leviathan  moved “forward” due to the temptations of unbridled utopian promises (think  Social Security and Medicare) and because  the inherent economic flaws didn’t present themselves until well after Americans  were fully dependent upon the system.  Not this time  around.

Where  did these millions of potential students of ObamaCare come from?  They  were created by an educational system, mainstream media, and Hollywood culture that consistently push a carefully crafted  “progressive” agenda.  Because of this, low-information voters can  easily be found among a highly educated class of doctors, lawyers, professors,  journalists, and of course politicians, just as they are found among totally  uneducated dupes.  Or as Mark Twain said: “It ain’t what you don’t  know that gets you into trouble. It’s what you know for sure that just ain’t  so.”  Couple the above with the intrinsic human desire to be accepted  among one’s peers, and what you end up with in the U.S. is what can only be  described as one giant low-information voter factory.  Who says  nothing is “Made in the USA” anymore?

But  there is a window of opportunity here (that I’m confident Republicans will screw  up) thanks to President Obama’s and the Democrats’ false promises and total lies  about ObamaCare.  And millions of low-information voters (at least  those willing to believe their own lying eyes) are suddenly receiving a  much-needed higher education:

Here  are just a few of the possible course titles for incoming ObamaCare  freshmen:

 

  • Economics      101: Did you really think you could keep your current health  plan?

 

  •  Philosophy  411: If your health plan cost      rises exorbitantly, but you can’t log on to  the exchange to see it, will      you still save $2,500 per year?

 

  • Sociology      205: How a once self-reliant middle class can get almost “free” health care      by intentionally working fewer hours and collecting taxpayer subsidies.

 

  • Home      Economics 911: How to live your 40-hour-per-week life on only 29      hours per week.

 

  • Computer      Science 404: How to spend  $634-plus million building a totally overpriced non-working website with friends while using none of your own money.

 

  • Journalism      Bias 101: Is showing up three years late to a party still within the boundaries of being just fashionably late?

 

  • Constitution      101: The three Ts of ObamaCare: Transitioning from your current  “inadequate” plan into ObamaCare, Transitioning peacefully into the afterlife with IPAB, and Transitioning from ObamaCare to a single-payer system.

And  my personal favorite:

  • Community      Service 101: Lessons in Altruism: “I was all      for ObamaCare until I found out I was paying for it.”

I  know that’s a lot to cram into a short time frame, but for a simple refresher  course on why big government always fails, see my previous AT piece (complete  with charts): “Could  Forrest Gump Plan Our Economy?”  Tip: For extra credit, simply  change part of the title to read: “…Plan One Sixth of Our Economy,” without  any other changes, and you’ll be deserving of an A+.

Senators  Ted Cruz and Mike Lee were vilified (by both parties) for standing on principle  and leading the fight in the budget battle to have ObamaCare  defunded.  At what point does the low-information voter cry out in  horror, beg for that very same outcome, and realize that those who were called  anarchists, racists, bomb-throwers, and hostage-takers were actually trying to  protect them from this monstrosity?  Perhaps this is asking too much  too soon of low-information voters with such limited  educations?

 

 


A Few ObamaCare Questions for the President

Obama3My article as originally published in American Thinker:           

Hey  Mr. President — if ObamaCare (ironically named the “Affordable” Care Act) is  such a wonderful thing for the American people, why aren’t they treating it like  the perquisite you claim it to be?

I  ask this because you’ve been out there claiming that Republicans are willing to “harm” the American  people by defunding ObamaCare and are trying to do so only to “stick it” to you.  (Why do you always think everything is about you?) Also, your ally, Debbie  Wasserman Schultz, is saying that once Americans really start experiencing it  (the “Affordable” Care Act), they just won’t want to let it  go.

But  the American people are starting to experience ObamaCare and they surely just  want to regain the freedom to “let it go.” Due to this law’s costly  burdens, thousands are being laid off, having their work weeks  reduced to less than 30 hours or are being thrown out of their current health plans. And for the privilege  of all of this, Americans will be stuck paying much more than before this monstrosity was  enacted.

And  how do the politically-connected Americans you surround yourself with feel about  ObamaCare? Surely if your health care law  is so beneficial, those with the most political capital must be running to the front of the line to cut in front of everyone  else and climb on  board?

To  the contrary, your friends in high places are asking for (more like demanding)  protection from ObamaCare. You’ve exempted Congress and most of its staff from this law. You’ve given  thousands of waivers to a select few. Even some of your biggest  supporters, the labor unions, now realize how harmful this law is to its members  and are demanding special treatment — I’m sure they’ll get it even though they  haven’t as of yet.

So  let me see if I’ve got all this straight: you say that the Republicans in  Congress are trying to “harm” the American people by attempting to legally  exempt everyone from this law that they didn’t want in the first place. So does  this mean that you are intentionally “harming” or attempting to “harm” Congress,  unions and all of your favorite crony donors by illegally giving them exemptions  from ObamaCare? I didn’t think so.

So,  Mr. President, If ObamaCare is the panacea that you and your administration  claim it to be, I have one more question. If you had a son, would his health  plan look like ObamaCare?

 


Are Public Schools to Blame for Student Loan Bubble?

My article as originally published in American Thinker:

The  potentially explosive student loan bubble  in the U.S. has been attributed to the pursuit of certain useless degrees, the  urging of some to attend college where doing so may not be  warranted, rent seeking on the part of universities and of course —  government intervention. But does blame for the more than one trillion  dollars in outstanding debt rest squarely on the above causes? Or can a sizable  portion of this massive debt be traced further back to failures within our  public education system?

We  can gain a little perspective on a portion of this student loan bubble if we  take a peek through Frederic Bastiat’s “broken window” and focus on one of the byproducts of our “broken”  public education system — the need for remedial college  courses.

Our  already overpriced (talk about a misallocation of resources) public  school system is sending students off into the world who lack many of the basic  skills that they should have acquired before being allowed to exit high school,  diploma in hand. Once in college, these undereducated students must take  remedial courses in order to be brought up to college  entrance level, wasting valuable time and resources.

Seeing  that society had already paid a hefty price to educate these students once on  these subjects, the need for such remedial catch-up courses shows that a portion (we can debate how much) of their public  education is in effect “broken” and therefore, must be “fixed” (paid for again)  just as in Bastiat’s lesson. As a consequence of this failure, the cost of  remedial education is adding billions in wasted dollars to the overall cost of college  education, much of it financed with debt.

Apart  from the obvious damage to the students, Paul Krugman’s Keynesian cult  would surely argue that while society may have already paid once for this  education, these colleges (and society as a whole) will miraculously prosper  from having all of this additional money spent on repeated classes. After  all, colleges receive this enormous sum of money which in turn pays the salaries  of professors and others who ultimately go on to purchase any number of products  or services, “stimulating” the economy into the Keynesian world of unicorns and  rainbows.

But  back in the real world, no new wealth is actually created during this process  and society is no better off than it was before. Just as in Bastiat’s  lesson, where society was short one new suit (what the shop owner would have  purchased) because the window that had already existed (wealth) was destroyed  and needed to be replaced, society is now short whatever those wasted education  dollars could have more productively been used for.

And  I would argue that society is in fact much worse off. Students who must retake  these classes are wasting valuable time that ultimately takes away from future  earnings by keeping them out of the job market longer. Also, all these billions  being diverted from productive use actually destroy future job  opportunities for students as well as for the lower-skilled among us.  Further, the future wages and purchasing power of these students are in effect  lowered by the cost to service that portion of their student loan  debt.

So  while it may be correct to blame government intervention for this massive  student loan bubble, to be fair, part of  the blame needs to be assigned to — you guessed it — earlier government  failures in yet one more arena. I guess one of the lessons here is that, be it  education, housing, green energy, or “stimulating” the economy, big government  has the antithesis of the Midas touch.

But  don’t dare attempt a free-market solution to a big government created problem,  as you can rest assured that your efforts will be crushed by statists such as President  Obama.