Scott Powers, an Orlando Sentinel reporter, was the pool reporter to cover a fund-raiser for Democrat Senator Bill Nelson at Alan Ginsburg's palatial home in Florida. Joe Biden and Bill Nelson were to speak at the $500 a head dinner. When Scott Powers arrived, he was escorted to a small, overcrowded storage room and told he had to wait there until Biden arrived. Powers was kept in the overflowing room with a chair squeezed in near its door for 1 hour and 15 minutes, before Biden staffers would allow him to come out as the speeches began. When the un-newsworthy speeches were finished, Powers was immediately escorted to his car and told to leave. He was never allowed to talk to any guests.
Given Joe Biden's claim that no individual has any sovereign rights, but only such provisional "rights" as the government chooses to give individuals at the convenience of the government, this imprisonment of a respected reporter is not really surprising. It is certainly consistent with the theft of our ownership rights in our own bodies and minds provided for by ObamaCare. Joe Biden is a man of principle and that principle is that every American individual is to serve the needs of the government or more exactly, its VIP political leaders, such as Joe Biden. Such is the arrogance of power among the Democrats.
You can read more about this here.
28 March 2011
27 March 2011
The Cost of Living in the United States
The Composite Cost of Living results for the states across the United States for the 4th Quarter of 2010 are now available:
The cost of living is influenced by the cost of doing business, the cost of land, the cost of housing, and the cost of government, among many other factors. Crowded areas or those in which the federal and state governments own too much of the land will tend to have high land costs. Housing costs are a function of land costs, building codes which may be designed to force the hiring of local labor or to use expensive materials, zoning restrictions limiting home development, and building permit restrictions designed to slow growth. The cost of doing business varies greatly due to differing government policies on taxes and regulations, as well as Workmen's Compensation costs. Then government spending varies greatly and the more the government's spend, the higher the taxes.
Examining the map above, we find the Northeast and the Pacific Coast to be the highest cost of living areas. The lowest cost of living states tend to be between the Appalachian Mountains and the Rocky Mountains minus the northern tier of states. Illinois and Louisiana are also excluded. The heroically inexpensive states with their composite cost of living indices are:
Kentucky, 89.2
Tennessee, 89.5
Oklahoma, 90.1
Arkansas, 90.6
Texas, 91.0
Nebraska, 91.1
Kansas, 91.3
Missouri, 91.7
Georgia, 92.2
Mississippi, 92.3
The worst states are:
Hawaii, 165.6
DC, 139.9
California, 132.6
Alaska, 132.6
Connecticut, 130.2
New Jersey, 128.5
New York, 128.3
Maryland, 124.8
Rhode Island, 123.2
Vermont, 120.4
My state of Maryland is expensive, but then what do you expect of a Democrat state. On the other hand, I have family members living in Oklahoma and Kansas and they really do live much better on much less there than one can in Maryland. If you want Nanny State, all intrusive government, you must pay through the nose for it.
Examining the map above, we find the Northeast and the Pacific Coast to be the highest cost of living areas. The lowest cost of living states tend to be between the Appalachian Mountains and the Rocky Mountains minus the northern tier of states. Illinois and Louisiana are also excluded. The heroically inexpensive states with their composite cost of living indices are:
Kentucky, 89.2
Tennessee, 89.5
Oklahoma, 90.1
Arkansas, 90.6
Texas, 91.0
Nebraska, 91.1
Kansas, 91.3
Missouri, 91.7
Georgia, 92.2
Mississippi, 92.3
The worst states are:
Hawaii, 165.6
DC, 139.9
California, 132.6
Alaska, 132.6
Connecticut, 130.2
New Jersey, 128.5
New York, 128.3
Maryland, 124.8
Rhode Island, 123.2
Vermont, 120.4
My state of Maryland is expensive, but then what do you expect of a Democrat state. On the other hand, I have family members living in Oklahoma and Kansas and they really do live much better on much less there than one can in Maryland. If you want Nanny State, all intrusive government, you must pay through the nose for it.
25 March 2011
Your Payment on the National Debt Interest
If you are employed, what is your share of the cost of the interest on the national debt? The national debt is presently $14,255,760,000,000. The interest paid in 2010 on the national debt was $413,954,825,362.17, according to the Treasury Department. [The White House claims the interest paid in 2010 was only $196 billion on a public debt of only $9.019 trillion, but we know how creative the Obama administration is in misinforming us.] In February 2011, the Bureau of Labor Statistics says 138,093,000 Americans were employed. The average debt interest payment per employed American is then $2997.65.
I sure am not making enough to be able to pay about $3,000 a year of interest payments on the national debt. Actually, I am not paying that much. There are a few rich people covering most of my share, I am sure. This will also be true for most readers. But, we should be asking ourselves if we have any business spending about $3,000 per employed person just to make interest payments. Don't you think we have a strong incentive here to greatly reduce government spending to the point we can pay down the national debt and reduce these incredibly high interest payments?
I sure am not making enough to be able to pay about $3,000 a year of interest payments on the national debt. Actually, I am not paying that much. There are a few rich people covering most of my share, I am sure. This will also be true for most readers. But, we should be asking ourselves if we have any business spending about $3,000 per employed person just to make interest payments. Don't you think we have a strong incentive here to greatly reduce government spending to the point we can pay down the national debt and reduce these incredibly high interest payments?
22 March 2011
The Hypocrisy of Democrat Caring - Inflation, Another of Many Examples
The Democrats always claim to care for the well-being of the poor and the middle class. When we examine this claim critically, all we see is hypocrisy and the maneuverings of flim-flam artists in most cases. Let us consider another such case.
When faced with a recession brought on by a spike in oil prices which then burst the housing and credit bubbles, the Democrats produced a huge porkulus bill to funnel more than $800 billion preferentially to their political followers, mostly overblown state and local governments, crony big business merchantilists, labor unions, trial lawyers, environmentalists, and community organizers. This was a huge transfer of money from the productive private sector to the non-productive government sector and away from the jobs-producing small businesses of the free market. The Democrats further restricted the free market with ObamaCare, so-called financial reform favoring big Wall Street firms over banks and financial companies of a smaller scale, threatened and real tax increases, cutbacks in coal mining and oil and gas extraction, and increased regulation burdens, especially by the EPA. Job loss was quick to follow. In December 2008, we lacked 15,287,000 jobs and by February 2011 we lack 23,108,000 jobs. The Democrat control of the House, Senate, and White House quickly added a loss of 7,821,000 jobs, which was added to the 4,254,000 jobs lost in the second year they controlled the House and Senate in 2008. The under-educated and low-skilled people the Democrats always claim as their own and to be so close to their hearts, were preferentially found among those now without a job. The Democrats could not have done a better job of targeting them for grief and deprivation.
Also in keeping with Keynesian economic theory, long known to be balderdash, but much beloved by governments always looking for reasons to spend more money, the Democrats increased the money supply hugely. Once that is done, avoiding a future bout of price increases is very nearly impossible. Cutting back on the growth rate of the money supply, once the economy begins to respond to having increased cash, but decreased saving and investment values due to dilution, becomes painful to many. Among the many who cannot cut back are the governments themselves. To spend so much, they create huge new debt and that debt has to be financed. Presently, the Federal Reserve Bank is buying 70% of U.S. Treasury notes! Without a fundamental change in spending policies by the government, which it is clearly loathe to do given the unwillingness to reduce spending by even $60 billion in the face of a deficit for 2011 of about $1,600 billion, the Federal Reserve Bank will be the only buyer of U.S. Treasury notes for a long time. They will lighten that obligation by causing inflation, so the debt becomes less burdensome over time. This is a favorite way for governments to effectively tax the people, without having to pass a tax increase.
This has further consequences for those who are poor, out of a job, on fixed income, or are in the middle class. Let us examine the consumer price index trends we are now seeing clearly:
Since July 2010, there have been only increases in consumer costs. These increases are given in terms of annual rates so that adding the last 12 months given adds to 2.0%, but round-off loses 0.1% of the total 2.1% increase over the last 12 months. The alarming message is that zeroes and negative numbers have been replaced since July with large numbers. The average monthly increase since July has been 0.2875. Projecting that alone forward would give us a consumer price index (CPI) increase from July 2010 through June 2011 of 3.45%. Still more alarming is the fact that the trend is actually upward over that time. It is more realistic to project at least a 4% increase in the CPI for this period. Such an increase generates further uncertainty which will make businesses more reluctant to add employees.
These increases have been led by increased food costs and fuel costs. Food and fuel costs are particularly difficult for the poor, those on fixed incomes, and even middle class families to bear. As we know, medical costs continue their high rate increases, accelerated by ObamaCare. The hardship is increased when many more people are unemployed. In 2009, the median U.S. inflation-adjusted household income fell 0.7% from 2008. It is estimated that the median inflation-adjusted household income in 2010 was down by 1.0% compared to 2008. Income has been going down and now prices, especially unavoidable ones such as food and fuel prices, are going up at a great clip.
Democrats, this is really the way to show how much you care for the poor and the middle class! Your slip is definitely showing. No, that would be much too nice. That can happen to anyone, or at least any woman. No, you are clearly revealed for the con artists you are. You cannot put this flim-flam game over on the American people for long. Surely they will catch on. A 5% decrease in the ability to purchase goods and services (4% CPI increase, 1% income decrease) is hardly likely to go unnoticed. Your snake oil is not working and sick Americans are going to notice they are becoming sicker. You had better hightail it out of town, you flim-flam Democrat con men and women! This is pure shades of Jimmy Carter replayed and the hopey-changey misdirection magic is not working anymore.
When faced with a recession brought on by a spike in oil prices which then burst the housing and credit bubbles, the Democrats produced a huge porkulus bill to funnel more than $800 billion preferentially to their political followers, mostly overblown state and local governments, crony big business merchantilists, labor unions, trial lawyers, environmentalists, and community organizers. This was a huge transfer of money from the productive private sector to the non-productive government sector and away from the jobs-producing small businesses of the free market. The Democrats further restricted the free market with ObamaCare, so-called financial reform favoring big Wall Street firms over banks and financial companies of a smaller scale, threatened and real tax increases, cutbacks in coal mining and oil and gas extraction, and increased regulation burdens, especially by the EPA. Job loss was quick to follow. In December 2008, we lacked 15,287,000 jobs and by February 2011 we lack 23,108,000 jobs. The Democrat control of the House, Senate, and White House quickly added a loss of 7,821,000 jobs, which was added to the 4,254,000 jobs lost in the second year they controlled the House and Senate in 2008. The under-educated and low-skilled people the Democrats always claim as their own and to be so close to their hearts, were preferentially found among those now without a job. The Democrats could not have done a better job of targeting them for grief and deprivation.
Also in keeping with Keynesian economic theory, long known to be balderdash, but much beloved by governments always looking for reasons to spend more money, the Democrats increased the money supply hugely. Once that is done, avoiding a future bout of price increases is very nearly impossible. Cutting back on the growth rate of the money supply, once the economy begins to respond to having increased cash, but decreased saving and investment values due to dilution, becomes painful to many. Among the many who cannot cut back are the governments themselves. To spend so much, they create huge new debt and that debt has to be financed. Presently, the Federal Reserve Bank is buying 70% of U.S. Treasury notes! Without a fundamental change in spending policies by the government, which it is clearly loathe to do given the unwillingness to reduce spending by even $60 billion in the face of a deficit for 2011 of about $1,600 billion, the Federal Reserve Bank will be the only buyer of U.S. Treasury notes for a long time. They will lighten that obligation by causing inflation, so the debt becomes less burdensome over time. This is a favorite way for governments to effectively tax the people, without having to pass a tax increase.
This has further consequences for those who are poor, out of a job, on fixed income, or are in the middle class. Let us examine the consumer price index trends we are now seeing clearly:
Since July 2010, there have been only increases in consumer costs. These increases are given in terms of annual rates so that adding the last 12 months given adds to 2.0%, but round-off loses 0.1% of the total 2.1% increase over the last 12 months. The alarming message is that zeroes and negative numbers have been replaced since July with large numbers. The average monthly increase since July has been 0.2875. Projecting that alone forward would give us a consumer price index (CPI) increase from July 2010 through June 2011 of 3.45%. Still more alarming is the fact that the trend is actually upward over that time. It is more realistic to project at least a 4% increase in the CPI for this period. Such an increase generates further uncertainty which will make businesses more reluctant to add employees.
Democrats, this is really the way to show how much you care for the poor and the middle class! Your slip is definitely showing. No, that would be much too nice. That can happen to anyone, or at least any woman. No, you are clearly revealed for the con artists you are. You cannot put this flim-flam game over on the American people for long. Surely they will catch on. A 5% decrease in the ability to purchase goods and services (4% CPI increase, 1% income decrease) is hardly likely to go unnoticed. Your snake oil is not working and sick Americans are going to notice they are becoming sicker. You had better hightail it out of town, you flim-flam Democrat con men and women! This is pure shades of Jimmy Carter replayed and the hopey-changey misdirection magic is not working anymore.
19 March 2011
Third-World Property Rights in California
California is well-known for its high taxes, high deficits, never-ending regulations, its coddled government employees, its poor schools despite spending twice the national average per student, its building restrictions and high property costs, its high level of domestic out-migration to other states, and its third-world property rights. California is one of the states that still allows governments to seize private property for private use virtually without restriction. National outrage following the Supreme Court decision to allow New London, Connecticut to seize the Kelo home and neighborhood for proposed private use brought reforms in many states and local governments to reign in such abuse of property rights recognized in our Constitution. The land seized from its rightful owners in the Kelo case is now a vacant wasteland. Similar vacant wastelands have resulted in troubled California owing to similar eminent domain abuse of private property for private, connected company gain.
Third-world property rights are one of the worst impediments to economic growth and the standard of living in third-world countries. California, with all its woes, has opted for property rights uncertainty to replicate those destructive effects upon ownership and investment right here in our most populated state. Tim Cavanaugh gave some examples at reason.com:
The Institute for Justice and some brave would-be victims have something to say about that however:
You can read more about this worthy case here. Please consider becoming a supporter of the Institute for Justice while you are there.
Third-world property rights are one of the worst impediments to economic growth and the standard of living in third-world countries. California, with all its woes, has opted for property rights uncertainty to replicate those destructive effects upon ownership and investment right here in our most populated state. Tim Cavanaugh gave some examples at reason.com:
But the acres of south Los Angeles wasteland generated by the Community Redevelopment Agency of Los Angeles (CRA/LA), the state’s largest and wealthiest RDA, are a grim testament to failure. The agency’s Normandie 5 Redevelopment Project has generated zero development. Its 107-acre Watts Project area, which has been in effect since 1968, boasts nothing but a Food 4 Less that hardly required government help to come into being. The massive $163 million Marlton Square project has stagnated, unbuilt, for nearly 20 years as a shady developer with friends in City Hall looted taxpayer funds. The two-block project area at the corner of Vermont and Manchester Avenues is a vacant lot. So is the long-fallow Central/Slauson project, where the CRA used eminent domain to shut down a metal works that was the only functioning business in the area.He also notes that the people attracted to such government property seizure schemes are not the best people:
Maybe the most important factor is the tendency of public-private partnerships to attract the worst elements of society: union goons, neighborhood activists, reverends, public-trough developers, political appointees, city planners, and so on. The Marlton Square project came close to breaking ground in 1999 under the legendary Lakers point guard and successful developer Magic Johnson—until itinerant local politician Mark Ridley-Thomas forced Magic out and turned the project over to a developer with a history of bouncing checks and cheating on his taxes, who went on to make millions of city dollars vanish before going bankrupt.One of the more notable characteristics of these ignoble schemes is that they usually victimize the poor or the lower middle class for the comfort and profit of unscrupulous well-off people with good connections to government. Fortunately, these would-be victims have a resolute champion in the Institute for Justice, which is making a point of becoming a nemesis for such low-life dispossession in the rascal-ridden state of California. An example of the work the Institute for Justice does is its defense of a community youth athletic center against the out-of-control use of eminent domain by National City near San Diego. A cavalier declaration of blight has been issued to 700 properties so that the city can exercise eminent domain over any of the properties over the next ten-year period. The property owners must successfully fight off the blight rulings within a limited time to save their property from some potential exercise of the eminent domain claim in later years. This means considerable expense and effort to prevent the loss of their property which may or may not happen. This arrangement is a most cunning way to cause many property owners to fail to get the blight ruling overturned, especially when they are people of limited financial resources. This is a plague upon the unwealthy for the future benefit of unscrupulous wealthy developers.
The Institute for Justice and some brave would-be victims have something to say about that however:
You can read more about this worthy case here. Please consider becoming a supporter of the Institute for Justice while you are there.
05 March 2011
The Ships That Won't Go Down
A friend sent this poem to me. I like it.
The Ships That Won't Go Down
by Henry Lawson (1898)
We hear a great commotion
'Bout the ship that comes to grief,
That founders in mid-ocean,
Or is driven on a reef;
Because it's cheap and brittle
A score of sinners drown.
But we hear but mighty little
Of the ships that won't go down.
Here's honour to the builders –
The builders of the past;
Here's honour to the builders
That builded ships to last;
Here's honour to the captain,
And honour to the crew;
Here's double-column headlines
To the ships that battle through.
They make a great sensation
About famous men that fail,
That sink a world of chances
In the city morgue or gaol,
Who drink, or blow their brains out,
Because of "Fortune's frown".
But we hear far too little
Of the men who won't go down.
The world is full of trouble,
And the world is full of wrong,
But the heart of man is noble,
And the heart of man is strong!
They say the sea sings dirges,
But I would say to you
That the wild wave's song's a paean
For the men that battle through.
by Henry Lawson (1898)
We hear a great commotion
'Bout the ship that comes to grief,
That founders in mid-ocean,
Or is driven on a reef;
Because it's cheap and brittle
A score of sinners drown.
But we hear but mighty little
Of the ships that won't go down.
Here's honour to the builders –
The builders of the past;
Here's honour to the builders
That builded ships to last;
Here's honour to the captain,
And honour to the crew;
Here's double-column headlines
To the ships that battle through.
They make a great sensation
About famous men that fail,
That sink a world of chances
In the city morgue or gaol,
Who drink, or blow their brains out,
Because of "Fortune's frown".
But we hear far too little
Of the men who won't go down.
The world is full of trouble,
And the world is full of wrong,
But the heart of man is noble,
And the heart of man is strong!
They say the sea sings dirges,
But I would say to you
That the wild wave's song's a paean
For the men that battle through.
Thanks Paul.
No Improvement in Employment, Recession Continues Unabated
Do not be encouraged by the announced falling unemployment rates. These are only informing us that the prospects for finding a job have been so bad so long that the unemployed have either given up on hunting for a job or the government has decided to assume that they no longer want a job.
As I have done many times before, we can calculate the number of jobs that people would want if the economy were robust and offering plenty of good jobs. It is not doing this due to the huge increases of wealth transfer from the private sector to the government sector throughout the first decade of this century and the many, many tens of thousands of federal, state, and local regulations which are strangulating businesses and preventing the formation of new businesses. When the situation was better in the late 1990s after the supply-side economics efforts from 1981 on had time to work their magic, many people wanted to work in desired jobs and the unemployment rate was very low. In January 2000, 67.49% of the total non-institutional working age population was either working, looking for work, or transitioning from one job to another. Our working age population has grown since then by more than 30 million people. We can estimate the number of jobs that would be desired now based on the 67.49% who wished to have a job in January 2000. I know of no fundamental reason why people would not be as eager to work now, if only good jobs were available.
Once we determine how many jobs would be wanted by this criterion, we can subtract the number of jobs actually held by Americans now. The resulting number is the number of missing jobs. This number of missing jobs is a great measure for the health of the economy, just as the GDP is also. The GDP has been improving somewhat for some time in this Great Socialist Recession thanks to productivity improvements per worker, but as we will see, job creation is more dismally deficient than we are led to believe.
Let me provide the job numbers for January and February employment and unemployment before we go on. The numbers in the table below are from the latest Bureau of Labor Statistics report or earlier reports. The table does not use seasonal adjustments. These are the actual numbers of people employed and unemployed.
The unemployment rate, using numbers not adjusted seasonally, was 9.8% in January and 9.5% in February. This is not as good as 8.9%, the seasonally adjusted unemployment rate. The real story is much worse than this. In December, we had 22.067 million missing jobs, which we can compare to only 5.689 million missing jobs in January 2000. Some sizable fraction of the January 2000 unemployed were probably briefly between jobs as they switched from one job to another, so this actually slightly overstates the number of missing jobs then. The job market was so good, people were then changing jobs frequently. In January 2011, the missing jobs rose to 23.5 million and we saw a small improvement in February to a mere 23.1 million missing jobs. The percentage of missing jobs is actually 14.3% now. That is much worse than the 8.9% unemployment rate we are told by the government and the media. Of course, we also know that many people are also underemployed in addition to this appalling number.
To get a better sense of what the progress has been on job creation as the economy measured by the GDP has begun to improve, let us examine a graph of the number of missing jobs (given in thousands, making 1,000 jobs in thousands equal to 1 million jobs). This graph has a baseline of 20 million jobs, so no month in the time from November 2009 through February 2011 has as few as 20 million missing jobs:
We see that January and February of 2010 were awful months, but there was some job growth through July of 2010. Then the jobs situation became worse through the end of the year into January 2011. February 2011 shows a bit of improvement, but the economy is still missing more than 23 million jobs! If the Democrats had increased taxes as they wanted to before the voters convinced them in November 2010 that that would be suicide for their political careers, this missing jobs situation would certainly be worse. But, with the upcoming scheduled reduction of corporate tax rates in Japan, the U.S. will have the highest corporate tax rates in the developed world.
It is easy to make a huge difference in the number of jobs available to Americans. Right now, it makes more sense for companies to expand their operations overseas, close to their non-American customers and where the taxes and the environmental regulations are often less onerous. The Cato Institute just released a study entitled New Estimates of Effective Corporate Tax Rates on Business Investment. The effective tax rate on U.S. corporations is 34.6%, but it is only 18.6% for the average OECD nation. The average for 83 nations is even lower relative to the U.S. rate at 17.7%! Only an idiot can fail to see that this is a strong negative factor for the creation of U.S. jobs. Indeed, this is why major corporate tax rate reductions have been made in Canada, our largest trading partner. Canadian business is booming compared to the U.S. and generating more tax receipts for government as a result, thereby reducing the Canadian deficits. Over the last decade or a bit more, Austria, Bulgaria, the Czech Republic, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Poland, Slovakia, Turkey, Egypt, Georgia, Kazakhstan, Lesotho, Mauritius, and Singapore have made large corporate tax rate reductions. Australia, Belgium, China, Denmark, Finland, South Korea, Luxembourg, Mexico, New Zealand, Taiwan, and the United Kingdom made substantial corporate tax rate cuts also. Many of these countries are going to make further tax rate cuts.
Only the U.S. has been too dumb to stop penalizing companies for providing the goods, services, and jobs we want! The Democrats have actually raised the future effective corporate tax rate with provisions in ObamaCare and the Dodd-Frank financial reform bill. They raised the rate with the imposition of mandates to use expensive and unreliable "green energy" and will raise it more with anti-carbon regulations out of the errant EPA. On top of all that, before the November election, they wanted to raise the basic corporate tax rate. The Obama budget proposal for 2012 and beyond calls for tax increases of $650 billion. He wants to add $46 billion of taxes from oil companies, thereby preventing them from taking advantage of many new oil and gas finds in the U.S. to create new jobs and wealth. Actually, they probably will not be able to extract much more oil and gas anyway while Obama occupies the office of the president since he is allowing no leases to be sold. In addition, he plans to hit multinational corporations with an additional $129 billion of taxes. Such an anti-business climate makes the avowedly socialist countries of Europe look like better bets for expansion in too many cases. The Democrats talk about wanting to create jobs, but virtually every concrete proposal they make will kill jobs.
Investment in U.S. corporations is also blocked with high taxes on dividends. The owners of a corporation pay an effective tax of 34.6% prior to any dividends being issued and then pay an amount on ordinary dividends equal to their individual income tax bracket. Through 2012, that bracket may be 35%, making the total tax they pay on an ordinary dividend equal to an overall tax of 0.346 + (1 - 0.346)(0.35) = 0.5749 or 57.49%. This leaves little incentive for such investors. In 2013, the situation gets worse, since the Democrats want the highest income tax bracket rate to automatically go up to 39.6%, which will take the dividend rate along with it. Dumb and dumber.
Job creation is mostly the business of small business. The personal income tax rates strongly affect small businesses, since their profits are normally added to the income of individuals on their personal income tax returns. The same is true for many angel investors and the family members who invest in a relative's business when he starts one up. The risks in starting a small business are huge. Most go out of business within ten years. Those that succeed in generating profits, return less to their investors by virtue of the long-term capital gains tax. Through 2012, this has just been set at 15%, but it is scheduled to go up to 20% in 2013, unless the more economically savvy Republicans can pass legislation opposed by Obama and the Democrat Senate before then. Meanwhile, no one can undertake a long-term investment without assuming that any success will be taxed at the 20%, not the present 15%, capital gains tax.
One of the most important requirements of good tax laws is that businessmen should be able to count on their tax rates not going up. When tax rates go up, they turn calculations that justify an investment of money and years of work into failures. Wealth and jobs are lost as a result. Even the threat of a tax increase causes proposed investments to be tossed out as excessively risky and it can cause somewhat marginal businesses to be closed down early. Most businesses have a learning curve in which the owner messes up and has a number of close calls with failure and bankruptcy. Many wildly successful businesses had such close calls in their infancy. Every time a tax burden or a regulatory burden is added for a young business, that business may be pushed over the cliff. We cannot calculate how many future successes are killed in this way. But, we do see that countries with lower tax and regulatory burdens on businesses do tend to have higher growth rates, generate more wealth, improve the living standards of both the poor and the wealthy, people live longer, there is less pollution, and they have lower unemployment rates.
This picture is so clear that it is evidence of a strong idiocracy in academia, the political class, and most of the media. Idiocracy is my word for persistent wrongheadedness in the face of a multitude of evidence to the contrary often subscribed to by otherwise intelligent people. The word is applied most frequently to college indoctrinated Progressive Elitists. They have worked very diligently to produce the Great Socialist Recession and to maintain our economy in a jobless state.
As I have done many times before, we can calculate the number of jobs that people would want if the economy were robust and offering plenty of good jobs. It is not doing this due to the huge increases of wealth transfer from the private sector to the government sector throughout the first decade of this century and the many, many tens of thousands of federal, state, and local regulations which are strangulating businesses and preventing the formation of new businesses. When the situation was better in the late 1990s after the supply-side economics efforts from 1981 on had time to work their magic, many people wanted to work in desired jobs and the unemployment rate was very low. In January 2000, 67.49% of the total non-institutional working age population was either working, looking for work, or transitioning from one job to another. Our working age population has grown since then by more than 30 million people. We can estimate the number of jobs that would be desired now based on the 67.49% who wished to have a job in January 2000. I know of no fundamental reason why people would not be as eager to work now, if only good jobs were available.
Once we determine how many jobs would be wanted by this criterion, we can subtract the number of jobs actually held by Americans now. The resulting number is the number of missing jobs. This number of missing jobs is a great measure for the health of the economy, just as the GDP is also. The GDP has been improving somewhat for some time in this Great Socialist Recession thanks to productivity improvements per worker, but as we will see, job creation is more dismally deficient than we are led to believe.
Let me provide the job numbers for January and February employment and unemployment before we go on. The numbers in the table below are from the latest Bureau of Labor Statistics report or earlier reports. The table does not use seasonal adjustments. These are the actual numbers of people employed and unemployed.
The unemployment rate, using numbers not adjusted seasonally, was 9.8% in January and 9.5% in February. This is not as good as 8.9%, the seasonally adjusted unemployment rate. The real story is much worse than this. In December, we had 22.067 million missing jobs, which we can compare to only 5.689 million missing jobs in January 2000. Some sizable fraction of the January 2000 unemployed were probably briefly between jobs as they switched from one job to another, so this actually slightly overstates the number of missing jobs then. The job market was so good, people were then changing jobs frequently. In January 2011, the missing jobs rose to 23.5 million and we saw a small improvement in February to a mere 23.1 million missing jobs. The percentage of missing jobs is actually 14.3% now. That is much worse than the 8.9% unemployment rate we are told by the government and the media. Of course, we also know that many people are also underemployed in addition to this appalling number.
To get a better sense of what the progress has been on job creation as the economy measured by the GDP has begun to improve, let us examine a graph of the number of missing jobs (given in thousands, making 1,000 jobs in thousands equal to 1 million jobs). This graph has a baseline of 20 million jobs, so no month in the time from November 2009 through February 2011 has as few as 20 million missing jobs:
We see that January and February of 2010 were awful months, but there was some job growth through July of 2010. Then the jobs situation became worse through the end of the year into January 2011. February 2011 shows a bit of improvement, but the economy is still missing more than 23 million jobs! If the Democrats had increased taxes as they wanted to before the voters convinced them in November 2010 that that would be suicide for their political careers, this missing jobs situation would certainly be worse. But, with the upcoming scheduled reduction of corporate tax rates in Japan, the U.S. will have the highest corporate tax rates in the developed world.
It is easy to make a huge difference in the number of jobs available to Americans. Right now, it makes more sense for companies to expand their operations overseas, close to their non-American customers and where the taxes and the environmental regulations are often less onerous. The Cato Institute just released a study entitled New Estimates of Effective Corporate Tax Rates on Business Investment. The effective tax rate on U.S. corporations is 34.6%, but it is only 18.6% for the average OECD nation. The average for 83 nations is even lower relative to the U.S. rate at 17.7%! Only an idiot can fail to see that this is a strong negative factor for the creation of U.S. jobs. Indeed, this is why major corporate tax rate reductions have been made in Canada, our largest trading partner. Canadian business is booming compared to the U.S. and generating more tax receipts for government as a result, thereby reducing the Canadian deficits. Over the last decade or a bit more, Austria, Bulgaria, the Czech Republic, Germany, Greece, Iceland, Ireland, Italy, Netherlands, Poland, Slovakia, Turkey, Egypt, Georgia, Kazakhstan, Lesotho, Mauritius, and Singapore have made large corporate tax rate reductions. Australia, Belgium, China, Denmark, Finland, South Korea, Luxembourg, Mexico, New Zealand, Taiwan, and the United Kingdom made substantial corporate tax rate cuts also. Many of these countries are going to make further tax rate cuts.
Only the U.S. has been too dumb to stop penalizing companies for providing the goods, services, and jobs we want! The Democrats have actually raised the future effective corporate tax rate with provisions in ObamaCare and the Dodd-Frank financial reform bill. They raised the rate with the imposition of mandates to use expensive and unreliable "green energy" and will raise it more with anti-carbon regulations out of the errant EPA. On top of all that, before the November election, they wanted to raise the basic corporate tax rate. The Obama budget proposal for 2012 and beyond calls for tax increases of $650 billion. He wants to add $46 billion of taxes from oil companies, thereby preventing them from taking advantage of many new oil and gas finds in the U.S. to create new jobs and wealth. Actually, they probably will not be able to extract much more oil and gas anyway while Obama occupies the office of the president since he is allowing no leases to be sold. In addition, he plans to hit multinational corporations with an additional $129 billion of taxes. Such an anti-business climate makes the avowedly socialist countries of Europe look like better bets for expansion in too many cases. The Democrats talk about wanting to create jobs, but virtually every concrete proposal they make will kill jobs.
Investment in U.S. corporations is also blocked with high taxes on dividends. The owners of a corporation pay an effective tax of 34.6% prior to any dividends being issued and then pay an amount on ordinary dividends equal to their individual income tax bracket. Through 2012, that bracket may be 35%, making the total tax they pay on an ordinary dividend equal to an overall tax of 0.346 + (1 - 0.346)(0.35) = 0.5749 or 57.49%. This leaves little incentive for such investors. In 2013, the situation gets worse, since the Democrats want the highest income tax bracket rate to automatically go up to 39.6%, which will take the dividend rate along with it. Dumb and dumber.
Job creation is mostly the business of small business. The personal income tax rates strongly affect small businesses, since their profits are normally added to the income of individuals on their personal income tax returns. The same is true for many angel investors and the family members who invest in a relative's business when he starts one up. The risks in starting a small business are huge. Most go out of business within ten years. Those that succeed in generating profits, return less to their investors by virtue of the long-term capital gains tax. Through 2012, this has just been set at 15%, but it is scheduled to go up to 20% in 2013, unless the more economically savvy Republicans can pass legislation opposed by Obama and the Democrat Senate before then. Meanwhile, no one can undertake a long-term investment without assuming that any success will be taxed at the 20%, not the present 15%, capital gains tax.
One of the most important requirements of good tax laws is that businessmen should be able to count on their tax rates not going up. When tax rates go up, they turn calculations that justify an investment of money and years of work into failures. Wealth and jobs are lost as a result. Even the threat of a tax increase causes proposed investments to be tossed out as excessively risky and it can cause somewhat marginal businesses to be closed down early. Most businesses have a learning curve in which the owner messes up and has a number of close calls with failure and bankruptcy. Many wildly successful businesses had such close calls in their infancy. Every time a tax burden or a regulatory burden is added for a young business, that business may be pushed over the cliff. We cannot calculate how many future successes are killed in this way. But, we do see that countries with lower tax and regulatory burdens on businesses do tend to have higher growth rates, generate more wealth, improve the living standards of both the poor and the wealthy, people live longer, there is less pollution, and they have lower unemployment rates.
This picture is so clear that it is evidence of a strong idiocracy in academia, the political class, and most of the media. Idiocracy is my word for persistent wrongheadedness in the face of a multitude of evidence to the contrary often subscribed to by otherwise intelligent people. The word is applied most frequently to college indoctrinated Progressive Elitists. They have worked very diligently to produce the Great Socialist Recession and to maintain our economy in a jobless state.