American Elephants


Obama Wants Greater Economic Equality. His Policies Destroyed It. by The Elephant's Child

President Obama’s Inaugural Speech, angry and divisive, was all about a call for the Progressive Project. Big Government, Big Health, Big Equality, Big Progressive Reform of Everything. Even reforming history to insist that the old ideas of the old white men who wrote the Declaration and the Constitution no longer measure up to the needs of modern progressive society.  Modern.

The centerpiece was a call for greater economic equality. The president said that “our country cannot succeed when a shrinking few do very well and a growing many barely make it.” That’s just what has happened over the last four years. A new big tax on “the rich” doesn’t begin to compensate for the misery Obama’s policies have inflicted on everyone else.

The recession formally ended in June 2009. We should have seen real recovery beginning, but the auto companies were bailed out, with portions of the value of the companies turned over to the workers. The car dealers — independently owned businesses whose only connection to the auto manufacturers was that they purchased the cars they sold from the car makers— were abruptly put out of business.

The management of GM was replaced with Obama’s own choices. Chrysler was turned over to Fiat, an Italian company. The union workers at GM and Delphi had their pensions restored, while the non-union employees were left out. GM was told to start making electric cars — Volts —that GM management said were not yet ready for prime time, which has proved to be true.

Then the administration cooked up a program to get all the people who were planning to buy a new car to turn their old ones in to be crushed, decimating  both the used-car market and the used-parts market, and gave the people who were going to buy a new vehicle anyway, a big subsidy to make their purchase promptly. Is there anything in that tale that might make businessmen nervous? Suspicious of the government? Inclined to hunker down and not get noticed? Right.

That was followed up with a vast and complete reformation of American Health Care, promising to reduce the cost, “bend the cost curve down” was the favored term. Except the cost of health care had been coming down slowly for some time, as new diagnostic tools became more available, new drugs improved outcomes, new techniques saved lives.

The “cost curve” was to bend down with the addition of 30,000 to 50,000 people without insurance, and with the addition of over 100 new agencies to manage our new socialized medicine, and perhaps 100 new employees in each of those agencies. The cost curve was to be bent down by forcing the entire medical establishment to get all their records online.  Complete failure. Expensive. Anything there to concern those businessmen who were expected to hire new workers and pay for their health insurance? Perish the thought.

There were the roads and bridges that turned out to be not shovel ready. Have you noticed that 4 years later, he’s still talking roads and bridges? There were the vast promises of new high technology jobs in new 21st century sources of clean energy. Lots of subsidies with taxpayer funds. Government picking and choosing which businesses to support always works well.  New tools, old energy. The wind remains completely intermittent; solar energy is diffuse, affected by natural things like clouds and night. The jobs? Temporary, and vanishing when the companies go bankrupt which most did.

Every regulation issued by the government has costs and consequences. The EPA has been a regular fountain of regulation, most unnecessary and accomplishing nothing except tighter government control of the economy. The costs to businesses are huge. Everything from businesses being abruptly shut down, to paperwork requirements that mean hiring more people to fill it out.

The Deepwater Horizon explosion killed 11 men, and shut down oil production in the Gulf for an ever-extending period. Big offshore rigs picked up and went to other countries where they were more welcome. The extended shutdown — was it needed for safety reasons? or to promote all that clean energy? — put all sorts of businesses related to the oil fields out of business, motels, restaurants, suppliers in many states.

That is the situation for businesses struggling to survive. Small business (50 employees and up) has long been the engine of growth in our society, not huge corporations. Those who should be leading the growth in the economy are understandably sitting on their hands, hunkering down, hoping not to get noticed. They are afraid of their government, and with good reason.

Median household income is 7% below where it was when Obama took office. Most of the high-paying jobs lost in the recession are being replaced with low-paying jobs. Small businesses are laying off workers to get below the magic number of 50 employees because of ObamaCare. Universities and colleges, the home of progressive angst about income inequality, are reducing hours for their adjunct employees because of ObamaCare.

The number of people on food stamps is up 46% since Obama first took office. There are 2.7 million more people in poverty than in 2009. So who is doing well? From whence comes Obama’s claim that the economy is recovering? The “shrinking few” that Obama complains about are doing fine. Wall Street investors, corporate chiefs are doing nicely because of administration efforts to keep interest rates low. The three richest counties in the country all surround  Washington DC, where we know pay is higher and people work less than the rest of us.

The only real answer to income inequality is a private sector  economy that is growing and thriving. That spreads opportunity and mobility in ways that no federal government could hope to do. Government jobs are paid with the funds supplied by the private sector in taxes on a population that is employed and creating and innovating. A free market economy unhampered by big government.



Paul Ryan’s Speech At Cleveland State University. by The Elephant's Child

On Wednesday, Paul Ryan delivered an entire speech at Cleveland State University on income mobility and poverty. Poverty rates are rising, food stamp use is way up. A Romney Ryan administration would offer real reform. Not by increasing the amounts that government spends on poverty programs, but by creating good jobs and a growing economy. Getting the nation’s spending and debt under control to avoid a financial crisis are vital because the poor and the vulnerable are always the hardest hit.

It was an impressive speech, advancing a positive social vision. I am unable to embed the videos here, There are two, that can be found here. Very worth every minute of your time. Paul Ryan is a very impressive young man, and he’s talking about solid ideas for returning America to the income mobility we have always known. “One is six Americans are in poverty today — the highest rate in a generation. In this war on poverty, poverty is winning. We need a better approach.”

 



Fool Me Once, Shame on You. Fool Me Twice, Shame on Me. by The Elephant's Child

One of the problems with debating Democrats, whether on a big stage in Danville, KY or at the gym with an obstreperous lefty, is that we’re usually debating apples and oranges.  Whatever the issue is, we define it differently. And that’s a problem.

Take the issue of “taxes and the rich.” Democrats try to create images of the filthy rich whose wealth came from ill-gotten gains, who keep their wealth in Swiss banks or in the Cayman Islands. These are people who do not deserve their wealth, which rightfully would belong to the all-American middle class, who work hard; while the rich loll around in the sun, beside the pool drinking something expensive.

Republicans insist that a big chunk of that category of “the rich” are small businesses whose owners file the taxes of their business—as individuals. Democrats will have none of it.  Small businesses, specifically as defined by President Obama and Joe Biden, are the little mom-and-pop enterprises, like your neighborhood lunch counter, the shoe store, and your plumber. This error in definition is a problem.

The Small Business Association — a government agency — says that small businesses, defined as companies with fewer than 500 workers, employ about half of the workers in the private sector.

The Chamber of Commerce defines small businesses as firms with revenue of $25 million or less.

You see the problem.  But it’s even worse than that. The Democrats struggle mightily to make you think of the top 1%, but when it comes to who they are planning to tax, you need to remember that oft-mentioned “We won’t raise taxes on anyone who makes less than $250,000, or $200,000 in the case of individuals.” That’s a long way from the top 1%. And it includes a huge number of small businesses who file as individuals.

Look again at how small business is defined. According to the Small Business Association, those companies with fewer than 500 workers employ about half of the workers in the private sector. Those companies are the engine of growth in an economy.

Think how a business begins. Somebody has an idea, he gathers funds by mortgaging his house, committing his savings, hitting up all his relatives. He hires a few people, and they all work hard and it turns out that his idea is a good one and he’s good at money management, so the shop grows and he hires more people. It is the small companies who are trying to grow and succeed who hire lots of people, not the big corporations. We’ve featured quite a few of those people who made videos in response to Obama’s “You didn’t build that,” to show that — yes indeed they did build it.

Mr. Biden, last night, echoing Obama’s statements, said something to the effect that we don’t believe in trickle-down growth, we want to grow the middle class out from the middle. That’s paraphrasing, but how the hell do they expect to do that? If past administration policies are an example, they take the “increased taxes” from the rich, and use them as a stimulus, intending, by putting more money in the hands of the middle class to increase demand, which in turn will make businesses grow. Uh huh. And no Republican has ever talked about, nor advocated “trickle down” growth.

The reason I put increased taxes in quotation marks is that the rich have many options, and they don’t have to pay increased taxes. Past history has shown that increasing taxes seldom brings in the increased revenue estimated. And, if they have raised taxes on all the small businesses who file as individuals, those small businesses will be laying off workers because of the increased expenses. They will already be laying off workers because of ObamaCare, and because of increasing regulation.

There isn’t enough revenue from increased taxes on the rich to make any difference with the deficit, and if they spend it on another futile stimulus, it won’t make any. There are all sorts of increased taxes coming as a result of ObamaCare. The need for more revenue will increase, because there is no serious intent on the part of the Obama administration to cut spending in any way. They care, therefore they spend.

President Obama has made clear his contempt for American business. He sees government work, or work for non-profits as a higher calling — as service.  And his entire administration has the smallest percentage in history, only around 6%, of people who have ever worked in the private sector.

Tom Sowell once wrote that “the political left has long had a remarkable lack of interest in how wealth is created.  As far as they are concerned, wealth exists “somehow” and the only interesting question is how to re-distribute it.” Sounds remarkably applicable today.

Seasonally adjusted, the net percentage of owners planning to create new jobs has fallen to four percent. Sales are weak. Fed Ex has announced planned  layoffs. The regulatory burden on small business is estimated by the Small Business Administration to be over $1.75 trillion annually.

There still seems to be some belief left over from the hope and change of four years ago. The president has been remarkably silent about any plans for his second term. His campaign speeches are almost entirely attempts to bash Republicans. Mr. Obama has made clear his contempt for Mitt Romney, which seems to be of a part with his contempt for business in general. He does not understand “growth”nor how it comes about. His goals have included a vast new regulatory burden, and he does not understand how that retards business growth, nor does he understand that since “they have enough money” why they shouldn’t share more of it.

Listen to what he has to say. Do you see any indication of what he would want to accomplish in a second term, how he would pay for it, and how he intends to relieve the burden that government has imposed on the people? And just how do you grow an economy “from the middle out?” There’s no plan, there’s no hope. It’s all just about winning — all politics, all the time.



Education Is Not Spelled J-O-B-S* by The Elephant's Child

Education is always one of the first answers President Obama has for the problem of unemployment. How to create jobs? His response is improving education and hiring more teachers. Yet this is the president who refused to continue the District of Columbia’s Opportunity Scholarships until absolutely forced into it.

He brought it up again in the debate last night. And he said he intended to hire hundreds more teachers. Always more teachers, yet since 1970, the public school workforce has doubled — to 5.4 million from 3.3 million. Two-thirds of those new hires are teachers or teachers’ aides. School enrollment over the same period — numbers of students — has grown only 8.5 percent. Employment of teachers has grown 11 times faster than enrollment.  We have too many teachers.

The Washington DC schools are usually rated as the worst in the country.  The capitol city spends $30,000 per student, and poor black children are suffering. Our kids remain high in self-esteem and lousy in math and science.

Young people are the losers in today’s economy. In the past four years the unemployment rate for Americans age 16 to 24 has been twice the rate for the general population.  It’s currently around 17%.  For young blacks, it’s 33%. Black workers, statistically less likely than whites to have a college degree, suffered as the economy shed lower-skilled manufacturing and construction jobs. Minority-owned small businesses are often the first to feel the pinch as corporations retrench.

These last statistics explain why President Obama answers the “Jobs question” with “education.” He wants young blacks to be college graduates so they can be successful. Yet this same president refused to continue the Opportunity Scholarships as we understand because the teachers’ union was opposed to them. This is the conundrum that liberals face. They divide people up into voting blocks to get their vote, promise goodies for that group, and then the needs of one group begin to conflict with what is promised to another. Obama has confidence that he has the black vote, for the election of the first black President is a source of intense pride for millions of blacks. But as Bloomberg’s David Lynch said: “The nation’s first African-American president hasn’t done much for African-Americans.”

Accuracy in Academia has developed a “Youth Misery Index,” which adds together youth unemployment, average graduating student debt (in thousands) and national debt per capita (in thousands).

Youth unemployment is at 17.4 percent—one of the highest levels since World War II. Average graduating student debt has reached a record-breaking $26,300. National debt per capita is $46,900—the highest ever. Add it up, and the Youth Misery Index comes out to 90.6 (17.4 + 26.3 + 46.9 = 90.6).”

Nick Schulz of AEI wrote recently of a recent dinner with representatives from major manufacturing companies. “I listened as the talk turned to how hard it is to find qualified applicants for jobs. What exactly are the skills you can’t find?” Schulz asked some of the captains of industry. “One of the representatives looked sheepishly around the room and responded: ‘To be perfectly honest…we have a hard time finding people who can pass the drug test.’ Several other reps gave a knowing nod. Applicants were often so underqualified, they said, that simply finding someone who could properly answer the telephone was sometimes a challenge.”

Even college graduates seldom have the skills that a new job requires — that’s why employers always ask for experience, and usually experience in a similar job. Large companies used to have training programs, some helped employees with potential to complete degrees. I suspect that in the current economy, educational help and training programs are less common.

Government job-training programs have been a flop.  Nine federal agencies are in charge of 47 employment and job-training programs. A report  found that with one exception, none of the programs are effective in helping unemployed workers find new jobs, and most overlap with similar programs.

Sounds to me as if after-school classes are needed to teach young people the basic workplace skills. Is that a job the black churches can take on? And for the economy in general, a rising tide raises all boats. A healthy economy will provide jobs. We need to worry less about job-training and more about getting the whole economy moving.

*Headline shamelessly borrowed from Accuracy in Academia.




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