Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

30 October 2010

Rally of the Indoctrinated and Obedient Youth

I watched the rally on the Mall on C-Span today going by the name of Restore the Sanity and/or Fear, while cooking and eating a meal.  I tell you that because I would not have spent my time doing that otherwise.  What I observed was a large crowd composed almost entirely of young white people under the age of 30.  The ratio of women to men was close to 2 to 1.

Now Stephen Colbert made a point of declaring the rally a demographic representation of America.  It was not.  It was even less a demographic representation of the Democrat Party with respect to race.  Unlike Tea Party rallies, families were not common in the crowd.  Unlike Tea Parties, there were few individual created signs.  They were brought to the Washington DC Mall with this injunction:
Think of our event as Woodstock, but with the nudity and drugs replaced by respectful disagreement; the Million Man March, only a lot smaller, and a bit less of a sausage fest; or the Gathering of the Juggalos, but instead of throwing our feces at Tila Tequila, we’ll be actively *not* throwing our feces at Tila Tequila.
There was really no political agenda put forth.  There was the usual Comedy Central caricature of conservative American viewpoints and the presumption was that if you were unhappy with their people, who were not clearly identified, then you were simply a fear-monger or an irrationally fearful person.  There was certainly no discussion of why unemployment is so high and has been so long.  There was no discussion of tax policy.  There was no discussion of the debt and deficits or of Social Security or Medicare problems.  There was no mention of ObamaCare.  There was no campaign to impugn business or to advocate a plethora of new regulations and mandates.  It was all light, at least if you were not someone being characterized as afraid of all Muslims or someone who finds Fox News to be a useful source of news.  It was not clear what the purpose was other than that Colbert stated that it was to show that they could draw a large crowd, which they did.

The crowd appeared to be mostly college students and relatively recent graduates of college, fresh from their many years of indoctrination in government-run schools and government controlled colleges.  When the MythBusters warmed them up prior to Stephen Colbert appearing, they literally jumped when told to.  They did waves for quite an extended time.  They cried on command and popped fingers from the inside of their mouths when told to do so.  The crowd proved they were the well-indoctrinated and authority pliable subjects ideal for socialist regimes.  Many of them had traveled long distances simply to be together with their kind.  Of course, many of the young women were single and looking for suitable socialist men, of whom there is a paucity, at least relative to the women.

Yes, men were in short supply.  First, when in the government-run schools, it becomes clear to many boys that they are set up and treated like the bogeymen of our society.  White males are the oppressor class in the socialist lexicon of group identities.  Many males become turned-off by education for this reason, either simply because they do not like being treated as though their race and sex make them evil or because they conclude that the educators have nothing useful to teach them.  So, women go on to college now in much larger numbers than men, where they wind up desperately looking for men with whom they can have real relationships.  There the women are further indoctrinated in socialism and in the idea that terrible social injustices characterize America and the only solution is to have ever-bigger government. 

Meanwhile, the men who did not go on to college are not their type and many fewer of them are socialists.  Overall, according to a Gallup poll of almost 150,000 interviews performed from January to May of 2009, 41% of women are Democrats, while only 32% of men are.  In the under 30 years of age group, about 34% of men are Democrats and 44% of women are.  We can get a better handle on the situation for Democrat women under 30 who dominated the "Restore the Sanity" rally.  College educated men are in the ratio of 43/57 = 0.75 and Democrat men to Democrat women are in the ratio of 34/44 = 0.77.  The product of these ratios is 0.58.  One can see why so many women might travel far to find a man of their kind at the Restore the Sanity rally, which really failed to develop any other purpose.  Comedy Central, with its parodies of non-Democrats as stupid, brutal, and fearful, can easily be watched at home.  The rally was really an effort of desperate women to restore their sanity with relationships with men they think, in their highly indoctrinated and elitist minds, are compatible.

Of course they could be Republicans or Independents and enjoy the fact that there are more men than women in both of those groups.  But, that would not be politically correct.  They would have to be more independent-minded to deny the school indoctrinators.

25 October 2010

California's Coming Massive Wealth Transfer to State Retirees

Among the many states which have promised state employees more in retirement benefits than they can reasonably deliver is the very Democrat state of California.  My last post discussed this problem broadly, but it did not examine the huge scale of the problem for California specifically.  That state is piling up future obligations which will come crashing down on the heads of California taxpayers more and more forcefully over the next decade.  It will act to force many more California businesses to relocate to less burdened states, such as Texas, which has created more than half of the new jobs in the country since the Socialist Recession began.

What California government admitted as of 2008 conditions was:
  • The California State Teacher's Retirement System is short $40.5 billion.
  • The California Public Employee Retirement System is short $35 billion.
Stuart Buck, a Distinguished Doctoral Fellow at the University of Arkansas has found that losses in the pension funds investments since 2008 has left them an additional $44 billion in the hole.  Worse yet, the state has been assuming that their investments for the pension funds will earn 7.75% to 8% per year return.  Given that we have had a decade of virtually no return on the stock market and given the huge problems which continue to plague the economy such as:
  • the continuing home foreclosure crisis
  • the further cost of bailing out Fanny Mae and Freddy Mac of about $300 billion
  • the many states with hugely underfunded state pension funds totaling about $700 billion
  • the many union multiemployer defined benefit pension funds with unfunded liabilities of about $700 billion which will destroy many unionized companies
  • the much increased costs of ObamaCare which will increase everyone's premiums, increase medical taxes, greatly increase business costs, and put a huge strain on state budgets
  • the increased costs of financial transactions due to the Dodd-Franks financial "reform" bill
  • the increased costs of energy use planned by the EPA under its declaration that CO2 is a pollutant
  • the increased costs of energy use due to ethanol, wind power, and solar power mandates, which California eagerly pushes forward
  • government moves to force more unionization onto companies
  • the ever increasing costs of more and more government regulations on businesses and those who pay the higher costs for their products and services
  • our corporations will have the world's highest corporate tax rates beginning in 2011 and they are going up to help fund ObamaCare
the 7.75 to 8% rates of return imagined by the California accountants is totally unreasonable.  Unless the state of California is going to invest all of its pension funds in China, their wishful rate is much too high!  So, Buck says that using the more realistic rates of return used by private pension funds, the California pension funds will be $282.2 billion short.  This should be corrected for the current market values, so the real shortage is about $326.6 billion.  It turns out that the retiree health benefits program is also underfunded, by $51.8 billion.  The total shortfall for retirees health and retirement is then $378.8 billion.   This is about half the scale of the shortfalls on liabilities that caused the Socialist Recession that has brought down the entire U.S.!  This would be a disaster if the California Gross State Product were half of the GDP of the U.S.A.  It is a large fraction for a single state, indeed the largest state fraction, but it was only 12.7% in 2008.  This would imply that California will suffer for its state pension fund shortfall about 4 times more than it is suffering from the pain of the current Socialist Recession spread over the entire U.S.

When this entire burden falls on the Democrat-dominated state of California, the People of that state will know the Grim Reaper is among them.  Actions and choices have their consequences despite a peoples' refusal to foresee those consequences.  The California perpetual Christmas for retired state employees will have the characteristic of mass destruction for the people and companies of California.  Currently, the state is spending about $180 billion in 2010.  The unfunded pension liability is the equivalent of 2.1 times the annual state budget now.  If the state of California were to try to rectify the shortfall in these pensions it has a legal obligation to pay, it would require a large increase in tax revenues, which it will be hard to come by due to growth since people and companies are fleeing the already over-taxed state now.  Further tax increases will only accelerate the rate of abandonment.  The Democrats have put the people and the companies of the state of California into a very unforgiving vise, thanks to their many vices.

24 October 2010

Government Employees Union is Lord of Campaign Spenders and Master Thief

The ultra special interest group in elections would be that which has the most to gain from Big Government.  The Lord of all the independent election campaign spenders is the government employees union, the American Federation of State, County and Municipal Employees, or AFSCME, union.  This union now has 1.6 million members and that membership has grown by 25% in the last decade, making it a very powerful union.

In comparison, the total number of non-farm workers in the U.S. grew by 5.0% from September 2000 to September 2010 and that number includes the large increase in government workers.  The U.S. population grew by about 6.5% in the last decade.  The AFSCME union grew by leaps and bounds because state and local government spending from 2000 to 2008 soared upward by 55% and federal government spending skyrocketed by 66.7%!  AFSCME grew rich on this huge transfer of wealth from the private sector to the government sector.  This bloodsucking of the private sector resulted in a decade of little job growth and little increase in the standard of living for other Americans.

The 22 October 2010 Wall Street Journal reported that AFSCME has spent or is spending $87.5 million on the Democrats to continue the transfer of wealth from the private sector to the government sector.  In comparison, the U.S. Chamber of Commerce, the 2nd biggest spender, is spending $75 million and the American Crossroads and Crossroads GOP is spending $65 million.  The Service Employees International Union, SEIU, which spend so heavily to get Obama elected and whose members pension fund is critically underfunded, is spending $44 million.  The next biggest campaign spender is another government sector employees union, the National Education Association, which is spending $40 million to keep the government spending spigots fully open.  It is clear that the unions are expecting to be paid back for their efforts with bundles and bundles of taxpayer money.  Meanwhile, the U.S. Chamber of Commerce and American Crossroads are simply trying to reduce the damage to the American People caused by the huge confiscation of private wealth by the governments and politicians who lust for power.

In the private sector, unions have come to represent a smaller and smaller fraction of those employed, with union members being more than 30% of workers in 1965, but only about 8% now.  In comparison, about 40% of state and local government workers are union members now.  That percentage has been fairly constant since the early 1980s, though there has been a recent Socialist Recession increase.  Those government employees in unions, when compared to state or local governments with no unions, are receiving 31% more pay and 68% more in benefits.  The states with the greatest incidence of unionized government workers are states with higher pay generally, so one has to correct for that.  The result is that they are paid 10% more with that correction, but such a correction to the huge benefit packages still leaves a large windfall to the unionized government worker.  The recent increase in union workers has been most noticeable on the West Coast, where 16.7% of workers in California are now union.  This is part of the reason why the local and state governments of California are in such financial straits.  It is also contributing to the anti-business climate of California and causing many businesses to leave the state or build new facilities outside the state.

Governments controlled by the Democrats are kind and generous to the unions.  But, the Tea Party movement has the Republicans much less inclined to be so generous.  On principle, they are in favor of smaller, limited governments.  They have become very aware that the growth of government has resulted in a loss of their freedoms and deprived them of personal choices.  The Tea Party is putting the screws to those long-tenured Republican politicians who have favored the growth of government.  The Tea Party people are aware that the transfer of wealth from the private sector to the government sector is hurting the economy and putting our children and grandchildren into unbelievable debt.  AFSCME is the opposition and is spending a hefty fraction of its members $390 per year dues to counter the Tea Party and the Constitution itself, which calls for a very limited federal government.

The Socialist Recession we are still staggering in for the third year, has caused a large reduction in state and local government income.  Many of these governments increased taxes on the People who were themselves staggering due to the Socialist Recession.  At least $160 billion of the $787 billion Stimulus Package was given to state and local governments so that AFSCME workers would not suffer from the recession as those of us in the private sector have.  The increased taxes and the federal Stimulus largesse allowed the states to have only a small reduction of employees, while local governments actually had a net increase in workers during the recession.  The Republicans must counter this privileged government worker nonsense as they gain strength in this election in Congress and in the states.  Republican Gov. Chris Christie has proposed that public employee unions in New Jersey be limited in the use of member dues for political purposes.  The National Right to Work Legal Defense Foundation wants to make government employee unions voluntary organizations, which is a viewpoint with which I agree and to which I have contributed.

The AFSCME union has a great desire to grow, which means it is invested in the growth of governments at the local, state, and federal levels.  It has another pressing reason to control the politicians: the defined benefits retirement plans for many state and local government employees in the union are unsound.  Illinois, Louisiana, New Jersey, Connecticut, Indiana, Oklahoma, and Hawaii have defined benefit legal contracts which they will not be able to meet by the end of the decade according to Prof. Joshua Rauh of the Kellogg School of Management at Northwestern University and Prof. Robert Novy-Marx of the University of Chicago Booth School of Business.  Illinois is in the worst shape, perhaps due to the legacy of the Chicago politicians such as Obama.  Assuming that the Illinois pension fund has an surprising 8% rate of return and the state makes the contributions planned, the pension fund runs out of money in 2018.  After that, the state must raise taxes by $14 billion a year.  The other states in the list will not last through 2020.  By 2030, 31 states may be unable to meet their defined benefit pensions requirements.  They will be going to the federal government with hat in hand to come up with the money to meet these requirements.  The resulting bailouts will match or exceed the bailouts of this Socialist Recession.

I recently discussed the defined benefit multiemployer pension failures of the private sector labor unions in a post called Union Pension Fund Swindles, Their Democrat Henchmen, and the Beknighted Taxpayer.
These private sector unions with very underfunded pension plans have been hoping to get the federal government and the Democrats to bail them out also.  Again the scale of the bailout is comparable to that of the bailouts in this Socialist Recession.

The legacy of the Democrat, and of some long-tenured Republican, politicians has been unfunded liabilities that are likely to total many times the staggering sums we recently paid in this Socialist Recession.  It is now clear that we still have huge payouts to make for Fanny Mae and Freddy Mac as well.  The payouts for their unmet obligations may be $300 billion.  The management of American government has been horribly mishandled and we will be paying the consequences with a lowered standard of living for a very long time.  It would have been so much wiser if we had lived by the principle that governments should be limited in power and that the People were capable of choosing their own individual values and managing their own lives.  The Nanny State has proven to be a thief operating on a scale to beggar us all.

23 October 2010

Texas Rewards Success, California Taxes It

California and Texas are 1 and 2 in Gross State Product (GSP), the state equivalent of the GNP. The 2008 GSP of California was $1.847 trillion and that for Texas was $1.224 trillion, with New York not too far behind Texas. From 2005 to 2008, the states with the fastest growth in GSP and their ranking on the personal and economic freedom index of Ruger and Sorens published by the Mercatus Center of George Mason University (dated February 2009) are:

Wyoming, 33.56%, 20
North Dakota, 28.52%, 4
Texas, 24.59%, 7
Utah, 23.17%, 14
Alaska, 21.72%, 47
Louisiana, 21.42%, 28
Oklahoma, 21.14%, 17
Montana, 20.48, 21
South Dakota, 20.34, 1

The corresponding results for California are:

California, 13.40%, 48

An article in the Investor's Business Daily called A Trenchant Tale of Two States points out further contrasts between these two states.  California had lost 1.46 million jobs due to this socialist recession we are in as of August when comparing to the jobs of December 2007.  But, Texas had replaced the jobs that were lost there earlier in the recession.  As of August, California alone accounted for 22.74% of the jobs lost in the nation since December 2007!

The magazine Chief Executive polls CEOs about the business environment in the states and California was ranked 50th of the states each of the last five years.  Texas was ranked #1.  The CEOs blame California's high taxes, its over-regulation, and bias against the profit motive.  On the other hand, Texas is appreciated for not having a personal income tax, not taxing capital gains, and having a more reasonable regulatory burden.  California's capital gains tax is as high as 10.55%.  Its regulations raise labor costs, promote litigation, and put building projects into suspended animation.  The state and local governments make a habit of preying on businesses and property owners with fees and mandates.


As the IBD article graphics above show, Texas over a ten-year period, had a lower personal tax burden, its gross state product growth was higher, personal income growth was higher, its population growth was much higher, and its non-farm payroll employment growth was much higher when compared to California.  Texas also bettered the national averages in all of these categories.  In addition, there was a strong net domestic migration out of California and a strong migration into Texas.  People vote with their feet.

The issue of a state personal income tax is worth looking at more closely.  Texas and the eight other states with no state personal income tax grew their nonfarm payroll by 11.76% from 1999 to 2009.  California and the other eight states with the highest upper personal income tax brackets, grew the nonfarm payroll by only 2.48%.

Some states, such as California, are very highly biased against the profit motive, business, and property owners.  It makes doing business in those states very unpleasant.  Some companies move out of the state, while others simply choose to do their future expansion in other areas.  Sometimes the other area is Texas and sometimes it is in another country.

The IBD article concludes with an interesting anecdote:  California governments love alternative energy.  The City Manager of Brisbane, CA pretends to be enthusiastic about solar power, but this does not stop him from charging $13,510 for a permit to install a 131 kilowatt system.  He claimed it made no sense to allow a commercial firm a break on that fee, since they only wanted a profit.  The bias against profit might as well be a bias against jobs and income growth.  This bias is a characteristic of the more socialist states such as California and they pay a steep price for that bias.

22 October 2010

Krugman Claims Europe is Economically Successful, Proving Socialism Works

Paul Krugman says:
Europe is an economic success, and that success shows that social democracy works.
Since 1980 -- when our politics took a sharp turn to the right, while Europe's didn't -- America's real G.D.P. has grown, on average, 3 percent per year.  Meanwhile, the E.U. 15 -- the bloc of 15 countries that were members of the European Union before it was enlarged to include a number of former Communist nations -- has grown only 2.2 percent a year.  America rules!
Or maybe not.  All this really says is that we've had faster population growth.  Since 1980, per capita real G.D.P. -- which is what matters for living standards -- has risen about the same rate in America and in the E.U. 15:  1.95 percent a year here; 1.83 percent there.
Seems interesting and perhaps surprising, but wait.  Think about it.

First off, in 1981, not 1980, we stopped moving deeper into socialism, but we did almost nothing to reverse it.  In 1988, we restarted our momentum down the socialist path under the first President Bush with President Clinton and then the second President Bush continuing the slide into the numbing clutches of socialism.  We now have the highest corporate tax in the world, excepting Japan whose corporate tax will be lower than ours starting in 2011.  Meanwhile, many of the European countries have been reducing their corporate taxes and many other business taxes.  Some have adopted flat rate income taxes with growth rates increasing as a result.  Many of the nations have returned state-run enterprises to the private sector.  Yes, there are many legacies of socialism in Europe and yes, they are still enamored of it in many ways.  At the same time, they have come to understand that there are economic penalties associated with it and they have backed off from socialism somewhat. The effects of the long term legacy of socialism are stronger in the comparison between the U.S. and Europe than have been the effects only compared in the window since 1980 as Krugman does.

There are other problems in the comparison.  One is that our population growth is not just a variable in need of correction.  It is due to Americans having a more positive view of the future, which the socialist environment seems to kill off.  This makes it more tempting to have children.  It is also due to the fact that we allow very high levels of immigration to the U.S. and many of our immigrants are very poor as they begin their life here.  Many take years to learn the skills that native Americans have.  But, let us leave this caveat aside and look at the more meaningful per capita GDP numbers corrected for Purchasing Power Parity (PPP).  This information is available at a Blog called Political Calculations in a post entitled Battle of the Titans: U.S. vs E.U. GDP per Capita, 2008.

We find there that:

United States 2008 GDP-PPP is $45,588.10

European Union 2008 GDP-PPP is $31,182.49

The U.S. beats the complete E.U. by miles and miles, or more than 46%!  But this is not what Krugman was comparing.  He left out the newer members of the E.U. to exclude those most hurt by their prior experience with socialism.  So let us look at the results on a country by country and a state by state basis while ordering them together, with the E.U. countries in red (note that Norway and Switzerland are not E.U. countries) in the table at the end of this article.

Luxembourg does well and beats the U.S. average, but it comes in behind the District of Columbia and has a bit less than half the GDP-PPP of D.C. and it has a smaller population, so it does not raise the E.U. result relative to the U.S.  The next country on the list is Ireland, which comes in just behind the U.S. average of $45,588.10 with $45,475.12.  Then the Netherlands and Austria manage to beat 16 states.  Sweden, which has made a strong reversal of its socialist model lately, beats out the nine poorest U.S. states, but loses to the Okies!  The United Kingdom only beats seven states, finishing behind Montana.  Germany beats only five states and loses to Alabama.  France and Italy can only beat Mississippi!  None of the other countries of the E.U. can beat any state of the U.S.

So despite the fact that many of the European countries have been backing away from socialism and the U.S. has been moving deeper into its clutches, the standard of living in the U.S. is clearly much higher than that of Europeans with their long history of embracing socialism, even gussied up as social democracy.  The upcoming election should slow down our present slid deeper into the quagmire of socialism.  As the table below makes clear, you have to weigh a horror of seeing anyone around you who is better off materially than you are very heavily to find any reason to think socialism will give you a higher standard of living.  I do not believe any thinking Americans really want to trade places with European countries on this list and we should be able to agree that the Paul Krugman claim is false.



















































































































































21 October 2010

Union Pension Fund Swindles, Their Democrat Henchmen, and the Beknighted Taxpayer

The unions prefer defined benefit pension plans to defined contribution pension plans.  They claim they want the risk in the plans to be with the employer, not the union member.  Defined benefit plans are either single employer plans or multiemployer plans.  The unions tend to prefer the latter, especially in heavily unionized industries such as construction, transportation, hotels, food, and entertainment.  The multiemployer plans were created by the Taft-Hartley Act of 1947 and allow workers to leave one company in the same industry for another while remaining in the same union or the same multiemployer agreement.  About 20% of workers in defined benefit pension plans are in multiemployer plans, or about 10 million active and retired workers.

There are about 1,500 multiemployer-union pension plans in the United States.  A pension plan that is less than 80% funded to meet its liabilities is defined by the Pension Protection Act of 2006 as endangered.  If it has less than 65% of the assets needed to meet obligations, it is defined as critical.  According to studies by Diana Furchtgott-Roth of the Hudson Institute and by economist Andrew Brown, in 2006 before the recession arrived, only 17% of these union plans were fully funded, though 35% of non-union defined benefit plans were fully funded.  Only 59% of union multiemployer pension funds were above endangered status, though 86% of non-union plans were.  13% of union plans were in critical status, while only 1% of non-union plans were.

It seems that unions are systematically eager to "win" higher retirement benefit payouts to their members so they can win re-election and members will stay with the union.  But, they are not diligent in seeking to keep the pension plans secure and safe.  In fact, in 2006, of the 438 union pension plans in critical condition, only 5% were even contributing enough money to pay for the current costs.  In comparison, there were 54 non-union defined benefit plans in critical condition, but 39% were at least meeting current annual costs with contributions.

The Government Accountability Office studied multiemployer plans over the time period of 1980 to 2006 and found that in 1998 the number of contributing active workers was equal to the number of retirees on the plans.  Presently, the Teamsters union Central States pension fund has four times as many retired workers as active workers paying into the plan.  There are many union members who expect retirement payouts of $60,000 a year who are likely to receive only the Pension Benefit Guarantee Corporation maximum of $12,870 per year for a union worker with 30 years of work!  The unions hide this possibility from their members.

Since the recession hit, the situation with underfunded pension plans is worse for most defined benefit plans, but most especially for the union multiemployer plans.  The 230 critical condition pension plans of 2008 were up to 640 in 2009, despite the reporting requirement actually lagging the present condition of these plans.  In hard times, more companies fail.  In these multiemployer pension plans, the remaining companies in the plan have to pick up the costs of the pensions for the employees in the plan who may never have worked for them. The burden of covering the orphaned workers can become huge.  Since unions in the private sector are very skilled at killing their employer, this is a common problem.

Many plans which have experienced failing companies, are very dependent upon bringing new workers into the plan.  This is a very strong incentive for the unions to force new companies to unionize to keep the Ponzi scheme going.  The card check, or the words-have-no-meaning Employee Free Choice Act bill which was so strongly desired by the unions, was to serve this purpose.  That plan, having failed to pass Congress, has now been supplanted by Senator Casey's (D, PA) bill, the Create Jobs and Save Benefits Act of 2010, which he hopes to get passed in the Lame Duck session of Congress after the Democrat's election Armageddon.  Representatives Earl Pomeroy (D, ND) [who appears to be losing re-election] and Patrick Tiberi (R, OH) have a union pension bailout plan called the Preserve Benefits and Jobs Act of 2009, which they introduced a year ago.  In July 2009, I posted Is a Government Take-Over of Pension Plans Coming?  If the Democrats have their way, it apparently is.

How big a liability are these Congressional hacks selling out the American People on?  We do not know.  But, last September Moody's Investor Services examined the Labor Department's Form 5500 reports of 126 multiemployer pension plans in 2007.  Remember this is only 126 plans out of about 1500!  In 2007, they said these plans were only 77% funded, with a total funding shortfall of $87 billion.  Moody's estimated that the 2008 data for these funds would show that they were only 56% funded and the shortfall would be about $165 billion.  Brett McMahon, vice president of Miller & Long Construction Co., an expert in the union pension fund issues, believes the total unfunded liability for the 1500 plans may be about $700 billion!

This building crisis is about to collapse the dam.  The Financial Accounting Standards Board (FASB) is likely to implement a new rule to take effect on 15 December requiring that companies more accurately report their liabilities for their multiemployer pension plans.  When the Kroger grocery store chain reported its multiemployer pension plan liabilities had more than doubled in a year to $1.2 billion, it mortified stock analysts and credit agencies.  YRC Worldwide, a trucking company, owed about $2 billion to various multiemployer pension plans in 2009 and about half of that will be paid to retirees who have never worked for a YRC Worldwide company.  The UPS paid $6.1 billion to leave the Teamsters Central States pension fund in 2008, before it declared it was in critical status in 2009.

These huge liabilities now greatly concern Moody's and Standard and Poor's.  They concern Wall Street and bankers and creditors, at least those on their toes.  After the new reporting requirements take hold on 15 December, many more of these banks and creditors will become aware of the problem.  This will be cause for considerable new economic woe.  The resulting situation will be very bad for many unionized companies and terrible for the private sector unions.  The Republicans will control the House of Representatives.  Redistricting according to the 2010 Census will probably help the Republicans to keep future control.  With unionized companies collapsing more rapidly because no banks will loan to them if they are liable for multiemployer pension funds, the funds will collapse catastrophically as company after company collapses.  The unions will be smothered with class action lawsuits by their members for being negligent in protecting their retirements.  And, the unions days of buying elections for the Democrats will be over, except for the public sector unions.

The SEIU, which is so close to Obama and the Democrats, already has announced that its multiemployer pension fund is in a critical status.  That happen in early 2009.  Many more union pension funds will follow.  Can you imagine the sense of betrayal many of the today's union members will feel?  Especially since Furchtgott-Roth and Brown found that union staff have much better funded pension funds than do union members.  Even worse, union officials have much better funded pension plans than do the union staff!  It seems the union officials were always well-aware of the shaft they were giving to their members!  They protected their elitist selves, while committing a serious fraud upon their members.

17 October 2010

Don't Ask, Don't Tell, Don't Enforce

U.S. District Judge Virginia Phillips, who earlier decided that the military's policy of Don't Ask, Don't Tell with respect to people in the military having or being inclined to same-sex sex was unconstitutional, earlier this week ordered the military to stop enforcing that policy.  I discussed her decision on its constitutionality here and expressed my agreement with her decision.  She had given the government time to respond to her decision with a plan to end the policy, which it failed to do.   The Democrats did try to pass legislation in Congress to strike the policy, but despite their overwhelming majority, they could not pass the legislation.  The Republicans, to their shame, largely opposed the legislation, as did numerous Democrats.  So, Judge Phillips has acted to halt enforcement of the policy that Obama and the chairman of the Joint Chiefs of Staff have said they wanted ended.  Nonetheless, the Justice Department has decided to appeal the decision.

This is one of those Go Figure moments.  The Democrats have long claimed they were the champions of homosexuals, but have not ended this policy in the last nearly two years despite having the Congress and the presidency locked up.  Laws discriminating against same-sex relationships and sexual acts are mostly popular with the People yet, though the discriminatory attitude is very much tied to the older generations.  Mostly religious conservatives favor discrimination.  Because of that, the Republican Party is mostly on-board for such discriminatory acts.  This is one of its grievous faults.  Faced with a disastrous election in a few weeks, many Democrats did not have the nerve to defend the equal rights of homosexuals and bisexuals to their lives, liberty, and pursuit of their happiness.  Judge Phillips gave the Democrats an out, which they should have taken.

It is claimed that when a U.S. District Judge rules a law unconstitutional, the Justice Department must appeal the case, which is what it is doing.  This is nonsense.  The President is sworn to preserve, defend, and protect the Constitution of the United States, which of course the members of Congress are also.  The Justice Department reports to the President and he should have ordered them not to appeal the ruling of Judge Phillips because he is suppose to recognize the excellent argument she made as a correct interpretation of the constitutionality of Don't Ask, Don't Tell.  Perhaps, in the now well-established tradition of the Democrat Party, he has not bothered to read her decision.  If he did, he is failing us with his judgment of her argument.  If he did not, he is failing us with his turpitude.  He should be taking his duty to the Constitution more seriously.  Of course, from many things he has said and done, we know that he does not care to actually follow the Constitution since he sees it as being in opposition to many of his socialist policies.  For instance, he faults it for being a roadblock to redistributive policies.

Each of the three branches of the federal government has the obligation to preserve, protect, and defend the Constitution.  This is not a task given only to one branch.  When any of the three branches fails to exercise its independent judgment, the exercise of our individual rights is harmed.  When Congress considers legislation, it is obliged to consider whether it is constitutional.  If any Congressman thinks it is not, he is obligated to vote against it.  In fact, if he is not sure that it is constitutional, he is obliged to vote against it.  If the President is presented with a proposed law passed by Congress, he is obliged to decide whether it is constitutional or not.  If it is not, he is obliged to veto it.  Because it is the nature of government to try to expand its powers, it should be the practice to recognize that if any of the three branches of government believe a law is unconstitutional, we should be disposed to refusing to allow the force of government to be used to enforce that law.  The bias of the People should be toward limited government and a maximization of the rights of the individual.  If the federal courts rule a law limiting individual freedom of choice unconstitutional, then we have recognized in recent times that the law cannot be enforced.  Unfortunately, we seem to have lost the idea that the Congress and the President are also supposed to be bulwarks against the encroachment of government against our equal, sovereign individual rights as well.  A three-legged foundation is much more stable than a one-legged foundation.

On a related issue, the Justice Department is also wrongheadedly appealing two decisions of a federal judge in Massachusetts that the 1996 Defense of Marriage Act federal law is unconstitutional.  The judge ruled that the states, not the federal government, have the power to define marriage.  He also ruled the federal law violated citizens due process rights.  I have never seen any power given to Congress by the Constitution which would allow it to decide who has a valid marriage contract and who does not. 

In actual fact, I believe it very unwise to allow any government to define marriage.  Marriage is a spiritual union of people and there is no way to preserve fundamental freedoms of conscience and the right to pursue happiness if governments are allowed the power to define what constitutes such a spiritual bond.  What they do have within their purview is the job of enforcing domestic partnership contracts, which is done at the state and local government levels, not the federal level.  My views on this are given here, here, here, and here.  Domestic partnerships should no more define and limit the number and sex of partners than does a small business contract.  A single heterosexual couple, gay men, lesbians, bisexual people, multiple heterosexual couples, and polyamorous people should all be allowed the protections and benefits of domestic partnerships suitable to their needs and as agreed upon as free adults.

16 October 2010

If Only the Preamble of the Constitution Said --

While I think the American People who accepted the Constitution of the United States of America thought that the Constitution would be seen by everyone in the context that I have given it more explicitly in my own rewrite of the Preamble, our modern federal courts, legislature, and president do not.  Neither do most of our academics.  If only the Preamble said this explicitly, our individual rights would be much more secure:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.  This Constitution will provide the government a few explicitly enumerated and very limited powers.  The government of the United States of America shall not deny or disparage the equal, sovereign, and many rights of the individual citizens of the United States of America to life, liberty, property, and the pursuit of happiness.

If the Preamble did say this, it would have served as a strong protection against the present broad interpretation of federal government powers and the very narrow interpretation of the scope of individual rights.  This is not to say that an always power-voracious government would not commonly choose to ignore the limits of its power as ours now does.  It does not mean it would not often trample our individual rights and treat them as highly unequal rights as it now does either.  No, our government would likely still be tyrannical, but its road to exercising that tyranny would have been more difficult and it would not be so far down the path of tyranny as it now is.

Did Capitalism Save the Chilean Miners or Try to Kill Them?

On 14 October 2010, Daniel Henninger wrote an upbeat opinion in the Wall Street Journal that noted that what Americans do in their work in the private sector often has noble consequences despite the frequently negative view of the market and corporations of such socialists as Obama.  In particular, he notes that a small private company, Center Rock, Inc., in Berlin, PA developed an amazing down-the-hole hammer drill head suitable for drilling quickly through unusually hard rock.  This drill head is a canister 28-inches in diameter and consists of 4 air hammers and 4 drill bits.  The Chilean miners just rescued after 69 and 70 days more than 2000 feet beneath the surface were brought out about 2 months earlier using a Schramm T-130 drill system using the Center Rock drill head.  Schramm Inc. is a West Chester, PA company.  These tools were created and marketed by for-profit American companies.

For 17 days the miners had no contact with the outside world and historical precedent would have given them but little hope of ever being rescued from that great depth.  It had taken some 30 probe holes to intersect a part of the mine to which the trapped miners had access.  On the 18th day, water, food, and medicines were being supplied to the trapped miners.  Brandon Fisher, President of Center Rock, and Richard Soppe of Center Rock worked very long hours for 37 days of drilling to create the shaft wide enough to bring the miners out.  A fantastically successful rescue had been accomplished through the efforts of many companies from around the world and the Chilean government.

Daniel Henninger noted that Obama has been campaigning throughout the U.S. with the message:
The basic idea is that if we put our blind faith in the market and we let corporations do whatever they want and we leave everybody else to fend for themselves, then America somehow automatically is going to grow and prosper.
To which, Henninger says that's a caricature, but yes, it is basically right.

This flies in the face of the viewpoint of the socialist or Progressive.  They usually view man as an animal dominated by low emotions such as envy and jealousy, hatreds and bigotry, a deep-seated dishonesty, and a willingness to use violence and fraud to take whatever he wants.  Most men are stupid.  A few who are brighter and fortuitously of a slightly better or more trainable nature, can be indoctrinated in the basic rules of the better socialist man.  These few, after many years of training and indoctrination in government-run schools, will form the elite who will guide a large and complex government apparatus to force upon the unwashed and largely stupid masses the values they would not themselves choose.  This government, too complex for most of the people to understand or to concern themselves with, will then nudge them and force them as need be to live their lives on a higher plane than they otherwise would.  They will be told this is for the collective good.  The guiding elite politicians and academics are rewarded for being the guiding elite with power, prestige, and money, while pretending that it isn't so.  They pretend it is self-less service to the unwashed masses.

This was the conclusion the socialist Owens, father and son, came to when their socialist experiment failed in New Harmony, Indiana in the early 1800s.  The viewpoint was still similar in such proselytizers for the American public school system as Horace Mann, John Dewey, and William James.  The teachers unions of today continue in that tradition.  So do Obama, Pelosi, and Reid.  So probably does Associate Professor William K. Black of Economics and Law at the University of Missouri - Kansas City.  He felt he had to respond to Daniel Henninger with a blog post called Capitalism Would have Killed the Chilean Miners: a Reply to Mr. Henninger.

Prof. Black wants to defend Obama and the Progressive viewpoint on the need to rigorously regulate the free market because human beings operating without severe regulation will eat each other alive.  He starts with asking why the miners needed to be rescued in the first place.  He says the Chilean mine was private and it had a bad safety record.  Black says
Reports from Chile stress that the mine violated the law in failing to have a second entrance to the mine (which would have greatly reduced the risk of the miners being trapped by the collapse of a portion of the shaft.)  Local officials have claimed that the only way the mine owners could have gotten away with such an obvious violation of the safety rules was through bribery of the regulatory officials. ....
Once the mine shaft collapsed in Chile, the private mining company declared that it not only could not pay to rescue the miners -- it could not even pay their wages.  The private company threatened to file for bankruptcy.  The rescue was paid for by the State-owned mine (i.e., the Chilean government had to bail out the private mine owner to the tune of an estimated rescue cost of $10 to $20 million in order to rescue the miners.)  A $25 ladder apparently would have prevented the tragedy, but the private owner's profit motive led them to avoid that expense.  The Chilean mine had gold and copper ore.  Both of these minerals are selling for record prices.  This makes the private mining company's failure to provide another exit and a ladder all the more outrageous.  Where did the profits go?  Capitalism would have left the miners to die.  The government paid to rescue the miners.
Prof. Black says "When we prevent a corporation from engaging in fraud or endangering its workers we do not harm capitalism, but rather save honest businesses from being driven from the marketplace."

I agree with Prof. Black that bad behavior is evidenced in the additional information on the mine, the mining company, and the Chilean government regulators.  The issues are complex and require us to carefully establish a context for our evaluation of the role of government in regulating businesses.  He is very concerned that the mining company controlled the miners and foisted a fraud upon them that endangered their lives.  He gives us a number of facts that bear on this issue of how the miners were forced into a life endangering job, which he does not seem to think need examination and discussion.  They do however.

First, the mine is said to have had serious safety issues and they were well-known to the miners and their union.  Their protests had been ignored.  Yet the miners kept going down into the deep mine knowing their lives were at risk.  Second, Black says the mining companies profit motive was so strong that it would not pay for a live-saving $25 ladder, even though gold and copper prices are at truly record levels.  Third, the company bribed government regulators to ignore the lack of a second mine entrance, rather than spend the money to create one.  Fourth, the mining company preferred declaring bankruptcy rather than paying for the rescue of its miners which cost $10 - 20 million and was paid by the Chilean state-owned mining company.  In fact, the mining company was unable to even pay the miner's salary.  Fifth, the final consequence of the miners being trapped for the company was that it was shutdown.  It no longer is allowed to operate the mine.

While Prof. Black is on the Economics faculty, he does not seem to think that we need know anything about this company but that its product sells for a lot and the company itself is greedy and irresponsible.  The facts suggest that it is more likely that the company was in fact so marginal in profitability that it should have gone out of business some time ago.  If it were making big profits because of the skyrocketing price of gold and copper, why would it go out of business rather than pay a mere $10 - 20 million of rescue costs?  Why would it bother to bribe government officials and ignore real safety issues correctable at a cost of $25?  These greedy mine owners are supposed to have been blind to the fact that their earning huge profits on gold and copper could easily be lost to them because of safety violations?  Possible, but probably less than likely and the professor does not even see the need to offer us evidence that this is so.  Perhaps he assumes, in the best Progressive fashion, that we are too stupid to ask such questions ourselves?  While gold and copper are very high priced now, one still has to consider the costs of production.  That Chilean mine may well have had a vein rich in gold and copper at one time, but it appears likely from the behavior of the company that they were working the dregs and barely eking out a living even given the present high prices of gold and copper.  If this is not the case, then the Chilean government will be trying to recover their costs for rescuing the miners from the hidden profits of the mining company owners, I expect. 

Enough with the mining company!  Let us return to the miners.  If conditions at the mine were known to be life-threatening, why didn't they simply take other jobs?  If Chile has a free market, which Black treats them as having, then no one forced the miners to stay on the job at the mine.  They could simply take a job that offered them a safer and more pleasant workplace.  Given that Chile has a state-owned mining company, the private mining sector is probably less free than in a real free market.  Governments that operate state-owned businesses often interfere with any competitive private businesses to support the less competitive state-owned business.

Now Chile, is not Haiti, which was very obvious when each nation had a very severe earthquake recently.  Chileans have property rights and consequently they build much better buildings that underwent much less damage.  They have a society that could recover from such devastation relatively quickly.  They are better educated than most people around the world.  While they sought help with the rescue, they also contributed greatly to the rescue work and managed it.  Chile may not be at the level of the U.K., the Netherlands, Germany, or France, but it is no Cuba, Bangladesh, Siam, or Angola either.  Chile has had the inheritance of instability of many South American countries and the legacy of the Spanish Conquistadors and favored old families.  Nonetheless, it is now a relatively advanced nation, though saddled with some state-owned businesses.  In the end though, it does not have so vibrant a free market that these miners felt they could walk away from a dangerous job and a marginal employer to find better work.

Why?  Basically the answer is that the rule of law and the equal, sovereign rights of the individual have not been long recognized as essential to Chilean society so that a broad-based and vibrant, innovative free market could develop on the scale of that in the U.S. or at least close to the potential of Chile.  One aspect of the mine story demonstrating this was that bribes were effective to avoid being shut down for some time.  This is a failure of the rule of law.  That many Chileans were unequal was long a part of Chile's tradition.  There is no U.S. Constitution to limit the powers of government and not yet a strong and always dependable will among the people to insist that the government serve them, rather than they it.  When Prof. Black says Americans need to have more business regulation, which Obama calls for constantly, because of the nature of business in Chile, he is using that story in a very out-of-context manner.  Indeed, the context is neither right for Chile nor for the U.S.

It is very reasonable for libertarians to argue that government regulation of American businesses is excessive and often very naive and ill-informed.  It is very reasonable to argue that the ends to be achieved by it are very often not achieved or achieved at too high a price.  It is also very reasonable to argue that regulations often infringe upon our equal, sovereign individual rights.  It is also clear that regulation is often a tool to keep smaller companies from becoming effective competitors against larger and older companies.  Here in the U.S., we do have a very vibrant free market by and large and when it is not so free in some segment, we find that it is not free and vibrant because the government is regulating it.  When there are jobs restrictions, it is commonly because of government interference in the market.  When companies are not being innovative, it is commonly because of government interference in the market.

Prof. Black acts as though business regulation is always done only to prevent business fraud.  He acts as though it is possible to expect that despite positing a human nature which is constantly trying to get away with fraud except when the moral hand of government uses regulations to prevent every effort at fraud.  The Progressive seems to naturally assume that men in the market are evil, while men in the government are angels.  The angels in the government will anticipate and prevent with regulations most of the evil actions being devised by the devils in the free market.  The angels will devise rules with minimal collateral damage because they will have a very good understanding of the market place and all the interrelationships in that market.

In reality, this is far from the truth.  In reality, the complex free market has many internal and private means to counteract anyone's attempt to use control frauds of the type that worry Prof. Black.  In the real private sector, people learn about the frauds of others and refuse to do business with them.  If a business produces unreliable products, people stop buying from that business.  Retailers will stop putting that company's products on their shelves.  If the product does harm, the company is quickly taken to court.  Prof. Black seems to think that without regulation the fraud control company will prosper.  But by the time the government knows to take regulatory action, there are likely to be many in the free market who already know the same thing and have already moved against the fraudulent company by no longer buying their product or by suing them in court.  In fact, one of the reasons companies sometimes want to be regulated by a friendly government agency subject to the guidance of politicians who can be bought with campaign funds, is to avoid the wrath of their customers expressed in lawsuits.

Workers often do make a decision, often a very conscious and considered decision, to take a job which is more dangerous than most.  Often they do so for higher pay, sometimes for greater adventure, and sometimes because they simply want to work with tougher, more courageous people.  This is their right to do.  There are many sub-cultures in the workplace.  Many of these sub-cultures do not wish to be turned into pre-school nurseries.  There is a human need for freedom of choice and some people will choose what most others would not choose.  This individuality should be honored and respected in America.  It once was and it did many good things for our country.  Despite the Progressive's desire to completely regulate our lives, we must, the unique individuals we are, assert the right to choose our own values and manage our own lives both as business owners and as employees.

The decision on how safe a workplace should be is very complex.  For instance, it is often a strong function of the knowledge of the workers, more than of fences and gates and shields.  It is often most affected by how focused people are on their tasks.  It may be a function of the culture.  It is certainly a function of the economics and competition at times as well.  It is also a strong function of the tasks that need to be done.  If central planning by government cannot do an adequate job of producing and distributing toothpaste, it certainly cannot do an adequate job of policing workplace safety.  The vast majority of these workplace safety issues are best left to the people involved in a free market relationship in that workplace.  Government is generally unable to do the job as well.  Indeed, government does not do as good a job at almost any aspect of business regulation as free people in a free market do.

As an employer, I can assure you that employees stay when they are getting what they want from the workplace and they leave when they are not.

14 October 2010

Election Gitters Cause Obama Administration to End Gulf Deep Water Drilling Moratorium

With the towering tsunami for Democrat office holders rapidly approaching, the Obama Administration ended the Gulf of Mexico ban on deep water drilling.  This is window dressing, a classical socialist Potemkin village, to divert the American voter's attention away from a jobs-killing and over-seas oil price boosting policy of the Obama administration. 

The Gulf of Mexico produces about 30% of American oil production.  The Obama administration has been very effectively reducing new American oil production since it took over by refusing permits to drill and by refusing leases on federally controlled onshore and offshore areas.  The huge tracts of Western federal land have seen a large reduction in oil and gas drilling due to Obama policy.  The shallow water (less than 500 foot depth) drilling in the Gulf of Mexico has been brought to a standstill since few platforms have been able to get their drilling permits approved by the Bureau of Ocean Energy Management for a long time, despite no moratorium in place to prevent such shallow water drilling.  A study by Southern Methodist University shows that the low 10 to 15 permits a month approved prior to the April 20 Deepwater Horizon explosion, has slowed to about a dozen total since then.  This is only about 2 per month and has left many shallow water platforms idle.  The Obama administration has halted the exploration for oil off the Alaskan coast as well.  In 2009, the federal government issued fewer leases for oil and gas than in any year under Clinton or Bush.  Leasing in 2010 appears to be occurring at a similarly abysmally low rate.

A report in the Wall Street Journal of 13 October 2010 says that the government estimates that the new deep water drilling regulations will cost oil and gas drillers an additional $183 million per year.  One always has to wonder what multiplier well above 1.00 should be used to estimate a more realistic cost.  The Interior Department is issuing a raft of new drilling requirements and plan to keep issuing more requirements.  The drilling companies have understand the new requirements and plan on how to comply.  They have to submit the compliance plans to the "over-worked" Bureau of Ocean Energy Management and wait for a yea or nay.  Then as each additional requirement comes along, they have to stop drilling and resubmit a new plan for a permit.  It is expected that many drillers will not be able to afford this and will leave the Gulf, as some have already.

Democrats are as interesting as their symbolic asses in their odd behavior.  They increasingly talk about wanting to cut back on our use of fossil fuels so we will not have to import so much oil.  They propose carbon taxes on this basis as well as in the name of the failed catastrophic man-made CO2 emissions global warming hypothesis.  As more and more people are becoming aware that man-made global warming is a myth, the socialists (Progressives) are using the false idea of energy independence or self-sufficiency as the justification for energy taxes and restrictive mandates.  Yet, at every turn, they oppose any effective attempt to generate more energy in America itself.  They oppose oil drilling and coal mining.  They oppose the development of shale oil deposits out West and they oppose the use of the new rock fracturing process to extract gas from large areas of New York, Pennsylvania, and Ohio.  They even oppose the ineffective, but highly touted, wind and solar power generator plants on environmental grounds in a great many instances.  Of course, they also oppose nuclear power plants as well.  It is of little concern to them that this energy policy is highly self-contradictory.  Such is the way demagogues think, except that this is really a refusal to think.

CATO Grades Governors on Tax and Spending Actions

Chris Edwards of the CATO Institute has put out the 2010 report card on governors.  He grades their performance on their taxation and spending actions and policies.  These state spending results are very important because one of the major reasons for slow job growth and standard of living increases since 2000 has been the 55% increase in state and local government spending from 2000 to 2008.  State spending in 2009 and 2010 is down due to the extended recession, but local government spending was up in those years enough that combined state and local spending in 2009 equaled that in 2008 and exceeded 2008 spending levels in 2010.  State government spending increases were especially steep in the years 2005 - 2008.  Aggregate state spending in 2008 was 31.4% higher than in 2004 and 46.8% higher than in 2000.  Local government spending increases were even faster than the state increases between 2000 and 2008.  These state and local government spending increases added to the federal government increase of 52.5% between 2000 and 2007 and the increase of 66.7% between 2000 and 2008.  These combined spending increases shifted huge amounts of wealth from the private sector to the government sector and greatly weakened the American economy.

The sharp increase in oil  prices in 2007 started the worldwide recession, which brought on our mortgage and loan crisis.  The heavily funded state and local governments had spent years meddling with land use and building restrictions which had driven up the cost of housing beyond belief.  In the extreme case of California, this caused 80% of new home buyers to become sub-prime borrowers!  Such pressures on home buyers helped to fuel support for Fanny Mae, Freddy Mac, the Federal Reserve, and private lending institutions to make mortgages more readily available.  The house of cards developed by the combined effects of huge local, state, and federal spending increases, the oil price shock, and the mortgage and loan crisis created the basis for a severe recession.  Of course, Obama's socialist and anti-business response to that crisis greatly extended and delayed the recovery.

Let's return our focus to the orgy of spending by local, state, and federal government since 2000 and concentrate on state and local spending and debt.  Between 2000 and 2010, state and local government debt increased by 205%!  This debt estimate is based on official, unrealistic projections of state and local pension funds, which estimates them to be underfunded by about $1 trillion.  Better estimates see them as underfunded by about $3.2 trillion.  We have a tendency to focus more on federal spending and debt, but the problem of local and state spending and debt is also huge.  We have a general government spending and debt problem. 

The Edwards report on governors scores them on
  • The average annual percentage change in per capita general fund spending proposed by the governor
  • The average annual percentage change in actual per capita general fund spending
  • The average dollar value of proposed, enacted, and vetoed tax changes
  • Changes in the top personal income tax rate
  • Changes in the top corporate income tax rate
  • Changes in the general sales tax
  • Changes in the cigarette tax rate
The spending on the general fund is used because governors generally have more control on that spending than on other state spending.  After all, state legislatures share in the spending, tax, and debt orgy.  The scoring is based only on the time period 2008 - 2009 since the period covered by Edward's governor report in 2008.  This is important, since Maryland Governor Martin O'Folly, err..... O'Malley earned a grade of F in the 2008 report since he urged and received a $1.4 billion tax increase in 2007, yet in this report he is at the bottom of the grade B list.  There is a paragraph in the report on each governor giving more information on their actions and policies and you should look up your governor in the report.  The paragraphs are labeled alphabetically by state.

The scores and grades are [State, Governor (Party), Score, Grade]:

South Carolina, Mark Sanford (R), 74, A
Louisiana, Bobby Jindal (R), 71, A
Minnesota, Tim Pawlenty (R), 66, A
West Virginia, Joe Manchin (D), 66, A

Wyoming, Dave Feudenthal (D), 63, B
Rhode Island, Don Carcieri (D), 62, B
Oklahoma, Brad Henry (D), 62, B
Nevada, Jim Gibbons (R), 61, B
Texas, Rick Perry (R), 61, B
Alabama, Bob Riley (R), 61, B
Montana, Brian Schweitzer (D), 61, B
Georgia, Sonny Perdue (R), 60, B
Missouri, Jay Nixon (D), 59, B
Idaho, C. L. "Butch" Otter (R), 58, B
New Mexico, Bill Richardson (D), 57, B
Vermont, Jim Douglas (R), 56, B
Indiana, Mitch Daniels (R), 56, B
Maine, John Baldacci (D), 55, B
Maryland, Martin O'Malley (D), 55, B

Kentucky, Steven Beshear (D), 54, C
Michigan, Jennifer Granholm (D), 53, C
Mississippi, Haley Barbour (R), 53, C
South Dakota, Mike Rounds (R), 53, C
Tennessee, Phil Bredesen (D), 53, C
Nebraska, Dave Heineman (R), 51, C
North Dakota, John Hoeven (R), 51, C
Hawaii, Linda Lingle (R), 51, C

Florida, Charlie Crist (R), 49, D
Ohio, Ted Strickland (D), 49, D
California, Arnold Schwarzenegger (R), 47, D
Delaware, Jack Markell (D), 47, D
Arkansas, Mike Beebe (D), 47, D
Iowa, Chet Culver (D), 47, D
Massachusetts, Deval Patrick (D), 43, D
New Hampshire, John Lynch (D), 41, D
North Carolina, Beverly Perdue (D), 40, D
Arizona, Jan Brewer (R), 40, D
Pennsylvania, Edward Rendell (D), 40, D

Washington, Chris Gregoire (D), 39, F
Wisconsin, Jim Doyle (D), 35, F
Colorado, Bill Ritter (D), 35, F
Illinois, Pat Quinn (D), 30, F
Connecticut, Jodi Rell (R), 28, F
New York, David Paterson (D), 25, F
Oregon, Ted Kulongoski (D), 19, F

The average score of the 45 state governors scored was 50.  The governors of Kansas, New Jersey, Virginia, and Utah had not been in office sufficiently long to score them.  The governor of Alaska is not scored because its budget is so peculiar that it cannot be compared to that of other states.

The average score of Republicans was 55, while that for Democrats was 47.  Yet, Gov. Manchin (D) of West Virginia was tied for the 3rd best score with an A at a score of 66, while Gov. Jodi Rell (R) of Connecticut had the third worst score of only 28 with a grade of F.  Nonetheless, the Republicans in this report's time-frame and also that of the 2008 report ( R 55 - D 46) scored significantly higher than did the Democrats.

Edwards points out that some governors think businesses are simply cash cows to be milked for higher state spending.  Prime examples are Quinn of Illinois and Kulongoski of Oregon.  Others, such as Carcieri of Rhode Island, Manchin of West Virginia, and Pawlenty of Minnesota understand that lower state taxes on businesses help state businesses to compete with those in other states and with those in other countries.  Edwards advises that corporation income taxes be abolished because they decrease jobs, create huge compliance burdens, and raise relatively little revenue.

In the last two years, nine states increased their top income tax rates:  California, Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon, and Wisconsin.  Three states have cut their top income tax rate:  North Dakota, Rhode Island, and Vermont.  Governor Carcieri of Rhode Island was outstanding in cutting the state's top income tax rate from 9.90% to 5.99%.

We need to pay attention to the assault on our liberties due to the growth of local and state governments as well as that from our voracious federal government.  This list also gives us a scorecard for the several governors who are running for the Senate in this election or who are being discussed as potential presidential candidates in 2012.  You might note that Charlie Crist of Florida has only a grade of D.  Among governors talked about as potential presidential candidates, Bobby Jindal had an A, Tim Pawlenty had an A, Rick Perry had a B, Mitch Daniels had a B, and Haley Barbour has a C.

A British Plea that America Honor Its Constitution and Not Take the European Path

Daniel Hannan, a British politician and author of A New Road to Serfdom, made this perceptive plea that America treasure the wisdom and the freedoms offered us by our Constitution and reject the European way so favored by Obama, Pelosi, Reid, and their comrades in socialism.  It would be great if every American listened to this short talk.

13 October 2010

The Battle Over Ethanol Limits in Gasoline

Congress has mandated that renewable fuels must provide 36 billion gallons to be blended into the domestic fuel supply by 2022.  This means principally that ethanol must be blended into gasoline to meet this requirement.  The ethanol trade group Growth Energy, headed up by General Wesley Clark, says this goal cannot be met unless the present EPA limit of 10% ethanol in gasoline is increased to 15%.  The EPA just announced that it has increased the 10% blend limit to 15% for cars and light trucks of model year 2007 and later.

The EPA is waiting for additional research on cars and light trucks of the 2001 to 2006 model years, before deciding whether to increase the ethanol blend limit up to 15% for those models.  Live stock ranchers, auto makers, oil refiners, and many environmental groups oppose an increase in the blend limit.  Live stock ranchers do not want their feed costs to go up as more and more corn is converted into ethanol.  Auto makers are concerned about lower performance from engines and damage caused by higher ethanol blends.  Many of their warranties are voided by the use of 15% ethanol blends, called E-15.  Oil refiners simply do not like having to make still more blends of gasoline.  The many blends cause their production costs to go up, which means they must charge their customers more.  Environmentalists are concerned that engines degraded by ethanol will emit more pollution.

There is concern about people being confused at the gas pumps by the additional blends of gasoline.  But this brings up the interesting issue of even if the EPA allows 15% ethanol blends, who would want to use them?  They will be more expensive per mile driven and cars and light trucks using them will suffer some performance loss.  The answer is probably that some states will start requiring their use through some means or other.  Will that be by subsidizing the high ethanol blends or will they actually mandate that people with newer vehicles must use the higher blends, despite their higher costs and performance degradation? 

There are strong lobbyists, such as the ethanol refiners and corn farmers who are conniving to get their states to make such requirements.  This will not be good for most Americans.  This is just one more example of factions and special interests taking advantage of most Americans for their own financial gain by using the force of government to remove themselves from the free market into a protected, crony status.  As I have often noted, the only way to prevent such crony and faction based rip-offs is to limit the power and scope of all of our governments: federal, state, and local.  Questions are being asked about why this announcement was made just prior to the mid-term elections, but the increased use of ethanol is popular in many rural areas of the Midwest.  Pleasing those special interests prior to the election is the reason for the timing.

Solar Power Increased Cost for German Electricity

Both the federal government and many of the state governments are mandating much increased use of so-called renewable power such as solar and wind generated electricity.  We should be very aware of the costs of doing this.  Germany has gone far down this road.  What are the results in Germany?

Germany makes Germans pay high levies on their electricity bills to pay people to invest in offshore wind turbines and roof-mounted solar panels.  These levies are guaranteed for 20 years.  Offshore wind turbine generated electricity is supported with a levy of $0.21 per kilowatt-hour and roof-mounted solar panels are given $0.46 per kilowatt-hour!  As a result, Germans have rushed to put solar panels on their roofs and the levies paid for wind, solar, and hydro power will be $11.3 billion this year, which is a 55% increase from last year.  About 8 gigawatts of new solar panel installations are projected for this year.  This is the electricity output of 4 large nuclear power plants, or would be if the sun always shone brightly in Germany 24 hours a day.  Those installing solar panels after this summer, will be paid 16% less for the electricity they produce.

The result is that on a German's electric bill, taxes and levies are now 41% of the bill and that percentage has been climbing rapidly.  VZBV, the German consumer association, says the solar panels installed in 2010 alone will cause additional electricity charges of $36 billion over the next 20 years.  Similar mandated renewable energy is constantly being advocated by Democrats, our version of socialists, in the U.S.  Our costs, especially if you live in California, have been cranked up as a result also.  Texas and Colorado are other states where the cost of electricity has been cranked upward significantly.  Read more about this here.

Incurring these increased energy costs is pointless.  Political central planners are frightening people around the world with stories of almost immediate failures of our energy supplies and catastrophic man-made global warming which require us to turn to incredibly expensive renewable energy.  The renewal they are talking about is apparently the renewed poverty of people around the world, who have often been improving their standards of living recently.  Their improved standard of living is offensive to Democrats and will be greatly impeded by nonsensical requirements to drive energy costs sky-high in accordance with the otherworldly dreams of Obama, Pelosi, Waxman, Markey, and others of the lunatic fringe of American socialist politics.

11 October 2010

Updated Close House Races and ObamaCare Repeal

I have updated my list of closely contested House of Representatives races.  You can see that the movement since the original post is clearly in favor of the Republicans, despite liberal media claims that they see a closing of the gap in the favor of the Democrats.  I have also added the names of the Republican candidate who opposes those Democrats who voted for ObamaCare.  I repeat my suggestion that you send campaign contributions to the Republican opponents of those Democrats who voted for ObamaCare and are in close election races.  Since those Democrats who voted against ObamaCare cannot be trusted to vigorously oppose it in the future, please contribute to their Republican opponents as well.

10 October 2010

Water, Not CO2, Controls Earth IR Emissions

The catastrophic man-made global warming alarmists have produced the temperature record shown below and claimed that the reason for the temperature increase since the mid-1970s is an increased concentration of CO2 in the atmosphere due to man's use of fossil fuels. 

Of course, we also know that the short-wave solar radiation reaching the Earth's surface over the period of 1983 to 2001 was increasing due to an active sunspot period.  This solar radiation plot is given below:

Despite the increase in solar irradiance during these years of increased global temperatures, it is commonly claimed by the CO2 greenhouse gas advocates to be too small an effect to account for the claimed observed temperature rise. They claim the major contributor to the warming is increased CO2, which decreases the cooling of the Earth by decreasing the amount of energy radiated out into space as outgoing long-wave IR radiation.  Here is a plot of the outgoing IR long-wave radiation from 1948 to 2009:


Ordinarily, one expects the outgoing long-wave IR radiation to be proportional to the incoming solar short-wave radiation.  From about 1979 to 2009, the outgoing long-wave radiation was increasing, as was the incoming solar radiation.  But from 1948 to 1975, the average temperature was flat according to the first graph above.  This suggests that the incoming solar short-wave radiation was not greatly increasing in that time-frame.  Contrary to that, the period from 1948 to the mid-1970s shows a big increase in the outgoing long-wave IR radiation, especially between 1950 and 1966.  No big increase in incoming solar radiation and increasing CO2 concentrations in the atmosphere should preclude such a large increase in outgoing long-wave radiation if the standard CO2-induced catastrophic warming hypothesis were correct.  The increasing CO2 concentrations should be causing the outgoing long-wave radiation to decrease as CO2 molecules re-emit half of the long-wave radiation they absorbed back toward the Earth's surface.  Increased concentrations of CO2 in the upper atmosphere, where radiative cooling dominates over convective processes, should allow the very energetically excited CO2 molecule which has absorbed incoming short wave radiation from the sun to efficiently re-emit that short-wave energy back into space.  Still more mysterious in terms of this CO2 hypothesis is the sudden jump in outgoing long-wave radiation from 1976 to 1981!  Basically, the overall strong increase in outgoing long-wave IR radiation from 1950 to 2009 should correspond to a major decrease in the amount of CO2 in the atmosphere.  There was no such decrease, but was instead a steady increase in CO2 concentrations, at least according to the data popularly presented by the advocates of catastrophic CO2-induced warming.

So, the low concentrations of CO2 in the atmosphere do not account for the temperature record constructed by the advocates of a strong CO2 warming effect.  What phenomena are then causing both the increased outgoing long-wave IR radiation and the broadly rising temperature?  For one thing, during the same period from 1983 to 2009 that the incoming solar radiation was increasing as shown above, the global cloud cover was decreasing.  This is consistent with the theory of Henrik Svensmark that when the Sun has an increase in solar activity, the sun projects its electromagnetic field further and that protects the Earth more from cosmic rays.  The decreased flux of cosmic rays is said to allow for the nucleation of fewer clouds, consistent with the decreased cloud cover in the plot below as the Earth warmed in its last warming cycle.


But, it turns out that this is not the only effect affecting global temperatures.  The following graphs show the atmospheric humidity at various pressures, which drop as the altitude increases.  I will also give an altitude, which is that of the U.S. Standard Atmosphere of 1976, for which the sea level temperature was 288.15 K or 15 C.  The time history of the humidity at 1000 mbar (1 bar) pressure or sea level is:


As the temperature has increased since the mid-1970s, the sea level humidity has increased.  This is expected.  Increased temperature causes increased water evaporation from the oceans and land.  This also causes a counterbalancing cooling effect since it takes a huge amount of energy to cause water to warm up and still more to cause the phase change into a gas as water vapor.

At the atmospheric pressure of 925 mbar, or about 750 meters altitude, the history of water vapor is shown in the following graph:


The humidity at this altitude may be said to have fallen from the 1950s a bit, then held steady from the mid-1960s to the mid-1990s.  After the mid-1990s, the concentration of water vapor increased.  The increase at this altitude lagged that at sea level by about two decades.  At this altitude, cooling of the Earth's near surface is dominated by convection processes and molecular collisions.  The historical trend is very different when we examine the humidity record at 600 mbar (4170 meters) as shown below:

Basically, the humidity fell from 1948 to the mid-1960s at this higher altitude and then has remained pretty steady ever since.  Energy transfer at this altitude is dominated by IR radiation.  The story at the pressure of 400 mbar or about 7200 meters altitude shows a steady decline from 1948 to 2009:


Thus, we see that at the higher altitudes, where radiative cooling dominates, water vapor has become rather less common in the upper atmosphere.  As I have previously discussed, the effect of either CO2 or water vapor on temperatures at the Earth's surface depends both on their absorption of incoming short-wave radiation and on outgoing long-wave radiation.  Increased IR-absorbing gases, often called greenhouse gases, cause the absorption of more of the sun's incoming radiation well above sea level.  This has a cooling effect upon the Earth's surface.  An increase in water vapor, the primary IR-absorbing gas, in the higher altitudes of the last two graphs would have a considerable cooling effect on the Earth at sea level.  The IR radiation absorbed by water vapor molecules would be very quickly and effectively radiated back into space. Conversely, the observed decrease in water vapor in these higher altitudes means more solar radiation reaches the ground or that part of the atmosphere where convection dominates as the mechanism for transferring energy.  Because convection moves energy into the upper atmosphere where it can be effectively radiated out into space rather slowly, increased solar energy absorbed in the lower atmosphere or at the ground level lingers longer. 

We see that the history of lower water vapor in the upper atmosphere is consistent with global warming, while increased CO2 is not.  This lowered humidity of the upper altitudes combines with the increased incoming solar radiation and the decreased cloud cover to cause an increase in the amount of solar energy reaching the ground and sea level.  The result is warming of the Earth's surface.  Furthermore, the absorption of more solar radiation at sea level results in more long-wave IR radiation into space since the added energy delivered to the surface is partitioned among many molecules very quickly due to the very short mean free path length in the dense atmosphere near the ground and the many molecular collisions to divide that energy among many gas molecules, especially the most prevalent nitrogen and oxygen molecules. The smaller energy per molecule means they emit at longer wavelength, so outgoing long-wave IR radiation increases.  Back in 1950, with higher humidity at higher altitudes, water molecules absorbed large amounts of energy and simply re-emitted that shorter wavelength radiation since at those altitudes the time between collisions is greater.  The so-called greenhouse effect of CO2 is clearly not a major factor, being inconsistent with the data discussed above.  This is consistent with many other arguments made on this blog that the catastrophic man-made CO2 emissions hypothesis is a failed hypothesis.

Given that socialists and Progressives have strongly advocated this hypothesis for many years and seen to it that climate change research was focused on the effects of increased atmospheric CO2 for many years with tens of billions of dollars of funding, it is incredible that so many fatal problems with this hypothesis have been documented.  It is a wonder to behold that so much contradictory data has not long since caused this hypothesis to be abandoned in failure.  It has become impossible to believe that the explanation for the continued backing for this hypothesis and the many claims that it is accepted science has any basis but a religious adherence to its usefulness to socialist elitists, radical environmentalists, and some crony businesses.

The data used was borrowed from a talk by Dr. Ir. Noor van Andel, the former head of research at Akzo Nobel, to the Dutch Meteorological Institute KNMI.  The arguments I have used differ somewhat from his and they are simpler.  Compared to his talk, this presentation is nearly free of climate jargon.