American Elephants

Chicago Shakedown and How Regulation Kills. by The Elephant's Child

Istria Cafe is a small business in Chicago, one of the most over-regulated cities in America. PJTV’s Alexis Garcia interviews the Pribaz brothers, the owners of Istria Cafe, to show you how regulations are destroying businesses and jobs. Would you believe that it is almost impossible to run a business in Chicago without violating rules and regulations, and paying extraordinary fines? From utilities, to health care Alexis Garcia tells you why some businesses might not survive in the down economy.

Businesses, small and large keep telling us, their representatives in Congress and the administration that excessive regulation is a problem. The administration not only doesn’t get it, they deny it absolutely. This is one of those spots where a lack of business experience tells. Someone who has never held a real private sector job cannot understand why “profit” is not something evil that only the greedy pursue.

And they cannot understand the extent to which regulation interferes. For example, Congress may decide that it would be a good thing if the signs in fast food restaurants contain calorie and nutrition information. This has happened. Such a regulation should begin with a study to see if the presence of such information has any effect on customer behavior, results in different choices, or does anything to control obesity. If all those factors are negative, then the regulation is a dumb idea.

Aside from that, the nature of the restaurant makes a difference. Pizza places and Chinese take out places have literally hundreds of ingredients and choices. Often impossible to convey on a sign. Can be done extensively on a menu. The ‘fast’  in fast food comes from people able to quickly scan a large sign and indicate their preference.  Such regulation may accomplish nothing except kill the goose that laid the golden egg.

Governments that believe they are smarter than the people and can make things better with more regulation cause more problems than most lack of regulations could. We do, of course, need basic safety regulations, but it’s easy for regulation to form such a network of good intentions that the regulated business must give up.

Presidential Misunderstandings. by The Elephant's Child

In his press conference today, and in his hasty return to a microphone to “clear up” his previous comment that “the private sector is just fine,” the president added that state governments were not hiring enough (enraging more than a few governors) and Congress needed to help them hire more firefighters and policemen. He also suggested that “austerity” causes unemployment. And yes, he does believe that more spending creates jobs. That is the problem.

This demonstrates, once again, that the president does not understand that public sector jobs do not really count in helping an economy to recover. Jobs in the federal government are paid for with taxes on the public.There is no “government money,” there is only money extracted from the people. Private sector money pays for new things, a new hamburger made or a new car, a new service performed, a new idea sold, or a newly cleaned suit.

Most states have to balance their budgets. They cannot, by law, run a deficit.  If a state must cut back on the number of firefighters in order to balance their budget, it is not up to the federal government to contradict them and send money to pay for workers that the state cannot afford to support.

The business cycle gets out of whack when things are good, and expectations get a little ahead of themselves.  Managers give big raises, hire a few more people, embark on ill-advised expansion, and expect things to keep getting better. Somewhere in all that enthusiasm there is a tipping point.

The tipping point that sent us into the current recession was a huge bubble in real estate, fed largely by government’s desire to get more Americans into their own homes. The legislation that enabled people who could not, under prudent rules of banking, afford the loans they were offered, also enabled people to play at “flipping homes” in hot real-estate markets. Enthusiasm for all the money to be made in turning bundles of mortgages into securities compounded the problem.

A few years ago, wild enthusiasm for doing business on the internet led to the .com bubble. The ideas for founding new businesses blossomed into the highly improbable, which did prove to be improbable. There is clearly a growing bubble in higher education — a college education costs too much, student loans become excessive, faculty salaries are too expensive, professors don’t carry a full schedule, not every campus needs full country club amenities, and too much coursework is frivolous.  There are no jobs for many graduates.

We will continue to have bubbles. “All things in moderation” is a familiar trope, but as we are human, mostly ignored.  As in the obvious case of Wisconsin’s recall election — common sense and basic math should prevent some of the worst errors.


President Obama’s Really, Really Bad Math. by The Elephant's Child

President Obama held a press conference today, and managed to commit a terrible gaffe. He said “the private sector is doing fine.” Here’s the whole quote:

The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.

James Pethokoukis, who is very good at this kind of thing, says:

Private-sector jobs have increased by an average of just 105,000 over the past three months and by just 89,000 a month during the entire Obama Recovery.

In 1983 and 1984, during the supply-side Reagan Boom, private sector jobs increased by an average of 292,000 a month. Adjusted for population, that number is more like 375,000 private-sector jobs a month.

(Aside:) I wonder how many people are just turned off, at this point, by more numbers. The efforts to make American students love math have not been very successful, and it may be hereditary. When your kid brings home some math problems that he can’t figure out — how many parents just make the situation worse, and continue a distaste for math in another generation?

To keep it simple, I wrote down this number from a reliable source, I just don’t remember who it was. To keep up with population growth, we would need to add 125,000 new jobs each month. So we would need 1,500,000 new jobs in the last year, so Obama’s job creation came up 700,000 short. Or to take James Pethokoukis’ average number of 89,000 a month — Obama would have needed 1,068,000 jobs in the last year to keep up with his own average.  800,000 just won’t cut it.  Somebody’s math here is wrong.

Somebody apparently alerted Mr. Obama to what he has said in the press conference, so he rushed back for the nearest microphone to say no, he didn’t mean that “the private sector was doing fine.” What he meant was that Congress had to stop being lazy and not doing anything and pass his jobs bill. Congress has no interest in passing his jobs bill, and has rejected his budget unanimously.

The President has held 16 ‘campaign events’ over the last 7 days and flown in Air Force One to 6 states.  More campaign events that all previous presidents, but he likes campaigning, it is the actual job of being president that he doesn’t seem to care for.

What’s In a Name? Obama’s “Green Jobs” Fraud. by The Elephant's Child

Chairman Darrell Issa wanted to get to the bottom of the Green Jobs claims by finding out what, exactly, constituted a green job. It seems that like the song — Anything Goes! Green jobs were the centerpiece of all the wind and solar enterprises;  the unemployed would be trained for new 21st century jobs.

They would insulate houses, never mind that here were dozens of insulation companies in every large community. They would build the mammoth wind farms; never mind that the installation had to be done by experienced people usually supplied by the manufacturer. They would build pipelines, nevermind that those were temporary construction jobs.  But with all those green enterprises surely there were hundreds or thousands of green jobs. Well, no.

Just like all the green enterprises, the jobs were a fraud as well. So they started calling things a little further removed from actual greenness — green.  Truck drivers, school bus drivers, people that worked at Goodwill (recycling you know), and of course all the mayors that have been so busy banning plastic bags — those are really green. And the Sierra Club — think of all the jobs demonstrating against power plants and pipelines. How green can you get?

The Triumph of Common Sense and Basic Math. by The Elephant's Child

Nick Gillespie’s piece at Reason, has a smart headline: “Wins in Wisconsin and California Signify Triumph of Common Sense and Basic Math over Status Quo, Ideology: Will be Replicated Everywhere”.  I like that. ” The triumph of Common Sense and Basic Math.”

“Voters everywhere are finally starting to realize that municipalities, states and the federal government are out of money.” I hope he’s right. We have videos of people unable to locate the United States on a map,  who cannot identify the Vice President of the United States, who don’t know that there are two houses of Congress, nor who controls either one. It seems inconceivable, but I suspect that it’s true — that many people simply do no know that we are in deep financial trouble.

With all the constant polling that is done around elections, I have never seen any statistic that indicates just how many people don’t pay any attention to the news and have little knowledge of the national scene. I don’t mean that they are dumb (though that is entirely possible) but just aren’t interested in politics. I always remember years ago when my first son was little and played with a little boy up the street— I was doing telephoning for a campaign, and asked his mother if she’d decided who she was going to vote for. She responded “I don’t know, my husband hasn’t told me yet.”

Gillespie says that Wisconsin adults thought that public sector workers should have to pay at least part of the cost of their health care and pensions.. Voters, he said care less about “unions” and more about whether they feel like they’re paying too much for services. Does that translate into big picture lessons about the national economy and the entitlement problem?

When one party is deeply concerned about the economy, and the other wants to do more of the same— more stimulus, more infrastructure, more green jobs,  are there any clear messages getting out? When all Democrats say “war on women” many times a day for an extended period do people begin to believe that Republicans are attempting to treat women badly?

I’m not a political operative, and I don’t have a feel for how you change hearts and minds. I’m not sure that anybody does. I think it has to come from within, when you realize that what you are being told just does not ring true. At least that’s what people who have  moved from one party to another tell us.

Will basic math and ordinary common sense win in the end?


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