Laissez Faire's Flaws

There is a serious flaw in the notion that competition causes lower prices, because supply and demand (modified by the notion of all the market will bear) wreaks havoc on pricing. Also, there are problems incurred when lower prices lead to increased consumption of scarce resources (see: water, electricity, etc…).

Then there's human nature!

Adam Smith was onto something in his other tome: The Theory of Moral Sentiments. The idea was that human nature brought individuals into conflict with self-interest driven economics; simplistically known as enlightened or unenlightened self-interest.

Free trade can be subjugated by an individual with no moral self-restraint and no respect for external restraints. Laissez faire boosters, once in government office, consistently try to drop regulatory efforts; essentially turning the playground over to the cheats and bullies.

There is a constant struggle twixt regulators and regulated that tries to inflict or mitigate pain to the consumer caught in the middle. Basic regulation is essential to functioning markets, because a few malevolent individuals can cause pain, stress and serious damage (see: 1986 – the S&L debacle; 2001 - the dot-bomb; 2007 – the Great Recession) to the economy.

"Owning" the Economic Mess

Republicans keep asking, “When will the Obama administration own the economic mess inherited from the W years?”

Never!

When my son was a toddler his natural curiosity drove him to make messes while investigating all the new and interesting things around him. My wife and I picked up the messes and, when needed, followed with appropriate punishment. We owned what and where the mess was made, but didn’t ‘own’ the messes.

The Republicans are essentially saying, “he hasn’t picked our mess yet, so he shouldn’t get more time; another term in office.” Part of the problem is that the children are constantly pestering the adults trying to clean-up, while complaining that they’re not being allowed back into the play area.

Until the Republicans are mature enough to recognize when they’re making a mess, stop making it and then clean-up after themselves, they should not be given control of the government they consider their playground.

China Mirrors the Former Soviet Union

China mirrors the former USSR

1. Politburo is a few men that tell everyone in the country what to do, then take credit for all successes and assign someone else blame for failures.

2. Research and development is most frequently borrowed from others.

3. The currency isn't traded on the open market; value is arbitrarily set by the Politburo.

4. A citizen can openly criticize the government of any where, except China.

5. History is what the Politburo says it is.

6. The economy is the exclusive property of the Politburo.

The only difference is that China has taken on a veneer of capitalism.

Let's Review...

Some of the current GOP candidates have forgotten a few basics in:

Economics

1. Adam Smith is credited with establishing the basis of capitalism in his book: The Wealth of Nations. Adam Smith was an economist and an enlightened philosopher who anticipated the clash between self-interest motivated economics and human nature, documented in his oft forgotten companion tome: The Theory of Moral Sentiments.

2. Economic growth in the last 30 years was greatest in the Clinton administration. Republican embraced Supply-side economics (a. k. a., trickle down) has resulted in thousands of factories and service centers, millions of jobs, moving out of our country. 23 million jobs were created during the Clinton years, while 3 million were created when George W. occupied the White House.

The federal budget deficit was reduced only in the Clinton years. The first year (2001) of the Bush admin had some carry-over budget surplus and still they managed to grow the deficit from $5.7 trillion to $10.2 trillion in the W era.

History

1. The Articles of Confederation contained the specifics of our first, weak, federal, US government; created and approved alongside the Declaration of Independence. The constitutional convention of 1787 happened because the founding fathers recognized the failure of the original, weak, central government. The US Constitution replaced the failed Articles of Confederation and created a strong, central (federal) government.

2. Thomas Jefferson’s Virginia Statute for Religious Freedom, drafted in 1777, outlined the specifics of religious freedoms that were not detailed in the Constitution.

In creating an entire federal government, including the Bill of Rights, in about one dozen pages (depending on font, font size and pagination) the founding fathers left many details to be defined by the republic’s new government.

3. If a nation were established as a truly Christian entity there would be one name (3 guesses, and the first two need not count) frequently and prominently featured in the founding documents; not done in the USA!

These are points that one need not believe because they are published here. All that has been included here can be verified in a variety of sources; something Republicans, pushing against these facts, have been hoping you won’t do. I encourage you to do precisely that verification; have at it!

Economic Re-regulation!

The RTC (Resolution Trust Corporation) picked up the pieces of the real estate debacle of the 1980s without any legal or regulatory consequences.

The current real estate and “mortgage backed” securities debacle is not yet causing any legal or regulatory consequences.

Do you believe that privatizing success (huge paychecks and bonuses to the people who caused the last recession from their casino on Wall Street) and socialized (taxpayer funded bail-out) failure is something Wall Street should be able to expect?

A few simple regulations (some reinstituted; all difficult to pass in the current quagmire that is the US Congress) could prevent a recurrence of the causes of both economic crises.

First, make mortgages, the only type of secured loan not currently, accessible to a bankruptcy court. Bring back the Glass-Steagall Act that was part of the legal remedy to the Great Depression; picked apart since 1980, the last remnants eliminated in 1999.

Without a director, the Consumer Financial Protection Bureau cannot fulfill its mission to police Wall Street. Politics stand in the way of confirming Richard Cordray to direct the CFPB just as it attempted to fluster Elizabeth Warren while she assembled the new regulatory agency. The flack comes to the US Congress, via lobbyists, from Wall Street.

The Street, financial casino of the USA and the world, is still finding new ways to avoid: regulation, review and responsibility. At some point we, the taxpayers, might tire of picking up the gamblers’ tab when the paper products created in the casino (the casinos’ operators claim said papers have value and reward themselves with great salaries and bonuses for shifting those papers around) are found to be worth only the paper they’re printed upon.

Government might have already saved your life…

If you’ve been told, “business good; government bad,” and had the unfortunate ability to give any credence to it, you still might be one of the millions of Americans whose generic medicines are available only because of the federal government’s intervention.

That’s right; at least 38 generic medicines are available only because the federal government has arranged import, storage and/or manufacture of drugs that pharmaceutical companies no longer make.

Why don’t our companies make these drugs?

These drugs have been dropped because they are not profitable enough!!!

Federal officials are once again entering the mix, because more than 180 drugs are now in short supply. These are also modestly profitable generics, and it does not seem to bother drug companies that some are used to treat things such as cancer.

The government can’t just import these drugs because some of the factories that would make them are in India and China; never having been inspected, some in locations that are not known. Once in the USA some products, from these same foreign manufacturers, have been tested and have been discovered to have problems, some life threatening.

I’m an older American and take prescription drugs to control my health; all but one of them are generic.

What about you?

The USA’s businesses are zealously insisting on Status Quo!

The economy is in a very slow recovery from a severe economic recession that started in December of 2007. American for profit, privately and publicly held, companies are holding over $2 trillion on the sideline; not investing in the future of their own businesses.

Meanwhile, some of the richest folks (money made from these very businesses) are financing a very far, far right branch of the Republican party. That right wing group has been formed to drop anchor on the idea that infrastructure over 50 years old needs investment, maintenance or replacement technology; things that would employ many (possibly millions of) people and create the future.

Why?

The old business paradigm of, “least cost everything,” has made a very small number of people very rich, and continues to make them lots of money. It is living in the past at the expense of the future. These short-sighted practices continue to benefit a very few, extremely rich folks at an extraordinary cost to middle America’s present and the kid’s (and grandkid’s, etc…) future!

If you don’t believe that the transportation, water, sewage and power infrastructure is in massive need of maintenance or replacement, you need to check with your local organization of civil, mechanical and electrical engineers.

Those who spread the word that the USA doesn’t need investment and progress, or that we’re broke and can’t do it, are telling themselves (and others) an enormous, dangerous lie! Believe the lie, spread it if you want, and apologize to your family and friends for what you’re doing to them, our country and the future.

The USA is stuck in the 20th century.

In 1989 the state of Texas experienced more than two consecutive days in which the temperature never reached 32 degrees Fahrenheit: freezing. To compensate for the high peak demand for electricity, and insufficient generating capacity, rolling black-outs were instituted.

In February of 2011 Texas experienced more than two days where the temperature never reached freezing; insufficient electric generation capacity required rolling black-outs.

This meant that in the intervening 22 years that Texas had done nothing to address an infrequent, recurring problem!

In 2005, when I was employed by TxDOT (Texas Dept. of Transportation), I sent an e-mail to my representative in the state’s legislature observing that the conditions existing on the campus where I worked were ideal for the use of wind and solar generated electricity to reduce the power drawn from the grid.

Nothing ever happened!

Flat roofed buildings (offices, schools, malls, etc…) across the USA could accommodate many thousands of solar panels (for electricity and/or hot water generation), and significant numbers of small to medium sized wind-based power generating structures; it has been possible for decades.

There has been no progress in this area either!

The US central plains are known as the, “Saudi Arabia of Wind.” The Rocky and Appalachian mountains have large regions of strong, consistent winds. The three coasts (Atlantic, Pacific and Gulf) have consistent winds on and off shore. These areas have wind that often blows night and day, so that sustainable electricity generation is available 24 hours a day, 7 days a week!

There has been little progress in taking advantage of these opportunities.

Anybody else see a problem here?

Redressing the Error of 2010!

Voters and, especially, non-voters did our country a great disservice by handing control of the US House of Representatives over to a group of intransigents who are anxious and proud to demonstrate their complete incompetence in: finance, economics and history.

Supporters of President Obama are angry because the President is trying to work with the US Congress; as the US Constitution outlines that he should. Meanwhile, that same Congress continues the practice, established well in advance of the Tea Potty, of handing off the job of governance to the office of the President.

Why?

The legislature is in the, self-tied, hands of perpetual, incumbent politicians who know that they can keep their jobs best by not doing their jobs. Every decision that an office holder makes will anger some constituents, eventually gathering sufficient opposition to his or her re-election. So, no matter what actually happened, “the president did it!”

President Obama needs to morph from the only reasonable adult in the room, to an authoritarian teacher in a room full of spoiled brats. These very same spoiled brats have displayed a desire, and willingness, to trash the American economy to undercut the re-election possibility of President Barack Obama.

The president has the power to send both branches of the legislature out on recess in extraordinary circumstances. The President should find, outline and utilize just such a circumstance. During said recess the President should make all the necessary recess appointments that would allow the executive branch of the federal government to get to work.

This will clearly demonstrate, to those of us who are still President Obama’s ardent supporters, the president’s willingness to do what needs to be done to actually lead this country back on to the path of greatness.

We (the voters) should find, encourage, support and vote for legislators that will help President Obama’s second term to be much more productive than the first.

Living in the USA!

Here in the USA we are the world’s only super power, with the world’s largest economy. In both categories we are far, far ahead of even the closest competition.

The question that we need to ask is: “How did we get here?”

The answer is: public investment!

There are some folks saying, “Stop, stop, stop,” for a variety of reasons; mostly wrong!  

The airports, seaports and highways are government investments that allowed citizens and businesses to move employees, raw materials and finished goods.

The military’s success is what makes us the world’s only super power; a division of the federal government, supplemented by state militias (military guard and reserve units).

Technology is very largely driven by indirect taxpayer, government, investment. There are 317 government labs listed here: www.federallabs.org/labs/results .

Microelectronics and Computer Technology Corporation (MCC, now a part of UT Austin’s Research facilities) was encouraged by the federal government. Sematech, another technology consortium, was a partnership with the US federal government.

ENIAC (Electronic Numerical Integrator and Computer) was the first general-purpose electronic computer and a project of the US Department of the Army. We all have the current results of all those development efforts in our pocket, purse or briefcase.


We all travel on the common carrier transportation infrastructure everyday. We also are constantly dependent on government efforts for clean air and water; those of us old enough can remember what air and water quality was when individuals and industry cared solely for their own self-interest.

All the government and government assisted development was done in the shadow of World and Cold wars, and the costs were borne by a collaboration known as American taxpayers. Now, some are becoming aware that these things are expensive. It becomes more expensive as some folks and businesses decide that they don’t want to pay any part of the bill, even as they use these very resources. 

The state of TX has tried multiple times to outsource government function to the private sector (Health and Human Services to Accenture, Information Resources to IBM and the Camino-Columbia Private Toll Road); all have failed!

In the preamble to the US Constitution, “we the people,” are to, “promote the general Welfare and secure the Blessings of Liberty to ourselves and our Posterity.” This can only be done when everybody realizes how lucky We are to be here in the USA and help decide, then follow through and do what needs to be done!

Obfuscation as a methodology…

When one hears from business folks something like, “we can’t do this or that in this overbearing/nightmarish regulatory environment…” there’s only one thing to do: fire the lobbyists!

Many industries have, cumulatively, vast populations of folks lobbying at all the state capitols and in Washington, D.C.; there is a need for multiple volumes of directories to keep track of all the working lobbyists. Industry and business folks complain of the need to operate in these contrived, obtuse environments from one side of their mouths, while telling their lobbyists how (and providing the resources) to keep legislators creating that very mess from the other.

Why would one want an extremely complex regulatory environment?

Because, in confusion there are gray areas that allow a company (LLC – Limited Liability Corporation) to operate in relatively unfettered freedom!

HUH!?

Have you ever heard the phrase, “beyond a reasonable doubt?” If you have ever watched any of the TV shows about police or lawyers, etc… of course you have heard it. When prosecuting attorneys are convinced that the laws, or circumstances, pertaining to certain events would not allow for a conviction (because to prove, “beyond a reasonable doubt,” a crime was committed is not considered possible) they don’t proceed with lawsuits.

For instance: nobody is yet being prosecuted for the deaths of 15 people in an explosion at BP’s Texas City, TX oil refinery, or 11 deaths on an oil rig working for BP. Neither is there any current prosecution for the 29 deaths caused by an explosion in a Massey owned coal mine. There are not yet any prosecutions of the financial service industry folks whose contrivances caused the US economy to fall into a severe recession; to go to the edge of a depression.

The problem with a complex regulatory business environment that businesses, and their well purchased politicians (both Republican and Democrat), complain about could have been solved easily while there was a clear Republican majority in both houses of the federal legislature and a Republican President. After all Republicans have claimed, “business good, government bad,” for at least 30 years. The problem was not cleared because solving the problem is a talking point, keeping the problem is the still the preferred action.

The problem will only be addressed when reasonable, moderate Republicans and similar Democrats, “of the people,” are elected by the people and for the people!!! Only this sort of politician can function in the interest of the American people in the face of the duplicitous message from the lobbyists (who speak for the industries who support, pay for and profit from that message)!

Playing chicken with the federal debt ceiling.

The US Congressional Republicans are playing chicken with the federal debt ceiling; the limit on the federal government’s ability to borrow money. The Republicans had a majority in the US House of Representatives and the US Senate from January 2001 to January 2007, during the Republican administration of George W. Bush, and in those years they raised the debt ceiling four times (’02, ’03, ’04 and ’06).

January 2007 to January 2009, still the Bush administration, the majority in the two chambers of the US Congress changed hands and had gone to the Democratic Party. The debt ceiling was raised three times in that interval: ’07, ’08 (twice).

The federal deficit was $5.7 trillion when George W. was inaugurated in January of 2001, and was $10.2 trillion dollars on the day before President Obama’s inauguration (see the US Treasury web site detailing the deficit, “to the penny” www.treasurydirect.gov/NP/BPDLogin?application=np ).

In the first few years of the W. Bush administration Vice President Dick Cheney was quoted telling the Treasury Secretary, Paul O’Neill, that, “deficit’s don’t matter.” During the current, Obama, administration private citizen Dick Cheney is on tour and television proclaiming that the federal deficit is a major threat to the US economy; a really convenient memory loss.

In the long term the deficit really is a problem, but the US economy went from record breaking growth in the Clinton administration to a recession (that went to the brink of depression), starting in December 2007. Reducing the deficit now will result in federal departments and programs being scaled back or shut down. That would negatively impact businesses that supply federal programs with products or services. It would also reduce federal employment; the businesses that cater to federal employees would suffer.

One might ask, “How does all that affect me?” Well, if you’re a federal employee on the brink of unemployment the consequences are obvious… If you’re investor you might ask your broker, or financial planner, how an investment portfolio might perform if major investors started to believe, regardless of fact, that the US government might actually default on some of its debt; put something soft twixt your chin and the floor.

TX Legislature fails our schools!

TX Comptroller, Susan Combs, released a report detailing the cost of current tax exemptions to the government of the state of Texas; look here:

www.window.state.tx.us/taxinfo/incidence/

The report documents the fact that current tax exemptions cost the state $32 billion every year.

Meanwhile, our TX legislature is considering a bill to reduce the state’s financial commitment to our public schools, because they will not make any effort to get those funds. The biennial budget for 2012-2013 is multiple billions of dollars short of what current law mandates the state spend on public education. The Republican majority in the legislature is changing the law to cover-up their unwillingness to invest in educating the children of TX!

Register and Vote in 2012 (and beyond), because TX deserves better governance!

Said vs. Done

Republicans are famous for their philosophy of, “government bad, business good,” even as they bailed out Wall Street, with taxpayer’s money, for causing a recession; bringing the US economy to the edge of the next great depression.

In TX, as well as in Washington DC, the Republican majorities have run the government the same way they would run a business: straight into bankruptcy.

The Republicans didn’t run the government into a ditch because of general incompetence; they are much smarter than they act. No, they do it because they lack the courage of their convictions. Many Republicans are partnered with Grover Norquist. Grover’s well known for wanting, “to shrink the government till it can be drowned in a bathtub.”

To accomplish said shrinkage a legislator might propose to eliminate expensive government programs, but that would incense more of their constituents with each and every program cut; eventually impairing their ability to get reelected. Remember the mantra of our perpetual incumbent politicians is that, “it is better to keep the job than it is to do the job!”

So, what does the perpetual politician do? They sign the certificate from Grover’s group promising never to raise any taxes; often reducing taxation as it becomes possible. The intentional reduction in revenue is accompanied by, contradictory, increased government spending.

When it becomes blatantly obvious that we have enormous, unfunded government spending the incumbent legislator will feign shock and outrage, even though he or she was an active participant in creating this situation.

What must be done? Cut spending, cut spending and cut spending!

Except that that isn’t the answer, it is the back door approach to doing what was planned from the start: reducing government programs.

So, what is the answer?

Review all spending to determine what is needed, what is outdated and what is unnecessary; the process that was intentionally bypassed on the road to debt. Then fund what is determined to be a vital government service. Resolving which programs are needed is difficult, but when the issue becomes the restoration of funding, taxes, the fur will really begin to fly.

The situation is as difficult as it was intended to be from the start, circa 1980 (Trickle Down). If you, the voter, are ready to begin real solutions then you’ll need to vote Democrat in 2012, because the rational Republicans (they really do exist) are deferring to the radical right.

Also, I recommend term limits to keep a new generation of elected officials from the temptation of perpetual incumbency.

The TX Republican mantra: You don’t need no education!

In the 2009 session of the legislature there was talk of adding more Tier 1 public universities to the two (UT Austin and TX A&M College Station) we already have. The money to do it was not available saving those, who didn’t have the political will to spend it, from themselves.

The structural budget deficit has combined with the bad economy to cause the remaining months of the current biennial budget to be seriously short of revenue. That’s bad, but the next biennial budget is shaping up to be much, much worse. So, what’s the legislature doing? They are trying to de-emphasize research (save money) at our tier 1 universities, disregarding the fact that the enormity of those research programs are one, of two, key defining issues of a tier 1 university.

Next the legislature attacks the other defining issue of a tier 1 university, exceptional academic programs, by trying to suggest that the criteria for determining what constitutes a good university professor should be weakened. Also, paying lower salaries to professors would be helpful in reducing the state’s budget problem. This will destroy those industry attracting, innovative, job creating tier 1 institutions.

Gov. GoodHair’s plan for a $10,000 four year degree, at a public university, will be worth at least $1,500!

The Radical Right Republican’s less government hypocrisy.

The Republicans want less government in our lives, unless you’re a woman of maternal age.

If the Republican far-right extremists, to whom all other Republicans currently defer, get enough agreement from elected officials they can get the US Constitution’s separation of church and state denied.

If that misunderstanding becomes the official government policy it clears the way for an American theocracy. It reinstitutes the middle age idea that made all officials, (in positions they were appointed to, or they purchased) in the state church’s hierarchy, community leaders.

Are we ready for a government that is all over us like a second skin; the return of inquisitions and crusades?

Supporting Public Education in Texas!

The Republicans have shown that they feel the business environment in TX will prosper if public education is given no better than second class status and financing.

The budget cuts they propose threaten our public schools, from pre-K to post Doc, and that is just wrong. If you don't think so, ask yourself: Would you have the job/career you've had without your education? Would you, or your parents, be able to afford private alternatives? Can you afford the tuition that is charged for TX's public universities (it has risen 90% since 2003) right now?

The time is right to use the Rainy Day Fund for the portion of the deficit caused by the economic downturn. In order to address the structural budget deficit there must be new and reworked state revenue streams, plus serious improvements in transparency, to pay for the essential services the state provides to Texans.