It’s Not His Job

This Thursday, President Obama will give a speech to a joint audience of Congress.  It will be about how he, our President, can create jobs.

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President's Don't Create Jobs

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That is not his job.  Jobs are created by demand for products and services not by politicians.  The “How I’m Going to Create Jobs” speech is a campaign speech.  Mr. Obama’s plan to “create or save” jobs is nothing more than a tool to build on his constituency in hopes of being reelected in November of 2012.  I am not convinced that our President has any interest in “creating or saving” jobs other than to help him retain the power he has, and build more power for the future.

Why do I feel this way?  First, let’s look at the “Jobs speech.”  Were Mr. Obama serious about “creating jobs,” as he says he is, why would this not have been his goal all along?  Why would he not have taken action already?  He claims that the Stimulus Bill was a jobs program.    The record shows that if it created or saved any jobs, the number was small and focussed on jobs in the government sector.  In theory, government jobs are paid for by taxes paid by private wealth creators (Butchers, Bakers, Candlestick makers) and government employment growth must be at the expense of private employment growth – if someone in the private sector must pay for more government employees, he or she will have less money to hire employees for private sector growth.

If this jobs speech were not all about politics, why the timing he has chosen?  I think it is a carefully planned speech meant for maximum political, if zero real-world, effect.  A week before going on vacation, Mr. Obama announced he would give the speech when he returned to Washington and would be working on it while on vacation.  He wants you to believe that he is working for you all the time.  I would prefer he take a week, play golf, enjoy time with his kids and relax.  When he returned from vacation, he announced he would give the speech to a joint session of Congress on the same night there was a scheduled Republican Presidential Candidate Forum.  He, of course, did not want to give the speech at that time.  Who would want to watch Mr. Obama read a teleprompter instead of watching the potential of a Presidential Challenger saying something outrageous in a debate?  If those two events were televised at the same time, I would bet the audience would be over twice as large for the Republican Debate.  His reason for choosing that date was so he could pretend that the Speaker of the House was being disrespectful to the President when (as Mr. Obama knew he would) Mr. Boehner asked him to reschedule for the next evening.  It is all part of the political dance that seems to occupy the White House and Congress far more than the business of the country.

If You are Serious about Jobs, Please Stop the 24/7 Politics

The second reason (why I think Mr. Obama’s speech on job creation is solely political) is his need to support Big Labor.  He needs big labor to fund his reelection campaign.  He needs to show that he is making opportunities for the 9.1 percent of the population that is officially out of work and the other 10% so discouraged that they are no longer looking or who have taken part time work.  He must know that the way to increase the number of jobs available in our society is to stop restricting everything the real job creators do.  For example, don’t you think employers would hire more people if they were spending a smaller part of their budget on compliance with regulations?  I think he also knows that business people weigh the risks and rewards that accompany the decisions they make.  Why would an employer borrow money to invest in space and tools for more workers?  He would do so if he saw more return than risk.  Unfortunately, today most employers see our government printing money and increasing regulation on business.  Both these things add risk or remove reward from investors. The more government meddles in business, the less likely are businesses to invest in growth.  Mr. Obama has not shown that he understands these facts.  Or, he is aware but choses to ignore them in favor of doing what is politically expedient for his future.

He is, however, squarely behind the “Employee Free Choice Act.”  That act would ban secret ballots and have union elections held in the open where Unions could (and I believe would) intimidate people to vote for them.   Anything but ‘free choice’ this would be a huge boost for unions and a big blow to employee rights.  From the standpoint of employers, this would be just one more reason not to hire more people and become a target for a costly unionization.  This takes control from the risk taker – the employer – and adds to the power of the union.   This is the sort of action that kills jobs or prevents them from being created.  Look for Mr. Obama to mention his support for this “important legislation” in his Thursday Speech.

Job creation is not Mr. Obama’s job.  However, if he is serious about job creation, there are hundreds of programs and regulations that he could reign in to help improve the climate for job creation.  My bet is that he will announce that he plans to do the opposite.  He will declare that we need to create a new advisory committee or a new agency or a new set of bureaucratic rules.  He will want to study the problem.

The time to study is long past.  Now is the time for action.  I don’t expect any useful actions to be revealed on Thursday night.  How about you?

“Trust me.”

Our entire economy is built on trust.  In fact, Capitalism is built on trust.  “Look past today’s scandals and you’ll find that capitalism has always been founded on trust, honesty and decency. That’s the only way it works.” – James Surowiecki, Forbes Magazine

The Quakers, who were banned from the professions for having shunned the Church of England, gravitated to the trades and became traders.  Actually, the fact that they trusted no-one except others of their faith led to them trading among themselves and literally starting capitalistic endeavor in England.  Prior to Quaker Capitalism, there was almost no trade even between feudal villages.  Might was right and if you went to the neighboring village to sell the fruits of your labor, you were as likely to be beaten and have your goods stolen as you were to sell anything. Forget the thought of sending goods to the neighboring village and expecting to be paid.   The quakers all but started the concept of credit that is key to capitalism.  They, and at the time no-one else, trusted that if they shipped goods to another Quaker in another area that they would be paid.

Who would ever sell on credit if they did not trust that they would be paid what is due?

Who would ever accept a small piece of paper worth maybe a penny in exchange for valuable goods and services if they did not believe the government would stand behind the value printed on the piece of paper?

Those questions are not being answered today like they were as little as three years ago.  Today, many people wonder if they will be paid back, should they grant credit.  As a result, it is much more difficult for individuals and businesses to get credit.  Is it as easy to get a home loan today as it was three to five years ago?  Is it as easy for a business to get an expansion loan as it was then?  Why not?  As trust goes down, qualifications go up.  You are not trusted as you once were, so now you must prove, more than before, that your lender will not suffer at your hands.  And our government has stepped in and added dozens of new rules and restrictions based on lack of trust and faith in borrowers.

So if business is built on trust, is lack of trust the reason business is suffering today?  I think it is a definite contributor.  The foundation of business (trust) is shaky so businesses are more cautious, less likely to take the risks needed to succeed.

Why is there less trust?  I think there are many factors, but much of it starts at the top.  Our government doesn’t want us to overreact to our economic reality so it changes the facts.  When government is constantly changing numbers to hide problems, it is hard for businesses to trust that government will not change other things that will impact the success of an investment.  This uncertainty and lack of trust is a real damper to investment.

If you are a politician and you want to be reelected, you don’t tell the people that 20% of the population is unemployed.  So when you report unemployment, you take those who have been out of work and are no longer looking (“discouraged workers”) out of the equation.  Then you report everyone who works 15 hours or more a week as being employed regardless the fact that most want to and are capable of working full time.   Employing these tactics and changing the facts,  our government/politicians can report that less than 10% are unemployed.  When you change the facts, they don’t sound so bad.

If you want to be reelected, you don’t want voters to think that we have serious inflation.  Double digit inflation was the downfall of Jimmy Carter.  He just wasn’t smart like today’s politicians.  Since Carter’s time we have decided that when we report inflation, we should not report food costs or fuel costs since both are so volatile.  So most of the Consumer Price index reports you see are less Food and Energy costs.  That’s pretty handy, since food has risen 2.3% in the first four months of this year (a 6.9% annual rate) and energy commodities (gas, heating oil, etc.) have risen 17.4% in the first four months of this year (an over 50% annual rate). Distorting the truth in this way allows politicians to report much more favorable numbers like 1.3% inflation over the past year (less food and energy, of course).

Politicians want to be reelected so they often do the bidding of big business or big non-profits.  The result is economic hurdles for small and medium sized businesses who are the job creators in our economy.    Where economic barriers are raised, small and medium sized businesses spend money to scale the barriers, not to invest in new plant, machinery, and personnel.  Examples?

A few major wine and beer distributors want to monopolize the market so they have been pushing legislation that would require all alcohol that crosses state lines to do so only through a distributor.  The effect would be that the big distributors would no longer have to compete with the thousands of wineries and micro breweries who self distribute.  The fact is that 90%+ of breweries, wineries and distillers want no part of this legislation.  But, there are Senators and Members of Congress (mostly from areas where there are few if any small wineries or breweries) who are more than willing to accept lobby money for their next reelection in exchange for moving forward this ill-conceived and unpopular legislation.

How can you trust a government that is willing to sell favors to those with the money to buy the favors?

The President and his party want the continued support of Big Labor so they are pushing for legislation that would clearly violate the constitutional rights of laborers but would benefit labor leaders by certifying more union shops thereby making more laborers join unions.  It is cynically called the “Employee Free Choice Act” and would strip from laborers the right to a secret ballot in union certification elections  –  Good for Union bosses and good for the politicians they support (pay) but a disaster for working folks.

How can you trust a government that is willing to take constitutional rights from most people to make their wealthy “Labor Leader” friends still wealthier?

Where there is no trust, there is no investment.  Where there is no investment, there is no job growth.

If we want to bring down unemployment, we would go a long way by just honestly reporting what is going on in the economy and by not changing regulations, taxes, and fees at every turn.  In my opinion, honesty, stability and trust would greatly improve the business climate and lead to job growth.  What do you think?

Why Don’t We Trust Our Government?

The simple answer to the question is this:  We don’t like be lied to, condescended to, and told we are idiots because we don’t like the current Imperial Presidency and the Elected-for-life Congress or courts.

TRUST - a graphic from ravenwerks.com

 

Example One:

Jack Lew, the Director of the White House Office of Management and Budget, wrote an op-ed piece that appeared in USA Today in late February.  Its purpose was to support the President’s Budget proposal to Congress.  Specifically, its purpose was to debunk rumors that the Social Security Fund was broke and that meeting the regular payments to Social Security recipients was helping drag down the budget.  If you want to read Mr. Lew’s amazing claims, go here.  The short and sweet of what Mr. Lew claims is that payments to Social Security by both employees and employers are kept in a separate fund, the fund has sufficient moneys to pay all expected Social Security Claims until at least 2025 (or 2032, or 2050 depending on which assumptions are made), and the real reason for our budget woes is that George Bush cut taxes on the wealthy and increased the Medicare benefits without funding them.  Let’s see how these statements meet the smell test.

First, there is no “trust fund dedicated to paying benefits.”  The fund is basically an accounting device.  The Government spends all income of the Social Security tax annually on both retirees and general fund commitments.  Since early in 2010, less money has been collected for Social Security than is paid out.  “Surplus funds” have for many years been nothing but IOUs from the U. S. Government to the Social Security ‘fund’.  As President Bush stated in 2005, “Some in our country think that Social Security is a trust fund — in other words, there’s a pile of money being accumulated. That’s just simply not true. The money — payroll taxes going into the Social Security are spent. They’re spent on benefits and they’re spent on government programs. There is no trust.” When people in the Federal Government point to the Social Security Trust fund and say it is fully funded for 25 more years, they are pointing to a pile of special Treasury Bills, that can only be bought back from Social Security by our Government.  In other words, they are non-negotiable securities or paper placeholders – IOUs that have no basis in value other than the “full faith and credit of the U.S. government.”  True assets have a market value.  The “assets” of the Social Security Trust fund have no market value.  Somewhere in prison, Bernie Madoff is green with envy wishing he had thought up such a clever fraud.

If this is not enough to make Americans distrust their government, President Obama nominated and Congress confirmed Timothy Geithner as Secretary of the Treasury.  Among other things, Geithner’s job is to appoint the Trustees of the Social Security Fund.  Yes, that’s the same Timothy Geithner who failed to pay over $34,000 in Social Security payments in 2001 through 2004.  “These were careless mistakes. They were avoidable mistakes.  But they were unintentional,” he said. “I should have been more careful.”  What he meant when he testified before Congress was that he wished he hadn’t been caught.  You or I would be in jail, but Geithner gets a powerful job and a $191,000 paycheck.  Is it any wonder most Americans feel there is a double standard, that they don’t trust their government?

Example Two:

The “Employee Free Choice Act” being pushed by both the President and the Democrats in Congress.  This is legislation intended to “amend the National Labor Relations Act to establish an efficient system to enable employees to form, join, or assist labor organizations [unions], to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes.” Right.  The only people who beleive that to be the reason for this legislation are the labor operatives who bought and paid for the legislators (and President) to put forward this unconstitutional law.  Fortunately, it has not yet made it through Congress, but it has not been for lack of effort on the part of its backers.

“Free Choice” is lie number one.  The act would eliminate secret ballots from Union Certification Elections and replace them with a requirement that Unions only get 50+% of the employees to sign a card indicating interest in having Union Representation.  If four large, mean-looking people came to your door and suggested that you needed to sign such a card or face consequences, would you feel that was a “free choice?”  If you were greeted by union organizers as you left work and asked in front of your fellow employees to sign a card to request a union, would that feel as much of a free choice as a secret ballot?  Second, the “mandatory injunctions for unfair labor practices during organizing efforts”, are only for employers who commit unfair labor practices, not unions.  Should this pass, it will be of the unions, by the unions, and for the unions, but paid for by the dues of workers who have no choice in how their mandatory union dues are spent.  Sounds like Free Choice to me.  You, too?  Why would you not believe your government when it tells you that it has just passed the Employee Free Choice Act?

Example Three:

Undeclared wars.  Our past five Presidents, including Mr. Obama, Mr. Bush, Mr. Clinton, the Senior Mr. Bush and Mr. Reagan, have all sent U.S. combat troops into foreign countries.  Though some Presidents asked Congress for approval and others did not, there is a common theme that Presidents have used to justify their wars that is troubling to most observers.  In short it can be called the domino theory.  Each President has claimed he had to do this and that this invasion was justified because it was in the direct interest of our country.  In effect each argued that if this issue was not put to bed, it would spread and encourage more aggression elsewhere.  In Bosnia, the story was that if we did not invade and stop Serbia, they would overrun all of the Balkans and the conflict would spread to all of Europe, much like in World War I.  In Granada it was to show potential military despots that the U.S. will not stand for anything but free people who have the right to elect their leaders.  If Hudson Austin was not stopped, the whole Caribbean and soon South America would fall to despots.  In Kuwait and Iraq, the two Bushes argued that Sadam Hussein was not only butchering his people but would soon hold the world hostage for its oil or with weapons of mass destruction.  If this happened, all of the Middle East would fall to radical muslims. The invasion of Afghanistan was to stop Al Qaida before they brought their rule and Sharia law to all of the Middle East.  Now we have Mr. Obama claiming that if we had not intervened, thousands of Libyans would have been slaughtered and refugees driven to neighboring Tunisia and Egypt.  The pressure of these refugees would upset the fragile state of both countries and they would soon be back in the hands of evil rulers.

In all cases, credible arguments could be made supporting the President’s action.  In all cases but the current one, the majority of Americans initially accepted the President’s military interventions.   So why are so many in both parties upset at Mr. Obama when they largely supported his predecessors?  Simple.  Hypocrisy.  Don’t you remember what Mr.Obama said so many times on the campaign trail?  “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.” Yet, that is exactly what he has just done.  Gallup’s poll shows this military action to have less support than any of those mentioned above and it is telling that an almost equal number of Democrats and Republicans disapprove.  Mr Obama never mentioned oil in his speech to justify the “No Fly Zone” invasion.  Does that seem strange?  If the U.S. gets about 1% of its imported oil from Libya and our European allies get about 10% to 25% of their imports from Libya, don’t you think that might have been a factor?  Most people do.  Mr. Obama never mentioned the word.  He did mention that thousands could be killed and we could not just stand by and not act.  What about Sudan?  Some estimate the killings to total in the hundreds of thousands, yet, the U.S. has stood by and not intervened militarily.  Oh, and yes, though Sudan does produce oil in the south, it is not a source of U.S. crude or much of one for the E.U.  The “No Fly” invasion may have nothing to do with oil though most people doubt that and wonder why Mr. Obama failed to even address the issue.  It is hard to trust a government that gives seemingly false excuses rather than reasons for its actions.

Reposting – Protection from “Good Intentions”

I am reposting this because it seems, again, very relevant.  This was first posted on June 3rd and I was most concerned with the nomination of Ms. Sonia Sotomayor as an Associate Justice of the Supreme Court.  That now appears to be a done deal but we still have a chance on “The Employee Free Choice Act,” health care reform, and the VAT, though, we may never get automobile manufacturers back from State control.

Though Daniel Webster died over 150 years ago, he must have known Barack Obama or at least he knew and understood the type.

He said it best when he said,

“Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.”

Think about it.  If you give Mr. Obama the benefit of the doubt (and about 30% of the population is not willing to do that – see Rasmussen Poll)(July 31 update – the number is 40%), he: 1) has the best of intentions to solve our economic woes (read, take over Chrysler and G.M.); 2) has the best intentions to provide healthcare for all Americans  (read universal healthcare for everyone in the USA, legal or not); 3) has the best intentions to simplify our tax code (read, impose additional VAT taxes); 4) has the best of intentions to lift up those who are limited by their race, gender, or culture (read, appoint an unqualified individual to the Supreme Court); 5) has the best intention to help workers by making it easier for them to organize (read, impose rules against businesses, in favor of Unions and against secret ballots)………

If Mr. Obama is able to get Ms. Sotomayor on the highest court, and it looks like he will succeed, he will have gone a long way toward removing the one defense we have against return to a Master/Slave relationship.  I don’t know how we stop this but I do know that sending  letters to each and every Senator is better than sitting and watching this happen.

Webster also warned: “Hold on, my friends, to the Constitution and to the Republic for which it stands. Miracles do not cluster and what has happened once in 6,000 years, may not happen again. Hold on to the Constitution, for if the American Constitution should fail, there will be anarchy throughout the world.”  There are good reasons not to have too liberal a view of the Constitution.

“They promise to be good masters, but they mean to be masters.”  Well put, Daniel.