American Elephants

The Minimum Wage. by The Elephant's Child

Raw beginners in the workplace aren’t worth much.  They have to learn how to work, how to follow directions, and complete what they are asked to do as quickly as possible.  The minimum wage is not meant to support families. Statistics show that  most people remain on the minimum wage for only about six months before they get a raise or move on to another job.

When you raise the minimum wage, you eliminate jobs for beginners. It’s that simple.

It’s hard to climb the ladder if idiots in Congress keep removing the bottom rungs.

“Social Justice” and Other Silly Ideas. by The Elephant's Child
January 27, 2011, 8:52 pm
Filed under: Capitalism, Economy, Politics, Statism, Taxes | Tags: , ,

Many economic concepts are counter-intuitive.  And that becomes a political problem.  It emerges in every campaign as “class warfare.”

The goal of the far left is “social justice.” They love the phrase, but explaining it is hard.  Things, they are sure, ought to be fair, and it is not fair if some people are rich and some people are poor.  It’s not fair if some people drive Mercedes and others have trouble buying a used car.  It’s not fair if some people live in big houses and others live in slums.  So “social justice” is to be attained by redistribution of income. It means not equality of opportunity, but equality of outcome.

The thing about redistribution of income for the left, is that it is to be accomplished by taking away other people’s money.  Many of those who are most concerned about “social justice” are notorious for their stinginess with their own money. Our current deficit and debt indicate how easy it is to spend other people’s money.

Income mobility in the American economy is one of the wonders of the world. A young person in America, according to Brookings economists Ron Haskins and Isabel Sawhill, needs only to observe 3 basic rules to  have a 75% chance of being in the middle class: 1. Graduate from high school.  2.  Get a job.  3.  Get married and wait until they are 21 before having a baby.

Americans don’t envy the rich, they hope to become rich.  Here in Washington State, which Obama carried with 57% of the vote in 2008, a proposal was on the ballot to add an income tax applicable only to individuals making more than $200,000 a year or families making over $400,000.  65% of the state’s voters opposed the tax. That’s not envy of “the rich.”

In his State of the Union Speech, President Obama felt compelled to raise the class warfare theme. Although he had just agreed to extend the Bush tax-cuts, he wanted to make it clear that he didn’t like it and would be back to raise taxes on the rich. Whether this is conviction or simply a sop to the far left is unknown.But long-range planning is very difficult when the government has a constant threat of higher taxes hanging over business.

Class warfare does not create jobs.  Attacking the rich or the successful does not create jobs. Government has no clue about creating jobs, they have made that quite clear.  They need to get out-of-the-way and let creative, hard-working Americans restore the economy.

Free People or Nanny Government? by The Elephant's Child

For all the talk about civility and bipartisanship, and media admiration for the  phenomenon, there is a chasm as wide as the Grand Canyon between the parties.  President Obama made that clear in his State of the Union speech last night.

The President does not believe in the free market.  He believes that the market needs the intervention and control of government in order to function most effectively.  Government will promote innovation.  Government will choose which industries should succeed and which are undeserving. And government can best decide what products should be made by American industry.  Perhaps that is why all the GE Volts are being bought by either GE or the Government.

It is true.  The free market requires trusting that ordinary Americans are capable of innovation, that they are capable of producing world-class products, and high-tech products without government direction.  If your basic belief is that you and your friends are brighter and more capable than ordinary people because you went to the right school, or because you won an election, or won a prize, then it may seem that those bitter clingers need your help.

But neither Orville nor Wilbur Wright had a pilot’s license.  Bill Gates was a college dropout, as was Mark Zuckerberg.  And what government would have thought that a social network was needed?  President Obama wants to reinvent himself as business friendly, but his idea of being friendly to business means government subsidies, corporate-government cooperation and less competition.

The ideal is apparently Jeffrey Immelt’s General Electric.  Subsidies are GE’s lifeblood.  In his op-ed announcing his appointment (as chairman of Obama’s jobs commission), Immelt called for a “coordinated commitment among business, labor and government,” and wrote that “government should incentivize …investment in innovation.” He advocated “partnership between business and government on education and innovation in area where America can lead, such as clean energy, are essential to sustainable growth.”

Sure enough, wherever Obama has led, GE has followed. Obama has championed cap and trade in greenhouse gasses, and GE has started a business dedicated to creating and trading greenhouse gas credits. As Obama expanded subsidies on embryonic stem cells, GE opened an embryonic stem-cell business. Obama pushed rail subsidies, and GE hired Linda Daschle — wife of Obama confidant Tom Daschle — as a rail lobbyist. GE, with its windmills, its high-tech batteries, its health care equipment, and its smart meters, was the biggest beneficiary of Obama’s stimulus.

To get these gears in sync isn’t cheap: The company has spent $65.7 million on lobbying during the Obama administration — more than any other company by far. So much for Obama’s war on lobbyists.

For much of the media, the nuances will be lost: You’re either pro-business or anti-business. But the distinction is crucial between making a profit through subsidy, regulation, and bailouts on one hand, and competition and innovation on the other hand. The latter creates wealth. The former consumes it.

Europeans, and what we have come to call the left, have always been suspicious of ordinary people. They were accustomed to monarchs and Czars and a nobility that ruled over the common people.  They referred to “the masses,” the” bourgeoisie”, the “common people” who needed direction and control.  You would think that 235 years of success and invention and innovation would teach the nannies something about what works and what doesn’t.

You would think that the lessons of Spain’s disastrous flirtation with green energy and green jobs, and Germany’s experience with solar energy, and Denmark’s romance with wind would make some impression, but such is not the case.

Innovation and invention are the result of free people set free to do what they strive to do.   Some will fail, but free people learn from their mistakes, and do better the next time.  But some will succeed beyond their wildest dreams.  It takes an amazing amount of arrogance to think that you can direct the lives of 310 million free people  better than they can themselves.  But then arrogance is not in short supply.

So Long, Farewell, Goodbye — Carol Browner. by The Elephant's Child
January 26, 2011, 3:52 pm
Filed under: Capitalism, Democrat Corruption, Economy, Energy, Environment | Tags:

Climate and energy Czar Carol Browner has resigned, and apparently will not be replaced.  Did the reality of climate catch up with her, or is Lisa Jackson so effective at EPA in churning out regulations to destroy jobs and hogtie industry that Browner no longer has anything to do?  Some knowledgeable sources say that she is resigning to avoid testifying under oath to a House oversight committee.  Chris Horner notes at Planet Gore that:

My Competitive Enterprise Institute colleague William Yeatman highlights this sentence from Politico’s “Morning Energy” coverage of the development: “Her calm, authoritative television presence during last year’s BP oil disaster made her one of the few government officials whose stature was enhanced in the aftermath of the Gulf of Mexico catastrophe.”

This analysis conflicts with her appearance on Meet the Press, when David Gregory juxtaposed her comments from her prior MTP appearance in the immediate aftermath of the BP spill (“this is the greatest environmental catastrophe in history”) with her later appearance on Good Morning America (when she trumpeted a National Oceanic and Atmospheric Administration report estimating that 75 percent of the spill was gone). Then, her office got caught doctoring a report to make it appear as if the administration’s drilling moratorium was approved by a panel of scientists.

She will be free now to return to her position as a commissioner of Socialist International.  It is a very good thing that she will no longer be around to help Obama cover up the radical nature of his energy plans.

The State of the Union. by The Elephant's Child
January 25, 2011, 8:23 pm
Filed under: Capitalism, Economy, Statism | Tags: , ,

The State of the Union is not too good.  The President’s speech: interminable, cliche-ridden, with nothing new at all.  We’ve heard all this before, and it didn’t work over the last two years.  I don’t know what possible reason we could have to assume that it will work now.

More spending, lots more spending.  This time he calls it “investments.” Investments in education, new technology, high speed rail, government directed innovation, “winning the future,” infrastructure, technology, clean energy and clean living.  It’s the Twenty-First Century, and we have to do twenty-first century things. I think he actually said “our sputnik moment.”

How dare he demand more spending, when the stimulus that was supposed to rescue the economy went instead to bail out the unions that had supported Obama’s election and to the states’ budgets?  He eventually admitted that there weren’t any “shovel-ready” projects.  He even managed to blame Bush and drag out the preposterous claim that greedy insurance companies are destroying your health care.

Innovation does not come from government, Mr. President.   Innovation happens when government gets out of the way!

The media was mostly fascinated with the fact that Democrats and Republicans were sitting together.  Obviously they weren’t much impressed with the speech either.

If this was supposed to be a “move to the center” or Obama “reinventing himself,” it didn’t work.  Nothing has changed.  It’s the same Obama.  The magic  is gone.

How Do You Solve a Problem Like Uncertainty? by The Elephant's Child

Today at the Corner at National Review, economist Veronique de Rugy reported an interview on NPR.  Steve Inskup interviewed Andrew Liveris, CEO of Dow Chemical Company, about his book Make it in America: the Case for Re-Inventing the Economy. This is a small part of the interview:

How do you, as a CEO decide which ops to keep in the US and which to keep abroad?

We look at all items on the cost line, all items on the incentive line and make the decisions on that basis.

What are areas where the US doesn’t do very well?

Well, I not only have high taxes, I have uncertain taxes.  Right now I have more regulations coming at me that are not fact-based, not science based, not data based, I actually don’t even know what my costs are going to be in the next 5 years.  And so I’m sitting back waiting for regulatory reform and the government of course is now engaged on that healthcare and the uncertainty around the healthcare bill and what’s going to end up happening there.  Energy policy. We’ve got lots of uncertainty in the energy policy regimen. I mean, I could keep going but that’s half a dozen.

The host noted that his comments seemed to focus on uncertainty, Liveris replied:

The choice.  Bad policy vs. uncertain policy is a tough choice.  I don’t think we have to go there.

This is a small part of a longer article pointing out that both sides, Republican as well as Democrat, are guilty of thinking that government needs to “invest” in one thing or another.  What they need to do, Ms. de Rugy points out is get out-of-the-way. Do read the whole thing.  I thought this part was especially worth repeating.

SHOCK: Rule of Law Revived in Chicago! (Dems scramble to snuff it out) by American Elephant

It’s ALIVE! …or is it?

The rule of law at least momentarily wheezed back to life in the most politically corrupt city in the country, opened it’s eyes and saw the light of day. Now Rahm Emanuel, the Chicago Democrat machine and very possibly the White House are scrambling to snuff it out.

Yesterday, an Illinois appellate court recognized in it’s decision what the whole world already knows, that Rahm Emanuel, as Obama’s Chief of Staff, has lived continuously in Washington DC for the past two years, not Chicago, and as such does not meet the clear-cut residency requirement to run for Mayor of Chicago. In doing so, they tossed out the decision by the blatantly corrupt  Chicago Board of Election Commissioners, that despite living and working in DC, despite moving his family to DC with him, despite renting out his former home to new tenants, that the foul-mouthed, sleazy little weasel is still a resident in his heart, or something. The court reversed a lower Chicago court, and ordered that Rahm’s name not be allowed on the ballot.

Chicago election law requires that a mayoral candidate must “reside in” Chicago for the full year before the election — not own rental property, not intend to move back someday — reside in. But the clear cut letter of the law is never clear cut when it stands between a Democrat and what they want.

Rahm immediately appealed to the State Supreme Court, and said with an actual ominous cackle, “I have no doubt at the end we’ll prevail in this effort.” Conveniently, Obama’s top adviser, Valerie Jarrett chimed in and let it be known that Obama also thinks Rahm should be on the ballot.

Jarrett made the comments at the end of an interview on ABC’s “Good Morning America” with co-host George Stephanopoulos, who asked her what Obama thought of the appellate decision.

“Well, you know, we haven’t talked to Rahm, but I’ll tell you one thing we know is that he’s going to vigorously appeal. Rahm is a fighter, and I’m sure — as you know, he will be appealing to the Supreme Court, and I’m sure he will vigorously make that case.”

Stephanopoulos pressed her asking, “Does he believe then — so is it fair assume then that the president did believe that Rahm is eligible and the appeals court is wrong?”

Replied Jarrett, “Well, I think that he believes that he’s eligible, and I believe that he believes that Rahm will pursue his appeal in the courts. And as he said then, he thinks Rahm would make a terrific mayor.” [emphasis mine]

Translation? They’ve talked to Rahm.

Call me a cynic, but when someone offers defensive language that has nothing to do with the question you asked them, you know they’re lying. Snuffleupagus didn’t ask if they had talked to Rahm, he asked what Obama thought of the decision.

This mayoral race is important to the White House. Obama is moving his re-election campaign to that most notoriously corrupt city, Obama’s top political adviser, David Axlerod, has already moved into position to run that campaign from Chicago, and Obama want’s his guy in charge of the city, and the political machine, so they can more effectively, illegally coordinate their efforts with each other, with the unions who contributed unprecedented sums to Obama and to whom Obama funneled untold millions, if not billions, in taxpayer “stimulus” money — not to mention the reorganized groups formerly known as ACORN.

If the Illinois Supreme Court finds in favor of Rahm, in clear contradiction of the law,  look for some of those justices to quietly get “coincidental” nominations to the Federal bench in some months when no one is paying attention.

It’s the Chicago way. It’s the Obama way.

(h/t Michelle Malkin)

The Hippopotamus in the Health Care Room. by The Elephant's Child

There is a hippopotamus in the health care room, that nobody mentions.   The progress of medicine in recent years has been stunning.  At the time of the Civil War, doctors were just learning about cleanliness in operations and anesthetics like ether were relatively new.  Aspirin to relieve pain was introduced by Bayer in 1900.  Sulfa drugs to prevent infection became available around 1935, though many were allergic.  Penicillin was first mass-produced in 1944, late in World War II.

The progress in medicine since that time has been amazing.  Medical imaging and all sorts of new lab tests measure things we never dreamed of measuring before.  You would think that Americans would relax in the confidence that their wonderful health care system could take care of most of whatever ills or discomforts came up.

What has happened instead is an obsession with health.  Can you pick up a magazine or newspaper that does not have one or more articles on caring for your health?  Radio and television ads extol the value of drugs or over-the-counter remedies.  There are magazines devoted to weight loss, healthy eating, body building, exercise, and specific forms of exercise.  There is a proliferation of gyms — at least in larger towns, and stores that sell gym equipment.  You can find medical advice and information on the internet. There are stores that sell nothing but supplements.

We have become a nation of hypochondriacs.

Grocery stores have special departments for “organic” foods.  Mayors of major cities ban things like “trans-fats” though trans-fats have never been shown to harm anyone.  People have become advocates of “localism” in foods — completely ignoring the blessing of having fresh summer fruits in the stores in midwinter, delivered by air from the Southern Hemisphere.

Some journalists have developed a specialty of writing about food, or health, or exercise.  They report on new studies without the ability to tell whether the sample is significant or if the results are verifiable.  Fraudulent studies about mercury in immunizations causing autism led many mothers to refuse to immunize their children with the result that some diseases like measles have returned.  On any given day you can hear conflicting medical advice.  The manufacturers of Lipitor are advertising on the radio to see their ad in a cooking magazine, at the same time that there are reports in the news that statins don’t do any good.  (check with your doctor)

What is the effect of all this on the health care debate?  We laugh at the San Francisco Board of Supervisors banning toys in happy meals from McDonalds.

My state government has banned phosphates in dishwasher soap.  Excessive phosphates in dishwasher soap may cause 3% of the algae in streams that may or may not disturb fish.  The deposit left by my un-phosphated dishwasher soap may be injurious to my health, I am told.  My dishes have a nasty film, as do my drinking glasses, and they may be becoming permanently etched.

We have gone from butter to margarine, to margarines made with olive oil or canola oil and water whipped in, back to butter, and now the FDA has decided that it’s not fats that are the bad stuff, but carbohydrates.  There are organizations of radical vegetarians who want to eliminate meat, and force everyone to become vegetarian. It never ends.  Michelle Obama has said that what our children eat cannot just be up to the parents.

This is all nonsense.  Just stop it.

Who Will Be Hurt Most by ObamaCare? by The Elephant's Child

John Goodman, of the National Center for Policy Analysis, asks an important question in today’s edition of his Health Policy Blog:

Who will be hurt the most by the health reform legislation Congress passed last year?

The answer is the most vulnerable segments of society — the poor, the elderly and the disabled.  Those who are left of center in Congress voted for a law that will significantly decrease access to care for the very people they claim to care most about.

There are two basic ways to reform health care.  One way, the way Congress chose, is top down.  The other is bottom up. The latter is the economic way of thinking which involves incentives.

The top down approach starts with a social goal, and tries to impose it with regulations and rules, mandates and constant tinkering and re-regulation to fix what doesn’t work.  Those who are left of center seem to be natural control freaks, and cannot resist telling people what to do.  Doctors, nurses, hospital administrators, pharmaceutical companies and insurance companies are all being told that they can no longer conduct their businesses and their lives the way they have, over many years, found to work most efficiently and most successfully.  A bunch of bureaucrats in Washington, who have no experience in any of these fields, are going to tell them how it all must be done.  The program depends for its success on keeping people from acting in their own self-interest.

The bottom up way to reform health care depends on incentives, or allowing people to pursue their own self interest.  And of course you don’t know exactly how it is going to turn out. Health saving saccounts are one example of positive incentives.  When it is to your advantage to spend less and use less health care, it is in your self-interest to spend and use efficiently. Employers who adopted health savings accounts and their employees were very satisfied with them.  Governor Mitch Daniels of Indiana initiated health savings accounts for low-income people and found that they too responded to incentives and liked the program.  ObamaCare has omitted health savings accounts.

Another example occurred in the Medicare drug benefit.  Your costs are significantly less when you use a generic rather than a name brand drug, though some new drugs have no generic version. When you reach a total expenditure of $2830, you reach what is called “the donut hole.” a point when you have to pay the full cost of your drugs, until you reach the next level, when all are paid except for a small co-pay. This has been an incentive tor people to request generics, and to use less expensive drugs when they work as effectively. That incentive worked efficiently to keep drug benefit costs far less than they were expected to be.  For those who could not afford to pay the full cost of drugs in the “donut hole” there was help available. The left, unable to grasp the idea of incentives, eliminated the donut hole in ObamaCare. Without incentives costs will rise sharply.

The bureaucrats are convinced that preventive care can keep people from getting sick and costing the health care system much more money.  Free tests to prevent people from becoming ill will be hugely expensive.  Doctors usually don’t order a test unless there is a symptom or a particular worry that indicates a test would be worthwhile.  The incentive here is to have lots of tests.  If everyone in America succeeds in getting all the recommend preventive services (no deductible and no co-pay) primary care doctors would have to spend more than 7 hours every day delivering services to healthy people.

The Left is so convinced of the collectivist vision of universal health care that they ignore incentives entirely.  It is an economic mistake.

Who Is Barack Obama? by The Elephant's Child

On January 19, USA Today had an article entitled “Who is Obama? Pragmatism makes him tough to define.”  The article begins:

“A socialist? A steady hand? A sellout?
Halfway through his first term — or only term, if Republicans can eject him in the 2012 elections — President Obama’s leadership style has made him something of a political enigma.

Barack Obama has been our president for just over two years, and we’re still wondering who he is. This is astounding.  I Googled “Who is Obama” and got 418,000,000 hits.  Richard Epstein has described him as having the perfect political personality— completely contained and not revealing of himself. Obama has described himself as a blank slate.  And he has reinvented himself regularly.  Things which he has a long public record of opposing, he favors, and the reverse as well.

In tomorrow night’s State of the Union speech he is expected to reinvent himself as a pro-business president, deeply concerned about jobs and the economy.  And yet, no one in the media calls him a flip-flopper, no one suggests he is lying.  He flashes that dazzling smile, and lo and behold, he is a pro business president.  After all, didn’t he hire General Electric CEO Jeffrey Immelt to head his jobs commission?  And William Daley, his new chief of staff, is a banker. Yet he wants to create jobs by spending more taxpayer money.

He reinvented himself with his speech in Tucson, as a caring and compassionate president.  The speech was widely praised, and I praised it myself because it was, I think, the first speech we have heard that was not all about him.  He got the tone right, but whoever handed out tee shirts at a memorial service was deeply tacky.

David Axlerod, former chief of staff and public relations man, says he excels at the role:

“He is at his best when things are at their worst,” he says. “When things look the darkest and people are downbeat and wringing their hands, he’s always the guy who says, ‘OK, what do we do next?’ “

The USA Today article is deeply interesting because it makes you think, even if you get no closer to the question of just who Barack Obama is and what he believes.  Regular visitors probably don’t have much doubt about where we come down.  But what do you think?  Who do you think he is? And why are we still asking that question?

A Heroic Recovery. by The Elephant's Child

Powerline has posted the story of Staff Sgt. Patrick Zeigler who had just returned from a tour of duty in Iraq in November 2009, and was at Fort Hood to prepare for beginning Officer Candidate School.  He was randomly targeted by Major Nidal Hasan who shot him four times, once in the head.  That shot wiped out twenty percent of Zeigler’s brain and left a large hole in his skull. Eight operations, a long course of rehabilitation, and a lot of stubborn determination — and he  has made a miraculous recovery.  It is a moving story.  Powerline provides a link to the remarkable blog of his fiancée and now his wife.  Don’t miss that as well.

It is a story worth pondering, for the contrast of the media treatment of the Tucson tragedy and the Fort Hood Massacre. Tucson, which as we know was the fault of  Sarah Palin and Rush Limbaugh’s influence on a schizophrenic young man who may never have heard of either of them.  The Fort Hood massacre was the work of a dissident who might have been a peaceful Muslim but clearly had no relation to Islamic terrorism despite his Imam’s connection with Al Qaeda in Yemen, which was surely just a coincidence.

It is a very strange story.  But how wonderful that modern medicine can perform such miracles, and that victims can recover against all the odds.  We wish the Zeiglers complete recovery and great happiness, and the same to Congresswoman Giffords and her husband.

The Debt Is Not A Joking Matter! by The Elephant's Child

Millions of Americans, when confronted with a negative balance in the family checkbook, usually sit down with the checkbook, a sharpened pencil and a lot of scratch paper, to see what can be done. Usually the discussion is filed under “Where can we cut back?”

Yet with our national check book in disastrous condition, according to the media, the President wants to spend more to invest in jobs, and education, and research.  It’s not just the deficit, we are deeply in debt.  The administration wants us to raise the statutory debt limit.  Here’s what Austan Goolsbee, chairman of the White House Council of Economic Advisers, had to say:

This is not a game.  The debt ceiling is not something to toy with…If we hit the debt ceiling, that’s…essentially defaulting on our obligations, which is totally unprecedented in American history.  The impact on the economy would be catastrophic…I don’t see why anybody’s talking about playing chicken with the debt ceiling.  If we get to the point where you’ve damaged the full faith and credit of the United States, that would be the first default in history caused purely by insanity.

The need to raise the debt ceiling is simply a symptom of a  bigger problem.  Congress has been spending too much money for too long.  There will be big consequences if the government doesn’t make some big changes to the way they spend.

When Nancy Pelosi became Speaker of a Democrat controlled House of Representatives in 2007, the national debt stood at $86 trillion. Today it stands at an incredible $14 trillion, and keeps growing.  By the end of this decade, President Obama’s projections show the national debt nearly doubling to $26 trillion.

The House Republican Study Committee has introduced a bill to get things under control.  The sensibly named bill, know as the Spending Reduction Act, makes real strides toward resolving the debt crisis by cutting $2.5 trillion of spending between now and 2010.

The bill makes $125 billion of immediate rescissions, which target money already approved by Congress, by cutting current spending back to 2008 levels and repealing the remaining funds from Obama’s failed stimulus package.  The biggest cuts come at the start of the next fiscal year beginning on Oct. 1.  The bill then cuts non-defense discretionary spending to 2006 levels and implements a hard freeze  through 2021.  This will save taxpayers $2.3 trillion.  Part of the savings come from trimming the size and cost of the civilian federal work force, and there will be no automatic pay increases.

You can expect screams of anguish from Democrats.  They will predictably claim that the cuts will kill people, and destroy lives.  Yet more spending  and “investment”will not return the freedom and dynamism of  the American economy.  The barriers to job creation that have been erected are formidable, and there will be many battles.  Labor unions will want more benefits and would-be wind farmers will want more subsidies.  It will not be easy nor comfortable. The Congressmen who are trying to fix things will need our support and encouragement.

(Oops, I wrote billion when I meant trillion in the 5th paragraph, now fixed).

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