American Elephants

Gasp! Rick Perry Called Social Security a “Ponzi Scheme” by The Elephant's Child

                      (click to enlarge)  Venn Diagram by The Examiner’s Tim Carney*

Goodness!  Rick Perry called Social Security a “Ponzi Scheme” and a “monstrous lie” and the Left simply quivered with excitement. He touched the “third rail” of politics. Democrats can tell all the old folks that Perry wants to take away their Social Security.  Democrats can win.

Are there really people out there that don’t know that Social Security has always been a Ponzi Scheme? “A fraud that involves the payment of purported returns to existing investors from funds contributed by new investors?” (Milton Friedman once called it “the Biggest Ponzi scheme on Earth”)

That is the problem that faces the social welfare states of Europe and the United States.  When programs to provide for the aged and infirm were instituted, it was assumed that populations would always increase.  If a couple had three or four children, as was common, and each of those children had three or four children, all paying in their taxes, there would be plenty of money to ensure retirement and cover whatever inflation there was as well..

Well, it worked for a while, but in the glow of peace and prosperity that followed the end of World War II, people had more babies.  Lots more.  Big families were not uncommon among those who grew up in the deprivation of the Great Depression. They called it the Baby Boom.

In 1930, Americans over 65 numbered less than 7 million, about 5.4% of the population.  The 2010 census found over 35 million Americans age 65 and over, another number is 40.3 million over 65 today. The first cohort of Baby Boomers are reaching age 65 this year, and by 2030 will reach 72 million, more than double the number in 2000.

These increasing numbers are a tribute not just to the parents of the Baby Boom generation, but to the success of American healthcare.  Mortality rates for eight of the 15 leading causes of death have declined significantly: influenza and pneumonia -8.4%; homicide -6.5%; accidents -5%; heart disease -4.7 percent; stroke -4.6%; diabetes -3.9%; hypertension -2.7%; and cancer -1.8%.  More Baby Boomers are exercise conscious and go to the gym regularly, and are far more conscious of what they eat.

I don’t know to what extent the exercise bit is true.  The media has trumpeted the intelligence, health, and general superiority of the Baby Boom generation since they were born. (Don’t forget, this is also the Vietnam Generation, the Flower Children, the Hippies)  It didn’t take long after the Baby Boom was recognized for marketers to realize that they had a huge new market.  Advertising has been directed at Baby Boomers ever since.  Did you think it was an accident that Depends now come in colors and patterns?

But the “trust fund”, the “lockbox?” Isn’t all the money you paid in— there, waiting for you? Congress changed the law in 1983 so that in any given year if current tax payers pay more in taxes than is needed to pay the benefits the excess will be invested in treasury bonds in a trust fund. What has Treasury done with the money? The government has spent it in exchange for IOUs. By 2015 the Trust Funds will run out of cash and the program will begin redeeming the IOUs and use them to pay seniors’ benefits until it runs out of IOUs.

We simply can not continue with Social Security and Medicare as they are currently structured. No one of either party suggests changing Social Security and Medicare for current recipients or for those 55 and over. But demographics forces us to reform the programs. Recognizing the demographics allows us the time to fix the programs in a way that doesn’t hurt anyone., but we cannot put it off for long.

Social Security and Medicare are programs created by Democrats to give people benefits that will make them dependent on Democrats for their continuation. In England, in Europe, these welfare-state programs have been disastrous. They have created a permanent underclass on the dole, dependent on government, and economies that are spiraling down. Any suggestion that benefits might be cut back is met with riots and cities in flames. That is not a future that Americans should accept.

* (h/t: economist Veronique du Rugy)


Important News About Those 18 Wheelers! by The Elephant's Child
August 30, 2011, 6:26 pm
Filed under: Economy, Law, News | Tags: , , ,

The Obama Administration’s Equal Employment Opportunity Commission (EEOC) has sued a major trucking company for its firing of a driver with an admitted alcohol abuse problem. Heritage notes that:

Alcoholism is classified as a disability under the Americans with Disabilities Act, the suit maintains, and therefore employees cannot be prohibited even from driving 18 wheelers due to their histories of abuse.

The Equal Employment Opportunity Commission, which filed the suit against the Old Dominion Freight Line trucking company on August 16, noted that while “an employer’s concern regarding safety on our highways is a legitimate issue, an employer can both ensure safety and comply with the ADA.”

I’m sure that makes you ever so comfortable out on the nation’s freeways. It was only in recent years that it was reported that training for truck drivers had been sharply curtailed. The EEOC has detailed the case on its website.

According to the EEOC’s suit (Civil  Action No. 2:11-CV-02153-PKH in U.S. District Court for the Western District of  Arkansas), the driver at the Fort    Smith location had worked for the company for five  years without incident. In late June  2009, the employee reported to the company that he believed he had an alcohol  problem. Under U.S. Department of Transportation  regulations, the employer suspended the employee from his driving position and  referred him for substance abuse counseling.  However, the employer also informed the driver that the employer would  never return him to a driving position, even upon the successful completion of  a counseling program. During the  investigation, the EEOC discovered drivers at other service centers whom the  employer had allegedly subjected to similar treatment.

“The ADA mandates that persons with disabilities have an equal opportunity to achieve in the workplace.  Old Dominion’s policy and practice of never returning an employee who self-reports an alcohol problem to a driving position violates that law,” said Katharine Kores, director of the EEOC’s Memphis District Office, whose jurisdiction includes Arkansas. “While the EEOC agrees that an employer’s concern regarding safety on our highways is a legitimate issue, an employer can both ensure safety and comply with the ADA.”

If the EEOC prevails in this case, Old Dominion would still be liable for any damage caused by a relapse of one of its recovering drivers. That signals to investors an increased risk involved in investing in the company,  and raises the cost of everything the truck line transports. And as well, it tells drivers that they don’t have to worry about their alcohol consumption.

Consequences. A law attempting to protect people with disabilities from persecution, well-meaning to be sure, ends up endangering every driver on the nations’ highways.  There are always unintended consequences.  Can we find a way to ensure that our legislators seriously consider that fact before they enact a good intention into law?

Sunny on Environmentalism. by The Elephant's Child
August 30, 2011, 5:52 pm
Filed under: Environment, Global Warming, Junk Science | Tags: , ,

The Sun Might Have Something to Do With It? by The Elephant's Child

Convincing new evidence indicates that global warming is caused by cosmic rays and the sun, not human activity. The research was published last week in Nature, and comes from CERN, the European Organization for Nuclear Research, involving 60 countries and 8,000 scientists at more than 600 universities and national laboratories.  CERN is one of the largest centers for scientific research, and is the organization that invented the World Wide Web, and that built the Large Hadron Collider. They have now built a pristinely clean stainless steel chamber that precisely recreates the Earth’s atmosphere.

Conventional wisdom has noted that in pre-industrial times the atmosphere of Earth contained approximately 270 parts per million (ppm) of carbon dioxide (CO2) and it has now grown to 390 ppm at the present time.  The Earth has warmed by around a degree over the past century so obviously the warming has been caused by industrialization and man’s use of hated fossil fuels. But it has been much warmer in the past when CO2 was not particularly high, and much cooler when it was.  The amount of CO2 is merely a trace element, and has been shown to increase after increases in temperature, and cannot therefore be causative.

By far the largest element in the atmosphere is water vapor, or clouds. We know that a cloudy day is apt to be much cooler, yet the hypothesis that clouds are a major influence on temperature has met with complete disinterest on the part of the blame-it-on-man bunch. The Global Warming Policy Foundation explains:

One can look for correlations in nature and appeal to climate models to prove or disprove the effect. Model based refutations are not impressive given the assumptions built into them. The observational evidence has been argued about for years. Experiments are however a different thing entirely.

Using a chamber to simulate the atmosphere Kirkby et al investigate aerosol nucleation as a function of increasing concentrations of sulphates, ammonia and ionisation. The ionisation source and the stand-in for Cosmic Rays is CERN’s proton synchrotron – the one that feeds its particles into the Large Hadron Collider. Atmospheric air could not be used – it has too many impurities – so the researchers use gas mixtures to recreate it. The chamber, 26 cubic metres of it, its controlled environment and ionisation conditions along with its state-of-the-art instrumentation are clearly the most rigorous test of the Cosmic Ray hypothesis yet devised. However, it must be stressed that the chamber is not the atmosphere.

They have found that Cosmic Rays significantly enhance the formation of aerosol particles.

These new results from CLOUD are important because they demonstrate some important atmospheric processes.  They are not the final word, but a first step in understanding a basic process.  Climate models will need revising.  Climate models are built with vast numbers of assumptions, yet assumed to be definitive. Observation and experiments trump the guesswork in the models every time. Yet the alarmist case for climate change exists only in the climate models. Clouds are very complex and poorly understood.    Here is the press release from CERN.  This article from the National Post covers more of the politics involved and how they play out. And here is the post from the Global Warming Policy Foundation.

The fascinating and troubling thing to me is the extent to which the policies of governments across the world — especially ours — under the direction of the Obama administration are focused on spending vast amounts of money to alleviate a problem that exists only in the assumptions of some computer models, not in the real world. Al Gore has profited mightily from alarmism, yet most of his claims are demonstrably false.  We don’t understand clouds and cloud formation. We don’t understand the Pacific Decadal and Atlantic Multidecadal Oscillations of currents.

The one thing that is becoming increasingly clear is that carbon dioxide levels are not the driver of global temperatures, and policies to change our economy based on that fallacious assumption are pure folly.

Correction, Mr.Obama, Here’s the Real State of American Energy. by The Elephant's Child

(h/t: Maggie’s Farm)

The Big Jobs Speech: No Change, Not Much Hope. by The Elephant's Child

Vacation is over, and next week, President Obama will give his big speech on jobs, or maybe the week after. He has announced his nomination of  Princeton University’s labor economist Alan Krueger to be chairman of the White House Council of Economic Advisers.

Mr. Krueger returned to Princeton a year ago after serving as assistant Treasury secretary for economic policy during the first two years of the Obama administration. He will replace Austan Goolsbee who has returned to the University of Chicago.

Krueger testified before the Senate Banking, Housing and Urban Affair Committee in support of government infrastructure spending, and Obama’s pet “Infrastructure Bank.” At least, Krueger  has co-authored a paper that shows that extending unemployment benefits will likely make unemployment worse, so that is a tiny step in the right direction — if he can convince the president. Krueger points out that it may be good safety-net policy, but will lengthen unemployment spells. The president has already signaled his intention to extend unemployment benefits and his belief that they will stimulate the economy.

Obama’s big jobs speech will offer more of the things that have not worked. The “shovel-ready” infrastructure jobs that turned out not to be shovel-ready, will return in the form of more infrastructure spending, and the bank as well. Unemployment will be extended, green jobs will be promised, the payroll tax reduction will be extended, and more food stamps.  It will not be a jobs speech, but a campaign speech in disguise. The government will once again be there to help you.

There is no way that Obama can support a real jobs program. A real jobs program would attack  the core beliefs of his political party, such as the idea that raising the minimum wage helps the poor and raising taxes on the rich will boost the economy.

The left believes in welfare, a strong government that will care for the people, that corporations have too much power, and that business needs much closer regulation.  The left believes that the fossil-fuel pollution emitted by industry and SUVs must be stopped to save the planet.  They believe that people must be instructed — and if necessary, forced — to move to a “clean green economy,” where they will use the lightbulbs, cars and appliances chosen by the government, and use energy and water economically, aided by smart meters that will ensure that they do.

What would a real jobs program look like? It is not as if nobody has described what is needed. As one small business owner said:

I’m not only sitting on my hands in terms of expansion and hiring, I’m paring back expenses wherever possible, getting lean as I can.  To say Ive lost confidence in Obamanomics is like saying the liberal media has lost confidence in Sarah Palin’s ability to govern if elected.  True enough, but it goes a bit beyond loss of confidence.

…The assault on folks like me comes on many fronts—business taxes, personal taxes, regulations, inflation, energy prices, Obamacare, etc. I have no way to reasonably outline any business plan(s) for the short or the long term.  All the variables are up in the air.

It is further exacerbated by the fact that I cannot predict what else these jackals might do to hurt me.  With most administrations and congresses, whether you agree with them or not, at least you could usually predict the limits of harm or help they might do to you.  Not with this Obama crew, and not with the Dems in Congress.

What do you suppose it says to American business when Obama’s National Labor Relations Board’s (NLRB) files a lawsuit against the Boeing Company for daring to build a manufacturing plant in a right-to-work state? No government has ever attempted to tell a private business where they must locate and who they may hire.  There is no Constitutional justification for such an attack.

The feds raided the Gibson Guitar Company last week; a swat team raided factories and offices, seizing pallets of wood, computers and guitars, and shutting the company down. The question seems to be about small amounts of ebony or rosewood used on the fingerboard of guitars. The wood is certified by the Forest Stewardship Council, and satisfies FSC standards.

The Justice Department apparently wants Gibson to not buy any wood from India, and to make their guitars in India — eliminating at least some of the company’s 2000 U.S. employees, but that isn’t clear yet. The government claims that Indian wood not finished by Indians is somehow illegal, but that is not what Indian law says.  That’s clear, isn’t it? Why would this send a tremor through American business?

Just these two cases demonstrate why business is hunkered down defensively. Add to that the enormous bundle of regulation the EPA is attempting to place on the back of the American economy. All forms of energy will become more costly. Brownouts and blackouts will be common. The cost of everything will rise because of higher energy costs. The government is trying to shut down oil pipelines, close coal-fired power plants, build unwanted and unaffordable high-speed rail, keep oil companies from drilling for oil.  Obama wants a new stimulus, and a renewed Fannie and Freddie.

There will be a new jobs program of some sort. It won’t help. No change, and not much hope.

John Stossel Defends the Indefensible by The Elephant's Child

Here’s some food for thought.  Many economic ideas are not as simple as they seem.


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