Continued References to Economic Recovery Are Weird

Fewer Americans were employed in December 2013 than were employed in either December 2006 or December 2007.  The percentage of non-institutionalized adults employed both in December 2012 and December 2013 was far lower than in December 2006 and December 2007.

 Over and over we hear that the economy is recovering, albeit slowly.  We have heard this throughout 2012 and 2013.  But note that the percentage of working age Americans employed in December 2011, 2012, and 2013 has been stuck at 58.6%.  This is 4.8% below the employment percentage of December 2006, which was just before the sudden cost of oil increase in early 2007 and before the subsequent financial crisis in 2008.

This is an incredible degree of employment stagnation.  Yes, 58.6% is above the low 58.2% of December 2009, but the 0.4% increase relative to that low point is only a fraction of the total December 2009 loss relative to December 2006 of 0.4% / 5.2% = 0.077.  In other words, for all intents and purposes, from 2009 through 2013 the employment situation has been essentially unchanged and awful.

We need to have 11.843 million more jobs to have the same percentage employment we had in December 2006.  Because of the big government policies of George W. Bush prior to Obama, that December 2006 employment percentage was already lower than it had been in December 1999.  Our jobs stagnation problem actually began at the start of this century.

Apparently a government jobs program, consisting of

• bailouts, 
• stimulus programs, 
• Food Stamp increases,
• Social Security Disability increases,
• Extended Unemployment Benefits, 
• ObamaCare, 
• Dodd-Frank and other financial regulations,
• Tax increases,
• Increased fossil fuel sourced energy costs (recently moderated by shale oil and gas increased production on private lands, while extensive federal land and off-shore oil and gas were denied development), and
• Subsidized so-called green energy,

has not been very effective in increasing employment.

But then a program to take people out of the private sector workforce, to transfer money from the private sector to the government sector, and to limit the options of the private sector's entrepreneurs and consumers could have no other outcome.  It is not as though this sort of program has not been tried before and been found to fail disastrously.  But those who believe in the efficacy of big government will not learn from history.

As a result, we have had at least 5 years of a jobs depression.  Given Obama's wrongheadedness and pigheadedness, we are likely to see this continue for at least another 4 years.  Four years being 3 more years of Obama and one year for a more rational and less abusive President to return control of the economy to the private sector.

Everything in the Democrat Economic Central Planning Arsenal is a Dud

The government told us the GDP growth rate in the first quarter was 1.8%, which is not a healthy growth rate at any time and is especially weak if an economy is recovering from a recession.  In May, the government increased that reported first quarter growth rate to 1.9%.  This was still not good, but it seemed to leave the door open to optimism that while recovery was slower than in other recessions, it would occur.  Then, the bottom fell out.  The first quarter GDP growth was revised downward to 0.4% and the second quarter GDP growth was said to be an anemic 1.3%, which has just been revised down to 1.0%.

Jobs growth is not keeping up with the growth in population.  The annual Consumer Price Index (CPI) stands at 3.6% and is running much higher in the last half year.  The average American worker workweek decreased by 0.1 hours and earnings fell by $0.03, which is no way to keep up with the inflation.  Labor productivity has very unusually been falling lately as well.  These factors bode ill for further hiring.

The rest of the world economy is not in good shape either, so there is no chance that exports will do much to change the bleak picture of the American economy.  The Purchasing Managers' Index (PMI), a measure of business purchasing activity, fell to a two-year low in August to 49.0.  Numbers below 50.0 mean contraction of business activity is going on.  Among the European countries with reduced activity are Great Britain, France, Spain, Italy, Ireland, and Greece.  The positive PMI's of Germany, Sweden, and Switzerland dropped.  The PMI of Japan is at a 3-month low and Taiwan's PMI is very negative at 45.2, its lowest value since January 2009.  Canada's GDP contracted, largely due to a 2.1% drop in exports.  The leading retailer in Australia expects falling sales.  China has a PMI on the edge of contraction and its exports to the U.S. have fallen.  The world economy is staggering.

In the U.S., the favorite Democrat central planning tools of stimulus spending and quantitative easing, or creating money from thin air, have not worked.  What a surprise!  Despite the GDP growth of the first half of the year being only 0.7%, the White House is telling us that GDP growth for the year will be 1.7%.  Wow, what a howler that is!  This means they are predicting growth in the second half of this year at an annual rate of 2.7%.  I suppose they think that growth will occur because businessmen and consumers are trusting that Obama's speech on his economic recovery plans this week will solve all of our problems!  For that to be so, all Americans would have to regress to the point that they believed that he could stop the oceans from rising and cure all of the diseases of the world, as many did when they first voted for him.  I think many even of those favorable voters have learned something since!  Even if that were the case, that growth which has not been evident through August, would have to occur entirely in the last 4 months of the year.

Let us examine a few issues with the stimulus approach loved by socialists.  The CBO, not really a very reliable source, recently released a report saying that the $787 billion American Reinvestment and Recovery Act has really cost us a $825 billion increase in debt.  They claim that they cannot figure out how many jobs were created by it, but it was somewhere between 1.4 million and an unbelievably generous 4 million.  I do not think they seriously try to estimate the number of jobs lost due to the bill.  So let us divide $825 billion by 1.4 million jobs and we find each job cost $589,300.  While some investment is needed to create meaningful jobs, that is enough money to pay someone the median income of $46,300 for 12.7 years!  I could readily provide several scientists with jobs with that amount of money, but the federal government is always incompetent and inefficient!  While I do not believe there is even a 1% chance that the stimulus bill created 4 million jobs, even if it did, each job would have cost $206,250 which would have allowed me to provide at least 1.5 long-term new jobs in my laboratory instead of a mythical job.

The CBO report claims that printing up $0.825 trillion in a $15 trillion economy added between 0.8% and 2.5% to the GDP in real, inflation-adjusted growth.  Printing this amount of money diluted the value of all money by at least 5.5% since 0.825/15 = 0.055.  One could argue that the dilution of money value is proportional to the smaller value of money in circulation, making the dilution much greater than this.  The act of printing that money did nothing to add to productivity so its effects upon production are transitory.  Worse yet, that monetary dilution devalued all property, including the already depressed housing market, and all commodities, such as oil, cotton, corn, wood, and metals.  Despite these huge negative effects, the CBO tells us that the expenditure increased the GDP by something in the range from 0.8% to a totally unbelievable 2.5%.  Well, this is another instance of the very bad track record of the CBO showing its lack of understanding of economics or its adherence to rules which do not correspond to reality.

The CBO then goes on to say that direct government purchases of goods and services have a multiplier effect of 1.0 to 2.5 for every dollar spent!  Well that is very interesting.  If that were so then the stimulus bill expenditure of $825 billion would have increased the GDP by between 5.5% and 13.75%!  Clearly, direct expenditures by government have no advantageous multiplier effect.  In fact, we can calculate the effect from their own numbers for the GDP growth they claim for the stimulus bill.  0.8/5.5 = 0.145 for the lower bound multiplier and the upper bound multiplier would be 2.5/5.5 = 0.45.  These calculated multipliers ranging from 0.14 to a clearly too high 0.45 are way below 1.0, which is more like what one expects from an incompetent and inefficient government with no real interest in human productivity.

Alan Reynolds, an unusually insightful economist, has written an excellent article entitled The Fed vs. the Recovery, which first appeared in the Wall Street Journal on 26 August 2011.  It is on the CATO Institute website here.  He says:

In demand-side theorizing, monetary stimulus means the Fed buys more bonds. The Treasury has certainly been selling a lot of bonds, and the Fed has been buying (monetizing) a huge share of those bonds. That helped push the broad M2 money supply up at a 6.8% rate over the past six months. Yet the only thing we have to show for all that stimulus over the past year has been rapid inflation of producer prices and a simultaneous slowdown in the growth of the private economy. Consumer price inflation also accelerated to 5.2% in the first quarter and 4.1% in the second, from just 1.4% in the third quarter of 2010.

He notes that industrial supplies and materials account for 34.5% of our imported goods so far this year and capital equipment and parts add another 23% of imports.  Because of the second quantitative easing (QE2) which began in November 2010 and ended in June of 2011, the value of the dollar fell about 15% relative to the Euro.  The Economist's commodity-price index went up 50.9% in a year in dollars, but 22.8% in Euros.  Our import prices rose by a 15.1% annual rate and our export prices rose by an annual 11.4% over the last three quarters under QE2.  These effects reduced the growth of real GDP.

Alan Reynolds notes that

The net effect was to reduce the profitability of manufacturing and distributing products in the United States, and therefore to shift such activities (and jobs) to other countries which were less handicapped by the dollar's weakness.

Fortunately for the S&P 500 companies, 46% for their sales came from other countries!  As a result, their operating earnings per share rose from $20.40 a year earlier to $24.86 by June 2011.  Thanks to our government's policy of printing money, this did most Americans little good.

One of the commodities whose price was driven up by QE2 with important and devastating consequences was that of oil.  As I have pointed out many times (thanks to reading Alan Reynolds), every postwar recession except that of 1960 has been triggered by a sudden increase in the price of oil. From August 2007 to July 2008 we had such an oil price spike as the value of the dollar fell and oil prices doubled.  We had another large oil price increase due to the dollar losing value from late August 2010 when Bernanke announced QE2 until the end of April 2011.  The price of oil increased from $72.91 to $112.30, an increase of 54%.  Just the price of oil increasing suddenly has a very negative impact on our economy.  This is aggravated by our refusal to allow reasonable increases in domestic production, which makes us more vulnerable to fluctuations in the value of the dollar relative to other currencies.

Both the Stimulus and the Quantitative Easing efforts have depressed the growth of the GDP and resulted in giving companies every incentive to hire aboard and every disincentive for hiring at home.  Meanwhile, the regulatory, tax, anti-business, promotion of labor cost increases, and anti-energy policies and rhetoric of the Obama cabal has been added to the wrongheaded policies of the Federal Reserve to put us into a never-ending recession.

The Obama Jobs Catastrophe Continues in June

Once again this June's unemployment numbers, offer no indication that the very high employment rates of the last three and a half years are abating or improving.  Despite the wild-eyed claims of the Obama administration, the Stimulus Bills and the drunken spending of the federal government over this period has resulted in no jobs growth improvements.  Combining these wasteful transfers of wealth from the private sector to the control of the government with the expenses and uncertainties of ObamaCare, the Dodd-Frank finance reform bill, the concerted efforts to force us to go abroad more and more for oil and gas while leaving extensive fields undeveloped at home and rejecting Canadian offers of tar sand oil, the efforts to bankrupt all of the coal-fired electric plants, the increased threat of anti-trust lawsuits, the developed world's highest corporate tax rate, a Justice Department bent only upon injustice, mandates for the use of unreliable and very expensive energy at unattainable levels in the near future, and myriad other anti-business and anti-earning-a-living efforts, has had just the impact on employment anyone not brain-dead would expect.

The employment numbers for June 2011 are shown in the table below based on the more job-inclusive household survey data, which is not here seasonally adjusted.  The Jun 2011 data is best compared to the July 2010 data to see if there has been any improvement in jobs creation over the past year under Obama's watch.

In making that comparison, the unemployment rate seems to have fallen from 13.75% in July 2010 to the June 2011 rate of 9.32%.   Unfortunately, this is only because many more people have given up on finding employment in that time.  It is more significant to note that 140,134,000 people were employed full-time in July 2010, while only 140,129,000 were employed in June 2011.  This is an actual decrease in the number of Americans employed by 5,000.  That is not a significant decrease, unless you take it in the context that the civilian working age population increased by 1.6 million people in that time!  A stagnant economy at least creates jobs enough to employ those of the growing population who want to work.  The effects of the socialist policies to remove vast wealth and decision-making power from the private sector to the government have produced an economy that cannot even keep up with population growth, let alone actually make progress on recovering from the Great Socialist Recession.

Based on January 2000 when the economy was robust and the existence of good jobs enticed many Americans to take jobs and the unemployment rate was a meaningful 4.0%, we can calculate how many jobs we would need now to have a similar good job economy.  The number of missing jobs now is 21,502,000, which is 1,084,000 more missing jobs than in July 2010.  One would have to say that Obama's so-called effort to "create jobs" is actually a job-destruction effort, which is very effective in doing that.  After any normal recession, the private sector makes adjustments and comes roaring back.  Obama has strangled the lion's roar.

An unemployment rate of 13.3% based on the number of missing jobs is a much more realistic unemployment rate than the 9.2% rate given by the Bureau of Labor Statistics of the Obama administration.  To that we have to add the 8.9 million employed only part time for economic reasons, according to the BLS.  They want full-time jobs, but cannot find them.  This makes a full-time job shortage of at least 18.8%. This still does not count the many millions of Americans working at jobs for which they are educationally and by experience over-qualified.

As has been historical demonstrated over and over, socialism is a disaster for people who want to earn a decent living, over and above the value many of us attach to our liberties and other aspects of being able to manage our own lives.

The Hidden Grimness of the State Unemployment Numbers

The government's Bureau of Labor Statistics (BLS) has released the state by state unemployment figures for May 2011 and compared them to May 2010.  In the 15 states they reported a significant change in jobs, they reported lower unemployment rates.  Changes in jobs in the other 35 states were not significant according to the BLS and will not be discussed here.  A critical review of the numbers shows this interpretation of the unemployment situation to be the work of flim-flam artists. 

Perhaps this should not surprise us in view of the control over the Dept. of Labor exercised by labor unions and the partisanship widely on the loose in the Obama administration.  The reality of the state by state review here is a grim one, but one with some useful information for job seekers.  Of course this analysis is also important for anyone deceived by the impression that the jobs situation is slowly improving.  It is actually getting worse.  At the national level I showed this to be the case here, noting that there are 693,000 more missing jobs in May 2011 than there were in May 2010.  There is no job creation adequate to keep up with the population growth of the nation.

The BLS reported that 665,400 more people were employed in May 2011 compared to May 2010 in these 15 states.  They reported that 87,300 more people were employed in California in May 2011 than in May 2010.  They used seasonally adjusted job numbers, but that should not matter given that they were comparing a May to a May.  I decided to check whether the same result would be found using the Work Force numbers and the Unemployed numbers which were not seasonally adjusted.  Since the Work Force is the sum of the Employed and the Unemployed (as recognized by the BLS), one can subtract the Unemployed from the Work Force and find the seasonally unadjusted Employed numbers for each state.  One wonders why the Employed numbers are not given directly if one expects transparency.  Transparency, much promised by Obama, is the last thing one gets from Obama and his followers.

So, what do we find for the jobs added in California over the last year?  We find that there are 40,100 fewer people employed, not 87,300 more people employed.  The state of Washington is another for which positive change in net jobs is reported as 19,600, but there was actually a loss of 32,100 jobs from May to May!  Overall, in the 15 states the BLS says added 665,400 jobs, only 333,100 were actually added.  This is almost exactly half the reported number of jobs added.  Of the 15 states reported to have lower unemployment, only 3 created as many jobs as the BLS said they did.  Examine the numbers in the table below:

The next to the last column provides the change in the Civilian Labor Force.  In any case in which the number is negative, people have either given up looking for employment or they have left the state, presumably for employment or in the hope of employment elsewhere.  In 9 of the 15 states in which Obama's BLS has claimed an improvement in the unemployment rate, this number is negative.  The only large positive number belongs to the state of Texas.  Nebraska's positive number is significant given the small population of the state.  But, note that California lost 149,500 people in its workforce, which means the situation in California is particularly grim.  The loss of 58,500 people in the workforce in Washington and of 76,600 in Michigan are also very grim signs.  Illinois, Pennsylvania, and Oklahoma also had large losses.  For the 15 states that supposedly had improvements in their unemployment rates, there was a net reduction in the civilian labor force of 247,000 people. 

Of course this could mean our population is shrinking, but that is most unlikely.  What it means in net is that people have given up on finding a job and the BLS no longer counts them in the workforce.  If they are no longer in the workforce, then they do not count in the calculation of the unemployment rate.  State by state, it could mean that people simply moved out of a state.  But if this list really has all of the states in it with statistically significant changes in jobs and they are all reported as positive changes, then it would be very odd of people to migrate to those states which are statistically known not to be creating jobs.  No, it is clear that the effect is that the unemployed have lost all Hope under the regime of this most hyped Hope President.

At this point, you might be thinking that the Obama administration just exaggerated the job additions by a factor of two, but there was still a bit of improvement in the job situation.  If so, you have missed a very important consideration.  From 2000 to 2010, our population grew at an average rate of 0.94% a year.  Assuming that each state on our list of 15 significant job growth states according to the BLS grew at the national average, each of those states would have to add 0.0094 times the number of employed people in May 2010 just to provide the jobs needed to keep up with the growing population.  I calculated that number in the last column.  California needed 150,196 added jobs to tread water, but it lost 40,100 jobs to fall behind by 190,296 jobs.  The state of Washington needed to add a net of 30,042, but it lost 32,100 to fall behind by a total of 62,142 jobs.  Failures such as these are why the jobs situation for the young is particularly awful.


Only 6 of the 15 states the BLS told us had an improving unemployment situation have created more jobs than they needed to to stay even with expected population growth.  They are, with the number of jobs they added above the number needed to accommodate average population growth:

Ohio, 21,807 jobs
Oregon, 16,076 jobs
Texas, 9,439 jobs
Nebraska, 4,480 jobs
North Dakota, 1,418 jobs
Wyoming, 38 jobs

It should be noted that Wisconsin almost met its goal to keep up with normal population growth.

First of all, noting that we were missing 21,484,000 jobs in May 2011, these six states creating more jobs than they need to keep up with population growth actually have very few jobs to meet the demand for jobs.  In addition, these states have their own unemployed.  But, if you are able to relocate to a state where the job situation is not hopeless, you may want to consider these states.  The North Dakota and Wyoming job markets are very small, so you should go to one of the top four states on the list baring unusual job preferences and skills.  Ohio and Oregon are somewhat surprising.  Everyone knows that Texas has been a job creator, but once you discount the false claim by the BLS that Texas created 205,400 jobs from May to May with the actual number of 114,300 jobs, the Texas phenomena is reduced to its being one of the few states to simply keep up with expected average population growth in job creation.

Now you can appreciate how truly ludicrous it is for Obama and his administration and his Democrat allies to make the claim that they are making progress on reducing the horrific unemployment.  It is their determined anti-business and anti-wealth-creation mindset that has kept us from recovering from this Great Socialist Recession and kept business from hiring.  Obama and those who share his socialist viewpoint have made a lifetime point of not understanding business and economics because they believe creating money is immoral.  But, earning money by offering others the values they want in the private sector is both moral and necessary.  The results of the Obama vendetta against people earning a livelihood have been brutal to the General Welfare in the extreme.  Not surprisingly, they do not want us to understand just how brutal they have been.

We must make every effort to remember these painful facts throughout this coming election cycle and work hard at explaining the reality to others.  If we are not successful, Obama and his Democrat allies will continue to wreck havoc on the People of the United States.

My 9/12 Protest Sign

My 9/12 Protest sign for the march from the Washington Monument to the Congress has two columns.  The first reads:

Read Ayn Rand!

Legitimate
Government:
•    Has Few Powers
•    Protects the Equal, Sovereign Rights of the Individual to Life, Liberty, Property, & the Pursuit of Happiness
•    Implied Individual Rights are Many
Individual Rights:
•    Constitutional Rights
•    Ownership of Body
•    Right to Earn a Living & Use Income
•    Freedom of Conscience
•    Freedom to be Left Alone & of Privacy
•    Freedom of Association
•    Individual Sexuality
•    Freedom to Trade
•    Freedom to Educate
•    Freedom to Hire


The second column reads:

Read Atlas Shrugged!

Illegitimate, Tyrannical Government:
•    Present Government
•    70% of Spending is Unconstitutional
•    Violates Individual Rights
•    Doesn’t Protect Rights Equally
•    ObamaCare Steals Your Body
•    Many Stimulus Plans Steal Your Income
•    Financial Controls Violate Freedoms of Trade, Contract, Hire
•    Coming CO2 Emissions Penalties are Pointless
•    Redistribution of Income is Immoral
•    Hates Enterprise & Self-Responsibility

Because there is a 60% chance of rain and it is raining now at 0430 hours, the sign is wrapped in thin clear plastic sheet.  It should hold up.  I hope many freedom-loving Americans will show up in a few hours, despite the rain!

Krauthammer - Obama's next act

Charles Krauthammer, in his column piece called Obama's Next Act, claims that almost everyone is underestimating Obama.  He says Obama has accomplished a huge part of his ideological goals.  He has

• "Irrevocably changed one-sixth of the economy" with ObamaCare and put the country inexorably on the road to national health care in a manner to bring about one of the most massive redistributions of wealth in U.S. history.
• The financial "reform", creating 243 new regulations, will provide government control of banks, "storefront check cashiers, city governments, small manufacturers, home buyers and credit bureaus," among many other economic activities.
• The Stimulus Bill was the largest spending bill ever and helped to lock in a requirement for further tax increases.
• The nationalization of student loans [gives the federal government control of who goes to college and which college they will go to --- in time.]
• The Medicare and Medicaid entitlements dominate future government budgets.  ObamaCare freezes out future reductions in programs, so there is no possibility for deficit reduction except to increase taxes massively, probably with "a European-style value-added tax.

Krauthammer says "the next burst of ideological energy -- massive regulation of the energy economy, federalizing higher education and 'comprehensive' immigration reform (i.e., amnesty) -- will require a second mandate, meaning reelection in 2012."  Krauthammer seems almost to expect Obama's reelection.

I am not as pessimistic as Krauthammer is, but he is right that Obama has accomplished a plunge deep into socialism.  The extraction process will be fraught with difficulties and dangers.  We are on the verge of losing the very concept of America as the Land of the Free, the Home of the Brave and replacing that transitionally with America, the Land of the Moocher, the Home of the Irresponsible, before it becomes permanently, America, the Land of the Slave, the Impoverished without homes.  To prevent this, we must overturn each and every socialist accomplishment of Obama listed above.  There is no other route to the salvation of the equal, sovereign rights of the individual to life, liberty, and the pursuit of happiness.  We must come to control the House, the Senate with a super-majority, and the presidency by the 2012 election.  The consequence of not doing so is death.  Or slavery, if you think there is a difference.

Obama Creates Jobs and Congressional Districts

Obama's Recovery.gov website claims to document the number of jobs the Stimulus Bill has created or saved.  It reported that 640,329 jobs were created or saved and was helpful enough to break those jobs down by congressional district.  The Washington Examiner has now added up the numbers of as-yet known fictitious jobs saved or created and has reached a number of 76,779.

Just to refresh your memory, the $787 billion 2009 Stimulus Bill was said to have created or saved the 640,329 jobs at a cost of $1,229,056 in terms of the allocated money.  To adjust for the fact that the government has proven very slow in actually spending the money and will not spend much of it until after the actual recession is long gone, the government claimed to have created these jobs at a cost of $531,250 per job.  Now we can adjust this cost per job for the maximal number of jobs which may have been created, 563,550.  The cost per job is then $603,628 per job.  Wow, I am impressed.  The Obama government may be able to create one job with a sum of money that the private sector would create about 12 jobs with.  Of course as we discover that more of these created jobs are fictitious, the cost per job will go up and the private sector will look ever more efficient in creating jobs.  And we ought not forget that the biggest actual effect of the $787 billion Stimulus Bill was to discourage the private sector from hiring for fear that the heavy government deficit spending would decrease business profits over the longer run as it caused inflation, weakened the dollar, and was used by governments to cause mischief.

The Obama Recovery.gov website has also shown us that this $18 million construct creates fictitious Congressional Districts.  It has created 440 such fictitious Congressional Districts.  In reality, there are 435 legitimate Congressional Districts.  Now as I recall, Obama campaigned at one point in 57 states and thought he had one more state to get to in order to have campaigned in all of the states.  That makes 58 states.  Now, of course, my readers all know there are 50 states, so Obama inflated the number of states by only a factor of 1.16.  The number of Congressional Districts has been Obama-inflated by 2.01, so Obama is gaining skills in inflationary power as he gains presidential experience!

Just to look at the case for Virginia, which has 11 Representatives and therefore has Congressional Districts numbering from 1 to 11, Recovery.gov lists the following fictitious Virginia districts:

00, 12, 13, 17, 21, 25, 36, 51, 79, 98

This is actually a below average degree of Congressional District inflation!  But I really get a kick out of District 00 and the fact that District 98 implies that Virginia is much the most populous state in the Union!  This takes us right back to the earliest days of the Union, when the Commonwealth of Virginia was just that.

The 12th and 13th Congressional Districts of Virginia were lost after the 1860 Census, and the 17th and 21st Districts were lost after the 1840 Census!  Democrats always have been very good at getting the votes of the dead, so it should be no surprise that they are also able to resurrect dead Congressional Districts when it suits their purposes.  Interesting thought.  Does this mean that we have underestimated Obama's powers as the Messiah?  What if he is creating jobs in Virginia prior to 1860 and 1840?!!!!!  This would mean he was aiding the cause of slavery in Antebellum Virginia.

Remember that for Obama and socialists of his ilk, the truth is that which furthers the cause of socialism.  It has nothing whatever to do with reality.

Obama Falsely Boasts He Saved Economy

Obama, the same megalomaniac who swore he would cure all diseases and end all poverty in his Democratic nomination acceptance speech, has been running about blowing his own horn that He saved the economy. How did he do this?

Well, apparently by letting Nancy Pelosi and Harry Reid construct a hugely wasteful and highly unproductive stimulus bill. Yes, that same bill which give socialist Democrats every wasteful and lunatic spending program they had wanted for years. It gave large sums of money to ACORN and to alternative energy development. Neither of which has ever produced anything very useful ever. It was said that it was going to put large sums of money into shovel-ready infra-structure projects, but actually the sums going in that direction were small. And, most interesting of all, even though the bill was said to be necessary to fight an immediate emergency in the state of the economy, most of the money is actually to be spent in the months leading to the 2010 election. To date, only about 5% of the money has actually been spent, so one cannot expect that there is much in the way of positive effects.

Because so little has been spent, while the huge debt to pay for it looms over our future, the main present effect of the stimulus bill is the uncertainty it creates looking forward. There are clearly going to be many negative ways this will affect the economy in the near future. The bill shifts huge sums of money from productive uses and uses that individual's desire to political uses. Many of those political uses will enrich the enemies of free enterprise. In other cases, the money is to be used to create advantages for some industries over other industries, which they are incapable of achieving in the free market. This is a misallocation of resources.

The stimulus money will create some jobs, but the critical issue is whether each job created is a lasting job and whether it kills more than one private sector job. The answer is that many of the jobs created are not lasting and that each created job kills more than one private sector job. This stimulus bill will create more unemployment than employment.

Obama is a false prophet.

IMF Says Global Economy Shrinks in 2009

According to the International Monetary Fund, the global economy is expected to shrink by 1.4% in 2009 and will grow at a 2.5% rate in 2010. IMF says the U.S. GDP will contract by 2.6% in 2009, while it will grow at an anemic rate of 0.8% in 2010. The very low growth rate of 2010 will cause even more jobs to be lost. In June, the unemployment rate in the U.S. passed 9.5% and the Obama administration now admits that it will soon exceed 10%! When they passed the Stimulus Bill, which produced only de-stimulus, they swore it would keep the unemployment rate from exceeding 8%. Obama and crew are clueless about the economy and business. Nothing could be more clear.

Now they want a second stimulus bill, because the first stimulus bill was not big enough! Of course, the only thing the first stimulus bill was designed to stimulate was Democrat supporters who are to be given a huge influx of money just before the 2010 elections. The Stimulus Bill was simply designed to be a vote bribery bill, not a means to rapidly kick-start the economy as the public was told it was to do. No, the insiders with political pull understood it to be pure pork and good old-fashioned patronage. We can be sure that a Democrat Second Stimulus Bill will be more of the same patronage and also too late in being distributed to actual producers to help lift the recession economy out of the doldrums.

The Organization for Economic Cooperation and Development is predicting that the average U.S. unemployment rate in the four quarters of 2010 will be 10.1%. Generally speaking, this should be high enough to insure that many Democrats now in Congress will be thrown out in the 2010 elections. This is part of the reason why the socialists are in such a hurry to blow through carbon cap and trade energy taxes, to socialize medicine further, to get union card check, and to add to the many social engineering programs they started with the First Stimulus Package by enacting a Second Stimulus Package.

I wonder: Are the Democrats planning to provide employment to the unemployed masses by having everyone erect a printing press in their home (ala the Great Leap Forward in China) to print enough money that we can cart it in wheelbarrows to the grocery store for a loaf of bread?

As we all know, Obama wants the U. S. to be more like wonderful Europe, as do most people in the Northeast and on the Pacific Coast. The much admired Euro area will have a loss of 4.8% in their economies in 2009, or a loss 2.2% greater than the U.S. While the U.S. is to have a paltry 0.8% growth in 2010, Europe is expected to have a loss of 0.3% according to the IMF. So, why wouldn't we want to follow in the hallowed footsteps of Europe? After all, the United States of America is not Exceptionally Good. But Europe is, according to all of our best American socialists.

Stimulate the Economy by Deregulation

An Op Ed in the Washington Examiner on 8 June 2009 by Wayne Crews and Ryan Young called To stimulate the economy, let it be free made some very good points. Wayne Crews is the Vice President for Policy at the Competitive Enterprise Institute. Ryan Young is a Fellow in Regulatory Studies at CEI. They note that:

Taking money out of the economy, wasting some of it on bureaucracy, and then putting it back in is not going to spark economic growth. About the only thing that has been sparked is a lobbying feeding frenzy over stimulus funding. Even the Democrat-controlled Congressional Budget Office (CBO) admits that the American Recovery and Reinvestment Act will hurt long-run economic growth.

So what would a more rational policy be for stimulating the economy? They first give us this perspective:

Businesses spent $1.17 trillion in 2008 to comply with federal regulations. The government spent another $49.1 billion to enforce those regulations. The total amount spent on regulation is on par with Canada's entire 2006 gross domestic product of $1.265 trillion.

The 2008 Federal Register weighed in at 79,435 pages, an all-time record. More than 60 agencies passed 3,830 new rules last year. The federal regulatory pipeline now has 4,003 rules at various stages of implementation. Of those, 783 affect small businesses.

The government calls a regulation “economically significant” if it costs $100 million or more; 180 such rules came onto the books in 2008, costing the economy at least $18 billion. This is an increase of 13 percent over 2007, which in turn was up 14 percent from the year before.

Among these $100 million-plus gems are rules for right whale ship strike reduction, reducing open-flame ignition of bedclothes, and at least $600 million worth of energy conservation requirements for everything from pool heaters to battery chargers.

With such perspective, it is clear that a great way to stimulate business is to reduce its costs and its frustrations and dangers. Something has to be done to reduce this regulatory nightmare. George Bush sure did not do it. He enacted more than 30,000 new regulations. The President and the Congress must reverse this sorry trend. Crews and Young suggest that unless a regulation is renewed by Congress, it should expire in 5 years. Obsolete or ineffective regulations should be packaged together and sent to Congress for their up-or-down vote. Congress will have to take on far more responsibility in the process. Congress passed 285 bills last year, while government agencies added 3,830 rules.

As a small businessman, it is impossible for me to know what the many laws and regulations are which may apply to my laboratory business. There are some I know about and these do impose impressive costs in time and money on my business. Then there are the many I do not know about. These me reason to have to fear that some government bureaucrat hungry to exercise his power will some day become aware that I am not compliant with some one of thousands of regulations about which I know nothing and use it to milk my business dry. This is not the way to encourage businessmen to take the risks of investing their money and time in building a business, hiring employees, and training them to do the job well.

The First Obama Stimulus Bill

There is talk about the need to have a second Obama stimulus bill, close on the heels of earlier bailouts for the financial and banking industries, the U.S.-based automakers, and money to help prevent mortgage foreclosures. Most economists and financial experts seem to be of the opinion that the first Obama stimulus bill has not been and will not be adequate to get the economy moving again. It certainly has not caused the private sector to invest and hire employees at what we have come to think of as normal levels. But, the first Obama stimulus bill and the Omnibus spending bill which followed on its heels did serve a purpose. They were designed to shift wealth and income from the private sector, especially the higher income side of the private sector, to the government sector. At this, they are clearly very successful. This is the primary desire of the socialists running the Obama administration and providing the leadership of the Democrat-controlled House and Senate.

Let us examine the first $787 billion stimulus bill to see how this was accomplished. Let us break it down as the Washington Post did on 14 February with costs in billions:

Health information technology (incentives for Medicare/Medicaid providers), $20.8

Health insurance for unemployed, $25.1

Assistance to unemployed families, $57.2

Tax Provisions, $73.8

• Making Work Pay Credit, $400/year for individual, $800/yr. for family, may exceed tax otherwise owed, offered for 2 years
• Tuition tax credit up to $2500, provided family makes less than $180,000/yr.
• Expanded child tax credit for low income families up to $1000 per child
• Families not owning a home in past 3 years get $8,000 tax credit to buy a home before the end of this year

Medicaid, $90

Health, Labor, & Education, $71.2

• National Institute of Health, $9.7
• National Coordinator for health information technology, $2
• Other health, $9.8
• Employment and training programs, $4.3
• Education for the disadvantaged, $13
• Special education, $12.2
• Student financial assistance, $16.6
• Other, $3.6

Housing, transportation, $61.1

• Highway construction, $27.5
• Other transportation, $20.6
• Housing assistance programs, $13

Grants to states to fully fund education budgets, $54

Energy and water, $50.8

• Energy efficiency, renewable energy, $16.8
• Federal loan guarantees for renewable energy & electricity transmission, $6
  
• Other energy, includes modernizing electric grid, $22.4
• Army Corps of Engineers, $4.6
• Other, $1

Nutrition, rural development, and agriculture, $26.4

• Food stamps, $20
• Broadband expansion in rural areas, $2.5
• Other, $3.9

Commerce, Justice, & Science, $15.8

• Grants to extend broadband, $4.7
• State & local law enforcement, $2.8
• National Science Foundation, $3
• Other, $5.3

Defense, Homeland Security, $11.4

• Homeland Security, $2.7
• Military construction, $4.2
• Defense facility repair & energy, $4.5

Environment, Interior, $10.5

• State grants for water infrastructure, $5.8
• Other, includes national park capital improvements, $4.7

Federal Facilities, $6.7

• Construction & repair of federal buildings, $5.4
• Other, $1.3

State Dept., technology & construction, $0.6

Overall, tax reductions for individuals are only $73.8 billion, not one penny of which will go to high income earners. Other than alternative energy, there are no private sector companies which will get any tax breaks. The total tax reduction part of the stimulus bill is only 9.4% of the "expenditure", so Congress got to fully direct 90.6% of the total monies use.

There is no incentive whatsoever for any industry to hire anyone, except in the construction, college & university, public school system, health care, computer & broadband, electric transmission line companies, law enforcement, vocational training, government, building materials, construction equipment, and alternative energy areas. Note that these encouraged areas are either government workers directly or private industry which has long been heavily dependent upon government funding and have been selected to receive subsidies from the remainder of the private sector through increased tax transfers of wealth. The money to be sucked out of the remainder of the private sector will fund these government-favored areas.

A great part of the money seems directed at making the medical industry still more dependent upon government. The $2 billion to set up the National Coordinator for Health Information Technology and the incentives to get Medicaid and Medicare providers to set up computerized medical records are especially interesting. It is perhaps quite rational to have more computerization of medical records and even to then use those records to better assess which medical procedures work best. However, we know that much more than this is afoot. It is very clear that the socialists now running the Federal government intend to use these computerized medical records to gain more control over medical treatments and to reduce the medical-decision power of the patient and doctor. This must happen as a part of the plan to have a single-provider (i.e., government) system of medical and health care.

It is very clear that the teacher's unions and the education establishment are being paid for their strong support of the Democrat Party and of ideological socialism. $79.2 billion is going to state grants for education, education for the disadvantaged, and special education. The colleges are making out big-time. The $9.7 billion to NIH, the $3 billion to NSF, the $1.6 billion for the office of science of the Energy Dept., the $16.6 billion in student financial assistance, and the tuition tax credit of $2500 will flood the universities and colleges with more money to continue to fuel their ever-escalating costs. A part of the $16.8 billion for energy efficiency and renewable energy will also fund university research. The NIH, NSF, Energy Dept. Office of Science money will mostly fund an increase in university research grants and new lab facilities. The student financial aid and tax credits will decrease the pressure to control tuition rate increases. There is little reason to believe that any of this money will provide more spur to the economy than that money would have if left in the hands of the private sector. While it is true that some colleges and universities are private, most are nonetheless strong advocates of much bigger government, for which they are rewarded with research money and many financial considerations already.

The construction projects to be funded are almost entirely for more government infrastructure, to be supported by tax dollars long into the future. Most investors will find little stimulus to their plans in this stimulus bill. Few wealthy individuals will have reason to invest their money in the United States. It will make more sense for them to move more of their money abroad, where the tax rates on higher income people are lower. American multinational corporations will have ever more reason to expand their operations abroad, while contracting them in the United States. Contraction of operations will mean that they will have less expense for providing health insurance and increased sick leave mandated by Congress as well. Many companies must be very worried about this.

This stimulus bill should have consisted of a major decrease in taxes to be realized by every individual and by corporations. As I have pointed out repeatedly, it is very foolish for us to tax corporations at the highest rates in the world, with the exception of Japan, with whom we are about tied. It is equally foolish to maintain a very punitive tax rate on upper income earners. These high corporate and individual rates actually decrease government revenues, so we do not need to take the claim seriously that these high rates make life better for those with lower incomes because then government can do more to help them. Indeed, we can laugh at it derisively and proclaim with assurance that the real reason for these rates is one of envy, hatred, and the desire to take down those who have achieved great success in the private, voluntary sector. Such motivations clearly controlled many of those in the New Deal of the Franklin Roosevelt administration and they now control the thoughts of the Obama administration and the Democrat Congress in their pursuit of a New New Deal. This and only this explains their carefully orchestrated snubbing of most of the private sector and of the very idea of the sovereignty of the individual.

Importing Japan's 1990s Miseries

Those who have not learned from history are doomed to relive the past, especially if they believe in some mythology about the past which imprints all the wrong lessons upon their minds.

One of the great examples of a mythology leading men astray is that of the Great Depression in which the demi-god Franklin D. Roosevelt gave Americans the confidence they lacked to rebuild the economy with his fireside chats and his determined pragmatic experimentation with social welfare programs. In fact, FDR greatly prolonged a recession and turned it into a deep depression and then when the economy began to improve, turned it into a second depression. The back to back depressions became the Great Depression and were not brought to an end until after the war, though wartime activity in some respects made it seem as though the depression ended when war production got well underway. FDR had an uncanny knack for creating maximal investment uncertainty and this kept private investors on the sidelines until after the war. The story is well told in The Forgotten Man: A New History of the Great Depression by Amity Shlaes and in Jim Powell's FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression.

There is a more recent case of history from which we could learn. In the entire decade of the 1990s, Japan suffered an economic meltdown due to a boom in stock prices and real estate prices brought on by a flood of easy money supplied by the Japanese government in the 1980s through 1990. Benjamin Powell has written an excellent commentary on this called Avoid Japan's Mistakes in the 8 March 2009 Washington Times. Powell points out that the Nikkei stock market index fell about 70% and real-estate prices fell by 80%. This was a significantly more severe downturn than our present travails are.

Between 1992 and 1995, the Japanese had six stimulus bills providing an average yearly stimulus equal to 3% of the Japanese GDP. In 1998, the Japanese stimulus programs were 8.5% of the GDP. Even this huge stimulus had little effect upon Japan's plight. Our present $787 billion stimulus bill is 6% of the American GDP. By the mid-1990s, Japan had a very low central bank interest rate like ours now. Japan turned to big bank bailouts and to nationalization of the banks in 1998 and 1999, only to make matters still worse. Japan also provided huge sums of government funds for construction projects to no effect.

The real-estate booms in both Japan and the U.S. caused too much money, too many capital goods, and too many people to enter the construction industry. Powell says, "Bank bailouts and fiscal stimulus bills don't work because they strive to maintain the status quo. But the status quo is the problem and exactly what needs to be corrected. ..... "Stimulus" bills that emphasize public works and infrastructure merely prop up the over-expanded construction industries."

Returning to my own viewpoint: This is true, but it is also the case that the financial industry itself was on a bubble and had too many people in it. The masses of people refinancing mortgages and dealing in the financial derivatives markets were excessive and now need to be pared back substantially. The market will take care of this and also of the bankruptcy of General Motors and perhaps Chrysler as well, if only the government will get out of the way. The huge sums of bailout monies are saddling our children and grandchildren with pointless debt. The derivatives financial institutions, many real estate firms, GM, some banks, and some construction companies are way beyond saving. Let them fail and let wiser heads take over their physical assets and hire and manage the people who used to work for these loser companies. There is surely no point in wasting more money on foolish bailout schemes.

Not only is the money being wasted, but the very uncertain and surprising ways in which the government is spending it is causing private investors to take their money out of the market and wait on the sidelines. Every time Obama sneers at the "investor class" he makes them more uneasy and more passive. Obama has frozen the energy of the most dynamic and creative economic forces. The ineffectiveness of the whole effort is causing people who had signed on as part of Obama's economic team to back away from government jobs in the Treasury Department so they will not be stained by association with such a losing effort. The banks and financial institutions who took the Federal money nearly forced upon them, marked themselves as losers. GM and Chrysler also put on targets as losers when they took bailout money. Interestingly, so did the United Auto Workers Union. The image of what they did to the American automotive companies in the competition with the Japanese, Korean, and European auto makers, may be enough to defeat the union card check bill killing secret ballots to decide the issue of union representation.

The concerted efforts of the Obama - Pelosi - Reid Axis Powers to do all of the following in a massive and rapid push designed to cripple the private sector and to build the socialist government-dominated society of their choice:

• the takeover of medical services with tighter controls and rationing of medical services by means of the newly created computer record system
• the move to control medical insurance
• the elimination of a doctor's right to refuse all Medicare funding, thereby making him completely subservient to the government
  
• the threat to force increased unionization upon small businesses
• the creation of massive government debt with crippling future interest payments
  
• the coming high inflation
• the meddling with the management of banking and other financial institutions, including forcing them to continue making risky, yet low interest rate loans
  
• the transfer of money from the private sector to the ever-obstructive and meddling government sector
• the promised higher taxes on investment profits
• the vendetta against the "investor class"
  
• the higher income and Social Security taxes on higher income families
• the ban against drilling for oil in the Gulf of Mexico and still more restrictions against drilling for oil and gas on the excessively extensive Federal lands
• the killing of funds to relocate spent nuclear fuel rods to Yucca Mountain thereby killing nuclear power in the near future
• the promised Federally orchestrated bankruptcy of the coal-fired electric power plants, which produce 50% of all U.S. electricity
• the punishing taxes or fees to be leveled on the oil and gas industries
• the restrictions of energy use and the greatly increased costs of energy use to fall on every American
• the huge stock market losses which will make many Baby Boomers more dependent upon government for retirement and health care
• the funding of more civil service organizations to remove workers from productive work in the private sector and make them cheap labor for the politicians
• the flooding of still more money into universities where most professors will use it to advocate more socialism in America and an ever-diminished role for the individual while college education costs continue to skyrocket
  
• masses of more government-chosen winners, who will be rewarded at the expense of hardworking and responsible taxpayers
• increased restrictions on trade with other countries
• increased submission to the so-called international law of the dictator and socialist government-dominated United Nations
• increased expenses for business mandated by governments as a way to keep bribes to voters off Federal and state expense accounts
  

All of which ought to cause a massive and sustained Second Great Depression. The Obama Axis Powers will be happy to use the continuing crisis as a means to push for still more government power as a means to solve the problems they have themselves caused. Of course, they will continue to blame everything on George Bush and perhaps Rush Limbaugh. Meanwhile, bewildered Americans will more and more frequently read Ayn Rand's Atlas Shrugged in order to really understand the root of all the evil which has overtaken them. Will the sign of the dollar and decals asking "Who is John Galt?" become commonplace on Depression era cars?

If you have any hope of thinking for yourself, choosing your own values, and managing your own life in accordance with those values, you are under a massive and brutal attack. It is way past time for every American who has any understanding of his right to life, liberty, property, and the pursuit of happiness to stand sure in his insistence upon preserving this essence of his individual life. Without it, there is no joy in living. We must stand united and individually in rebellion against this statist takeover of our lives.

This is much, much worse than anything King George III ever conceived of. In comparison to Obama, the king was a hero of freedom. Let us hope Americans can recover some measure of the concern they once had for individual freedoms before they lose everything.

Upward Revision of Stimulus Job Cost

I just heard Obama give a speech last night (perhaps a replay from the night before) in which he claimed his now about $900 billion "stimulus" bill would create or save 3 million jobs. This means the cost per job has gone up to $300,000 per job. I would bet that many private industry jobs will be lost because the income per job is falling $20,000 short or less from what the employer needs to realize in order to keep the job in existence. This means that taking money away from these employers to put into the stimulus package for others, may kill as many as $300,000/$20,000 jobs. This is 15 jobs lost in order for the government to save or create 1 job!

Incredibly disgusting! It does not get more idiocentric than this. Once again I am befuddled with respect to figuring out how much stupidity versus how much ruthless power mongering rules the minds of our Washington politicians.

What does a new job cost?

The Obama "stimulus" bill is to cost $825 billion and it is claimed, with little justification, that it will create or save 3 to 4 million jobs. One estimate is 3.7 million jobs, so let us use that estimate to figure the cost of these government "created" jobs. Few people realize that it will also destroy many jobs with future taxes and inflation. Few also understand that Obama's plans to keep our business taxes much higher than those of most other nations and to squeeze our use of energy to almost nothing, is already causing companies to lay employees off and not to hire new employees.

The cost per job created or saved in Obama's plan can be calculated to be $222,973. Some of these jobs, about 10% are said to be government jobs. This would be 370,000 jobs. These government jobs will not be self-supporting in the future, but will require on-going taxation to suport them at the cost of those of us who are in the private sector. The other 90% of the jobs, it is claimed, will be in the private sector.

The cost to create or save these jobs is amazing. Obama claims to be most interested in lower income people and their plight in a toughening job market. In the private sector, a professional position at a firm is commonly expected to add about 3 times the salary of the professional in income so that the firm can cover his salary, benefits, workman's compensation, payroll taxes, work space and tools, liability costs, added utilities, pro-rated advertising costs, and profit. Using this yardstick, the average salary for a year on the job "created" by Obama is $74,324. This is well above the salary of the average American worker. So, instead of creating jobs for the little guy, Obama would appear to be giving jobs to his political cronies and supporters as payoff for his election as President. Or, he is just a hugely inefficient job "creator." Likely, this is some combination of the two.

That 10% of the jobs in government should cost less in tools, liability costs, advertising, and profit. To be sure, these cost reductions are probably replaced handily by lower productivity, poorer management, and a general attitude of loathing for the taxpayer in the private sector, which causes many government workers to have little regard for frugality and the efficient use of resources. Many of these jobs will long be a heavy saddle on the backs of workers and employers in the private sector, not only levying higher taxes upon them, but also regulating them to death, and gobbling much of their time in added paperwork and government agency reporting chores.

Actually, the situation is even worse than this with respect to the government jobs. If we examine the breakdown of the spending more carefully, we find that $214.5 billion of the Obama bailout money is to go to state and local governments. According to Mark Zandi of Moody's economy.com, this will save or create 330,400 government jobs. That is an average cost of $649,213 per job. Apparently we should all decide to become teachers so we can partake of this massive payoff program for the support the teachers unions gave Obama! If we divide this cost by 3 we will have an annual salary of $216,404 for working 9 months of the year!

OK, I know that the average government worker or teacher is not going to be given a salary of $216,404 per year. But, why not if so much money is going to be given to local and state governments for only 330,400 jobs. Apparently, government waste is much greater than even you and I imagined! Perhaps this money will not be doled out as high salaries, but will be used to partially fund the unfunded pensions and retirement benefits which are going to balloon state and local government costs in many cases in the years ahead as Baby Boomers retire. This is payoff to the fastest growing unions in the United States, the government workers unions. Of course, we all also know that much of it will go to graft and waste.

What would it cost to create a normal private sector job in the U.S.? I could not find a good average cost, so I will start with what it would cost me and a new young scientist employee to create a new job in my materials analysis laboratory business. I can figure this several ways. First, I would have to add some laboratory equipment, about $75,000 worth. It would also require about $15,000 toward salary, payroll taxes, and benefits to supplement the training of the new scientist and the growth of our new areas of analytical services until more customers became aware of them and came a-calling. So, the cost figured this way is about $90,000. Or, I can create a job at a cost of about 2.25 times a salary of $40,000 a year, which is $90,000. This laboratory, as is the case with many very small businesses is a lean, mean fighting machine, so we can get along with a multiplier of only 2.25, or even 2.0 for the short haul of a recession, rather than the usual professional factor of 3.0. Figured this way, we borrow the money to buy the equipment and pay that off as we make money using the equipment to solve materials problems.

Of course, many other small businesses need much less expensive equipment, so many can undoubtedly create a job for less than we can in this laboratory. There are also many jobs which can be saved in the private sector with only a few thousand dollars of additional income for a company or a few thousand dollars of lower taxes. Clearly, the U.S. taxpayer would get much more bang for his buck if the stimulus program were aimed at small businesses. Of course, it is not surprising that it is not, because small businesses have no great lobbying clout and their owners are associated more commonly with the out-of-power party, which gave them little but more regulation after the early Bush tax cuts in the last administration. Howerve, no particular sector of the economy should be targeted by government as the winner.

The stimulus package that would work would be one of broad tax cuts for corporations, investors, personal income taxes, estates, and capital gains. Allowing corporations to bring back income earned in out-of-country operations without having to pay a 35% tax on it would also be very wise. A cessation of threats to put all of the 50% of our electric generating capacity based on coal out of business would also be very reassuring, as would be a general set-aside of all the efforts to mandate huge reductions in the use of energy, such as the 80% reduction Obama is advocating. Business has no future without energy, so why invest and create new jobs if our future is to shiver in caves until most of us are starved and frozen.

We also need a government which is willing to allow companies to have profits, which Obama has been arguing against in his sublime economic ignorance. We need to know that government will not be allowed to grow faster than the industry which supports it. With such knowledge and some willingness of government to get off our backs, we in the private sector will surge forward and produce all the productive, long-term jobs needed in America to continue the American Dream, which we created in the first place. With these conditions, our recovery from the recession will be quick and sure. With the Obama government spendthrift plan, uncertainty will reign in the business realm and investors will stay in their shells, which is exactly where they are now and for very good reason. Obama has a penchant for wasting the taxpayers resources and is madly displaying that penchant now.

Surely it is better to have the private sector create good, long-term, taxpaying jobs at a cost of less than $100,000 per job than to have government "create" them at costs upward of $223,000 per job. Only the most idiocentric ass (or donkey), more interested in creating an ever larger government and an ever smaller role for the rights and freedoms of the individual, will choose to make government the "creator" of jobs. Of course, the Messiah Obama is riding into town on just that ass.

More Perspective on Keynesianism's Failures

Ike Brannon, a former Senior Advisor of the U.S. Treasury and Chris Edwards of the Cato Institute wrote a short article in the Cato Institute Tax & Budget Bulletin entitled The Troubling Return of Keynesianism. You can subscribe to the Tax & Budget Bulletin here.

They point out that simplistic Keynesianism ended with its clearly failed policies of the 1970s when inflation took off and government efforts to create jobs clearly failed. History showed that stimulus actions were always too ill-timed or too ill-suited to have actually helped the economy. Politicians were also commonly driven by political motives which were not in the public interest. The failure of Keynesianism was demonstrated by the Nobel-prize winner Milton Friedman. Others replaced Keynesianism with "rational expectations" theory, which held that people make reasoned economic decisions based on their expectations of the future. Government cannot systematically fool them into taking actions which make them worse off.

John Cochrane of the University of Chicago noted that the idea of fiscal stimulus is "taught only for its fallacies" in university courses these days. Thomas Sargent of New York University says "the calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research." Robert Barro of Harvard University says the stimulus plan does not make sense. Just because the economy is in crisis, it does "not invalidate everything we have learned about macroeconomics since 1936." Other top macroeconomists such as John Taylor of Stanford University and Greg Mankiw of Harvard are also critical of the idea that the Obama stimulus plan will help the economy.

So, what have macroeconomists learned that can be helpful to the economy? Stop trying to cope with the business cycle with its short term time horizon and deal with long-term economic growth. They have learned to concentrate their efforts on tax reform, regulation, and trade issues.

David Boaz - Making Work, Destroying Wealth

The Obama administration and his media backers with their bailout and public service projects seem to greatly admire John Maynard Keynes. Keynes essential theory was that the principal job of government is to create jobs and that this should be pursued maniacally without regard for the destruction of wealth. Boaz, agreeing with Jerry Jordan, says the real challenge for society is creating wealth.

He posted a note called "Making Work, Destroying Wealth" which is very instructive in telling how a number of economists through the last several centuries have pointed out the error of Keynes way of "thinking." Frederic Bastiat analyzed the near-sighted thinking with his famous broken window analysis as one early example.

Read the entire article and you will also find a quite amusing story about a businessman touring in China who comes upon a team of nearly 100 workers toiling on an earthen dam with shovels, who suggests that one man with a bulldozer could build the dam in a day. I have an image of thousands of ex-financial managers using the businessman's alternative tool to build infrastructure in America in the year 2011. I just hope those teams of workmen will include many from the financial community who sent campaign contributions to Obama. Unfortunately, he will give them better jobs in the expanded government or subsidized industries controled by government and the average taxpayer will be reduced to using the alternative tool to build infrastructure.

Richard Rahn - Feel like a chump?

Richard Rahn, a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth wrote a hard-hitting commentary in the Washington Times on 22 January 2009 about Federal taxes in this time of huge government bailouts for favored industries, local governments, and other Democrat causes. He asks if we "feel like a Chump?" We should be feeling very much like chumps as these politicians laugh at our gullibility.

He points out that when Congress wants to spend $825 billion on a so-called "stimulus program," which many economists are rightly pointing out is actually a de-stimulus program, Congress and the new administration have some very interesting views on taxation. Among these are:

• Chairman Charles Rangel of the House Ways and Means Committee, which writes tax legislation, did not pay taxes on some of his income, such as rent from Caribbean property.
• Senate Majority Leader Harry Reid has repeated said that paying taxes is "voluntary."
• Tim Geithner, the new Treasury Secretary under Obama, failed to pay income taxes for many years, when he worked for the IMF. He then served as the president of the Federal Reserve Bank of New York while still owing those taxes. [Can you imagine the tax penalties most of us would be assessed over those years if we had not paid taxes we owed?] [Wikipedia presently says he "served as the president of the Federal Reserve Bank of New York and was a small-time tax chiseler."] He now controls the IRS.
• Many Congressional and media defenders of Geithner and Rangel correctly argue that the tax law is complex and some laws are vague and unclear. Rahn notes that, like everyone else, he does not understand how to obey the 65,000 page Internal Revenue Code. So if the well-connected politically do not have to pay their taxes, shouldn't the rest of us be treated equally under the law as required in the Constitution?
• He thinks all Americans should pay the same tax rate and remembers that when Sen. John Kerry ran for president in 2004, his billionaire wife paid a lower tax rate than most Americans did.
• The typical American family of four is paying $132 to subsidize Goldman Sachs and already committed to paying $662 to Citibank, even before Treasury guaranteed $300 billion of additional debt for Citibank.
• The Obama "stimulus" program of an additional $825 billion will cost the American family another $20,000 in taxes and/or losses to inflation.

He concludes, 'Just remember, those members of Congress who vote to tax you and spend your money on "bailouts" and phony "stimulus" may be calling you a "chump" behind your back.'

Ethanol From Corn Government Mandates

The Federal Government wants to use hundreds of billions of dollars in so-called stimulus spending to counteract the housing and financial problems caused by governments and to bolster many weak companies, some over-paid union workers and their over-paid union bosses, and those state governments which were most irresponsible in their spending. Do you suppose that there will be an ounce of wisdom in how the tax money of the responsible and competent will be used? Or, will the decisions be made simply to support the political careers of our elected politicians?

The answer is clear and can be observed from many past experiences and the direction many politicians have already signaled that they are taking. Among the signs, we should note that it was just a short while ago when the politicians were convinced, or tried to convince us, that ethanol refined from corn was the answer to energy independence and to air pollution. Science has clearly since, and had already in part at the time, shown this claim to be false. All the ethanol mandates and subsidies have achieved is to increase our gasoline costs, increase our food bills, increase the tax bill and the deficit, cause farmland prices to go up, made bundles of money for ADM and some farmers, hurt ranchers and other meat producers, and left many poor people in the world more hungry. This being the clear case, should we not expect our politicians to en masse rush to pass new legislation to remove the gasoline mandates and to remove the offending subsidies, both of which are clearly contrary to the general welfare?

Of course, we should expect this, if we believed that the politicians actually cared for the general welfare, which they cite as the reason for almost every piece of legislation. We understand that the welfare of each and every one of us individuals is not high on their list of values, however. So it is no surprise that the absurd ethanol mandates and subsidies are still on the books and are still hurting all of us who are not corn farmers, owners of ADM, or politicians. Knowing this, why on earth do we stand by and not only not squawk about this ethanol scam, but we are allowing the Federal Government to create many new massive frauds in the name of a recession stimulus package.

The Federal Government under both Hoover and FDR provided many stimulus packages, which did not only not prevent the Great Depression, but actually greatly prolonged it. They created massive uncertainty for investors by trying to pick the winners and the losers with constantly changing rules, just as Bush and Obama have done or are about to do. Hoover and FDR spent massive amounts of tax money and gave it to the unproductive, the incompetent, and the lazy, while taking it from the productive, the competent, and the hard-working. This is a sure way to destroy an economy and market system which a recession has momentarily staggered. Bush and Obama wish to do the same thing Hoover and FDR did. This is a repeat of history, in which a pragmatic Republican starts a mess and a socialist Democrat comes to the "rescue", only to make the mess much worse, because socialism is a massive loser to capitalism, even when it is crippled by unprincipaled pragmatism.