Allegiance to the American Principle, Not to Democracy

Today in the United States of America, most of the People believe that the laws and regulations of the federal government, or for that matter of the state and local governments, should be what they want them to be.  They recognize that these laws cannot be what everyone wants them to be, however, so they decide the impasse should be decided by a virtually unfettered democratic vote.  This is a viewpoint which is inconsistent with the great and original American Principle:  Legitimate government must have limited powers and have the sole purpose of protecting and defending the equal, sovereign right of the individual to life, liberty, property, the ownership of one's own body and mind, and the pursuit of happiness.

Our revolt against Great Britain was justified in our Declaration of Independence.  That great document, written by Thomas Jefferson, with some modifications by Ben Franklin and John Adams, defines legitimate government as that government instituted by the People to secure the unalienable rights of the individual to life, liberty, and the pursuit of happiness.  To this list, I explicitly add the right to property and the ownership of one's own body and mind, because though these rights are fully contained in the shorter list of the Declaration of Independence, modern Americans have largely rationalized them into oblivion.

The early citizens of the states freed from colonial rule by Great Britain, established an initial form of government which was exceedingly limited at the national level and found that it was incapable of sufficiently providing for the defense of the nation and allowing free trade between the states, that the government needed to be strengthened.  The result was a new government mandated by the People with the very highly limited powers carefully enumerated in our Constitution.  These few powers primarily dealt with defense and foreign relations and trade.  Some of the powers had internal consequences such as the maintenance of post offices and post roads, the establishment of patent rights and copyrights, the standardization of money, and the regulation of trade between the states.  The purpose of these internal powers was to strengthen the communications, interactions, and trade of Americans, each of whom had the right to associate with other individuals to establish a wide range of relationships with them and to trade with them.  The strengthened ties across state lines had immense consequences for the thinly populated American states for their defense of their extensive territory.

The Framer's of the Constitution did not at first think the Bill of Rights was necessary.  The federal government they had provided for in the Constitution did not have the power to violate the rights of the individual as they interpreted its provisions.  But, the People who had to ratify it had concerns about just that issue.  Many states would not ratify the Constitution without more explicit protections of individual rights, so the Bill of Rights was written to protect those rights which the People had seen damaged by earlier governments, including most prominently those violated by Great Britain in their recent memory.  Amendment IX made it clear that the listed protected rights were not a complete list of the individual rights of the People.  Amendment X made it clear that powers not explicitly given to the federal government were retained by the People and the states.  The entire structure of the Constitution and its purpose in promoting the tranquility, justice, general welfare, common defense, and the blessings of liberty to the People, clearly is an attempt to provide a government of highly limited powers consistent with the legitimate government defined by our own Declaration of Independence.

Today, Americans usually test a proposal for a new law or regulation by asking whether it would be good for them as an individual or as they imagine it might be good for some group of Americans they think are not capable of acting in their own self-interest.  Most Americans fail to test a law against the American Principle.  Rather than ask if the proposed law or regulation is supportive of every American's individual rights, they ask only that it be good for them or for some particular group of Americans, or in some cases, some particular group of illegal aliens.  In that process, the critical role of individual rights is lost.  The tyranny of the majority or a plurality of voters is made the gold standard of legislative priorities and political morality.  This is a huge mistake.

It is one that the Framers of the Constitution were very aware of and from which they tried very hard to protect us.  The American people thwarted the Framers great work by adopting the very creative expansive interpretations of the powers to regulate interstate commerce, to tax, and to provide for the General Welfare that they were indoctrinated in by the Progressive Elitists who have taken over education and most of the media in America.  The Progressive Elitists eviscerated Amendment IX, claiming that the People have no rights except those explicitly mentioned in the Constitution.  This is not even a creative interpretation of the Constitution - it is a very willful determination to ignore an amendment so basic and critical that it was put into the Bill of Rights.  They have also largely ignored Amendment X, reserving powers to the states and the People.  Amendment XVII, gave the people of each state the vote for their Senators and undermined the republican form of government and state powers, promoting the idea that the United States was a nationwide democracy, subject to the tyranny of the plurality of voters throughout the nation.

In the recent health care reform debate, we observed how the loss of the American Principle twisted the terms of debate.  American governments have actually made it more difficult for the People to provide for their own medical care by interfering with the rights of the individual to choose his own medical providers, his own health insurance policy, and his own standards of medical quality.  While minorities of the debaters were aware of this, the federal government and most state governments have ignored these arguments and plowed ahead with their programs to increase their control over the People.  They refused to take the liberty-enhancing arguments seriously and promoted those of the Progressive Elitists who argued that the governments must exercise still more control over our medical and health care insurance options.  They argued that some people did not buy health insurance and they counted on the People thinking this was unwise.  The Elitists said they must buy health insurance and because some of them will not buy complete enough coverage, we will tell them what must be covered in their insurance plans.  Some people have health problems already, which means their insurance costs will be high, so we must set up large pools in which the healthy will pay much more for their insurance so that the known unhealthy can be covered at as low a cost as the healthy can be.  Thus, the healthy will be heavily taxed to subsidize the health care of the unhealthy and this will be the case even if the unhealthy are unhealthy because they have made themselves unhealthy.

The staying hand of the American Principle was barely discussed.  It was rarely noted that the reform plan greatly reduced a man's right to control and promote his own life.  It was rarely noted that it represented a government claim that the government owns a large share of our very bodies.  It was rarely noted that the plan was a hugely confiscatory transfer of wealth from the young and the healthy to the old and the unhealthy, as well as from the middle class to the poor, making this bill one with very unequal impact upon the citizen's individual rights and their welfare.  It was not noted that if one is not free to provide for one's own medical care and seek protection from pain, then one cannot be said to be free to pursue one's own happiness.  The necessary government rationing of health care in ObamaCare will take the power to seek relief from pain out of our individual hands.

We have seen the destruction of the American discourse on the extension of the Bush tax cuts as well.  The Progressive Elitists wish to increase taxes on Americans making more than something over $200,000 per year, claiming that those people can afford it.  Of course, they do not know all of those people, so it is patently absurd for them to claim that those people can afford it.  It is even more absurd that they think that it is their right to make any decision on who can afford to be taxed more.  If we all have equal rights, then the government should not be taxing some of us more than others of us.  Also, in the midst of the Great Socialist Recession, these Progressive Elitists are recommending many increased taxes on business activities, such as an increase in the capital gains tax rates, the corporation tax rate, and the death tax.  This is a straight play on the weakness of a democracy in that it wants to place greater burdens on those with fewer votes, so the majority will be given as large a bribe as possible to reward the governing Progressive Elitists with more power.  The American Principle that every American individual's rights are paramount, including those in business, is stomped upon.

The intimate body searches of the TSA in airports is being discussed vigorously, but many are refusing to give due consideration to the American Principle.  Amendment IV, written when Americans believed in the American Principle, says

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

When Dagny passes through the TSA security check area, no Warrant has been issued based on probable cause that she is carrying explosives onto a plane, yet she is searched in the most intimate way.  It really could not be more clear that this is a fundamental violation of her individual rights. All the talk that people will feel safer from terrorist attack if they are searched and therefore if Dagny is searched, is completely irrelevant.  It is fine for anyone who wishes to volunteer to be searched intimately, but it is not within their rights to force someone else, for whom they have no Warrant based on probable cause, to be searched.  This matter is no different in principle from

•  a random search of anyone to check if they are under the influence of marijuana,
•  randomly forcing people to describe what they were doing throughout the last 24 hours just in case they might have been involved in a crime which the government knows nothing about,
• a random stop to see if you are on the list of people who filed a tax return with the IRS last year or not,
• or a random search to see if you can prove that you are a documented U.S. citizen, immigrant, or visitor. 

You may argue that this is a matter of life and death, but I would argue that giving up the American Principle is a much more critical matter of life and death.  Besides, the present policy means that we have ceded victory to the terrorists, whose goal is less to kill some of us, than it is to degrade the quality of most of our lives.  A life without our equal, sovereign individual rights is a very degraded life.

Obama Says He Was Not Born in Hawaii

Obama long ago made it clear that he did not have much respect for the U.S. Constitution, since it was a roadblock to his redistributionist politics.  I have long held that his presidency was no real presidency because he never took his oath of office to defend, protect, and preserve the Constitution seriously.  He out and out lied when he took the oath of office and he was very aware that he was doing so.

In the opening scene of the video below, Obama says that he was not born in Hawaii, he was not born in America, that he may not be a U.S. citizen, and that he came from Kenya.  In the second scene, Michelle Obama says he was born in Kenya.  It is very clear that Barack Obama is not a natural born citizen and is therefore ineligible to be President of the United States of America.  That he holds the office under false pretenses is further proof that he has no respect for the Constitution.



Barack Obama should be impeached, but it will not happen.  He will be a one-term impostor to the presidency.  He should never be called President as a result, however.  The history of American Presidents should always have an asterisk by his name proclaiming his illegitimacy.  Let us have no more talk that he is the worst U.S. President ever.  That description belongs to someone who actually was President, perhaps Jimmy Carter.

Arizona Encourages Government-Dependent Politicians

29 November Update:  The Supreme Court has agreed to hear the free speech case argued by the Institute for Justice discussed in this earlier post.  Congratulations to the Institute for Justice in its efforts to protect our individual rights!

Arizona has an interesting way of promoting the political career of government-dependent politicians.  Arizona law puts politicians on the dole even before they are elected.  Now, I ask you, how can We the People expect politicians on the dole to government to look out for our interests in keeping the power-lusting governments off our backs?  The answer, of course, is that such politicians are guaranteed to be bought and paid for big government supporters.  The Arizona "Clean Elections" Act is the mechanism for buying big government politicians and putting them in office.  The bias in favor of government doing what it most wants to do, which is to gain more and more control of the People's lives, is huge.

The Institute for Justice has challenged this Arizona interference in elections on the basis of its interference with our freedom of speech in a case called Arizona Free Enterprise Club's Freedom Club PAC v. Bennett.  The U.S. Supreme Court is expected to decide whether to hear the Institute for Justice's challenge of this law on Tuesday, 23 November.  The Institute for Justice is also representing the Arizona Taxpayers Action Committee, Arizona State Treasurer Dean Martin, and State Representative Rick Murphy.

The Arizona government subsidizes those candidates for office who elect to take a subsidy.  For every dollar an independent candidate brings in, the subsidized candidate is given an equal amount of money.  The candidate on the dole does not have to do any work to acquire donations from those who believe so strongly in his principles that they will donate their own money to the candidate.  The candidate on the dole is then free to be a perfect demagogue and has no need to be persuasive enough to get people who will carefully consider his viewpoints before giving him campaign donations to actually do so.  Those who part with their money often think about why they are doing so before acting.  Those same Arizonans who favor an independent candidate are then forced to subsidize the candidate whose views they may abhor.  This is not just an abridgment of the freedom of speech, but it is an inversion of speech.  If you believe one thing, you are actually forced to say you believe the opposite!

Fortunately, in January 2010, a federal district court ruling struck down the matching funds in elections as a violation of freedom of speech.  But, the 9th U.S. Circuit Court of Appeals stayed the order of the initial federal district court ruling.  In June, the U.S. Supreme Court took the unusual action of reinstating the initial court ruling which had prevented Arizona from matching funds.  As a result, the 2010 elections in Arizona were not sullied by this big government attempt to bias the selection of politicians in its favor by effectively limiting the freedom of speech of the People of Arizona.

Bill Mauer, an Institute for Justice attorney, said

Matching funds violate the First Amendment rights of candidates, citizens and independent groups.  The government may not give an electoral advantage to one candidate by ‘leveling’ the speech of his opponents.  The system is set up to punish those the government believes are speaking too much, while subsidizing those it believes are speaking too little.  In a free society, the government has no business micromanaging how citizens debate, of all things, who should run the government.

Having been so serious for so long, you deserve a break.  The Institute for Justice has a fun cartoon video summarizing their viewpoint on the effects of the Arizona "Clean Elections" Act.



The Institute for Justice has been very effective in protecting our freedom of speech in other cases involving election laws in a number of states.  Most recently, the 10th U.S. Circuit Court of Appeals ruled on a Colorado law that forced six neighbors opposing a ballot issue to register with the state government and comply with very complex campaign election finance laws.  In this case, Sampson v. Buescher, Judge Harris Hartz wrote for the unanimous court that the campaign finance disclosure requirements were too complex for most citizens and simply prevented them from speaking out on political issues.

The U.S. Court of Appeals for the District of Columbia ruled that the federal government could not restrict how much individuals gave to SpeechNow.org or other similar groups in another Institute for Justice case.  That victory was marred by the ruling that the group did have to abide by the difficult rules of operating a political committee, despite the Supreme Court having ruled in Citizens United that corporations did not have to do so.  Go figure.  The Institute for Justice has also won victories in Florida where its very broad "electioneering communications" law was ruled unconstitutional and in Washington where the state tried to regulate talk radio commentary on a ballot issue.

Not only is the Institute for Justice very effective in winning vital cases to protect our freedoms, but it does it very cost efficiently.  It has won the highest 4-star rating from Charity Navigator for the 9th year in a row.  Please consider fighting for your freedoms by making a donation to the Institute for Justice.

The new TSA full, full, full body search in the context of our individual rights

I just read about the horror of a woman who had undergone the new TSA full body search procedure in which her breasts, buttocks, vagina area and labia were all felt.  This does represent a new way in which we have lost the ownership of our own bodies, but it is not unrelated to many other ways in which the ownership of our bodies and minds has been challenged successfully by government.  I also understand that some will say this trade off of our ownership of our bodies is justified because otherwise the government cannot offer us complete assurance that we will survive a flight.  The decision is not trivial, yet there are reasons why we must draw the line on what the government can do with our bodies, if we are to maintain the ownership of our own bodies.  While I personally would not feel the horror the woman searched in the story did about being so searched, each of us as individuals should have the right to feel or not feel that horror.  Her body is hers.  We must respect that.  And though I do not feel the horror, I do very much resent being searched.  I resented it even more when my 12 year old daughter was searched on 3 legs of 4 legs of a round-trip flight between Baltimore and Tulsa years ago.  Apparently, those searches today would be much more invasive.

The full body search with sexual intimacy is logically consistent with the idea that we as individuals do not own our own bodies and minds.  We are to be forced to buy health insurance approved by elitist bureaucrats, because we are incapable of rationally providing for the care of our own bodies and the state has an interest in the ownership of our bodies.  We are told that we cannot decide when to use a seatbelt, a bike helmet, or whether to use tobacco or marijuana, because the state shares the ownership of our bodies.  We are told in some locales that we cannot eat some foods because some politicians think those foods are not healthy and they own our bodies.  In an earlier day, males were told that they did not own their minds and bodies and that it was appropriate to conscript them and force them to fight in undeclared wars.  We are told that only government-owned or government-approved schools can educate us, because we do not own our own minds, which need to be indoctrinated with ideas beneficial to government control of the People.  For a very long time, government has discouraged people from developing their individual sexuality, once again an infringement upon the individual's right to own their own bodies and minds.

Ideas matter and the direction that many ideas take are often linked.  It is the old story that first they came for the Jews and I was not a Jew so I did not care much.  Then they came for the Gypsies and I was not a Gypsy.  Then they came for the mentally retarded and I was not mentally retarded.  Then they came for the old and the infirm and I was not old and infirm.  Then they came for me and no one else was me, so they did not care.

Our individual rights are many.  They may be summarized as:  every individual has an equal, sovereign right to life, liberty, property, the ownership of their own mind and body, and the pursuit of happiness.  Do not allow any attack on any of our broad rights to succeed because it threatens every other of our rights.  The forceful taking of each of our rights is a preparation for the next assault on the next right.  There can be no compromise on this, because the assaults are never-ending.  Long ago, we allowed the assaults on our property, right to work, right to hire, and income to reduce those rights to sometimes honored privileges.  We lost the right to our minds, when we allowed government to take over education.  We lost our rights to our bodies with the FDA, Medicare, Medicaid, and now ObamaCare.  We can no longer talk about such subjects as racism and affirmative action or the morality of judging people as individuals based upon their individual character on many college campuses run by our governments.  We have never allowed equal expression and equal treatment of people whose sexuality was not both heterosexual and monogamous.

Right after right has been compromised, because few people will defend all of our rights.  The employee does not care about the rights of the employer and thinks it is perfectly fine that the employer must act as an accountant, a tax record keeper, and a tax collector, all unpaid mandates forced upon him by government agents very willing to use force.  The man who earns a living using equipment such as laboratory equipment or that to manufacture goods, is hit hard with property taxes on that equipment, while the lawyer or the accountant is unequally hit with no such devastating tax.  Then the People complain that manufacturing jobs are going overseas and we are only a service economy!  Of course, few of us pay corporation taxes, so why shouldn't the U.S. have the highest corporation taxes in the OECD in 2011?  Of course, we will lament the fact that many U.S. multinationals are expanding operations abroad faster than in the U.S., but does it ever dawn on us that the unequal taxation of corporations is the reason, as well as a violation of the equal rights of the shareholders of that corporation? 

There is a very good reason for a holistic understanding of our rights as individuals and the implied necessity of a government of very limited powers, which our Constitution decreed as the demand of the People.  But the constitutional demand is not very strong when the People have forgotten that they must be the backbone of the Constitution, which by itself can only serve to bridge a momentary lapse of attention by the People.  It is very clear that it is unable to protect the rights of the individual when we pay little attention to them ourselves for a hundred years of determined Progressive attack and not infrequently of Conservative attack!

Obama's Jobs Creation Mythology

Obama gave a speech upon wrapping up the G20 Summit Meeting in Seoul, South Korea on 12 November in which he said that 1 million jobs had been created in the U.S. in the last year.  Let us check this statement out.

The year for which jobs statistics are available as of now and as of his talk was November 2009 through October 2010.  In November 2009, 139,132,000 Americans had jobs.  In October 2010, the number of Americans with jobs was 139,749,000.  This is an increase of 617,000 jobs.  These numbers are for the actual numbers of Americans working and are not seasonally adjusted.  This deep into a recession, the seasonally adjusted numbers may not be very meaningful.  They are also subject to some judgment, which makes them wobbly figures, as evidenced by their frequent adjustment in subsequent months after they are announced even though the unadjusted number remains rock steady.

Now, perhaps Obama was rounding off the number of jobs created to the nearest million.  Reasonable rounding practice would say that was fine if the number being rounded was quite a few million, but at 617,000, the reasonable rounding would have been to the nearest 100,000 or to 600,000 in this case.  On the other hand, we never know if he is only counting new jobs and not subtracting the jobs lost in that time-frame.  Or maybe he is still trying to convince us that his stimulus programs created many more jobs than they destroyed.  We cannot know what he had in mind.  But, we know that most people who heard him talk think he was saying that 1 million more people are working now as compared to a year ago.  That is not the case.

Worse yet, the American population is growing and we have an increase in the number of people of working age and therefore need more jobs now than we did one year ago.  To maintain a constant percentage of the population in jobs, the economy has to create many new jobs each year.  Since looking at the unemployment rate when long into a recession commonly tells us little about how many jobs are desired, I largely ignore the so-called unemployment number.  On examining the history of employment numbers, I found that few Americans were unemployed in the late 1990s and that in January 2000, at the start of the decade, the unemployment rate was 4.04% and 67.49% of the working age, non-institutionalized, population was employed or actively looking for work.  If the economy were robust and able to generate jobs that people would want as much as they did then, we should figure that 67.49% of the working age population would still want jobs today.  This allows us to calculate the number of jobs needed to satisfy those who would work if the jobs were available and reasonably enticing.

The Great Socialist Recession began in December 2007 in the United States.  It started earlier in most other areas of the world, having been kicked off by a spike in oil prices, which soon caused a financial crisis since much of the world was working on easy credit.  Our jobs problem in this decade did not start in December 2007, however.  In January 2000, we needed another 5,689,000 jobs to put everyone looking for work in a job.  That number corresponded to a 4.04% unemployment rate with some fraction of the unemployed being unemployable due to minimum wage laws and some fraction due to people changing jobs by choice.  By December 2007, the number of missing jobs had already grown to 11,023,000 jobs due to a growing population and a higher unemployment rate of 4.80%.  It also appears that the desirability of jobs had fallen somewhat by then.  I believe this was caused by the huge growth of local, state, and federal governments throughout the decade.  By December 2007, these excessive governments were already draining the private sector of much of its wealth and had dragged down its job creation powers.  The growth of government mandate expenses on businesses had grown even faster than had the governments themselves.

By December 2008, the U.S. economy was missing 15,287,000 jobs.  By December 2009, it was missing a gigantic 22,108,000 jobs.  Let us examine the number of missing jobs by month from November 2009 to the latest statistics of October 2010.

Please note that bottom of each bar for the missing jobs starts at 20 million jobs, so we can observe the variation in the number of missing jobs more readily.  Also, in November 2009, the number of missing jobs was 20,646,000 jobs and in October 2010 the number of missing jobs had increased by 589,000 jobs to a total of 21,235,000 jobs.  So, contrary to Obama's claim of creating 1 million jobs and the implication that most people would draw from that of progress in supplying the demand for jobs, we find that the problem of missing jobs has actually become worse.  617,000 more people are working but just to remain in the bad situation we had already been in during November 2009, we needed to have created 1,206,000 jobs rather than about half that number which were created.  Things are still getting worse.

Examining the graph, we see that the job situation worsened in December 2009 and again in January 2010.  It then slowly improved through July 2010.  But it got worse again in August, September, and October 2010.  Obama has nothing to crow about.  But, that does not stop him from trying to convince us that he does.

The Right to Association with Others - The Right to Work and Hire

The equal, sovereign rights of individuals to life, liberty, property, the ownership of their own minds and bodies, and to pursue their own happiness are very broad.  Limitations put upon individuals by legitimate governments are few and strictly limited to the prevention of violence and fraud.  Among the most basic of an individual's rights are the right to work for a living.  Another is the right to associate with others for voluntary purposes, which includes such rights as the right to trade goods and services, the right to hire employees, the right to be an employee of another, the right to be a service provider, the right to be a customer, the right to use property to provide goods and services, the right to practice a profession or trade, the right to enter into a business partnership, the right to enter into a domestic partnership, the right to exchange ideas, and the right to enjoy friendships and romantic and/or sexual relationships.  The freedom to work and the freedom to associate voluntarily with others are very broad freedoms, which legitimate governments seek to protect.  On the other hand, illegitimate governments, which are much more common, seek to interfere with these basic freedoms.

Illegitimate government was defined in our Declaration of Independence.  Government which is destructive to the unalienable rights of the individual to, among other rights, the right to Life, Liberty, and the Pursuit of Happiness is declared illegitimate and tyrannical.  The United States of America today is full of such illegitimate and tyrannical governments.  These governments feel especially free to interfere with our voluntary associations in trade, work, and cooperation in the following ways

• controls and regulations on the production of goods,
• mandates and limits on the employer - employee relationships, 
• the licensing of professionals and tradesmen, 
• the imposition of slavery upon employers to keep financial records and to keep tax records and file tax forms, 
• limitations on the exchange of services, 
• the dictation of who can be hired and who cannot be hired, 
• the unequal treatment of various domestic partnership combinations, 
• the denial of access to the market of very large companies, 
• the excessive burdening of small companies with laws, mandates, regulations, and paperwork,
• micromanaging safety issues not understood by governments in complex workplaces,
• micromanaging performance standards not understood by governments in complex professions,
• exaggerating safety issues to gain control and to reward special interests,
• exaggerating issues of potential fraud in the interest of control and to award special interests,
• discriminating against many professions with property taxes on their tools and equipment, which does not hurt government pets such as lawyers and accountants and actually increases their business,
• discriminating against many professions because some people believe they are immoral, such as prostitution or marijuana suppliers,
• discrimination against some people in education and the exchange of ideas,
• preventing those with little wealth or income from entering many professions or trades,
• using minimum wage laws to discriminate against the undereducated and the disabled,
• using minimum wage laws to discriminate against young people lacking previous job experience or those living in low-cost-of-living areas (popular with unions),
• limiting the number of companies providing services to bolster the income of those previously in business,
• as a change-up, forcing companies and associations to grant special privileges to unions, people of favored races, people with handicaps, and to governments,
• requiring people to purchase goods and services, such as the services of accountants and lawyers by businesses, health insurance under ObamaCare, seatbelts in cars, child safety seats, high mileage vehicle mandates, unnecessary radiation inspection services for fully contained radiation sources, 
• the regulation and taxation of fossil fuels due to unproven and scientifically wrong fantasies of man-made global warming disasters,
• subsidies for favored people, companies, institutions, and industries, such as the cake-taking ethanol, wind generation, and solar power industries,
• manipulations of the value of the dollar to favor financial institutions or exporters or importers,
• restrictions on foreign competition such as the Jones Act provisos against foreign-owned shipping,
• interference with railroad and trucking rate structures,
• bailing out companies with strong union ties, such as GM and Chrysler, at the expense of other companies and taxpaying consumers,
• the massive transfer of wealth from the private sector to governments,
• requiring the payment of labor union labor rates on government projects or by government contractors,
• crippling American businesses with much higher taxes and regulatory burdens than foreign competitors have,
• and interfering with or failing to ease restrictions on foreign trade, since every individual has the right to trade with others, even when they are in foreign nations.

Of course, many of these restrictions on the freedom of association and work are justified with claims that public safety or the prevention of fraud make them necessary.  These claims are commonly exaggerated in the interest of some special interest, often that of the politician to award his friends and contributors being the foremost special interest.  Fraud should be combated with vigorous legal action against actual instances of fraud, not by overly active imaginations conjuring up ways in which someone in a profession might defraud a customer.  These anti-fraud prevention schemes will always cause more trouble than they address.  They gain traction, however, because many Progressive elitists believe the People are too stupid to choose their own associations well.  The People are imagined to be defenseless against fraud.  Somehow, the government will anticipate every possible fraud and prevent it.  Or so it wants us to believe.  In fact, it is mostly just successful in keeping entrepreneurs from competing for the business of a nation of sovereign individuals.

One of the best organizations in fighting such abuses of governmental power is the Merry Band of Freedom Litigators at the Institute for Justice. They have a long and successful track record of attacking irrational licensing laws and other approaches to preventing people from working and earning a living.  Here is a recent example of their work:

As demonstrated by a series of eight new reports issued in October 2010 by the Virginia-based Institute for Justice, one of the principal obstacles to creating new jobs and entrepreneurial activity in cities across the country is the complex maze of regulations cities and states impose on small businesses.  IJ’s “city study” reports are filled with real-world examples of specific restrictions that often make it impossible for entrepreneurs to create jobs for themselves, let alone for others.

The Institute for Justice has documented how police in Pine Hills, near Orlando, used barber licensing laws there, to fine barbers hundreds of dollars who had years of experience as barbers, but no license.  These raids on unlicensed barbers were used as a cover to search for drugs without a search warrant, showing how a disregard for some individual rights commonly leads to a disregard for other rights.  They also found that in eight major metropolitan areas, nearly one in three professions requires a license.  In the 1950s only about one in twenty professions needed a license.  One of the best ways to reduce unemployment is simply to let people work.  No subsidies are needed, no tax breaks are needed, and no government-sponsored training need be provided.  The governments simply need to get out of the damn way and allow people to work!

My bullet list above provides reason after reason for why Americans are unable to find jobs or to create their own jobs now.

American Carbon Trading Exchange Dies

The Chicago Climate Exchange (CCX), which received start-up funding from the socialist Joyce Foundation on whose board Barack Obama served, announced on 21 October that it was ending its carbon trading mission.  The CCX has provided voluntary, but legally binding, greenhouse gas reduction pledges or offsetting carbon emissions permits.  CCX was an investment of Al Gore's Generation Investment Management and the political clout machine at Goldman Sachs.  While voluntary at first, the CCX was anticipating the massive theft of wealth from Americans upon the Waxman-Markey cap and trade law being passed to make carbon trading mandatory.  Steve Milloy noted on 6 November that the media has completely ignored the failure of the CCX, which they had done so much to promote.

The failure of the Copenhagan meeting to set up a greenhouse gas emissions reduction commitment to follow the Kyoto Protocol which is ending in 2012, the refusal of the U.S. Senate to pass cap and trade legislation, the Great Socialist Recession, ClimateGate, the scientific failure of the catastrophic man-made global warming hypothesis, the surge of the Tea Party movement, and the upcoming Republican control of the House of Representatives, a renewed balance in the Senate, and the Republican control of most state governorships and legislatures have finally slowed down the momentum of the wrongheaded crusade against the use of fossil fuels with requirements to substitute unreliable and very expensive so-called "sustainable energy."

GM, Ford, IBM, American Electric Power, Chevron Oil, Intel, Bank of America, GE, BP, Alcoa, Caterpillar, and FP&L are among many companies who have bought carbon offsets or pledged reductions instead of investing in new equipment or keeping long-time employee Joe on during the Great Socialist Recession.  Not to be too cavalier, there are some cases in which energy use reductions actually did make economic sense, though buying carbon emissions credits never did.  Overall, political and environmental pressures certainly did distort the market and did cause many Joe's to be let go and other young David's to never be offered their first job.  GM, American Electric Power, and Chevron were buying trees in Brazil in order to get emissions credits.  Each of these companies has laid people off during the recession, while they played the ruse of being environmentally conscious.  Indeed, there are many claims that two-thirds of the carbon emissions reductions claimed on the exchanges are bogus, but they still cost money to play the game.

The value of Greenhouse Gas Emissions credits traded in the U.S. dropped 47% to $387.4 in 2009.  The volume of trades of CO2 tons fell by 26% to 93.7 million tons, though that was a volume 39% higher than in 2007.  The fact the value of trades fell more than did the volume shows that the value of a ton of CO2 was lower in 2009.  It is now much lower in 2010!  The HSBC climate index follows companies making at least 10% of their total revenues from selling goods and services related to climate change and dropped CCX and Trading Emissions from their index when the value of their market capitalization fell below $400 million as the share prices of these firms fell 37% between 1 September 2009 and 19 March 2010.  The CCX was bought by the IntercontinentalExchange Inc. or ICE, along with the European Climate Exchange and the Chicago Climate Futures Exchange, in April 2010 for about $634.5 million.  The European Climate Exchange is still bolstered by mandatory carbon trading requirements due to the Kyoto Protocol.


While mandatory carbon trading requirements do not have a national basis in the U.S., they are required in some regions of the U.S.  The Regional Greenhouse Gas Initiative in the Northeast and Middle Atlantic states has Maryland, Delaware, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont, and Maine as members.  This group of masochistic states is committed to the following state economy mass destruction goals for the region:

2009 - 2014, 188,076,976 short tons of CO2 Emissions, 0% growth
2015, 183,375,052 tons, 2.50% reduction, 1 and one-third years of the output of the Kilauea Volcano in Hawaii, of one many tens of thousands of volcanic vents on land and underwater
2016, 178,673,127 tons, 2.56% reduction
2017, 173,971,203 tons, 2.63% reduction
2018, 169,269,278 tons, 2.70% reduction

Now using energy efficiently is wise, but the entire purpose of the state mandates is to drive companies to make energy use reductions that do not make economic sense.  This Northeast - Middle Atlantic alliance is not the only regional alliance requiring member states or provinces to commit Hari Kari.  The Western Climate Initiative is another.  A wise investor would bet against energy-intensive companies with major operations in either set of states.  Those in the Western Climate Initiative are California, Arizona, New Mexico, Oregon, Washington, Utah, Montana, British Columbia, Manitoba, Ontario, and Quebec.  These state based requirements are providing business for the European Climate Exchange.

Kristel Dorion who has worked for 10 years on carbon offset projects under the United Nation's Clean Development Mechanisms program says that investors are looking elsewhere than carbon offsets.  It is about time.

The 2011 State Business Tax Climate Index from the Tax Foundation

Kail M. Padgitt, of the Tax Foundation produced the 2011 State Business Tax Climate Index in October.  The report evaluates the effects of state taxes of the following types with the relative weighting following as a percentage:

• Individual Income Tax, 29.64%
• Sales Tax, 25.16%
• Corporate Tax, 19.35%
• Property Tax, 14.57%
• Unemployment Tax, 11.28%

The results of the evaluation are shown in the map below by rank:

In the scoring, the average was set at 5.00 on a scale of 10.00.  I have made up two tables giving the score of each state assigned by the Tax Foundation Study and its rank for 2011 and the rank for 2010.  To this I have added my calculated growth in the state's Gross State Product from 2005 to 2008.  I have also indicated the party in control of the governor's office, the State House, and the State Senate in 2010.

The highest ranked three states, South Dakota, Alaska, and Wyoming, stand out from the other states with their high scores.  The second set of three states, Nevada, Florida, and Montana, also enjoys some significant separation from the other states.  Then New Hampshire and Delaware stand out a bit also.  Beyond that, very small differences in state scores can mean changes of several rank positions, until you get to the bottom 7 positions beginning with Maryland.

Do high taxes discourage the growth of the state Gross State Product (GSP)?  The top 10 ranked states grew by an average of 17.59% from 2005 to 2008, while the bottom ten states grew by 13.36%.  Low taxes provided a 4.23% growth rate advantage to the low tax states in that three year period.  Let us do the math to find the effect this difference in growth would have over 5 three year periods:  1.1759 to the fifth power is 2.248, while 1.1336 to the fifth power is 1.8720.  The difference is that the low tax state economies become 2.25 times larger, while the high tax economies become 1.87 times larger.  Such growth differences matter to the quality of the People's lives.

Let us examine if there is any difference in tax ranking that correlates with the party holding power in the states.  Of course, the 2010 powers that be were not likely to have instantly changed many state taxation traditions, so the duration of control by a given party is also important.  But to keep things simple, we will just consider the party in power in 2010.  Besides, according to Judge Napolitano on Fox Business on Sunday, there is only one party, the Big Government Party, so we should find equality in this tabulation if he is right.  For the top 10 states in the business tax ranking, counting 1 for each case of control of a governorship, house, or senate, the Republicans score 17 and the Democrats score 11.   For the bottom 10 states, those with the worst business taxes, the score is Republicans 6, Democrats 24.  Sorry Judge Napolitano, but on the matter of the business tax climate, it appears that it matters quite a bit which party controls a state.

Of course, there are exceptions.  For instance, Arizona was controlled in all three state government components by Republicans and yet it was in the 34th position and had actually fallen from the 28th position in 2010.  Bad Republicans in Arizona!  I will also chide Oklahoma, where much of my family lives and where I graduated from high school.  Oklahoma has generally been a Republican state for a couple of decades now, but it ranked only 30th among the states.  With Texas (13), Colorado (15), and Missouri (16) on its borders, it is surely losing many businesses to those nearby states with much higher rankings.  In rankings that consider the regulatory environment as well, Oklahoma does better in the ranking, but still there is a clear need for improvement here.

Speaking of the border effect, the state of Maryland is pursuing an insane high tax strategy as well.  It is ranked 44, but Delaware (8), Virginia (12), and Pennsylvania (26), and even West Virginia (37) are all on its borders and offer better business tax climates.  This is why Northrop Grumman, with large operations in Maryland, just moved its headquarters to Virginia which just improved its ranking by three positions.  Virginia was chosen as the #2 best state for business by CNBC, who picked Texas #1.  Virginia's governor says Virginia is coming after Texas and will take over the #1 spot.  Maryland is not in the race and couldn't give a fig.  Maryland's expertise is in suckling at the teats of the federal pig and living off the taxpayers from across the entire country.

Looking at the map above, it is very noticeable that New Hampshire, Delaware, Virginia, Florida, Texas, and Indiana are each states that have much better business tax climates than any of the states on their borders.  They are each sucking in businesses from the nearby states and helping their homegrown businesses to succeed in the most effective manner: by not putting burdens on them with high taxes.  States using limited time tax incentives or offering training to the employees of industries the state has picked as winners are not as effective in growing businesses and jobs as those who leave all this to the private sector.  Dell Computer had a four-year special tax break from the state of North Carolina for a facility, for instance, and has now announced that it is leaving the state when the four years are up.  This is not surprising.  North Carolina is ranked #41, so it makes sense for Dell to go back to Texas at a #13 ranking or maybe move that facility to Florida with its #5 ranking.

A Rational Examination of the October Employment Report

We are now three years into the Great Socialist Recession.  This is much the longest recession since I began paying attention to national events when I was five years old in 1952.  Yes, I actually watched the Democrat and Republican National Conventions with a great deal of interest in 1952.  But back to the present and the employment results for October 2010.  First of all, when deep into a very long recession, the most talked about number, the unemployment rate, is meaningless.  One has to dig deeper into the numbers to understand what is going on with the critical jobs situation.  We will do that.  When we do, we will find that there is much less to crow about than the Wall Street Journal and Fox Business News thinks there is.  Speculation that this is going to help Obama's re-election is way premature.  If it does, there is no Justice in these United States of America.

But first, here are the numbers we need to gain that understanding:

These are not the seasonally adjusted employment numbers.  I do not use them.  The Bureau of Labor Statistics announced with the October Report that they had revised the number of employed people for the months of August and September.  They were talking about the seasonally adjusted number.  The September number of those actually employed in September in the October Report is the same as the number from the September Report and the same as in my table of a month ago.  Apparently the formula for making the seasonal adjustments is what changed!  Frankly, any such formula this far into a recession is likely to be meaningless.

It does not mean much if a few jobs are added, when the number is much, much smaller than the increase in adults of working age.  The number of non-institutionalized Americans of working age increased by 208,000 from September to October.  Some 67.49% of these potential new workers would want jobs if employment were as available and desirable as it was in January 2000.  140,379 additional jobs would be needed to provide the jobs they would want.  But, note that the actual number of net additional jobs was only about 31,000.  This is bad, bad news.  Not only have none of the many previously unemployed been put back to work, but few of the additional people of working age have prospects of getting jobs either.

This is such a discouraging situation that the number of people reported as unemployed went down by 237,000 people when the number of employed went up by only 31,000!  206,000 more people gave up looking for work in October.  Despite the loss of 204,000 jobs in September, 619,000 people gave up looking in September.  One would think the 204,000 newly unemployed would have been added to the 619,000 to make an unemployed number in September of 823,000!  Similarly, 378,000 fewer people were looking for work in August than in July, despite there being 215,000 fewer jobs in August.  Clearly the August report should have had 593,000 more people looking for work.  This is just one disaster after another.

Using the employment level of January 2000 as a benchmark for the number of jobs needed to give everyone who would want a reasonable job such a job, we are lacking 21,235,000 jobs now.  At the time when the Great Socialist Recession started in December 2007 or just after, we already had a shortfall in jobs compared to January 2000 of 5,334,000.  From December 2007 to now, the number of full-time missing jobs has increased by another 10,212,000 jobs.  The 6-7 November 2010 Wall Street Journal front page article incorrectly reports a smaller number of lost jobs, namely 8.4 million.  Perhaps they are only counting people put out of a job and not counting those who have had no opportunity to ever hold a job.  To understand the weakness of the economy, we have to understand that the massive growth of governments throughout the last decade has transferred massive wealth from the private sector that creates jobs to the governments, which do not create jobs.  The economy had already suffered one-third of the decade's total job loss in December 2007.  The Great Socialist Recession then caused the other two-thirds of the huge total job loss of about 15,546,000 in the decade.

The Wall Street Journal article notes that at the "job creation" rate of October, it would take 50 months to replace the lost 8.4 million positions.  Well let's see.  8.4 million divided by 31,000 is 271 months!  What are they talking about?  Probably some phantom seasonally adjusted job growth.  As we noted above, the one month increase in the job age population should require another 140,000 or so jobs to accommodate the population growth.  An infinite amount of time will never provide those jobs at a rate of 31,000 new jobs in a month.  Meanwhile, the Federal Reserve Chairman told college students in Jacksonville, Florida that

And as a result, the unemployment rate, if at all, is coming down very, very slowly."

I sure am happy he put in that "if at all" qualifier, but one can clearly see that he was creating a very rosy picture compared to the reality.  He should have said that it is a good thing many of you will have college degrees, because those who do not will never get a job and even many of you with college degrees will not.

Of course many of those jobs are missing because of the minimum wage laws.  Many more are missing because ObamaCare has convinced many employers not to hire due to its costs and the fact that it is not an intelligible law.  It is too complicated to deal with if you employ 45, 55, 100, or 200 people.  Only the multinational corporations may have the manpower to deal with it and to apply, as McDonald's and Boeing have, to be exempted from its provisions.  Other large corporations are applying for exemptions from the high costs of ObamaCare already, but how can a corporation know if such exemptions will be granted?  Smaller companies have no idea how to apply and have less hope of having the clout to be given exemptions.  Many companies will just decide to sub-contract tasks or do without manpower.  Sometimes they can substitute machines for people.  Sometimes they just decide to have a widget made in China or India instead of hiring a new employee who will force them into the ObamaCare morass.

The costs of financial businesses are up due to Dodd-Franks regulations, so we can hardly expect them to hire.  The EPA is promising draconian fossil fuel cost increases following their insane ruling that carbon dioxide is a pollutant, so power companies, industries using power, and transportation companies are going to see their costs go up.  They do not know how much.  The EPA was waiting until after the elections to fry them with those costs.  The People will have much less money to spend too, because the costs of almost all goods and services will go up when the cost of using energy goes up.  Then there is the fact that businessmen still do not know what their tax rates will be in January, unless they are a corporation.  The corporations do know that their 2nd highest in the OECD tax rate of 35% will be the highest rate in the OECD in 2011.  Investors face many new problems in 2011 with capital gains taxes going up by one-third and interest and dividends being taxed at the individual marginal tax rates of up to 39.6%.  This will be a strong disincentive for job creating investments this year and thereafter.

Since the Democrats took control of both houses of Congress in 2007, there has been no sign of tax sanity at all in the federal government.  If Obama is yanked from office in the 2012 elections and the Senate is controlled by the Republicans, there will finally be a chance that our very excessive taxes can be brought under control, so jobs can once again be created.  The ObamaCare and EPA carbon dioxide threats will have to be dealt with as well.  Critically, the federal, state, and local governments will all have to reign in their profligate spending.  The deficits and the printing of about $1.75 trillion to add to the pre-recession $0.8 trillion cannot go on.  Jobs are not created in a world gone insane.  Of course, the USA has gone more insane than most of the OECD nations, so most of the job growth will occur in other nations until we address our many problems.

Meanwhile, blacks, most of whom are ever so loyal to Obama, are suffering an unemployment rate of 15.7% compared to a white unemployment rate of 8.8%.  Hispanics, more commonly Democrats also, are enjoying the Obama unemployment rate of 12.6%.  Some blacks and some Hispanics must be starting to think about where their allegiance should lie.  Perhaps it should be with the party more friendly to the job-creating private sector.

Obama White House: 8% Unemployment Until 2013!

Obama's economic advisers believe the U.S. unemployment rate will continue to be above 8% until 2013.  We have already had 17 months of unemployment above 9%.  We have had 20 months of underemployment above 15%.  Now Obama and his team are saying we will have another 32 months or so of unemployment above 8%!

Obama and the Democrats have had a series of economic advisers who have been unable to prescribe any actions to take on the economy which have been beneficial.  Instead of the obvious beneficial recognition that taxes on businesses and the wealthy are too high, Obama and team have insisted on one tax increase after another.  Instead of recognizing that business needs the freedom to produce and to provide services, Obama, with his clueless socialist philosophy, has insisted that businessmen and women are all evil, conniving slime balls, who must be evermore intrusively regulated by government bureaucrats.  Since the phenomenal growth of the government's spending from 2000 to 2008 with an increase of 66.7%, was not enough, Obama stole huge measures of wealth from the private sector with huge additional spending and with huge mandates. The mandates require businesses to spend much more money and time to provide what Obama regards as social services, but does not want to add to the federal budget and deficit.

If you wonder how the huge increases in actual federal spending are a drain on the private sector, it is because that spending will be paid for by the private sector through a combination of:

• Higher future taxes
• The loss of present and future property values on buildings, equipment, and facilities
• The unavailability of money for present and future investment in new plant, equipment, facilities, and training
• Higher interest rates on borrowed money due to inflation and increased business risk brought on by growing government, which is always a threat
• The lower value of the dollar, making resources and supplies from abroad more expensive
• The lower growth of the economy due to money for political purposes doing nothing to increase the productivity of the American worker and businessman
• The mischief of using some of the money to subsidize very uneconomic products such as ethanol, solar power, wind energy generation, and mandated health insurance as a means to dump the costs of these lunacies upon the private sector
• Huge increases in the time to provide government with much more paperwork and to keep many more records for such things as ObamaCare, energy use, CO2 generation, financial activities, and recording and filing 1099 Forms for every person or company more than $600 was spent with

As a businessman trying to rationally plan your future investments, the blizzard of federal spending, mandates, regulations, paperwork, and taxes is mind-numbing.  You stop dead in your tracks and say "I do not understand what is going on.  Clearly Washington is trying to kill my business.  I have to stop making decisions until I can figure Washington out.  But I do not have enough copious free time to do that.  Is that even possible?  What they are doing is so clearly lunacy.  I will just hold as tight as I can until this mess is somehow straightened out.  If it is not, then it is time to retire."

 Meanwhile, one thing you will definitely not do is hire anyone.  So, remembering that the one thing we can count on from the Democrat socialists is that they have no understanding of the economy and even less of business, especially small businesses, who is crazy enough to believe that unemployment will come down to 8% in another 32 months under their management of a very meddlesome and ubiquitous government.  So long as a clueless government guided by the theories of Marx, Alinsky, Mao, Castro, Chavez, and Mussolini has its hands in everyone's every pocket and its fingers in everyone's personal apertures, the unemployment rate will never again be less than 8%.

Unless the government pretends to give everyone a job as the Union of Soviet Socialist Republics used to do.  The good old USSR used to have three to six people watch one person work, but all were said to be employed.  Look where that got them.  That is not the fate Americans want.  The majority understand economics and the business of business better than do Obama and his economic advisers from academia.  They are about to overthrow his regime of childish and destructive control-freak meddlers into the workings of the very complex and very adult private sector of America.  The Socialist Party is going to lose 69 seats in the House of Representatives, giving the Republicans a substantial majority in the House and mercifully ending the Pelosi "You have to pass the bill to know what is in it" regime there.  The Republicans will come to have 49 or 50 Senate seats and look to end up with 33 or 34 governorships just in time for the decadal redistricting of House seats.

The Republicans, even given more resolve by Tea Party members, may not be able to undo all the ill-gotten gains of the socialists with only control of the House, but they can and should defund all of the mischief of that socialist program.  Will they have the guts and will the American People prove to be the Winter Soldiers who will stand with then to fight Obama?  It will come to that, because Obama is a committed socialist and his promise to fight viciously with fists and elbows is the only promise we will ever be able to count on from him.

Of course we will always remember these whoppers:

• I will cure disease throughout the world, stop the warming and stop the rise of the oceans.
• I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.
• I will not increase your taxes unless you make more than $250,000 a year.
• If you like your health insurance, you can keep it.
• The health care reform bill will decrease the cost of your insurance premiums.
• The Stimulus Bill will keep unemployment below 8%.
• There are no earmarks in the $787 billion Stimulus Bill.
• The health care package will pay for itself.
• The ObamaCare fee is not a new tax.
• We have run out of places in the U.S. to drill for oil.
• I will not rest until the BP Oil Spill stops.
• The Finance Bill will provide transparency and end the risks and abuses that nearly collapsed the financial system.
• The health care bill will not increase the deficit by one dime.

We can count on him adding greatly to the list over the remaining two sad years of his occupancy of the White House.  The man is a joke and a tragedy.

If only the first black American President had been Prof. Walter E. Williams and his wife had retracted her promise to assassinate him if he ran for the presidency!  With his good understanding of economics and the limits of legitimate government, what a President he would have been.  With advice from his friends Dr. Thomas Sowell and Supreme Court Justice Clarence Thomas, that triumvirate would have saved America much misery and would have demonstrated why you do not write anyone off on the basis of identity politics.

Eliminating the Deficit Is Not Hard

Daniel Mitchell of the Cato Institute has a prescription for a simple way to balance the federal budget without higher taxes.  He would freeze the budget where it is or allow either a 1% or 2% increase per year to achieve budget balance in a few years.  Freezing the budget where it is, projected tax revenues will slightly exceed the spending in 2016.  With 1% spending increases, a micro surplus would occur in 2017.  A 2% spending increase allows a surplus in 2020.  His is a simple response to the absurd claims by John Podesta of the Center for American Progress that the Bush tax cuts cannot be extended or made permanent because there is no reasonable way to downsize the government.

Let us look at this a bit further.  I have plotted the actual federal spending in 2005 dollars from 2000 through 2009 below, with the corresponding actual federal tax revenues.  Beginning in 2002, the tax revenues have been consistently lower than the spending, so we have become habitual deficit spenders.  The Obama government's expected spending and tax revenues for 2010 through 2015 are also plotted.  The Obama government intends to continue huge deficits through the 2015 fiscal year.  I have also plotted what government spending would have been if it had increased each year since 2000 at the same rate as the growth of our population.

For many decades, federal government spending has been excessive.  It was certainly excessive in fiscal 2000.  At least $2 of spending was unconstitutional even then for each $1 that might have made a reasonable claim for being constitutional.  If the federal government had increased its spending at the rate of population growth since then with a constant per capita spending rate, the tax revenue income would have been a match for spending except in the dip of revenue corresponding to the aftermath of the dot.com bubble bust and the present Great Socialist Recession in 2009 and 2010.  This would have been government we sorta, coulda have afforded.  Instead, we have had an insistence that at no time should the government feel any constraints on its spending.  In 2009 and 2010, the years whose spending Obama and the Democrats have completely controlled, the spending has been more than two-thirds higher than tax revenues.  I see no reason for the ridiculous spending of the years 2009 and 2010 to be continued, even without growth.  The new Republican House should insist that 2011 spending return to at least the absurdly high spending level of 2008.  The federal budget could then be allowed to grow at the population growth rate of 0.986% a year from 2000 to 2010.  The rate of spending from 2011 through 2015 is the curve I have called Spending Rationalized.

Under the Spending Rationalized plan, spending would be barely in excess of tax revenues with the extended Bush tax cuts in 2013 and there would be a small surplus in 2014.  There is no reason for government to grow faster than the population does.  In fact, while one might argue that the kind of protective services of local and state governments might justify growth at the population rate, there is no reason for the federal government to grow as fast as that.  At least there is no constitutional reason.  A constitutional government's main expense, by far, would be defense.  The threats to us defensively tend to be what they are, whether we have some more people or some fewer people.  Actually, with more people, enemies may be more reluctant to tangle with us, so the defense needs per capita may drop.

The socialists of the Obama government may argue that the recession will require on-going higher spending levels.  But, the many Obama attempts at stimulating the economy with massive spending bills have not worked.  It is clear that what is needed is a restoration of business confidence, both for large corporations and for medium and small businesses.  They need a known and not too expensive regulatory climate coupled with a reasonable tax policy that recognizes that many American companies are in direct or indirect competition in the world markets.  They need the government to get out of the way and let them produce. 

The only way to get out of the looming cost of government problems such as the Medicare, Medicaid, and Social Security underfunding problems is to cut back on those programs somewhat and foster real growth of the private sector.  The Obama idea of transferring wealth in larger and larger amounts from the private sector to the governments is a recipe for the collapse of the American economy, not just on the temporary scale he has forced in 2009 and 2010, but on a permanent basis.  Indeed, I have little confidence that Obama and the Democrats would even hold spending down to the very high levels they are projecting.  I am even more confident that under their management, the growth in tax revenues they are projecting for 2011 onward is unrealistically high.

Those increases in revenue are not too high if there is a sufficient change of philosophy in Washington that results from the Republicans gaining control of the House, which has to originate all spending bills.  If the Republicans manage to defund ObamaCare and to prevent the EPA from driving up the cost of energy due to their ridiculous declaration that CO2 is a pollutant, then there is hope the U.S. economy might become healthy enough to be able to generate the tax revenues projected.  If Obama takes over the many union pension funds that are underfunded and in critical condition and pushes through union card check so that many more businesses will be forced into a death spiral by being unionized during the lame duck session of Congress just after the election, then growth will be slowed for several years and things may be less rosy than the Democrat projection of tax revenues assumes.  Or, the Republican leadership may think it can ignore the Tea Party and its demands for smaller government and start making compromise after compromise with the socialists to grow government more and the business recovery will be impeded.  Many ifs remain and we will have to be aggressive in making demands of the Republicans once they are in office if the economy is to be set upright again.

The Bailouts and the Stimulus Bills provided gifts to many financial and large companies, but they hurt almost all other companies except for those in the green energy and global warming fraud business.  Obama's much touted small business loans came late and were not at all what small business needs.  Few small businessmen want Obama to become their partner.  Come to think of it, most large businesses belatedly learned that he is not usually a good business partner.  Most American businessmen, and especially small businessmen, agree that they just want government to stop constantly writing more laws and regulations to micromanage their businesses.  There are more laws and regulations than they can comprehend, which is not surprising given that the law makers themselves do not have the time to read the laws for which they vote.  Businessmen have to earn a living and then they are either supposed to read the voluminous laws themselves or have the surplus piles of cash to hire someone else to do it and constantly advise them.  This is a huge drain on small businesses and an unnecessary drain on any business of any size.

So, if government wants to have the tax revenues to spend for all the programs it is already committed to, then it had better change its tune and start recognizing that it is business that generates the income the government taxes or distributes money as wages and salaries, which the government taxes.  You could say that the business of America is business.  I think I have heard that before.  It is often held up to ridicule, but business is the way we all lead productive lives and generate the wealth that sustains the government and for that matter the charities of America.  It is high time we see the validity of that saying that the business of America is business.  So, in the name of the business of America, we need a federal government which knows to avoid being constantly in the way of those who are producing America's wealth.

Rally of the Indoctrinated and Obedient Youth

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

Now Stephen Colbert made a point of declaring the rally a demographic representation of America.  It was not.  It was even less a demographic representation of the Democrat Party with respect to race.  Unlike Tea Party rallies, families were not common in the crowd.  Unlike Tea Parties, there were few individual created signs.  They were brought to the Washington DC Mall with this injunction:

Think of our event as Woodstock, but with the nudity and drugs replaced by respectful disagreement; the Million Man March, only a lot smaller, and a bit less of a sausage fest; or the Gathering of the Juggalos, but instead of throwing our feces at Tila Tequila, we’ll be actively *not* throwing our feces at Tila Tequila.

There was really no political agenda put forth.  There was the usual Comedy Central caricature of conservative American viewpoints and the presumption was that if you were unhappy with their people, who were not clearly identified, then you were simply a fear-monger or an irrationally fearful person.  There was certainly no discussion of why unemployment is so high and has been so long.  There was no discussion of tax policy.  There was no discussion of the debt and deficits or of Social Security or Medicare problems.  There was no mention of ObamaCare.  There was no campaign to impugn business or to advocate a plethora of new regulations and mandates.  It was all light, at least if you were not someone being characterized as afraid of all Muslims or someone who finds Fox News to be a useful source of news.  It was not clear what the purpose was other than that Colbert stated that it was to show that they could draw a large crowd, which they did.

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

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

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

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

California's Coming Massive Wealth Transfer to State Retirees

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

What California government admitted as of 2008 conditions was:

• The California State Teacher's Retirement System is short $40.5 billion.
• The California Public Employee Retirement System is short $35 billion.

Stuart Buck, a Distinguished Doctoral Fellow at the University of Arkansas has found that losses in the pension funds investments since 2008 has left them an additional $44 billion in the hole.  Worse yet, the state has been assuming that their investments for the pension funds will earn 7.75% to 8% per year return.  Given that we have had a decade of virtually no return on the stock market and given the huge problems which continue to plague the economy such as:

• the continuing home foreclosure crisis
• the further cost of bailing out Fanny Mae and Freddy Mac of about $300 billion
• the many states with hugely underfunded state pension funds totaling about $700 billion
• the many union multiemployer defined benefit pension funds with unfunded liabilities of about $700 billion which will destroy many unionized companies
• the much increased costs of ObamaCare which will increase everyone's premiums, increase medical taxes, greatly increase business costs, and put a huge strain on state budgets
• the increased costs of financial transactions due to the Dodd-Franks financial "reform" bill
• the increased costs of energy use planned by the EPA under its declaration that CO2 is a pollutant
• the increased costs of energy use due to ethanol, wind power, and solar power mandates, which California eagerly pushes forward
• government moves to force more unionization onto companies
• the ever increasing costs of more and more government regulations on businesses and those who pay the higher costs for their products and services
• our corporations will have the world's highest corporate tax rates beginning in 2011 and they are going up to help fund ObamaCare

the 7.75 to 8% rates of return imagined by the California accountants is totally unreasonable.  Unless the state of California is going to invest all of its pension funds in China, their wishful rate is much too high!  So, Buck says that using the more realistic rates of return used by private pension funds, the California pension funds will be $282.2 billion short.  This should be corrected for the current market values, so the real shortage is about $326.6 billion.  It turns out that the retiree health benefits program is also underfunded, by $51.8 billion.  The total shortfall for retirees health and retirement is then $378.8 billion.   This is about half the scale of the shortfalls on liabilities that caused the Socialist Recession that has brought down the entire U.S.!  This would be a disaster if the California Gross State Product were half of the GDP of the U.S.A.  It is a large fraction for a single state, indeed the largest state fraction, but it was only 12.7% in 2008.  This would imply that California will suffer for its state pension fund shortfall about 4 times more than it is suffering from the pain of the current Socialist Recession spread over the entire U.S.

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

Government Employees Union is Lord of Campaign Spenders and Master Thief

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

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

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

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

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

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

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

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

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