by Steven Waechter | Jul 1, 2013
It is axiomatic in history that the new worlds of the revolutionaries tend to resemble the social systems of the past. Tsar Alexander II freed 60 million serfs with the stroke of a pen, and seventy years later Joseph Stalin would re-impose serfdom under the guise of collective farms. He used bullets instead of ink. Similar stories can be told of the French Revolution, the Chinese Civil War, Oliver Cromwell, and probably all revolutions in some respect.
Alexander Hamilton wanted America to copy the British system, complete with political elites, state-supported monopoly corporations like the British East India Company, and all-powerful central government. It took two hundred years to overcome Jeffersonian resistance, but Hamilton finally won when TARP was implemented.
Perhaps it is no surprise that Barack Obama’s career-building commitment to the rhetoric of egalitarianism would lead to a stratified-by-force society resembling the old feudal model.
Get Fewer Hours, for Less Pay, and No Benefits
A friend of mine is facing the situation that has been making headlines lately; employers are cutting hours and eliminating their existing health care programs. Her employer (a farm-and-country retail chain) currently provides their employees with monthly cash payments earmarked for employee healthcare needs.
The company has been considering eliminating the cash payment, because paying the Obamacare penalty will be cheaper. Now, let’s examine this with the incredulous and caustic clarity that is my trademark – the company will stop giving money to employees for their healthcare needs, and give it to the government instead.
The employees lose their health program and are now individually liable for the Obamacare penalty if they fail to obtain health insurance on their own – fewer resources and greater obligations, a pincer strike on their standard of living.
FTE’s
Obamacare minstrels have been pointing out that the law goes into effect for companies with over 50 full-time equivalents – or “FTE’s,†so a company with 10 full-time employees and 100 part-time employees would have 60 FTE’s and would have to provide insurance but only for employees that work over 30 hours a week – in this case, 10 employees.
Fewer benefits, fewer hours, less income, and more obligations; employees lose at every bloody turn. To make up the difference, employees will scrounge for second and third jobs, as well as government support.
It used to be that you found a job and worked hard, so you would not have to rely on public support. Now, you will be dependent on the government whether you have a job or not.
We’re All Day Laborers Now
Corporate America is in a process of firing all of their employees and replacing them with temps. Much like some serfs were Villeins and some were Cottagers (the difference was that some retained land and others were landless laborers providing service to the lords for subsistence), there are several types of temp employee.
Some are just like standard employees, except that they have to reapply for their job every 3 to 6 months, while others are full-fledged employees of a temp agency, and are sent out on contracts to whatever employer has engaged them.
Check the job boards for your home town; temp agency jobs might be the bulk of what is available.
Revolutionary Destruction
Causing strain on social and economic relationships has been a tactic of ideological struggle between countries, factions, movements, religions, and all radicals since the beginning of time.
Causing stress within families can justify enormous social work bureaucracies; causing stress within the workplace can break down the economy and make employers and employees view each other as enemies and potential litigants; and so on with teachers and students, citizens and police, and any thing else you can think of to insert more arbitrators, sensitivity counselors, HR consultants, labor activists, and social workers into the workings of the nation.
I haven’t even included the doctors opting for early retirement. So, what will the part-time employee with no health coverage whose tax refund was eaten up by the Obamacare penalty and has no spare cash because scheduled hours were reduced do for healthcare? There will be Medicaid, and emergency rooms – but hospitals will be understaffed.
Perhaps you should become good friends with your local veterinarian; it helped on “The Walking Dead,†and it might come in handy as we slide into post-industrial feudalism.
by Steven Waechter | Nov 28, 2012
The tax credit for wind energy is back on the agenda, and Iowa’s own Chuck Grassley and Terry Branstad are taking leadership roles in fighting for the extension, going so far as to appear together at a press conference about it.
Wind energy is my favorite target at the moment, because it combines socialist economics, corruption, aesthetic vandalism, junk science, and cynical political machinations – all melting together into a hideous soup of wasted money and ruined skylines.
Tough Love
After the last election, targeting two of Iowa’s best known Republicans for criticism is perhaps a risky business, but for those who think I – with my dislike of leftists – shouldn’t be doing it, I offer the following historical analogy:
In the days of the Roman legions, the centurions were legendary for their swift discipline. One centurion developed a habit of breaking his staff over the backs of soldiers who had acted disobediently. “Give me another,†he would say to his aide when it happened, and it happened so often that “give me another“ became his nickname . In this way, withering cruelty became not a malicious attempt to destroy, but deep concern for long-term wellbeing.
Well, give me another.
Political Venture Capital
Wind energy is an odious political scam. First of all, the industry cannot survive without government subsidy, namely, the tax credits. The wind industry makes profits not from the power grid, but from their tax returns.
It is also ridiculously expensive and underproductive. When Alliant Energy built the Whispering Willows wind farm in Franklin County, they petitioned utilities regulators for a rate hike to help cover the cost. The market had reached a price for electricity, generated by coal, but at that price the wind farm was not economically viable – it wouldn’t produce enough electricity to cover its cost.
They built it anyway. Even though the money in the wind industry is earned on the tax return and not the power grid, they didn’t want to eat an operating loss, so rates have to increase. Consumers in central Iowa found themselves paying more money for the electricity they used – still mostly generated from coal – to pay for a wind farm erected so the utility could earn a tax credit.
The utility sells the power and claims the credits; the landowners earn fees for having these modern art sculptures on their land; the turbines produce just enough electricity to power a massive, metaphorical conveyor belt carrying money from the pockets of poor customers to the rich and the politically-connected… Because that is progress these days.
Grassley stated at the recent news conference that “We have a 20 year investment in this… it would be terrible to throw a way a 20 year investment if it will mature in a short time.â€
We have been waiting for the wind energy industry to mature since the days when pioneer farmers could order a windmill from the Sears and Roebuck catalog. Most of them were dismantled after rural America was electrified. Now, the fantasy is that the same technology that was felled by electricity will be the future of electricity.
Central Dreaming
Nothing becomes outdated faster than a fantasy about the future. This is never more true than when the fantasy has its birth in the minds of politicians; a future brought to you by the same people who bring you inflation, wars, and prisons.
The general public is also rapidly becoming too poor to cover higher utility bills, but wind energy fits into the political rhetoric of our time and so they charge forward. Wind energy doesn’t make power cheaper, reduce our trade deficit, strengthen the dollar, or generate tax revenue – but it can get you elected.  It employs only a handful of people, especially when compared to the coal industry – which politicians have threatened to kill. The turbines themselves are insanely ugly, and provide a far too convenient backdrop for political photo opportunities.
I understand that this is politics. I also object to the fact that this is politics. The experience of subsidized public housing should have been enough to dispel the urge to make fantasy into reality, but it wasn’t. We will all pay the price. Literally.
![Waechter’s Final Pre-Election Weigh In: No Matter How You Vote, the Economy Will Not Improve]()
by Steven Waechter | Oct 29, 2012
I cast my ballot early. I didn’t vote third-party and therefore my vote isn’t being wasted. It also isn’t going to matter.
Since 1990, the United States has run aggregate trade deficits above $8 trillion. This is funny, because in 1990 the M2 metric of currency supply was only $3 trillion. There should be nothing but dust coming out of the ATM machines. We have purchased entire merchant-fleets full of foreign goods, and paid for it by quite literally printing money.
Foreign countries, being more blatant about their currency devaluation policies, have been willing to go along with this arrangement. The result is this dynamic: The US prints dollars to buy goods from China, and the Chinese central bank prints yuan to buy the dollars. We get cheap Chinese stuff, the Chinese central bank gets huge dollar reserves, and the Chinese people get jobs and lots of inflation.
As the years went by, this dynamic absolutely shattered the productive impetus in the American economy. There is no reason to manufacture anything, or engage in productive activity in general. There is also no reason to hire people to help you be productive.
You can see this dynamic in your own communities, with factories that are closed, the kids that can’t find jobs, and farmers – busy producing inflation-sensitive commodities on land, which can’t be outsourced – buying new trucks with cash. The illness in our economy is bad monetary policy.
In a normal economy, if there is demand for consumer goods, entrepreneurs have to take land, labor, and capital and combine them in a way that produces goods efficiently, and at a price the general public can afford to pay. The American economy has another option – we can simply print money and spend it on imports, which is much simpler, requires no investment of capital or any hiring, and is much cheaper.
The result was the largest consumption binge in history, and an economy dependent on investment bubbles – tech stocks, housing, government bonds. The Federal Reserve poured new money into the financial system. You could get a home equity loan to cover your credit card debt, rung up at retail outlets selling almost exclusively imported goods.
Since manufacturing was on the way out, the service sector was the place to be, and the best service sector jobs require college degrees, so the answer is to go to college. Both parties agreed; the answer wasn’t to address the problems with our monetary system, but to attend college. Every young person was told that college is critical.
Now, we have more people in their 20’s living with their parents, more college graduates than ever are working part time, if they can find jobs at all, and the only policy solutions coming out of our elected officials is to double down on college, fund green energy schemes ( I‘m talking about you, Chuck Grassley) and economic development kitsch projects at all levels, building economic Potemkin Villages designed to try and keep the consumption binge going.
Close down Maytag? No problem! Build a race track! Remember when Nancy Pelosi said that unemployment checks would stimulate the economy? People need to spend, spend, spend, because there is no work, work, work.
Without the inflationary monetary policy coming out of the Federal Reserve, the government could not run the enormous deficits, the trade deficit couldn’t have gotten this large (currency would have become scarce, and productivity more valuable), and the government would have to be honest about the absurd arithmetic surrounding our entitlement programs.
Therefore, neither party will countenance a serious challenge to our current monetary system. Even Paul Ryan’s budget plan – so maligned by the left – doesn’t eliminate the deficit nor tackles entitlements. Sound money might even threaten the defense budget, and is therefore terrorism.
So, Barack Obama champions stimulus programs to re-inflate consumption and crows about tariffs on Chinese tires; Mitt Romney labels China a currency manipulator for being willing to bite the inflation bullet themselves and hold our currency as a reserve.
Work in a factory keeps their people busy and gives them the illusion of progress – a bit like how college keeps young people in America busy and gives their parents the illusion that their children will “amount to something.“ Concerns that college diplomas are worthless and that the wages of the Chinese factory worker are shredded by inflation are secondary.
Offshoring is not the machination of evil capitalists; it is a phenomenon of monetary policy, plain and simple. Other countries are willing to hold our currency as a reserve, so we can buy imports with inflation. According to the Examiner, Jeep is next on deck to offshore.
So, services and technological expertise is the key to success in America, as long as another large, developing economy doesn’t devalue their currency and start holding dollars as a reserve.
Especially not one with a large, English-speaking population, and definitely not one with a past influenced by British rule. Why, if that happened, we could just print money and buy our services from that country, and you would run the risk of not fully understanding the technician’s accent the next time you have to call tech support, which is simply unimaginable.
I cast my vote. I ended up voting for the one that I figure is less likely to throw me into a gulag. I suppose this makes my vote “idealistic.â€
Here we are. We have an economy that cannot produce wealth, based on consumption, with a government that we cannot finance and cannot change. We are consistently running trade deficits in excess of $40 billion per month but are told that we lack demand for stuff, almost 50 million people are dependent on food stamps, and an entire generation is shacked up at home, paying their student loans and otherwise too poor to participate in the consumption economy. Yet, there is no stomach for change.
When debating Walter Mondale in 1984, Ronald Reagan cited Cicero and remarked, “If not for the elders, correcting the mistakes of the young, there would be no State.â€
What are the young supposed to do when their elders who run the government have lost their minds?
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by DJ Durant | Nov 13, 2010
Our grandchildren were over last weekend–two boys ages 5 and 3. At one point the 3-year-old was telling me about being disobedient and how Daddy had to give him a big spanking. Now I know my son and I’m sure that he was providing gentle discipline, but the point wasn’t lost and can be applied to last week’s election.
Much has been made of the Republican’s gains in the House and Senate, and their effective control of Congress. This was clearly a repudiation of the Obama, Reid, and Pelosi policies of economic stagnation. Make no mistake about it, this was about the economy. The Democrats insistence on spending taxpayer’s money ineffectively, squandering it, actually, passing huge and unpopular bills, and their complete lack of caring about the taxpayer and the cumulative effect on the economy led to their downfall.
Part of this is due to their arrogance. Part is due to the Democrats’ lack of understanding of how our economy works. America is and always has been a capitalist society. Government control and planning is an anethema. Our economy works best when businesses and individuals are confident and can make plans to invest, spend, hire and borrow with a degree of certainty. America has not had any level of confidence in over two years, since the collapse of Lehman Brothers in September 2008. The Democrats, and President Obama, Harry Reid and Nancy Pelosi specifically, have done everything they could to ensure a lack of confidence by ramming through legislation designed to further their agenda and in the process, scaring the living crap out of people. Hence the rise of the Tea Party, and the big spanking.
Everything the Democrats have done has suggested higher taxes or significantly additional costs and fees. First, they’ve managed to pass a “stimulus” bill that has to be paid for somehow, and that has failed to stimulate much. Second, they passed Obamacare that will raise the cost of doing business for everyone, and I mean everyone, and must be paid for with additional taxes. Third, they passed a “financial reform” bill that will raise the costs of banking and lending, with the net result of limiting access to credit. Finally, their failure to extend the Bush tax cuts raises everyone’s taxes, regardless of income, by a minimum of $2,000 next year. All of this money has to come from somewhere. And so people are nervous and nervous people do not spend money. Nervous businesses do not hire and invest in infrastructure and equipment. And the cumulative effect of all of this is a lack of revenue flowing into the US Treasury. You cannot have 9.6% unemployment and expect treasury tax revenues to increase. And this is why the Democrats got spanked.
Republican leadership now has to lead or they’ll get spanked. They need to undo the uncertainty and instill confidence in the electorate and business. This means revising all of the poor legislation that was passed the last two years, if not repealing it altogether. This is what they were elected to do. If they pass legislation and President Obama vetoes it, then in two years, the voters will have another chance to spank. And despite all of his rhetoric, I don’t believe that the President truly gets it. There is still an incredible lack of humility emanating from the White House. Even this week in Seoul, the President got spanked by the Europeans and Chinese, and he refuses to acknowledge his policies aren’t working; rather, his policies are ”misunderstood”.
On a separate but related topic, The Federal Reserve and Chairman Ben Bernanke has decided to print another $600 billion and buy back US Treasury securities in a process known as Quantitative Easing (QE). Flooding another $600 billion into the economy over the next six months is like pushing on a string. Until the government gets its fiscal act together, it won’t do anything other than increase the money supply with no increase in aggregate demand for goods and services. This money has to go somewhere, and investors will search for a place where they can get a reasonable rate of return. So, after the election, there was a rally in the stock and bond markets, but this week, stocks and bonds sold off, but commodities rallied–specifically oil, cotton, soybeans and gold. On Friday, even commodities weakened. The stock markets have generally rallied since September 1 because corporate earnings have been solid. But earnings are a result of sales, and in order for sales to increase, people have to want to risk spending the money, which brings us back to fiscal policies.
So the next month will determine whether or not the resurgent Republicans and spanked Democrats can and will work together. The amazing thing about our economy is that it hasn’t collapsed despite collosal mismanagement in our nation’s capitol. Stay tuned. Things are about to get very interesting.
