Below is my first post since returning almost two weeks ago – lots of work to catch up on when you are gone that long.

The United States economy is not performing well.  It can be argued that our institutions are held in lower regard than at any previous time.  More people are out of work than at any time since the 1930s.  The physical health of our nation’s people seems to be devolving into an epidemic of obesity and drug dependence.  The historically accepted family structure of man, wife, children, is under daily assault and by many accounts its demise is causing further major cultural problems from a weakening social fabric, increase in crime, drop in general ethics, to an education system that fails to educate in math and the sciences.  Many people feel that people are irreversibly damaging our environment and causing changes to our climate and to our entire ecosystem.  Our freedoms seem to be nibbled at each day to the point were it is now accepted by large portions of the population that “America” is no longer the nation with the most freedoms.  Surveys from all corners tell us that the American People are not as optimistic as they were previously and that most Americans feel our nation is in a possibly irreversible decline.

Is Mr. Obama the Problem?  The answer is, of course, “Yes and No.”  He is a part of the problem as is each leader of each institution in our land.  Pending your understanding of the role of leadership, he is either a critical part of the problem or just one of many components.

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graphic from Leadership-Quotes.org

The reason for asking the question is that we have an opportunity in 2012 to effect at least a partial solution to our nation’s problems.  We can choose to retain or replace Mr. Obama as President.  Or, we may choose to limit his power somewhat by electing a Congress that has majorities from the opposition Republican Party.

I know there are fans of the President and those who think he can do nothing right.  My problem with both these groups is that both overstate their cases.  This leads to ‘solutions’ that tend to be emotion-driven, not reason-driven.

My answer is that Mr. Obama is a very big part of the problem and that we would do well to replace him in 2012.  I don’t think he is a bad person as many do.  I need to know him better to know things like whether he is good or bad .  I think he is a vain person, far too absorbed with how he is viewed by others.  I have wondered since he began his campaign in 2007 about “Hope and Change.”  It was Napoleon who said, “A leader is a dealer in hope.”  I think Mr. Obama has more similarities to Mr. Bonaparte than we want to imagine.

I disagree with many, if not most, of Mr. Obama’s positions. He has more faith in government and bureaucracies than I do.  He thinks more government is the solution to most problems.   I think less government would be better.  He is of the belief that highly educated people are wiser than those with hard experience.  He has surrounding himself with people who are clones of himself – privileged education, a lack of experience outside of the protective walls of academia or government employment, a belief in his superior intellect.  It bothers me that of all his cabinet members, there is hardly any experience outside of academia or government.  His support group, like himself is one dimensional.

.Most of all, I think he is lacking as a leader and what our government needs is a true leader, one who can make people believe that what they are doing is both the right thing and the thing they want to do.  Today, polls show that the majority of Americans neither believe that we are doing the right things or that we want to do the things our government is asking us to do.  We are lacking a leader who understands that, “ The leaders who work most effectively, it seems to me, never say “I.” And that’s not because they have trained themselves not to say “I.” They don’t think “I.” They think “we”; they think “team.” They understand their job to be to make the team function. They accept responsibility and don’t sidestep it, but “we” gets the credit…. This is what creates trust, what enables you to get the task done.”- Peter Drucker (emphasis mine)  Mr. Obama has both personally taken credit for all accomplishments during his watch but has also blamed others for the failures.

Is Mr. Obama the Problem?  Yes.

We have two huge problems with Unions and their effect on the growth and cost of government: The “Check-off” and The Unionization of Government Employees.  The exponential growth and cost of our government can be directly linked to these two things.  So what should we do?

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http://courantblogs.com/susan-campbell/wp-content/uploads/2011/12/ballotbox.jpg

Make the “Check-off” illegal and unions will lose both their power and the stranglehold they now have on politics.  Why?   The “Check-off” is a procedure whereby an employer is required to deduct union dues directly from an employee’s pay and then pay the money to the union.  Like income tax withholding (which in my view should also be terminated) the worker never sees the money and has virtually no control of how it is spent.

Imagine how differently most Union employees (and they do work FOR the Unions, not their employers in most cases*) would feel about the Unions if each month they had to write a check for $30 to $50 for the privilege of having a job.  I think Unions would lose a lot of members and with the loss of members, the loss of cash flow.

Now imagine how difficult it would be for unions to buy influence with their (now not-so-huge) contributions to (mostly Democrat) representatives.  In Oregon Congressional District #1, where I live, newspapers report that over a million dollars has already been spent by Unions on the Democrat running for Congress in a special election in January.  Think if that were only (?) $500,000.  The Republican might have a chance.

Even more important, we need to ban unionization of public employees.  Prior to the late 1950s, it was the commonly held belief that: 1. Governments were not abusive employers and therefor government employees did not need protection from them; 2. Collective bargaining for wages and benefits between government workers and their elected-offical bosses was inappropriate, if not unethical, because an elected official could ensure more votes from a very large block if he made the bargaining easy for the employees.  Most government leaders saw great problems with unionization of government employees.  FDR, who was the most progressive President we had seen to date, was strongly opposed to government employees unions.  This attitude remained until the late 50s.

“All of this was changed in 1958 when an aide to New York Mayor Robert F. Wagner, Jr. suggested that city workers could be a large enough voting bloc to ensure his reelection. Wager signed an executive order authorizing city workers, notably those of the transit system, to unionize and bargain collectively. As the percentage of Americans working for the government grew, other politicians began to see support for public employee unions as a way to get votes. State politicians around the country allowed public employees to unionize shortly after Wagner’s executive order. President John F. Kennedy (Executive Order 10925 – March 6, 1961) allowed federal government workers to unionize starting in 1962.” (from While America Aged in Philip Greenspun’s Weblog)

Today there are about 8 million government workers in unions while there are less than 7.5 million non-government workers in unions.  Over the past 20 years, Union contributions to political campaigns have gone almost 95% to Democrats and 5% to Republicans. (source)

That’s $486,440,870 to Democrats and $27,886,800 for Republicans.

Is it surprising that Unions gain more and more power as they elect more and more Democrats who give them great wages and benefits and who follow their lead in legislation?

*If an employer asks a Union employee to cross a picket line, he will obey his Union boss, not his ‘employer.’

A good friend sent the following video to me (and 10 of his friends) today.

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Almost immediately, one of his liberal friends (a college professor) emailed back to the group the following:

Well, a Washington Post story, Oct. 14, 2011, on the cost of the Bush tax cuts for the top 5%, puts it at $1,034,424,338,581. Sorry, but to me that sounds like a lot of money. I also think it’s unfair that Warren Buffett should pay income tax at a lower rate than his secretary, and, for that matter, Warren Buffett thinks so, too.
Jane  

I had to write back to my friend:

Jim,

I think Jane must have missed the point of the piece.  The point, in my view, was that by inciting class warfare and taking almost everything from “the rich” we can barely solve the budget deficit problem for one year.  The problem is that we are simply spending more than we have to spend.  Rather than focus on the “Bush tax cuts” I wish Jane and others, who think like her, would consider the possibility of reducing Federal spending.  Between 2001 when Mr. Bush and a(n almost) Republican Controlled Congress took power and the end of 2010 when Mr. Obama and a Democrat Controlled Congress we have gone from spending 18% of our GDP on the Federal Government Budget each year to 25% of GDP.  Since 7% of $14 Trillion is right at about the $1 Trillion, per year, that would be quite a bit more than would be collected without the “Bush tax cuts.”  According to the article to which Jane referred ( http://www.washingtonpost.com/blogs/ezra-klein/post/calculating-the-cost-of-the-bush-tax-cuts/2011/10/14/gIQADB7dkL_blog.html ) the “Bush tax cuts” have cost the Federal Government about $1 Trillion total since 2001.  She might also have made note of the fact that the Washington Post was quoting a website created by “Citizens for Tax Justice, a left-leaning advocacy group for progressive taxation.”
It appears that Jane does not understand the difference between a $1 Trillion a year problem and a $1 Trillion per 10 year solution she proposes.
It troubles me that many intelligent people like Jane are so blinded by class envy that they can’t imagine solutions that don’t attack those who are not “Progressives” like she is.

Jane responded to that with:

Why not reduce federal spending AND repeal the Bush tax cuts for the super rich? As to class warfare, I quote Warren Buffett again: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” And I don’t envy the billionaires, nor do I want to attack them; I just think that they should contribute their fair share to the solution of our budget problems. Jane

I’m taken by the words she used, “”the super rich” (class envy?) and “contribute their fair share” (Socialist?).  And, I’m still convinced she did not get the point of the video.  What do you think?

In my view, “collective” bargaining has no place in the Government workplace.  Yet the push for collective bargaining is driving the fastest growing part of the union movement: government agencies.

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Government Employee Union Rally

Why don’t I think “collective bargaining” is appropriate in the government workplace?  Before I answer, be aware that I am not against true union negotiation with employers in the private sector.  That is not to say that I approve of the way union/employer relations are manipulated by politicians/government.  I do think it is the right of an employee, working for a private sector employer, to join with a friend and/or with a number of other people to show a united front when dealing with an employer.  In the private sector, the employer shares both the risks and the rewards of employing others to provide needed labor to do business.  The employee has the risks and rewards of choosing to work for the employer.  If the employee wants changes in the work environment, he can choose to ask for those changes (more pay, more time off, better equipment, different hours, etc.) or not.  And the employer can choose to make those changes or not.  The employee is then free to quit at any time and knows the consequences fall on him alone.  The employer, too, is free to choose not to make changes but knows that the consequences of losing employees or having employees strike will effect him and his business.  Both parties are acting of their own free will and in their own self interests.  In my book, if government doesn’t unfairly restrict one party to the advantage of the other (see my post on the Union push for the “Employee Free Choice Act”) this will result in a marketplace for labor that is ‘self-leveling.’  Neither party will enjoy a big advantage over the other for long.

That is not the case with “collective bargaining” between a union labor group and a government employer.  Things are about the same for the employee, but the employer’s situation is far different.  In the private sector,the employer has his own job, plus his business and the value of that investment at stake.  He will work hard to make sure that any contract is one that can be upheld and which will not put him at a disadvantage to his competition or bankrupt his company.  A government employer differs in that he has only his job at stake, no investment, no customer base to lose, no competition to take his business if he bargains away too much such that costs rise.  A Private employer must weigh the costs of a contract and what it will do to his competitiveness in the marketplace.  The government employer has no such concern.  His only desire is to make sure he gets his job done.  That normally means that his main motivation in a negotiation is to not rock the boat.  Having labor slow down or strike can cause him to look bad and maybe get a bad job review.  There are rarely greater consequences than that.  All the incentives are to make the employees happy.

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From www.Demotivator.org

As an example, let’s look at Teacher’s unions to start.  In general, government schools have no price competition from private schools.  Private schools must charge tuition where the government schools are provided at no direct cost to the student or his family.  Since the people bargaining on behalf of the government school are either Administrators or School Board Members (or a combination of the two) they have nothing at stake except their jobs.  The Administrator who gives away the store in negotiations may lose his job as a consequence, being fired by the school board.  The school board member may lose his job when the voters reject him at the next election because he was not using school funds wisely.  That is all they have to lose.  And they rarely lose that even if they overspend and do too much for the employees and too little for the customers (students/parents/taxpayers).  That makes it pretty easy to offer or accept benefit or wage or pension terms that don’t cause major probems, at least in the short run, for the school budget.  There is no incentive to hold the line on critical issues of wage, benefits, and working conditions.

Are there any unions representing teachers at private schools?  I don’t know of any.  So why do we have unions for almost all public school teachers?  Union officials would say that if teachers are not represented by a union, they will be taken advantage of by their school employers.  If that were the case, private school teachers would likely flock to the public schools where they could get higher pay and above market benefits.  Why don’t they?  I can only think of a few explanations.  Either they are incompetent, lazy, or poorly trained and can’t get hired by public schools, or, they choose not to work for the public schools.  If the latter is the reason, they must either think that their working conditions are good, or, they think the working conditions at the public schools are not.

Much like the massive collectivization of Soviet farms in the 30s, collective bargaining for teachers has had major effects.  I would characterize those effects as negative in both cases.  The Soviets saw farm production drop dramatically.  ”Why should I work my butt off if Comrad Istovich sits around all day and doesn’t pull his weight on the farm?  He gets just as big a ration as I do.”  Teachers represented by Unions see their pay and benefits tied to seniority not performance.  Why should they work the extra hours if the teacher in the class next door does nothing but the minimum needed to keep from being fired?  And, I would argue that being fired from a Union protected public school job is more difficult than you can imagine.  If you want to understand just how hard, google “rubber room.”

In a country that has prospered based on its ‘exceptionalism’, it is hard to understand why we would allow Union collective bargaining to systematically eliminate individual incentives, to aim for the middle instead of the best.  It is hard to imagine why we would let unions become the  true employer of the people working for tax dollars instead of the taxpayers.

We now have unions of firefighters and police officers.  And, unionization of postal workers and Environmental Protection Agency and Tax and Trade Bureau bureaucrats.  Last I checked, all of these employees are hired by agencies that are fully funded by tax and fee revenues provided by taxpayers.  The mission of each group whether firefighters or clerks in the TTB is to provide services for the taxpaying public.  These employees should work for the taxpayers, not for their union bosses.

Next post will explore ways to reverse the trend of unionization of public employees.

Congressman Mike Kelly from Butler, PA is a car dealer.  He has worked in the private sector his whole life and finds it harder and harder to do business every day because of the excessive regulation from Congress and State and Federal Agencies.  He is obviously fed up.  The five minute ‘rant’ in Congress shown below is obviously heartfelt.  He uses no tele-prompters.  He just speaks his mind.  I think what he says would be echoed by most people involved in private business where they have ‘skin in the game’.

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Would you rather have men like this passing laws in Congress or people like Nancy Pelosi who has always fed at the public trough?  Let me know what you think.

Small Businessperson saved from GSA-created paperwork

“Government is not reason; it is force!  Like fire, it is a dangerous servant and a fearful master.” – George Washington.

To say our Federal Government Agencies are out of control and spiraling toward disaster is to be kind, or, naive.  To understand that government is “a dangerous servant and fearful master” is to properly view it and warily make use of government as a tool, a dangerous tool.

A personal experience yesterday is a microcosm of the larger (hugely larger) problem.

Our company has a contract with the GSA (General Services Administration).  This contract allows Federal Government buyers to purchase goods from our company at established prices that have been pre-negotiated with us by GSA negotiators.  The purpose of the contract from the government perspective is to negotiate once for the best price and then allow all government buyers to benefit from that one-time negotiation.  It also gives each buyer the confidence that the GSA has checked out the company for quality, delivery, financial stability, etc.  This is much like a union or guild or consumer’s group.  A large group of people or organizations band together to negotiate better insurance rates or commodity prices, etc.  So in theory, the company only has to go through the negotiation once (saving time and money) and the GSA does the drill on behalf of the Army and the Dept. of Agriculture and the FDA, etc. so they, too, save time and money.  That’s the theory.

Unfortunately for all of us, practice differs from theory here, as almost everywhere.

Consumer groups or guilds do not have the power of law like the GSA.  If the AARP can’t get the best deal with Holiday Inn, it suggests to its members that they stay at Comfort Inn.  AARP does not have the right to any data not available to the public.  It cannot force Holiday Inn to do anything other than negotiate for a price and terms.  The two work as equals:  a large group of consumers, who want favorable terms, negotiates with a large corporation who is willing to offer concessions to get that business.  Either  the negotiation is successful for both parties or it is successful for neither and they agree to disagree, i.e., no contract is signed.

The GSA, however, can require companies to comply with all of the hundreds of requirements of the FAR (Federal Acquisition Regulation) in order to have the opportunity to attempt to get a contract.  If you think by saying “hundreds of requirements” I am exaggerating, consider that the Index for the FAR runs 144 pages.  The ‘basic’ document runs 2,007 pages, and the FAR is updated or changed on a regular basis.  There are companies you can hire who employ large numbers of people who do nothing but ‘help’ other companies to interpret and understand the FAR.  I would argue that it is not possible to fully “understand” the FAR and that is proven by the government disclaimer that any advise you receive from the GSA or the government websites is not reliable (“Disclaimers: The Federal FAR Helpdesk Service is provided to assist government personnel in answering FAR questions. You should first search the FAR to find your answer, talk to your policy office and or legal office before resorting to this Helpdesk. Questions regarding agency supplements should be directed to your internal policy or legal office.”)  

Back to my personal experience yesterday that gave rise to this post/rant:  In renegotiating our contract for a five year extension, which we have been working on for the past three months (don’t ask the administrative cost to our company of seven people), we finally came down to near the end yesterday.  We received a list of the final 25 things (that’s the actual number of items on the  list of “last few items”) we needed to provide, confirm, attest to, or otherwise answer to the GSA, by law!  Item number four made reference to the IFF (Industrial Funding Fee – that’s the fee we must pay to the GSA for the ‘service’ they provide to us and which fee we are required to add on to our price to the government so we are not burdened with the fee).  Our IFF (and I thought all GSA contract holders’ IFF) has been 0.75% of the total price of the goods or services provided to the government.  In other words, if we sell $100,000 of goods to the Army, we must pay $750 to the GSA for their “service.”  Since that fee was built into the price to the Army, our only real cost is the administrative cost of accounting for the fee, writing the check, and making the quarterly filing to the GSA.  However, in item 25 of the list it asks us to confirm that our IFF is .9925% of sale amount.  We emailed to find out why the two different figures and were told the fee had been changed and they were sorry for any confusion they had caused us.  By the way, this fee is non-negotiable, by law.  In the real world all terms are negotiable

I can live with the increased fee since it is a direct pass-through to the buyer.  It doesn’t change our cost to file quarterly (even when we make no sales).  It is a minor issue to change all our prices but, by law, we are not allowed to change our prices until at least 12 months after the renewal of the contract.  So the effect is that we eat their fee increase for at least 12 months.  I can live with that, too.  $242.50 for each $100,000 in sales will not kill our company.  What bothers me is: why is there a need for an increase?   Since the fee is a percentage of sale, and since the GSA is not doing anything more to ‘help’ either its government customers (Navy, FDA, etc.), why do they need more money?  My guess is that they have grown the number and scope of the rules and regulations and have increased their staff to account for it.  In other words, I think the bureaucracy has grown and is increasing the cost to all GSA customers to pay for it.  In short, government will pay more for goods and services and the Fed will have to print more money or you will have to pay more taxes.

And, remember, the GSA is a tiny part of our government.  Its budget request for 2012 was just over $600,000,000 ($600 Million compared to the actual 2010 budget of $275 Million).  As part of the $3.7 Trillion 2012 budget, the GSA is just .016% or 16 hundred-thousandths of the total federal government budget.  Now imagine if the entire government had to increase its budget by (275 to 600 plus or well over 200% increase) or its fees by over 30% (.0075 to .009925) every two years.  Oh, wait, that has actually happened.  Our total government spending between 2008 and 2010 went from $2.9 Trillion to $3.5 Trillion or over 15% (and that doesn’t count all the commitments made in the Stimulus Bill, Obamacare, etc.).

I have a hard time imagining how our government could spend more money on what it buys today if the FAR and most centralized government purchasing ended tomorrow; if agencies became responsible to buy for themselves.  When rules are made to prevent fraud and corruption by the worst actors in our society, they invariably hurt the good guys.  They also drive up the price for everyone.  To save agencies from having to hire and manage honest and resourceful buyers, the FAR punishes all others in the system, but, especially the taxpayers who must foot the tremendous bill.

I don’t like to criticize without being constructive.  Therefore I will offer a suggested alternative.  Each manager of each government agency shall have as part of his or her duty the management of a strict operating budget for his or her group, department, or agency.  Failure to live within the budget must have consequences up to and including loss of pay, position, benefits, and the actual job.  When was the last time you saw a mission statement from a government agency that included “operating within the budget established for the agency”???  Make it part of the Mission of every government operation and put some teeth in it.

I am remiss in not having posted in a while and particularly in not recognizing Veterans on Veteran’s Day.  So here is a 5 minute video to remind us all about what our veterans do and why they do/did it.

Happy belated Veteran’s Day to all my fellow vets….and thank you for your service.

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The Democrats who controlled Congress and the Administration of President Obama claimed that the near 800 Billion Dollar “Stimulus” was needed to jumpstart the sagging economy.  They told us that our economy could only rebound if government stepped in to save us (from ourselves).  I would argue that the Stimulus Bill was, for the most part, a tool to reward those who had supported Mr. Obama and the Democrats in Congress in the 2008 elections.  It was partisan use of the tax dollars that you have paid to buy votes for Mr. Obama and his friends.  And it was on a scale greater than any pork ever voted by Congress, ever.

That is not how Mr. Obama or his supporters saw the bill.  From the Whitehouse.gov website on February 17, 2009 - ”What I am signing is a balanced plan with a mix of tax cuts and investments. It is a plan that’s been put together without earmarks or the usual pork barrel spending. And it is a plan that will be implemented with an unprecedented level of transparency and accountability,” President Obama said before signing the bill into law. “And we expect you, the American people, to hold us accountable for the results. That is why we have created Recovery.gov – so every American can go online and see how their money is being spent.”  Really?

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Porkulus

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I would argue that every sentence in that signing statement by our President is untrue and was known to be untrue when he spoke the words.

1. “…a balanced plan with a mix of tax cuts and investments.”  Let’s see.  The ARRA planned to provide about $175 Billion, about 20% of all “Stimulus” funds for Medicaid, family services, and unemployment insurance programs.  Add to that another $80+ Billion for Education, mostly what they called the State Fiscal Stabilization Fund.   Yet they dedicated a total of only $2.1 Billion (way less than one percent) for Manufacturing and Economic Recovery and Infrastructure Financing.  ”Balanced?”  ”Investments?”

2.  ”It is a plan that’s been put together without earmarks or the usual pork barrel spending.”  Really?  Just the $82 Billion that went for the State Fiscal Stabilization Fund was intended to ensure that teachers were not laid off in numbers like private sector workers.  It is no mystery that the NEA and its affiliates were and are the biggest supporter of Mr. Obama and Democrat politicians in general.  What a handy way to pump up your base of contributors.  That’s not pork?

3.  ”And it is a plan that will be implemented with an unprecedented level of transparency and accountability.”  Just for fun, go to the website as Mr. Obama advises.  Start with the comparison maps under “Where is the Money Going?”  the first map that comes up shows total recovery dollars distributed by state vs. the unemployment by state.  It doesn’t show things based on per capita recovery dollars.  It makes no sense.  In fact, that whole series of maps is “transparent” like a London fog.  If you can explore that site and believe that it is anything but an attempt to confuse the subject, you are wired differently than I am.

I could go on, but have written much about this already.  The reason for raising the issue again is that Mr. Obama’s “Stimulus Lite” or jobs plan is just more of the same.  And it is pure and simple campaign strategy.  He knows it has no chance of passing and he hopes it won’t.  Then he will have all those nasty Republicans to blame for defeating his best effort to create jobs.  He keeps looking for reasons why he has not delivered on his promises rather than making the needed effort to get the job done.  Mr. Obama doesn’t want more jobs near as much as he wants excuses that will help him to be reelected.

At a private meeting with President Obama earlier this year, the late Steve Jobs, previously a strong Obama supporter, said something very revealing about Mr. Obama,

“The president is very smart, but he kept explaining to us reasons why things can’t get done. It infuriates me.” – Steve Jobs

Me, too, Steve.

What did the ARRA do for you?

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