Is it too late to save the manufacturing sector in America? I hope not. A lot of people have earned a good living doing manufacturing jobs over the years. My dad was one of them. That job put food on the table, clothes on our backs, and a roof over our heads. He didn't work in the plant running a machine or assembling the products. He was a tool and die designer working in manufacturing engineering, primarily working with stamping equipment. Most of his jobs were working in the appliance industry or with air conditioning and heating equipment, designing the dies used in the large stamping presses that form steel sheet.
A typical factory has a machine shop that cuts steel or castings to make equipment used in the plant. Some plants are just large machine shops that cut the various products they sell from steel bar or aluminum or iron castings. The various machines used in these plants are purchased from other manufacturing companies, and in the past, these machines were primarily made in the USA.
Various technical disciplines are needed to support the manufacturing equipment. These employees perform maintenance and repairs. When components wear out those are purchased from manufacturers of bearings or seals or hoses, etc. that were also generally other US companies in past years. Salesmen for many different companies call on these factories and sell them lubricants, belting, steel bar, brass forgings, screws, wire, and everything else required to keep the plant operating. The plant itself employs engineers and draftsmen that perform R&D and design new products. The manufacturing engineers figure out how to use machines and tooling to efficiently manufacture the products at the lowest cost possible, while maintaining quality standards. Marketing works with engineering to develop specifications for the new products and design literature or other forms of advertising to promote the products to target customers. A sales force sets up sales calls and shows the product features and benefits to these target customers.
Of course, all plants have a large support staff that are employed as well. That includes human resources (or the personnel department as they used to be called), accounting, information technologies, computer operations, logistics, purchasing, inside sales, and stenographers or secretaries. There were also truck drivers and mechanics and electricians and machinists.
A lot of these folks that used to work in manufacturing didn't care what the minimum wage was. They made more than minimum wage. If they had a skilled technical or professional career, their salary was well above minimum wage. They all got a lot of benefits as well. Health insurance, life insurance, dental insurance, disability insurance, and a pension and/or 401K plan were the norm. These folks didn't collect benefits from the government to get by. They paid into the system with income taxes. Successful companies earned a profit, so they paid taxes as well. The employees didn't generally begrudge the company a healthy profit. After all, a profitable employer meant job security and expansion of the workforce. There were opportunities for advancement.
Today, we hear about excessive profits. The liberal politicians love to talk about the high cost of medical insurance or gasoline or any other the products of any industry under attack. They pontificate about how the high cost is caused by the excessive profits the industry earns, because they charge too much for their goods and services. The large corporations that our parents and some of us worked for are now vilified on a regular basis. Capitalism is the evil they blame for all of our economic woes. All you hear about is that small business creates all of the jobs today. Can small businesses do what used to be done by the large corporations?
Small businesses aren't a bad thing. They perform a lot of services for large corporations, doing things that used to be done by employees of the larger company but now are "farmed out" to more efficient smaller organizations. They employ a lot of people as well. However, offering all of the benefits that employees of the large organizations have is not economical.
Certain types of products aren't feasible to be manufactured by small companies either. These products require a significant investment in R&D. The R&D requires a large staff of engineers and scientists, laboratories with test equipment, and years of development time. Then, a large sales volume is required to amortize the costs of R&D. The manufacturing equipment also requires a very large capital investment and large sales volume to justify the investment. A small corporation doesn't have the capital to make these products happen.
If the politicians running our federal government don't figure out the value of large corporations in America, our standard of living will definitely suffer. This country has a lot of people that used to work in manufacturing. Today they are unemployed or working in low paying, unskilled jobs in the retail sector. Instead of paying a lot of taxes and taking care of themselves, they are suffering. Can this MessAPolitico be stopped? As long as the politicians can blame someone else for their sins, they have no motivation to stop it. They love to have constituents that are beholden to them for everything they have. The main problem with politics today in America is that politicians aren't public servants. They will implement any MessAPolitico that gets them re-elected.
Monday, April 29, 2013
Saturday, April 27, 2013
How Can America Win?
The US stock market seems to think that we are winning. Are we? I'm not sure. Things feel a little better, and the stock market is all about emotions and perceptions. When people start to feel some confidence, they start to spend. When people gain enough economic security, they are willing to buy cars and houses. When consumers begin to spend, manufacturers begin to invest. They invest in machinery and hire people. Our economy could certainly use some positive feelings to get on a full fledged roll. Right now people have some hope, but I wouldn't guess that this thing is on a roll yet.
I know that everyone says that the US economy is changing to a service economy. They say that our manufacturing can't compete in the world market. Today we do have a world market, whereas thirty years ago the US market was largely separate. Most of the industrial products were made in the USA. A lot of the consumer products were also American made.
There was a very vibrant textile industry centered in South Carolina and stretching from southeastern Alabama up through Virginia and into New England. That has left the country for Asia and Latin America. Electric motors for North America were primarily made in the USA, although a couple of manufacturers had opened plants in Mexico. Now that is virtually all gone to Mexico, China, and Poland. Everything from televisions to furniture to air conditioners is imported today. Why? Can America compete in the manufacturing world?
High labor rates in America are not anything new. In the 1970's, we were all worried that all manufacturing would move to Japan, because the workers over there made such low wages. We competed by having high productivity. We did that with automation better manufacturing methods.
Automation doesn't kill jobs; it actually saves jobs and allows manufacturers to pay higher wages and successfully compete. The automation improves quality, while increasing worker output per labor hour. If more parts are built per hour, the labor cost per part drops, and that can allow a manufacturer to pay more while remaining competitive. Higher quality also makes the end product more valuable to the customer, and the higher price keeps the manufacturer profitable. Automation requires capital investment, and significant volume is needed to justify the investment though. It also requires technically savvy employees to design, install, program, and maintain the equipment.
Will automation save the day today? Not as likely. Today, the low cost countries have automation too. So American manufacturing is doomed, right? Well, not necessarily.
America still has a major advantage. We have very plentiful natural resources. America has everything from oil to coal to metals to land for producing food, cotton, and lumber and everything in between. The excellent supplies of these ingredients and raw materials should drive the prices down. Our cost of energy and materials should be the lowest in the world. However, our costs are rising every year, and this MessAPolitico is happening by design.
The environmentalists are perpetuating the global warming hoax. They have made the claim over and over that global warming is man-made. Over and over, they say that burning fossil fuels is producing carbon dioxide. All we hear these days is that carbon is evil. Supposedly, carbon dioxide and other so-called greenhouse gases let the sun rays through to heat the earth and trap the heat, acting like a greenhouse that is warmed in winter. (I guess the cave men ended the ice age by driving their SUV's. Or maybe it was all of the gases they produced farting after eating dinosaur meat and driving the dinosaurs into extinction.)
So the tree hugger solution to the imaginary problem is to drive the price of energy produced by fossil fuel up, up, up. As the price rises, the demand for fossil fuel drops. Higher prices for fossil fuel based energy sources also will eventually make alternative energy viable. Do you realize how expensive our electricity, natural gas, and gasoline will have to get to make these technologies viable? Probably around triple the price of energy today. Our EPA is doing the best they can to make this happen.
We have energy everywhere, but the government says this place and that place over there and these other places over here are all off limits. We can't have a Keystone XL pipeline, because it might cause some vaguely defined environmental disaster in the state of Nebraska. We can't use oil from ANWR because it is a pristine and beautiful area. We shouldn't use hydraulic fracturing because it might damage the ground water. There's no drilling in the ocean -- look at what happened with the BP oil rig off of the Louisiana coast. Are these real environmental concerns? Is the EPA really trying to protect us from these environmental disasters? Probably not. They just want to drive the price up so high that we won't be able to afford to burn fossil fuels.
Of course, these MessAPolitical policies continue to hold back our economy. They have taken away a huge strategic advantage for America. If we could keep the price of electricity and natural gas low compared to the rest of the world, it would be a very important factor in keeping manufacturing jobs in America -- at least in energy intensive industries like steel, aluminum, paper, and chemicals. Of course, consumers that spend less for gasoline and electricity and natural gas have more money in their pockets to spend on other things. That would boost the other industries outside of the energy sector. The cost of shipping and transportation would drop, and that could bring prices down creating more demand for all goods.
The MessAPolitics of tree hugging is killing the economy in America. Hey Washington, WAKE UP! Man-made global warming is a hoax. Don't hold our energy hostage. Set it free to restart the economy. Please, voters remember what I have written the next time you enter a voting booth.
I know that everyone says that the US economy is changing to a service economy. They say that our manufacturing can't compete in the world market. Today we do have a world market, whereas thirty years ago the US market was largely separate. Most of the industrial products were made in the USA. A lot of the consumer products were also American made.
There was a very vibrant textile industry centered in South Carolina and stretching from southeastern Alabama up through Virginia and into New England. That has left the country for Asia and Latin America. Electric motors for North America were primarily made in the USA, although a couple of manufacturers had opened plants in Mexico. Now that is virtually all gone to Mexico, China, and Poland. Everything from televisions to furniture to air conditioners is imported today. Why? Can America compete in the manufacturing world?
High labor rates in America are not anything new. In the 1970's, we were all worried that all manufacturing would move to Japan, because the workers over there made such low wages. We competed by having high productivity. We did that with automation better manufacturing methods.
Automation doesn't kill jobs; it actually saves jobs and allows manufacturers to pay higher wages and successfully compete. The automation improves quality, while increasing worker output per labor hour. If more parts are built per hour, the labor cost per part drops, and that can allow a manufacturer to pay more while remaining competitive. Higher quality also makes the end product more valuable to the customer, and the higher price keeps the manufacturer profitable. Automation requires capital investment, and significant volume is needed to justify the investment though. It also requires technically savvy employees to design, install, program, and maintain the equipment.
Will automation save the day today? Not as likely. Today, the low cost countries have automation too. So American manufacturing is doomed, right? Well, not necessarily.
America still has a major advantage. We have very plentiful natural resources. America has everything from oil to coal to metals to land for producing food, cotton, and lumber and everything in between. The excellent supplies of these ingredients and raw materials should drive the prices down. Our cost of energy and materials should be the lowest in the world. However, our costs are rising every year, and this MessAPolitico is happening by design.
The environmentalists are perpetuating the global warming hoax. They have made the claim over and over that global warming is man-made. Over and over, they say that burning fossil fuels is producing carbon dioxide. All we hear these days is that carbon is evil. Supposedly, carbon dioxide and other so-called greenhouse gases let the sun rays through to heat the earth and trap the heat, acting like a greenhouse that is warmed in winter. (I guess the cave men ended the ice age by driving their SUV's. Or maybe it was all of the gases they produced farting after eating dinosaur meat and driving the dinosaurs into extinction.)
So the tree hugger solution to the imaginary problem is to drive the price of energy produced by fossil fuel up, up, up. As the price rises, the demand for fossil fuel drops. Higher prices for fossil fuel based energy sources also will eventually make alternative energy viable. Do you realize how expensive our electricity, natural gas, and gasoline will have to get to make these technologies viable? Probably around triple the price of energy today. Our EPA is doing the best they can to make this happen.
We have energy everywhere, but the government says this place and that place over there and these other places over here are all off limits. We can't have a Keystone XL pipeline, because it might cause some vaguely defined environmental disaster in the state of Nebraska. We can't use oil from ANWR because it is a pristine and beautiful area. We shouldn't use hydraulic fracturing because it might damage the ground water. There's no drilling in the ocean -- look at what happened with the BP oil rig off of the Louisiana coast. Are these real environmental concerns? Is the EPA really trying to protect us from these environmental disasters? Probably not. They just want to drive the price up so high that we won't be able to afford to burn fossil fuels.
Of course, these MessAPolitical policies continue to hold back our economy. They have taken away a huge strategic advantage for America. If we could keep the price of electricity and natural gas low compared to the rest of the world, it would be a very important factor in keeping manufacturing jobs in America -- at least in energy intensive industries like steel, aluminum, paper, and chemicals. Of course, consumers that spend less for gasoline and electricity and natural gas have more money in their pockets to spend on other things. That would boost the other industries outside of the energy sector. The cost of shipping and transportation would drop, and that could bring prices down creating more demand for all goods.
The MessAPolitics of tree hugging is killing the economy in America. Hey Washington, WAKE UP! Man-made global warming is a hoax. Don't hold our energy hostage. Set it free to restart the economy. Please, voters remember what I have written the next time you enter a voting booth.
Wednesday, April 24, 2013
Is It Our Fault?
A reporter in Islamic headgear attended a white house press conference last week. She asked Jay Carney if he considered civilian casualties in Afghanistan terrorism. Then, Tom Brokaw made a statement in an interview on Meet the Press saying that we need to take a look at our use of drones in the war on terror. Did we do something to deserve this? That's the burning question on the minds of the liberal media.
Most Americans with at least half a brain know the answer to this question. They are angered and frustrated by terrorism. This case is unusual, because there were terrorists left after the act, and they didn't blow themselves up. These cowards went online and learned how to build a weapon of mass destruction. They built a couple of these devices and purposely placed them amongst some regular Americans that were very simply chosen because they were guilty of being Americans. Women, children, or anyone that was just attending a fun event were in the area when the bombs were placed and quickly detonated. Was it an accident that regular civilians were killed in Boston? No. Was this an act of war against the US military? No. It was an act designed to terrorize, kill, and injure a lot of regular people.
Somehow, after the murderous terrorist attack that killed and maimed innocent civilians in Boston, these so-called journalists decided that the bombing could be equated with accidental deaths in a war that we didn't start. The American military does everything possible to avoid civilian casualties in the midst of war, but it is war. Often times, the battle is fought against an enemy that hides around women and children, using them as shields. They know that we will avoid killing the women and children. These guerrillas and terrorists don't give a hoot about the civilians they kill or the ones they use as shields. They don't even care about the kids they send out with bombs to blow themselves up. These journalists have the audacity to blame America for the deaths every time some civilians are killed, even when they are often times the people that were shooting at our soldiers or setting IED's on the side of the road to kill and maim.
I've heard a number of people say that they want the terrorists captured alive to find out why they did it. Is that really in question? It has been widely reported that at least one of these bombers had visited multiple radical Islamic websites. Did they learn terrorism during a trip to Russia? If we can't figure out why these guys did what they did, then it's not all that surprising that we have trouble dealing with the war on terror. These days, about 99% of terrorist attacks are done by Islamic terrorists, but the liberal media desperately hopes that some crazed Tea Party member or a white, gun-loving, redneck will commit the next mass murder. These are the targets of all the early speculation by all liberals. Why? Are these folks idiots? Yes. Yes. Yes!
Political correctness has rendered law enforcement highly ineffective. Targeting prevention efforts at the likely suspects would require far less resources and would be far more effective than the current "shotgun" approach. In the interest of political correctness, a lot of effort has to be expended searching little old ladies or children or anyone else that can be found, just to make sure these efforts are truly random. The other side of this randomization it to purposely not target a lot of good terrorist candidates. We wouldn't want to violate their civil rights or even give the wrong appearance to the world.
Of course, we don't mind violating the constitutional rights of a lot of law abiding citizens that own guns legally. Once again, felons can continue to buy their guns without a background check from one of their buddies on the street. Criminals have never submitted to background checks, and they never will, even with a few new laws.
To add insult to injury, these terrorists came to this country, and immediately received government assistance. That's right, we paid for them to be guests in our country. Then, they decided that they hated America. Instead of going back home to Chechnya, these mental giants decided they would kill a bunch of Americans to pay us back. Why? Because Americans don't live the way they think we should.
This MessAPolitico was caused by a bunch of bleeding heart liberals. With all of the numb skulls running our government at all levels, I don't honestly know how we can right the ship this time. Please America, vote for smart politicians in the next election. (Maybe "smart politicians" is an oxymoron.)
Most Americans with at least half a brain know the answer to this question. They are angered and frustrated by terrorism. This case is unusual, because there were terrorists left after the act, and they didn't blow themselves up. These cowards went online and learned how to build a weapon of mass destruction. They built a couple of these devices and purposely placed them amongst some regular Americans that were very simply chosen because they were guilty of being Americans. Women, children, or anyone that was just attending a fun event were in the area when the bombs were placed and quickly detonated. Was it an accident that regular civilians were killed in Boston? No. Was this an act of war against the US military? No. It was an act designed to terrorize, kill, and injure a lot of regular people.
Somehow, after the murderous terrorist attack that killed and maimed innocent civilians in Boston, these so-called journalists decided that the bombing could be equated with accidental deaths in a war that we didn't start. The American military does everything possible to avoid civilian casualties in the midst of war, but it is war. Often times, the battle is fought against an enemy that hides around women and children, using them as shields. They know that we will avoid killing the women and children. These guerrillas and terrorists don't give a hoot about the civilians they kill or the ones they use as shields. They don't even care about the kids they send out with bombs to blow themselves up. These journalists have the audacity to blame America for the deaths every time some civilians are killed, even when they are often times the people that were shooting at our soldiers or setting IED's on the side of the road to kill and maim.
I've heard a number of people say that they want the terrorists captured alive to find out why they did it. Is that really in question? It has been widely reported that at least one of these bombers had visited multiple radical Islamic websites. Did they learn terrorism during a trip to Russia? If we can't figure out why these guys did what they did, then it's not all that surprising that we have trouble dealing with the war on terror. These days, about 99% of terrorist attacks are done by Islamic terrorists, but the liberal media desperately hopes that some crazed Tea Party member or a white, gun-loving, redneck will commit the next mass murder. These are the targets of all the early speculation by all liberals. Why? Are these folks idiots? Yes. Yes. Yes!
Political correctness has rendered law enforcement highly ineffective. Targeting prevention efforts at the likely suspects would require far less resources and would be far more effective than the current "shotgun" approach. In the interest of political correctness, a lot of effort has to be expended searching little old ladies or children or anyone else that can be found, just to make sure these efforts are truly random. The other side of this randomization it to purposely not target a lot of good terrorist candidates. We wouldn't want to violate their civil rights or even give the wrong appearance to the world.
Of course, we don't mind violating the constitutional rights of a lot of law abiding citizens that own guns legally. Once again, felons can continue to buy their guns without a background check from one of their buddies on the street. Criminals have never submitted to background checks, and they never will, even with a few new laws.
To add insult to injury, these terrorists came to this country, and immediately received government assistance. That's right, we paid for them to be guests in our country. Then, they decided that they hated America. Instead of going back home to Chechnya, these mental giants decided they would kill a bunch of Americans to pay us back. Why? Because Americans don't live the way they think we should.
This MessAPolitico was caused by a bunch of bleeding heart liberals. With all of the numb skulls running our government at all levels, I don't honestly know how we can right the ship this time. Please America, vote for smart politicians in the next election. (Maybe "smart politicians" is an oxymoron.)
Monday, April 22, 2013
Do Oil Companies Make Excessive Profits?
If you read my post about the laws of supply and demand, maybe you can guess where I'm going with this one. Do the oil companies make excessive profits? I don't think so. However, the oil market is ripe with collusion that limits competition, and that collusion hurts the consumers. Consequently, it also hurts the US economy.
Does the collusion occur between oil companies? I firmly believe that it does NOT! So, where do we have collusion? The answer is at OPEC. That is a big one. A huge percentage of the world's oil supply comes from the OPEC countries. These countries have meetings where they all get together to decide how much oil they should produce to keep the price high. OPEC doesn't control 100% of the oil, or these countries would drive the price even higher. It seems that the rest of the world tends to crank up their production whenever the price of oil gets very far above $100 per barrel.
What percentage of the price of a gallon of gasoline is profit for the oil companies? It is generally below 10%. That's hardly an excessive profit margin. In fact, the taxes imposed by our government make Uncle Sam and the states much more insidious. They collect a much larger percentage profit from the gasoline sold than the oil companies. Does the government deserve this big tax collected? They didn't drill and find the oil, pump it out of the ground, transport it to a refinery, refine it, carry it in inventory, ship it to the gasoline station, invest in equipment to pump it and sell it to the consumer, or do anything else of value. By the way, the oil company doesn't pay that tax; you do. Of course, all of the workers in the oil companies, on tankers, in gas stations, etc. etc. pay income taxes as well. Guess what, we pay those too because the cost of labor is built into the price. It looks to me like the government is making all of the excessive profit.
Of course, the government under Barack Obama is doing a lot of other stuff to help us out too. They are doing everything they can to reduce the supply of fossil fuels. The goal is to keep the supply low enough to raise the price of all fossil fuel energy. That's the only way they can make alternative energy even close to competitive and profitable. Since our tax dollars have been used to invest in alternative energy companies and companies that build alternative energy equipment, this is really a form of collusion that is very damaging to the consumer. The "tree hugger" crowd wants to price fossil fuels out of business, and they don't care what that does to the economy. If you lose your job, that's a necessary consequence of saving the earth from that mythical disaster, man-made global warming.
This MessAPolitico is driven by ignorance and greed. There are a lot of people that believe in man-made global warming. There are also a lot of so called scientists at big universities that make a lot of money off of government grants. If you want a grant, you had better make sure your research supports the EPA contention that driving an SUV will destroy the earth. There are all those crony capitalists that are taking government money (our money) and using it to make themselves rich too. Those so-called "green energy" businesses can't stand on their own in the marketplace, and no amount of government investment is going to make the business plans work. But these entrepreneurs won't be starting these businesses without paying themselves big salaries that are paid for by our investments made on our behalf by the US government. If the government succeeds at artificially driving the supply of fossil fuels down by disallowing pipelines or hydraulic fracturing (fracking) or drilling in the ocean or drilling in the ANWR or whatever, then the price may just get high enough to make alternative energy viable financially. The question is very simply this: will our economy still be alive at that point?
All it takes is collusion created by a conflict of interest on the part of the government MessAPolitico. Get the government out of the way! Allow free market capitalism to save our jobs and save our economy.
Does the collusion occur between oil companies? I firmly believe that it does NOT! So, where do we have collusion? The answer is at OPEC. That is a big one. A huge percentage of the world's oil supply comes from the OPEC countries. These countries have meetings where they all get together to decide how much oil they should produce to keep the price high. OPEC doesn't control 100% of the oil, or these countries would drive the price even higher. It seems that the rest of the world tends to crank up their production whenever the price of oil gets very far above $100 per barrel.
What percentage of the price of a gallon of gasoline is profit for the oil companies? It is generally below 10%. That's hardly an excessive profit margin. In fact, the taxes imposed by our government make Uncle Sam and the states much more insidious. They collect a much larger percentage profit from the gasoline sold than the oil companies. Does the government deserve this big tax collected? They didn't drill and find the oil, pump it out of the ground, transport it to a refinery, refine it, carry it in inventory, ship it to the gasoline station, invest in equipment to pump it and sell it to the consumer, or do anything else of value. By the way, the oil company doesn't pay that tax; you do. Of course, all of the workers in the oil companies, on tankers, in gas stations, etc. etc. pay income taxes as well. Guess what, we pay those too because the cost of labor is built into the price. It looks to me like the government is making all of the excessive profit.
Of course, the government under Barack Obama is doing a lot of other stuff to help us out too. They are doing everything they can to reduce the supply of fossil fuels. The goal is to keep the supply low enough to raise the price of all fossil fuel energy. That's the only way they can make alternative energy even close to competitive and profitable. Since our tax dollars have been used to invest in alternative energy companies and companies that build alternative energy equipment, this is really a form of collusion that is very damaging to the consumer. The "tree hugger" crowd wants to price fossil fuels out of business, and they don't care what that does to the economy. If you lose your job, that's a necessary consequence of saving the earth from that mythical disaster, man-made global warming.
This MessAPolitico is driven by ignorance and greed. There are a lot of people that believe in man-made global warming. There are also a lot of so called scientists at big universities that make a lot of money off of government grants. If you want a grant, you had better make sure your research supports the EPA contention that driving an SUV will destroy the earth. There are all those crony capitalists that are taking government money (our money) and using it to make themselves rich too. Those so-called "green energy" businesses can't stand on their own in the marketplace, and no amount of government investment is going to make the business plans work. But these entrepreneurs won't be starting these businesses without paying themselves big salaries that are paid for by our investments made on our behalf by the US government. If the government succeeds at artificially driving the supply of fossil fuels down by disallowing pipelines or hydraulic fracturing (fracking) or drilling in the ocean or drilling in the ANWR or whatever, then the price may just get high enough to make alternative energy viable financially. The question is very simply this: will our economy still be alive at that point?
All it takes is collusion created by a conflict of interest on the part of the government MessAPolitico. Get the government out of the way! Allow free market capitalism to save our jobs and save our economy.
Saturday, April 20, 2013
Supply & Demand is Just a Theory
It seems that everyone you ask claims to know how the laws of supply and demand work. They all say that they understand these laws and believe in them, but do they? Why does everyone believe in this economic theory as long as it works in their favor? As soon as the price goes up on something they want or need, then that was caused by some evil, greedy corporation jacking up the price to make obscene profits.
Are obscene or excessive profits even possible? Some would say it is possible where a monopoly exists. I don't believe it can really happen even then? Having a monopoly would definitely change the dynamic. The company having the monopoly would have total control over their profitability, but they couldn't make unlimited profits. Let me explain.
Think about how the automobile market would be different if there was only one automaker in the world. That automaker could choose to sell their cars for $100,000 each, but how many consumers would be able to afford a car? Chances are, they wouldn't sell very many cars. You couldn't go to another manufacturer if the quality was poor either. However, there still is competition in the marketplace. You would still have the option to ride a motorcycle, ride a bicycle, walk, ride the bus, or take a taxi.
Additionally, would a price of $100,000 each be the point that maximizes the profitability of this single automaker? Probably not. In fact, they would probably offer several different cars to choose from. One model would probably be smaller and less luxurious, offering bare-bones transportation to the low end of the socioeconomic scale. Another model might have a few amenities at a slightly higher price, and it would cater to the massive middle class. Of course, there would still be the luxury model that would likely have the highest profit margin per vehicle, along with a price tag that only a small proportion of the consumers could afford. The cheaper models would generate a lot of volume, so they would likely earn a larger number of profit dollars, even though the percentage profit on each car would be lower. Also, the high volume would drive the cost of production down for all of the different models by increasing the economies of scale (sorry, there's some more of that micro economic theory).
In order for this production and marketing strategy to work, the vehicles would have to be priced low enough that the target market segments for each vehicle could afford to buy it. If they can't, you won't sell any cars. Then, the price has to be attractive to enough consumers compared to the costs of alternative transportation so that they will buy as many cars as you can build. Of course, the company would need to design the car and develop manufacturing processes that keep the cost of manufacturing below the price at which the product can be sold or they won't make a profit at all.
Business analysis would be required. First, the marketing department would do surveys to find out what features the different consumers would like to have and how much they would be willing to pay for the vehicle with different combinations of features. Maybe the cars could even have options to suit different consumers that have differing wants and needs. (What a concept! Tailor the product to individual consumers! Who would have ever thought of that one?) Then, the pricing would determine how many consumers would purchase the vehicle. A calculation using a demand curve generated from the market survey results would determine what volume would maximize profits. (Do you remember the law of diminishing marginal returns?).
Okay, so how can this company get obscene or unlimited profits even in a monopoly like this? Can a true monopoly really even exist? Don't we always have alternatives? In the short run, you may not have a reasonable alternative, but in the long run you do. For instance, if the price of cars was too high, but you worked 20 miles from home, then what could you do? Maybe you could ride the bus, but it takes two hours to get to work and two hours to get home. That's not a very reasonable alternative, but you could sell your house and move to a mile from work. Then you could ride a bicycle or walk or even take a 5 minute bus ride.
The only real insidious market conditions generally don't come from a pure monopoly like the one I have described above. Instead, they occur when all competitors in a particular market collude to control the market. The corrupt group of competitors doesn't have to control 100% of the market to create market conditions that are very favorable to the producers and very unfavorable to the consumer. Even if they only control a very large portion of a market for a commodity that is in great demand, that is bad for the consumer. However, there is still a limit to how much profit can be made, and raising the price will reduce demand. It is unlikely that maximum prices would maximize overall profit.
If a market does allow for a company to make very high profits, how long will that last in a capitalistic economic system? High profits will encourage the company to produce more product themselves to increase profits. Also, other companies will see the high profit potential in this industry and design their own competitive product offering. The consumer benefits in the end, because the increased supply drives prices down, and each competitor will try and cater to a different market segment better than the others do. They are also likely to be shunned by the marketplace if their product quality is substandard, or their prices will be driven downward to compensate. The end result for the consumer will be lower prices, higher quality, and more variety of products to better suit their wants and desires.
So, where does the MessAPolitico come into play here? Well, our illustrious liberal politicians like to talk about how the big, evil corporations are making outrageous profits by stealing from the little guy. Then, they go about passing laws to protect us regular folk with regulations (that drive up the price of automobiles and everything else). These same caring politicians also tell us that they will tax the rich people and their corporations to get that immorally obtained profit back. They will use it to pay for all sorts of "free" services and things for those folks that have been wronged and sent down the path to poverty.
The poor most certainly believe that they deserve this "free" stuff. They also begin to believe that those things they get really are free. A bunch of folks even think that those high corporate taxes are paid by the corporations and the rich folks that own them. Well, the joke's on them, because all of us regular people pay those taxes. That's right. We pay more for all of the stuff we buy from these corporations. We pay for all of the extra costs created by meeting excessive government regulations too. Last, but certainly not least, the higher prices reduce demand, so the people providing the services or manufacturing the products will have fewer jobs.
Anytime the government steps in to help us or protect us or give us "free" stuff, watch out. We're about to fall victim to the law of unintended consequences again! (Hey, maybe I should have made this another installment in my series on unintended consequences.)
Are obscene or excessive profits even possible? Some would say it is possible where a monopoly exists. I don't believe it can really happen even then? Having a monopoly would definitely change the dynamic. The company having the monopoly would have total control over their profitability, but they couldn't make unlimited profits. Let me explain.
Think about how the automobile market would be different if there was only one automaker in the world. That automaker could choose to sell their cars for $100,000 each, but how many consumers would be able to afford a car? Chances are, they wouldn't sell very many cars. You couldn't go to another manufacturer if the quality was poor either. However, there still is competition in the marketplace. You would still have the option to ride a motorcycle, ride a bicycle, walk, ride the bus, or take a taxi.
Additionally, would a price of $100,000 each be the point that maximizes the profitability of this single automaker? Probably not. In fact, they would probably offer several different cars to choose from. One model would probably be smaller and less luxurious, offering bare-bones transportation to the low end of the socioeconomic scale. Another model might have a few amenities at a slightly higher price, and it would cater to the massive middle class. Of course, there would still be the luxury model that would likely have the highest profit margin per vehicle, along with a price tag that only a small proportion of the consumers could afford. The cheaper models would generate a lot of volume, so they would likely earn a larger number of profit dollars, even though the percentage profit on each car would be lower. Also, the high volume would drive the cost of production down for all of the different models by increasing the economies of scale (sorry, there's some more of that micro economic theory).
In order for this production and marketing strategy to work, the vehicles would have to be priced low enough that the target market segments for each vehicle could afford to buy it. If they can't, you won't sell any cars. Then, the price has to be attractive to enough consumers compared to the costs of alternative transportation so that they will buy as many cars as you can build. Of course, the company would need to design the car and develop manufacturing processes that keep the cost of manufacturing below the price at which the product can be sold or they won't make a profit at all.
Business analysis would be required. First, the marketing department would do surveys to find out what features the different consumers would like to have and how much they would be willing to pay for the vehicle with different combinations of features. Maybe the cars could even have options to suit different consumers that have differing wants and needs. (What a concept! Tailor the product to individual consumers! Who would have ever thought of that one?) Then, the pricing would determine how many consumers would purchase the vehicle. A calculation using a demand curve generated from the market survey results would determine what volume would maximize profits. (Do you remember the law of diminishing marginal returns?).
Okay, so how can this company get obscene or unlimited profits even in a monopoly like this? Can a true monopoly really even exist? Don't we always have alternatives? In the short run, you may not have a reasonable alternative, but in the long run you do. For instance, if the price of cars was too high, but you worked 20 miles from home, then what could you do? Maybe you could ride the bus, but it takes two hours to get to work and two hours to get home. That's not a very reasonable alternative, but you could sell your house and move to a mile from work. Then you could ride a bicycle or walk or even take a 5 minute bus ride.
The only real insidious market conditions generally don't come from a pure monopoly like the one I have described above. Instead, they occur when all competitors in a particular market collude to control the market. The corrupt group of competitors doesn't have to control 100% of the market to create market conditions that are very favorable to the producers and very unfavorable to the consumer. Even if they only control a very large portion of a market for a commodity that is in great demand, that is bad for the consumer. However, there is still a limit to how much profit can be made, and raising the price will reduce demand. It is unlikely that maximum prices would maximize overall profit.
If a market does allow for a company to make very high profits, how long will that last in a capitalistic economic system? High profits will encourage the company to produce more product themselves to increase profits. Also, other companies will see the high profit potential in this industry and design their own competitive product offering. The consumer benefits in the end, because the increased supply drives prices down, and each competitor will try and cater to a different market segment better than the others do. They are also likely to be shunned by the marketplace if their product quality is substandard, or their prices will be driven downward to compensate. The end result for the consumer will be lower prices, higher quality, and more variety of products to better suit their wants and desires.
So, where does the MessAPolitico come into play here? Well, our illustrious liberal politicians like to talk about how the big, evil corporations are making outrageous profits by stealing from the little guy. Then, they go about passing laws to protect us regular folk with regulations (that drive up the price of automobiles and everything else). These same caring politicians also tell us that they will tax the rich people and their corporations to get that immorally obtained profit back. They will use it to pay for all sorts of "free" services and things for those folks that have been wronged and sent down the path to poverty.
The poor most certainly believe that they deserve this "free" stuff. They also begin to believe that those things they get really are free. A bunch of folks even think that those high corporate taxes are paid by the corporations and the rich folks that own them. Well, the joke's on them, because all of us regular people pay those taxes. That's right. We pay more for all of the stuff we buy from these corporations. We pay for all of the extra costs created by meeting excessive government regulations too. Last, but certainly not least, the higher prices reduce demand, so the people providing the services or manufacturing the products will have fewer jobs.
Anytime the government steps in to help us or protect us or give us "free" stuff, watch out. We're about to fall victim to the law of unintended consequences again! (Hey, maybe I should have made this another installment in my series on unintended consequences.)
Thursday, April 18, 2013
Why Don't we Socialize the Legal Profession?
I don't think that it's fair for poor people to be denied top-notch legal services in America. If a person of limited means needs legal advice or gets in trouble with the law, why should they have to rely on inexperienced and overworked public defenders. They don't get the superb representation that rich people get, and maybe that's why they end up in jail so much more often.
Even the middle class can spend their life savings on legal fees if they get in a dispute in court. Why should you need to wipe out your savings to stay out of jail or keep your driver's license if you get slapped with a DUI charge? The rich definitely have an advantage in court, because they can afford the best legal defense America has to offer.
These evil rich people and the corporations that they own can also defend themselves if they are sued by the little guy. They show up in court with a team of high priced barristers to argue against one overworked, bargain basement lawyer working on a contingency basis. Because of these advantages, the little guy will just get squashed like a cock roach in the courtroom.
Of course, the lawyers are in court filing suits against the corporations that have somehow inflicted pain, suffering, injury, or death on some poor, innocent plaintiff. Do they file these suits because they are wanting to save the day for these poor people that need help so badly? Maybe some do, but none of these lawyers does it without a fee. They offer to work on a contingency basis, so the little guy doesn't have to pay anything unless they get a settlement or win in court. Regardless of how many or how few hours the lawyer and his team spend on the case, they get 40% of the proceeds. So much for the needs of the plaintiff.
I think that Congress should pass the Obama Legal Defense Act. It should limit how much lawyers can charge for their services. Lawyers and their teams should only be able to charge an hourly rate that is the same regardless of whether there is a large or small amount won in the suit. Poor people should get their defense paid in full by the government, and they can select whichever lawyer they want, because they will all cost the same.
This could end a major MessAPolitico that favors the evil rich people in the world. I'll bet the current system was set up by Republicans to help their evil, rich supporters. I can't wait until the lawmakers in Congress get started on this one!
Even the middle class can spend their life savings on legal fees if they get in a dispute in court. Why should you need to wipe out your savings to stay out of jail or keep your driver's license if you get slapped with a DUI charge? The rich definitely have an advantage in court, because they can afford the best legal defense America has to offer.
These evil rich people and the corporations that they own can also defend themselves if they are sued by the little guy. They show up in court with a team of high priced barristers to argue against one overworked, bargain basement lawyer working on a contingency basis. Because of these advantages, the little guy will just get squashed like a cock roach in the courtroom.
Of course, the lawyers are in court filing suits against the corporations that have somehow inflicted pain, suffering, injury, or death on some poor, innocent plaintiff. Do they file these suits because they are wanting to save the day for these poor people that need help so badly? Maybe some do, but none of these lawyers does it without a fee. They offer to work on a contingency basis, so the little guy doesn't have to pay anything unless they get a settlement or win in court. Regardless of how many or how few hours the lawyer and his team spend on the case, they get 40% of the proceeds. So much for the needs of the plaintiff.
I think that Congress should pass the Obama Legal Defense Act. It should limit how much lawyers can charge for their services. Lawyers and their teams should only be able to charge an hourly rate that is the same regardless of whether there is a large or small amount won in the suit. Poor people should get their defense paid in full by the government, and they can select whichever lawyer they want, because they will all cost the same.
This could end a major MessAPolitico that favors the evil rich people in the world. I'll bet the current system was set up by Republicans to help their evil, rich supporters. I can't wait until the lawmakers in Congress get started on this one!
Tuesday, April 16, 2013
Terrorism or Man Caused Disaster?
Barack Obama has already led America so well that terrorism doesn't exist in the world anymore. We fought the war on terror and won it. That makes me feel all warm and fuzzy inside.
Since terrorism no longer exists and all the world loves us, that thing yesterday in Boston couldn't have been terrorism. It was probably some crazed, right-wing extremist that the Republicans drove into an insane frenzy with their incendiary rhetoric. This guy was probably an ignorant, white redneck who was frothing at the mouth over the loss of his assault rifle.
I am really disappointed in the president for one thing though. He promised to never let this type of thing happen again. I believe Bill Clinton promised the same thing after the Columbine disaster under his watch. They just can't seem to keep us safe from the "crazies" no matter what laws are passed to restrict our freedoms.
You know, Israel, Europe, Afghanistan, and Iraq all have mass murders and terrorist attacks fairly frequently. Funny thing is that they rarely use guns. I can't remember a single incident that was committed with a gun. No, they use bombs or occasionally even box cutters and jumbo jetliners. The terrorist attacks that occur using guns are generally committed in the inner city neighborhoods of the USA. These acts are committed in defiance of any law that is passed. After all, murder is against the law regardless of the weapon. Yes, you might call these acts crime, but I really consider it to be terrorism. After all, it is intended to terrify anyone that ventures into the wrong neighborhood in one of our large cities. Those acts of violence, whether committed with guns, knives, or fists, get the intended outcome. Most people avoid those neighborhoods unless they end up there by accident because their GPS is broken (or maybe it got stolen, because they parked in the wrong neighborhood).
Hey liberals, what law are you going to pass to stop the terrorism we had yesterday? Should we outlaw any event that brings together large numbers of people in one place? (Maybe the act was our fault for making such an exciting target for the terrorists.) Should we randomly search everyone seen walking down the street with a backpack or duffel bag? How about installing more cameras that use facial recognition software to look for suspected terrorists? The government could monitor the things we purchase, our telephone conversations, our email, our comings and goings, our friends and associates, our political views, etc. etc. Then they could pass a law that lets them arrest people who do things that look suspicious. They could go ahead and do a search of our computers and our homes. If they think something is up, who needs a warrant? Just wondering about your motivations is enough probable cause for a search.
This MessAPolitical is a "slippery slope." We're all going to end up losing freedom, and it might just make us less safe than we are. The government is coming for anyone that doesn't fall in line, and we may not be able to defend ourselves from the tyranny it is imposing. Don't forget the constitution. It's our only line of defense.
Since terrorism no longer exists and all the world loves us, that thing yesterday in Boston couldn't have been terrorism. It was probably some crazed, right-wing extremist that the Republicans drove into an insane frenzy with their incendiary rhetoric. This guy was probably an ignorant, white redneck who was frothing at the mouth over the loss of his assault rifle.
I am really disappointed in the president for one thing though. He promised to never let this type of thing happen again. I believe Bill Clinton promised the same thing after the Columbine disaster under his watch. They just can't seem to keep us safe from the "crazies" no matter what laws are passed to restrict our freedoms.
You know, Israel, Europe, Afghanistan, and Iraq all have mass murders and terrorist attacks fairly frequently. Funny thing is that they rarely use guns. I can't remember a single incident that was committed with a gun. No, they use bombs or occasionally even box cutters and jumbo jetliners. The terrorist attacks that occur using guns are generally committed in the inner city neighborhoods of the USA. These acts are committed in defiance of any law that is passed. After all, murder is against the law regardless of the weapon. Yes, you might call these acts crime, but I really consider it to be terrorism. After all, it is intended to terrify anyone that ventures into the wrong neighborhood in one of our large cities. Those acts of violence, whether committed with guns, knives, or fists, get the intended outcome. Most people avoid those neighborhoods unless they end up there by accident because their GPS is broken (or maybe it got stolen, because they parked in the wrong neighborhood).
Hey liberals, what law are you going to pass to stop the terrorism we had yesterday? Should we outlaw any event that brings together large numbers of people in one place? (Maybe the act was our fault for making such an exciting target for the terrorists.) Should we randomly search everyone seen walking down the street with a backpack or duffel bag? How about installing more cameras that use facial recognition software to look for suspected terrorists? The government could monitor the things we purchase, our telephone conversations, our email, our comings and goings, our friends and associates, our political views, etc. etc. Then they could pass a law that lets them arrest people who do things that look suspicious. They could go ahead and do a search of our computers and our homes. If they think something is up, who needs a warrant? Just wondering about your motivations is enough probable cause for a search.
This MessAPolitical is a "slippery slope." We're all going to end up losing freedom, and it might just make us less safe than we are. The government is coming for anyone that doesn't fall in line, and we may not be able to defend ourselves from the tyranny it is imposing. Don't forget the constitution. It's our only line of defense.
Monday, April 15, 2013
We've Got to do Something
The Democrats always have to do something to fix every problem in the world. You can't be allowed to hurt yourself or someone else or the environment. After the mass murder in Newtown, CT, Barack Obama said that something has to be done to prevent this from ever happening again. That is setting us up for sure disappointment. Unfortunately, I have no doubt that another mass murder will happen again.
In fact, another incident just happened early last week when the guy in Texas attacked a bunch of innocent people with a knife. So, now what? Do we pass knife control regulations? Do we need to register our knives? Should we outlaw butcher's blocks for the kitchen that hold more than seven knives? Are convicted felons allowed to own knives? What about those large assault knives - should they be outlawed completely?
Of course, a lot of people are killed by hammers. Should those be outlawed? Sometimes explosives are used to kill people. Why don't we outlaw dynamite and plastic explosives? You can rig up a propane tank to make a powerful bomb, so there go the gas grills. People have been known to run over someone with a car or even get drunk and drive and kill innocent people. Even women and children get killed this way. Better get rid of the cars. Oh yeah, baseball bats and tire irons are used to kill people. America's pastime is going to be a thing of the past, and I hope you don't have a flat tire.
By the way, murder by any means is against the law. So, I guess that means we don't have murders committed anymore. It's against the law for felons to own or carry guns, so I guess they don't carry them anymore. Armed robbery is against the law, so that never will happen again. And if we pass a law making it against the law for people to own guns, that will work just great. No gun related deaths will ever happen again.
Isn't all of this just ridiculous? The felons will still be able to get a gun without a background check. You might as well make mental illness against the law. This stuff will all work just as well. The president said this is not about politics, but it absolutely is. If the real goal was to minimize the effects of these type incidents in schools, we would put armed guards in the schools. The Democrat/Liberal motto is this: just do something that looks like you care. Even though it won't work, at least you proved that you cared by doing something.
Furthermore, the politicians wouldn't need armed guards anymore with all of the new gun control regulations preventing gun violence. If their guards are allowed to protect the politicians and themselves, why can't we protect ourselves and our families? Concealed carry permits at least make criminals wonder whether they will be attacking or robbing a person that can defend him or herself.
This MessAPolitico isn't going to make anyone safer except criminals. Many of the worst cities for gun crime in the USA have the most restrictive gun laws. Please don't make America as safe as Chicago or Washington.
In fact, another incident just happened early last week when the guy in Texas attacked a bunch of innocent people with a knife. So, now what? Do we pass knife control regulations? Do we need to register our knives? Should we outlaw butcher's blocks for the kitchen that hold more than seven knives? Are convicted felons allowed to own knives? What about those large assault knives - should they be outlawed completely?
Of course, a lot of people are killed by hammers. Should those be outlawed? Sometimes explosives are used to kill people. Why don't we outlaw dynamite and plastic explosives? You can rig up a propane tank to make a powerful bomb, so there go the gas grills. People have been known to run over someone with a car or even get drunk and drive and kill innocent people. Even women and children get killed this way. Better get rid of the cars. Oh yeah, baseball bats and tire irons are used to kill people. America's pastime is going to be a thing of the past, and I hope you don't have a flat tire.
By the way, murder by any means is against the law. So, I guess that means we don't have murders committed anymore. It's against the law for felons to own or carry guns, so I guess they don't carry them anymore. Armed robbery is against the law, so that never will happen again. And if we pass a law making it against the law for people to own guns, that will work just great. No gun related deaths will ever happen again.
Isn't all of this just ridiculous? The felons will still be able to get a gun without a background check. You might as well make mental illness against the law. This stuff will all work just as well. The president said this is not about politics, but it absolutely is. If the real goal was to minimize the effects of these type incidents in schools, we would put armed guards in the schools. The Democrat/Liberal motto is this: just do something that looks like you care. Even though it won't work, at least you proved that you cared by doing something.
Furthermore, the politicians wouldn't need armed guards anymore with all of the new gun control regulations preventing gun violence. If their guards are allowed to protect the politicians and themselves, why can't we protect ourselves and our families? Concealed carry permits at least make criminals wonder whether they will be attacking or robbing a person that can defend him or herself.
This MessAPolitico isn't going to make anyone safer except criminals. Many of the worst cities for gun crime in the USA have the most restrictive gun laws. Please don't make America as safe as Chicago or Washington.
Friday, April 12, 2013
The Department of Education Budget
Our US federal government spends billions of dollars on the Department of Education. To be more exact, the FY2011 budget for this department is just under $130 billion dollars. Yet this department operates no schools, has no pupils or students, and doesn't educate anyone. Yes, education is primarily a function funded by the state and local governments.
This is the budget showing the FY2011 through FY2016 federal allocations for education:
The Department of Education was originally created in 1867 as means of helping the states create effective school systems. Over the years, the focus of this department has changed. Generally, it provides guidance to the public schools regarding current circumstances in the country or the world. For instance, it was heavily involved in the civil rights movement during the late 1960's and 1970's. It initially became a cabinet level agency under the administration of President Jimmy Carter in 1980.
Currently, schools in the United States are educating around 56 million elementary and secondary school students in 99,000 public and 34,000 private schools. The Department of Education also provides grants, student loans, and work-study programs to over 15 million students in the nations colleges and universities.
This information comes from the official website of the Department of Education (http://www2.ed.gov/about/overview/fed/role.html). When you read this, it really sounds like they provide about a quarter of the $130 billion in federal funds to private schools. Do they? No. The money is sent to the illustrious public schools only. The only thing that is sent to the private schools is an endless supply of rules, regulations, and bureaucracy. That way they can insure that the private schools give your children a fine education. Without the help of the Department of Education, how would the private schools ever get this important job done??????
Now lets add in the state and local expenditures on education. That amounts to $850.7 billion for the 2008-2009 school year. (I don't have numbers for both in the same year.) That brings the total government expenditure for education to around $980 billion. That's right, nearly a trillion dollars that is spent on public education.
If we just look at elementary and secondary education, that is:
$578 billion at the state and local level
~$97 billion at the federal level
~$675 billion total
As I said before, I don't have the numbers for the state and local budgets in the same year as the federal budget numbers. However, I do have the numbers published in the U.S. Department of Education, FY2010 Summary of Performance and Financial Information, Washington, D.C., 2010. It says that the expenditures for public elementary and secondary schools was budgeted at approximately $540 billion for the 2010-2011 school year. With 49.4 million students in these schools, the expenditure per student was projected to be $10,792. Yes, the Department of Education's own financial statistics say that we are spending $10,792 per student to provide mediocre educational results. Does this cover the entire cost per student? I'm sorry to report that there is more. This doesn't cover the capital investments required like the cost of building new school buildings. In fact, the numbers from different sources never seem to agree. Is that so surprising? All of this data comes from tens of thousands of schools in thousands of school districts that are supported by local governments, state governments, and the federal government. Invariably, the data is several years old, and it is presented in a way that requires a degree in accounting and indoctrination in bureaucratic thinking to understand.
So how does that compare to the private school costs. The Department of Education report cited above says that there are about 5.8 million students in private elementary and secondary schools. The CATO Institute website reported back in June of 2009 about a study done in Florida. This study compared the test scores of private school students that were given state scholarships (i.e. vouchers) against the students that were in the public school system. It turns out that there was little difference between the scores received. However, there was a big difference in the costs. The public school education in Florida costs $11,150 per student, whereas the state only paid $3,950 per student to the private schools. The conclusion was that "public schools are spending nearly three times as much per pupil and have nothing to show for it."
Government schools (or indoctrination centers or teachers' union halls) are nothing but a bureaucratic money pit. They also are feeding the MessAPolitico that is our kids' education. The country is suffering financially. The kids are suffering financially. It's time for the government to get out of the education business now.
This is the budget showing the FY2011 through FY2016 federal allocations for education:
| FY2012 FEDERAL BUDGET ESTIMATES | ||||||
| BILLIONS OF $'S | ||||||
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | |
| Total Education | $129.8 | $121.1 | $118.1 | $118.0 | $123.4 | $128.7 |
| Pre-Primary thru Secondary | $78.2 | $49.9 | $42.7 | $42.6 | $42.6 | $42.7 |
| Tertiary (Higher Education) | $0.8 | $22.3 | $27.0 | $28.8 | $34.5 | $40.1 |
| General Science & Basic Research | $14.7 | $14.9 | $15.7 | $14.2 | $14.0 | $13.8 |
| Research & General Education Aids | $4.0 | $3.8 | $3.7 | $3.7 | $3.7 | $3.8 |
| Training & Employment | $9.1 | $8.7 | $8.0 | $7.8 | $7.7 | $7.4 |
| Other Labor Services | $2.2 | $2.0 | $2.0 | $2.0 | $2.0 | $2.0 |
| Social Services | $20.9 | $19.5 | $18.9 | $18.9 | $18.8 | $18.9 |
The Department of Education was originally created in 1867 as means of helping the states create effective school systems. Over the years, the focus of this department has changed. Generally, it provides guidance to the public schools regarding current circumstances in the country or the world. For instance, it was heavily involved in the civil rights movement during the late 1960's and 1970's. It initially became a cabinet level agency under the administration of President Jimmy Carter in 1980.
Currently, schools in the United States are educating around 56 million elementary and secondary school students in 99,000 public and 34,000 private schools. The Department of Education also provides grants, student loans, and work-study programs to over 15 million students in the nations colleges and universities.
This information comes from the official website of the Department of Education (http://www2.ed.gov/about/overview/fed/role.html). When you read this, it really sounds like they provide about a quarter of the $130 billion in federal funds to private schools. Do they? No. The money is sent to the illustrious public schools only. The only thing that is sent to the private schools is an endless supply of rules, regulations, and bureaucracy. That way they can insure that the private schools give your children a fine education. Without the help of the Department of Education, how would the private schools ever get this important job done??????
Now lets add in the state and local expenditures on education. That amounts to $850.7 billion for the 2008-2009 school year. (I don't have numbers for both in the same year.) That brings the total government expenditure for education to around $980 billion. That's right, nearly a trillion dollars that is spent on public education.
If we just look at elementary and secondary education, that is:
$578 billion at the state and local level
~$97 billion at the federal level
~$675 billion total
As I said before, I don't have the numbers for the state and local budgets in the same year as the federal budget numbers. However, I do have the numbers published in the U.S. Department of Education, FY2010 Summary of Performance and Financial Information, Washington, D.C., 2010. It says that the expenditures for public elementary and secondary schools was budgeted at approximately $540 billion for the 2010-2011 school year. With 49.4 million students in these schools, the expenditure per student was projected to be $10,792. Yes, the Department of Education's own financial statistics say that we are spending $10,792 per student to provide mediocre educational results. Does this cover the entire cost per student? I'm sorry to report that there is more. This doesn't cover the capital investments required like the cost of building new school buildings. In fact, the numbers from different sources never seem to agree. Is that so surprising? All of this data comes from tens of thousands of schools in thousands of school districts that are supported by local governments, state governments, and the federal government. Invariably, the data is several years old, and it is presented in a way that requires a degree in accounting and indoctrination in bureaucratic thinking to understand.
So how does that compare to the private school costs. The Department of Education report cited above says that there are about 5.8 million students in private elementary and secondary schools. The CATO Institute website reported back in June of 2009 about a study done in Florida. This study compared the test scores of private school students that were given state scholarships (i.e. vouchers) against the students that were in the public school system. It turns out that there was little difference between the scores received. However, there was a big difference in the costs. The public school education in Florida costs $11,150 per student, whereas the state only paid $3,950 per student to the private schools. The conclusion was that "public schools are spending nearly three times as much per pupil and have nothing to show for it."
Government schools (or indoctrination centers or teachers' union halls) are nothing but a bureaucratic money pit. They also are feeding the MessAPolitico that is our kids' education. The country is suffering financially. The kids are suffering financially. It's time for the government to get out of the education business now.
Wednesday, April 10, 2013
The Department of Education
The federal government doesn't have any schools. Schools are run by state and local governments. The schools in my area are county schools. Several cities in the area have independent school districts that are separate from the county school system. There are NO federal schools around here. Are there any around your area? I didn't think so.
So what business is it of the federal government? Why do we need a federal department of education? We don't. All the federal government does is meddle in our affairs. They issue "one size fits all" edicts that do nothing but add to the bureaucracy. Have these rules made education better in the USA? I keep hearing that we are amongst the lowest performers in the developed world in science and math. That doesn't make it seem that all those rules and regulations have done much good. Are schools safer today than they used to be? Nope.
The school administration loves these inflexible rules. I'm convinced that they prefer to have zero tolerance policies that require no judgement calls on the part of school personnel. These administrators are so afraid of offending someone or showing special treatment to one person over another. If the rule says that there is zero tolerance for students that bring a knife to school, then that student must be given a suspension. Period. A butter knife, a hunting knife, or a switchblade are all treated equally.
I once heard a story on the radio about a kid that had braces. His mother wanted to give him a banana in his lunch box, but it would get stuck in the braces. If he cut up the banana before eating it, the problem was avoided. So his mother put a butter knife in the lunch box with the banana. A teacher saw the butter knife, and the zero tolerance rule was invoked. He was suspended for a butter knife. You could have done much more damage with a legal fork than a dull butter knife. This kid lived in a rural school district, not the inner-city. Stabbings and knives and weapons weren't a big problem at this school, but the "one size fits all" rule said that the school had to punish this good kid. This became a blemish on his record. Somebody might have screamed "discrimination" if he got to bring in a butter knife, when some inner-city kid was suspended for pulling a switchblade on the teacher that told them to be quiet or quit fighting or whatever.
This is just one blatant example of why the government should get the heck out of education. I mean that the federal, state, county, city, or any other government should get out of education. It should be privatized. I'm definitely a supporter of education vouchers. Then you can choose who will educate your children. The government indoctrination centers really are dying to get your kids away from you to train them to be good little tree hugging, socialist, anti-religious liberals.
So when we are talking about areas that could be eliminated from the federal bureaucracy, education has to be high on the list. In fiscal year 2011, the federal government spent around $130 billion, and they don't even have any schools. Let's cut out the money pit and MessAPolitico completely. Don't just cut 10% or 25% or even 50% of the funding for the department of education. Completely eliminate it. Get rid of all the bureaucrats, top to bottom. Close it down. Save $130 billion dollars every year, or really, more than that since these budgets go up every year. I'm betting you won't even notice the difference unless you work there. If you do notice something, it's more likely to be a positive change than a negative one.
So what business is it of the federal government? Why do we need a federal department of education? We don't. All the federal government does is meddle in our affairs. They issue "one size fits all" edicts that do nothing but add to the bureaucracy. Have these rules made education better in the USA? I keep hearing that we are amongst the lowest performers in the developed world in science and math. That doesn't make it seem that all those rules and regulations have done much good. Are schools safer today than they used to be? Nope.
The school administration loves these inflexible rules. I'm convinced that they prefer to have zero tolerance policies that require no judgement calls on the part of school personnel. These administrators are so afraid of offending someone or showing special treatment to one person over another. If the rule says that there is zero tolerance for students that bring a knife to school, then that student must be given a suspension. Period. A butter knife, a hunting knife, or a switchblade are all treated equally.
I once heard a story on the radio about a kid that had braces. His mother wanted to give him a banana in his lunch box, but it would get stuck in the braces. If he cut up the banana before eating it, the problem was avoided. So his mother put a butter knife in the lunch box with the banana. A teacher saw the butter knife, and the zero tolerance rule was invoked. He was suspended for a butter knife. You could have done much more damage with a legal fork than a dull butter knife. This kid lived in a rural school district, not the inner-city. Stabbings and knives and weapons weren't a big problem at this school, but the "one size fits all" rule said that the school had to punish this good kid. This became a blemish on his record. Somebody might have screamed "discrimination" if he got to bring in a butter knife, when some inner-city kid was suspended for pulling a switchblade on the teacher that told them to be quiet or quit fighting or whatever.
This is just one blatant example of why the government should get the heck out of education. I mean that the federal, state, county, city, or any other government should get out of education. It should be privatized. I'm definitely a supporter of education vouchers. Then you can choose who will educate your children. The government indoctrination centers really are dying to get your kids away from you to train them to be good little tree hugging, socialist, anti-religious liberals.
So when we are talking about areas that could be eliminated from the federal bureaucracy, education has to be high on the list. In fiscal year 2011, the federal government spent around $130 billion, and they don't even have any schools. Let's cut out the money pit and MessAPolitico completely. Don't just cut 10% or 25% or even 50% of the funding for the department of education. Completely eliminate it. Get rid of all the bureaucrats, top to bottom. Close it down. Save $130 billion dollars every year, or really, more than that since these budgets go up every year. I'm betting you won't even notice the difference unless you work there. If you do notice something, it's more likely to be a positive change than a negative one.
Monday, April 8, 2013
Problems with a Balanced Budget Amendment, or the Law of Unintended Consequences VI
The majority of Americans believe that our federal, state, and local governments should balance their budgets. That is, the spending should not exceed the tax revenues collected. However, at the polls last November, big spenders were re-elected. That includes liberal democrats in the US Senate and, of course, President Obama. Somehow the electorate doesn't believe that these radical, big spending, liberals are the problem. Do the people really believe in taking a balanced approach where revenues are increased AND spending is cut? (By the way, we've had the tax increases for a small number of Americans, but no real spending cuts.) Do the people really agree that even the extremely small cuts (that aren't really cuts at all) will be devastating to the economic recovery? Will spending cuts kill the economic recovery? Does government spending create jobs or even save them? I don't believe so.
Politicians have been talking about taking steps to balance the budget sometime out in the future. That would be 3-10 years away. They are waiting on the economy to outgrow the pace of spending growth, but what if the deficits and government regulations and high cost of energy they have created just won't let our economy get off the ground? What if the great depression wasn't eased and ended by government spending programs (i.e. Keynesian economics)? Could it be possible that the great depression would have just been a tough recession if FDR hadn't intervened? Did all of those trillion dollar pork barrel programs that were promoted by Obama really avert a depression, or did they make this thing much worse than it needed to be?
I personally believe that all of this deficit spending is a huge MessAPolitico. I also believe that this recession would have been difficult, but it would be over if the government hadn't intervened to protect us from reality. I would love to have a balanced budget amendment at all levels of our government. I think that bills passed by lawmakers should be analyzed for cost, and each taxpayer (and potential voter) should be told how much that it will cost them in extra taxes. If we had to pay for all of that pork, would we be so keen on having politicians spend the money? I'll bet not. At least the politicians might try to cut an existing program before starting a new one so that new revenue wouldn't be needed.
If a balanced budget amendment was passed that simply makes an unbalanced budget illegal, would that fix everything? No. You see, our lawmakers just can't agree to cut anything. If an unbalanced budget is illegal and no one will cut spending, then taxes must go up. That's right, the law would require collecting enough tax revenue to cover the costs. I know that we tend to think that a balanced budget amendment would force the politicians to reduce spending, but we just might get the unintended consequence of a massive tax increase if a simple amendment passed.
Right now, we borrow about 40 cents of every dollar the federal government spends. Do you realize that we would need to raise 2/3 more tax revenue to balance the budget without any spending cuts? Wow! Let's do the math. If we collected 100% rather than 60% of the money spent, we would need to collect 100/60 = 1 2/3 times as much. Can this much tax be collected? If you believe in the Laffer curve, the answer is definitively no. If you raise the tax rates by 2/3, will 2/3 more taxes be collected. No. The excessive taxes will take too much money out of the economy. A major recession, commonly called a great, great, great depression, will bring all economic activity to a halt. There will be no profits to tax, no dividends or capital gains to tax, and a lot less income to tax.
The Cut, Cap, and Balance amendment that was proposed by Congress a couple of years ago would have been a good one. It limited spending to the revenue collected last year. That would force spending to be kept in check.
The Congress is proposing to balance the budget over a number of years and by betting on the come, and that strategy is not destined to succeed. I personally believe that they need to drastically cut with an axe. Any department that isn't absolutely necessary should be eliminated. Everything that can be privatized should be privatized. I think that there are a very few things that must be done by the federal government. Everything else should be left to the more efficient and responsive private sector economy. All they need to do is dump 40% of the federal government agencies that are trying to do something that shouldn't be done by government (or maybe shouldn't be done at all).
Finally, we regular people borrow money sometimes. We get mortgages and car loans and use credit cards. We eventually pay these loans off. That's right, we don't just spend more than we earn year in and year out, and continue getting new loans to cover the shortage. We actually make payments on our loans, and the payments don't come from getting a new credit card and transferring the balance. Why can't the government ever pay off the national debt? Why do we not develop budgets and a plan for systematically getting the national debt paid off? I believe this is another major MessAPolitico.
Maybe we should be talking about a Pay Off the National Debt Amendment. Could that be the solution? Yes. No one believes that it can be done. I do. It might take 20 or 30 years, but it can be done. It all must start with a balanced budget immediately. It also starts by cutting out everything but the things that absolutely must be done by the federal government. I believe we could then run budget surpluses of $500M-$700M annually, and that surplus could be used to retire some national debt. You might fear the effect of huge government spending cuts, but I fear what will happen if we don't do it and do it now!
Politicians have been talking about taking steps to balance the budget sometime out in the future. That would be 3-10 years away. They are waiting on the economy to outgrow the pace of spending growth, but what if the deficits and government regulations and high cost of energy they have created just won't let our economy get off the ground? What if the great depression wasn't eased and ended by government spending programs (i.e. Keynesian economics)? Could it be possible that the great depression would have just been a tough recession if FDR hadn't intervened? Did all of those trillion dollar pork barrel programs that were promoted by Obama really avert a depression, or did they make this thing much worse than it needed to be?
I personally believe that all of this deficit spending is a huge MessAPolitico. I also believe that this recession would have been difficult, but it would be over if the government hadn't intervened to protect us from reality. I would love to have a balanced budget amendment at all levels of our government. I think that bills passed by lawmakers should be analyzed for cost, and each taxpayer (and potential voter) should be told how much that it will cost them in extra taxes. If we had to pay for all of that pork, would we be so keen on having politicians spend the money? I'll bet not. At least the politicians might try to cut an existing program before starting a new one so that new revenue wouldn't be needed.
If a balanced budget amendment was passed that simply makes an unbalanced budget illegal, would that fix everything? No. You see, our lawmakers just can't agree to cut anything. If an unbalanced budget is illegal and no one will cut spending, then taxes must go up. That's right, the law would require collecting enough tax revenue to cover the costs. I know that we tend to think that a balanced budget amendment would force the politicians to reduce spending, but we just might get the unintended consequence of a massive tax increase if a simple amendment passed.
Right now, we borrow about 40 cents of every dollar the federal government spends. Do you realize that we would need to raise 2/3 more tax revenue to balance the budget without any spending cuts? Wow! Let's do the math. If we collected 100% rather than 60% of the money spent, we would need to collect 100/60 = 1 2/3 times as much. Can this much tax be collected? If you believe in the Laffer curve, the answer is definitively no. If you raise the tax rates by 2/3, will 2/3 more taxes be collected. No. The excessive taxes will take too much money out of the economy. A major recession, commonly called a great, great, great depression, will bring all economic activity to a halt. There will be no profits to tax, no dividends or capital gains to tax, and a lot less income to tax.
The Cut, Cap, and Balance amendment that was proposed by Congress a couple of years ago would have been a good one. It limited spending to the revenue collected last year. That would force spending to be kept in check.
The Congress is proposing to balance the budget over a number of years and by betting on the come, and that strategy is not destined to succeed. I personally believe that they need to drastically cut with an axe. Any department that isn't absolutely necessary should be eliminated. Everything that can be privatized should be privatized. I think that there are a very few things that must be done by the federal government. Everything else should be left to the more efficient and responsive private sector economy. All they need to do is dump 40% of the federal government agencies that are trying to do something that shouldn't be done by government (or maybe shouldn't be done at all).
Finally, we regular people borrow money sometimes. We get mortgages and car loans and use credit cards. We eventually pay these loans off. That's right, we don't just spend more than we earn year in and year out, and continue getting new loans to cover the shortage. We actually make payments on our loans, and the payments don't come from getting a new credit card and transferring the balance. Why can't the government ever pay off the national debt? Why do we not develop budgets and a plan for systematically getting the national debt paid off? I believe this is another major MessAPolitico.
Maybe we should be talking about a Pay Off the National Debt Amendment. Could that be the solution? Yes. No one believes that it can be done. I do. It might take 20 or 30 years, but it can be done. It all must start with a balanced budget immediately. It also starts by cutting out everything but the things that absolutely must be done by the federal government. I believe we could then run budget surpluses of $500M-$700M annually, and that surplus could be used to retire some national debt. You might fear the effect of huge government spending cuts, but I fear what will happen if we don't do it and do it now!
Friday, April 5, 2013
The Law of Unintended Consequences V
Government intervention is always done with the intent of helping some group of people. Typically, whatever they do is done to help the poor and down-trodden. Anyone that opposes liberal initiatives to save the world is labeled a friend of the greedy, rich corporate thieves. We've had a war on poverty that started under Franklin Roosevelt, but our inept government can't seem to bring that war to an end. The government MessAPolitico is really adept at spending our money, but inept at solving any problem as intended.
What are some places where our government has "really helped" - not? Here are some examples.
Medicare and Medicaid were created during the "Great Society" initiative of Lyndon Johnson. Have you noticed that the cost of medical care in the United States pretty much tracked with the inflation rate of the rest of the economy until the mid-1960's. What happened then? Medical costs suddenly outpaced the rest of the economy. Adding a bunch of money into any segment of the economy creates a lot of demand. When the demand goes up, prices go up. Before Medicare and Medicaid were created, poor people received their medical care on a pro bono basis. The doctors and charity hospitals provided the basic medical care needs of these poor people. With the new Medicare and Medicaid programs, the doctors and other healthcare providers had no problem charging full price for services that were once provided pro bono. After all, the money wasn't coming from the poor; it was coming from that rich guy, Uncle Sam. So the government helped us out by making the price of medical care skyrocket.
Fannie Mae and Freddie Mac took it as a mission to put more people into homes of their own. How did that work out? Well, they forced banks to relax their lending standards. The rules for qualifying for loans were relaxed, giving more people a loan. The rules requiring significant down payments were relaxed. With more and more families qualifying for a home loan and other families qualifying for bigger home loans than ever before, the demand for homes was through the roof. As with the medical care jump in demand or any industry experiencing high demand, the prices increased rapidly. We had a "perfect storm" in housing (or maybe a "perfect MessAPolitico"). The storm gave us high prices and little of no down payment for far too many homeowners. This put the banks at extremely high risk. Too many homeowners had nearly zero equity in their home; if prices dropped just a little, there wasn't enough equity to cover the loan. Of course, that happened. The economy took a downturn. Many of these new homeowners lost their jobs, so they couldn't make the payments. They had little or no "skin in the game" (equity to lose), so they just turned the keys over to the bank and moved out. The bank was stuck with a foreclosed property that wasn't worth enough to pay back the loan. In fact, home prices plummeted. Now everyone who owned a home lost money in their equity. If they were upside down on the mortgage, they couldn't sell the home and move if they found a job in another city. The homeowners either lost their homes or they were trapped in them. The goal was to get people that couldn't afford homes into a home of their own. That didn't happen in the end, and some people that had been secure in their homes lost them. The banks and other lending institutions were suddenly in seriously bad financial shape. Without the strong banks, lending was curtailed throwing the entire economy into a deep recession -- one that I would say hasn't ended yet. How's that for unintended consequences.
I will say it again: the government could screw up a wet dream. I wish the government would just stop protecting and helping us. I can't take much more of this MessAPolitico.
What are some places where our government has "really helped" - not? Here are some examples.
Medicare and Medicaid were created during the "Great Society" initiative of Lyndon Johnson. Have you noticed that the cost of medical care in the United States pretty much tracked with the inflation rate of the rest of the economy until the mid-1960's. What happened then? Medical costs suddenly outpaced the rest of the economy. Adding a bunch of money into any segment of the economy creates a lot of demand. When the demand goes up, prices go up. Before Medicare and Medicaid were created, poor people received their medical care on a pro bono basis. The doctors and charity hospitals provided the basic medical care needs of these poor people. With the new Medicare and Medicaid programs, the doctors and other healthcare providers had no problem charging full price for services that were once provided pro bono. After all, the money wasn't coming from the poor; it was coming from that rich guy, Uncle Sam. So the government helped us out by making the price of medical care skyrocket.
Fannie Mae and Freddie Mac took it as a mission to put more people into homes of their own. How did that work out? Well, they forced banks to relax their lending standards. The rules for qualifying for loans were relaxed, giving more people a loan. The rules requiring significant down payments were relaxed. With more and more families qualifying for a home loan and other families qualifying for bigger home loans than ever before, the demand for homes was through the roof. As with the medical care jump in demand or any industry experiencing high demand, the prices increased rapidly. We had a "perfect storm" in housing (or maybe a "perfect MessAPolitico"). The storm gave us high prices and little of no down payment for far too many homeowners. This put the banks at extremely high risk. Too many homeowners had nearly zero equity in their home; if prices dropped just a little, there wasn't enough equity to cover the loan. Of course, that happened. The economy took a downturn. Many of these new homeowners lost their jobs, so they couldn't make the payments. They had little or no "skin in the game" (equity to lose), so they just turned the keys over to the bank and moved out. The bank was stuck with a foreclosed property that wasn't worth enough to pay back the loan. In fact, home prices plummeted. Now everyone who owned a home lost money in their equity. If they were upside down on the mortgage, they couldn't sell the home and move if they found a job in another city. The homeowners either lost their homes or they were trapped in them. The goal was to get people that couldn't afford homes into a home of their own. That didn't happen in the end, and some people that had been secure in their homes lost them. The banks and other lending institutions were suddenly in seriously bad financial shape. Without the strong banks, lending was curtailed throwing the entire economy into a deep recession -- one that I would say hasn't ended yet. How's that for unintended consequences.
I will say it again: the government could screw up a wet dream. I wish the government would just stop protecting and helping us. I can't take much more of this MessAPolitico.
Wednesday, April 3, 2013
What about the Origination Clause in the Constitution?
The Pacific Legal Foundation has filed a lawsuit with the supreme court to stop Obamacare. The Patient Protection and Affordable Care Act originated in the Senate. It was challenged in the supreme court last spring as being in violation of the commerce clause of the constitution. While the supreme court ruled that the bill was not in violation of the commerce clause, it did so with chief justice John Roberts writing that the fines that were intended to coerce people into buying insurance were actually a tax. If he had considered the fees to be fines, he would have considered the law unconstitutional, but he clearly stated that they were taxes. Period.
This seemed to me at the time to be setting the stage for a different challenge - that it violates the origination clause in the constitution. The constitution states that all budget, spending, and tax bills must originate in the House of Representatives. Since the PPACA originated in the Senate, it was unconstitutional from the onset.
So why did it take so long to bring this suit? Chief justice Roberts laid out the road map to successfully kill the president's crowning achievement. That would be the one that the majority of Americans have claimed that they DO NOT WANT in no uncertain terms, over and over. (Yea, yea, I know Obama won the election and the Democrats retained control of the Senate. That just shows how "out of touch" and/or stupid over half of the American populace it. You know that about half the population has a below average IQ. For you democrat voters and Obama lovers, that would be an IQ below 100.)
So get on with it Pacific Legal Foundation. Come on supreme court. We've got to kill this MessAPolitico before it gets implemented. That means now.
This seemed to me at the time to be setting the stage for a different challenge - that it violates the origination clause in the constitution. The constitution states that all budget, spending, and tax bills must originate in the House of Representatives. Since the PPACA originated in the Senate, it was unconstitutional from the onset.
So why did it take so long to bring this suit? Chief justice Roberts laid out the road map to successfully kill the president's crowning achievement. That would be the one that the majority of Americans have claimed that they DO NOT WANT in no uncertain terms, over and over. (Yea, yea, I know Obama won the election and the Democrats retained control of the Senate. That just shows how "out of touch" and/or stupid over half of the American populace it. You know that about half the population has a below average IQ. For you democrat voters and Obama lovers, that would be an IQ below 100.)
So get on with it Pacific Legal Foundation. Come on supreme court. We've got to kill this MessAPolitico before it gets implemented. That means now.
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