American Elephants


Why Intellectuals Hate Capitalism by The Elephant's Child

John Mackey, CEO of Whole Foods explains why Intellectuals hate Capitalism. Professors at our Universities have long seethed with envy when they see the published income of corporate CEOs. After all, they have PhDs, it is their ability to pass on real knowledge that made these upstarts able to become corporate big shots. If you wondered why college tuition has so far eclipsed any rise in the economy, part of it is the demands of professors to receive what they believe to be their due emolument. This video is from August 2015, pre-Amazon, but illuminating nevertheless. It explains a lot.

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Victor Davis Hanson Speaks on the Problem of California by The Elephant's Child

Dr. Hanson speaks of the wealthiest state, the Golden State, and where has California gone wrong? California was supposed to be the answer or the guide to a better future for the rest of the world, with the best climate, the best universities, the most beautiful state with lovely beaches, redwood forests, Yosemite, Lake Tahoe, bountiful farmlands and citrus groves — what happened? This is the San Mateo County “Progress Seminar 2017” held in May. Hanson is a renowned historian, emeritus professor of Classics at Cal State University at Fresno, fellow at the Hoover Institution at Stanford University,  5th generation Central Valley farmer, and author of at least two dozen books.  If you’re not from California, why should you care?

Though he talks about what is going wrong in California, it is also what is going on in perhaps lesser ways in the rest of the country.  The cities of so many dreams have become unaffordable,  business is leaving for more welcoming states, a heavy tax burden, water problems, energy problems, a coastal elite and impoverished Central Valley. Hanson has retained all of his worlds, which inform his scholarship and views on modern life and the long span of history since the days of ancient Greece.



The Interesting Relationship Between Online Business and American Retail Business. by The Elephant's Child

It’s pretty clear that online business is playing hob with retail in general. Retailers are hurting as consumers turn to online sources where they can get quick service, particularly from Amazon, and not have to go trailing through a mall to try to find what they need.

A story in the Wall Street Journal today exposes an uncomfortable relationship between the federal government and Amazon. “The U.S. Postal Service delivers Amazon’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.”

This arrangement is an underappreciated accident of history. The post office has long had a legal monopoly to deliver first-class mail, or nonurgent letters. The exclusivity comes with a universal-service obligation—to provide for all Americans at uniform price and quality. This communication service helps knit this vast country together, and it’s the why the Postal Service exists.

But people went online too, and first class mail is down some 40% from its peak. I contact many friends by email now, rather than writing a letter, and you probably do too. The post office still visits each mailbox each day, but there’s less traditional mail, so the service has filled its spare capacity by delivering more boxes. But when the post office delivers 10 letters and one box and a passel of junk mail to one mailbox how do they allocate the cost of the postal worker, the truck, and the network and systems that support the postal worker?

In 2007 the Postal Service and its regulator determined that, at a minimum, 5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.

Amazon is big enough to take full advantage of “postal injection,” and that has tipped the scales in the internet giant’s favor. Select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for “last mile” delivery at cut-rate prices. With high volumes and warehouses near the local depots, Amazon enjoys low rates unavailable to its competitors. My analysis of available data suggests that around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.

I don’t know which stores will be gone in a few years, or if they will survive. Right now, it’s clear that retail is hurting, and some retailers are in trouble. Will our malls survive? The federal government has”had its thumb on the competitive scale for far too long.” They need to stop picking winners and losers. I believe that the country will be better off if online and retail  compete and continue to survive.

I don’t know if the retail problems cover all kinds of goods or just some. Are Home Depot and Best Buy as much affected as say, Nordstrom and J.C. Penney? I need more evidence. Amazon just bought Whole Foods, in anticipation of making a big push for the grocery business, but Amazon is planning to build stores, where everything you select is tallied up automatically on your card as you take it off the shelf. We tried Amazon’s online groceries when too sick to get to the store, and it was prompt and  good service. Someone remarked that they saved money because they weren’t tempted with impulse items online. I prefer to go to the store.

The Government is subsidizing Elon Musk as he has fun with new engineering ideas, but Tesla is running into major problems, and solar is turning out to be a flop, just as his first experiments with this big vacuum tube thing for moving people has had it’s first success in a miniature version. All very interesting, but I don’t understand why he gets government subsidies. One might assume that we got an early lesson with Solyndra.

 



The Trump Agenda for Achieving 3% Economic Growth by The Elephant's Child

The overarching goal of the Trump administration is to Make America Great Again, which means promoting MAGAnomics—sustained 3% economic growth. That’s Mick Mulvaney, director of the Office of Management and Budget, writing in the Wall Street Journal on Wednesday.

For most of our nation’s modern history, a healthy American economy meant one that grew at roughly 3.5%. That was the average growth rate between the late 1940s and 2007. Since then, it has hardly topped 2%.

The difference between those two growth rates is staggering. If the American economy had grown at only 2% between the end of World War II and 2000, average household income would have been roughly $26,000 instead of $50,000.

Over the next 10 years, 3% growth instead of 2% will yield a nominal gross domestic product that is $16 trillion larger, federal government revenues $2.9 trillion greater, and wages and salaries of American workers $7 trillion higher.

What’s involved? Tax Reform: Encouraging capital investment will boost productivity. When businesses have more money to invest in plants and equipment, it means hiring more people who produce more. Lower tax rates reduce the cost of capital and thus ignite economic growth. 70% of business income goes to wages, so the benefits flow to workers as well.

Controlling unnecessary regulation: Regulations often turn out to be far more burdensome than the regulators realized, and they increase the cost of doing business. The EPA has been extravagant with overzealous environmental regulations and have pushed many businesses overseas. Realistic cost-benefit analysis helps to protect jobs as well as keeping the environment.

Welfare reform: Many people who could be working are staying home. We need them to go back to work, but the welfare system creates disincentives for those who seek work. Welfare reform will ensure that those who are truly in need of help will get it, but does not encourage people to stay home.

Smart energy strategy: Cheaper, cleaner, more abundant energy will increase investment and employment across many industries. Reliable supplies and stable prices will reduce uncertainty especially in the manufacturing sector and reduce the risks of building new plants and hiring more workers.

Fair Trade is already beginning to work. Government spending restraint is currently visible in the White House budget, and has the entire government at work figuring out how to accomplish more with less waste and more efficiency. Private investment allocates capital more efficiently than government. Rebuilding America’s infrastructure will create more jobs, but environmental restrictions and bureaucratic red tape can play hob with the best intentions.

The Founders may never have expected in their wildest dreams the enormous bureaucracy of our nation’s capitol, but they were very familiar with human nature and its flaws—and that doesn’t change. The Constitution was intended to slow things down, to require more consideration and more responsibility. MAGAnomics is intended to set the stage for the greatest revival of the economy since the early 1980s. It will remind people what a great America means.

Sounds like a good plan to me.



Ranking the States for their Fiscal Reliability by The Elephant's Child

Here in greater Seattle, following national publicity surrounding the Seattle debacle with raising the minimum wage, the Seattle City Council has determined that it would be a good idea to raise taxes on the rich.  They passed an ordinance.  It will be challenged in court, for the Washington state constitution says they can’t have an income tax, and their plan clearly defines who is rich and who is richer, and has to pay even more.

Several states have decided to raise taxes this year to cover budget shortfalls. A new study suggests that the states might find themselves in worse financial shape after the money starts rolling in. (Leftists do not understand the free market. That’s why they are Leftists.)

According to the latest ranking of states by the Mercatus Center at George Mason University, the most fiscally sound states in the country are all low-tax, GOP strongholds, while the 10 least-solvent states are almost all high-tax and heavily Democratic.

The rankings in the fourth-annual “Ranking of the States by Fiscal Condition” report, which was released this morning, are based on an review of audited financial statements for 2015 covering five measures that gauge the states’ ability to pay their bills, avoid budget deficits,  meet long-term spending needs and cover pension liabilities.

Cash solvency measures a state’s ability to pay immediate bills. Budget solvency focuses on whether states will end the year with a surplus or deficit. Service-level solvency gauges a state’s ability to meet a demand for increased spending. Long-run solvency concerns a states’ ability to meet longer-term spending commitments. Trust fund solvency  examines the states’ unfunded pension liabilities and state debt.

The 25 most-solvent states are solidly Republican except for four. Of the bottom least-solvent states, all but five are solidly Democratic. The most fiscally sound states also tend to have the lowest tax burdens, according to a separate analysis by the Tax Foundation.

The Mercatus Center Analysis can be found here, along with a map which includes more separation of the states into groups. The bottom line seems to be that the more money the state government takes from taxpayers, the worse they do in handling it. That should be surprising, but it’s not.



Newt Gingrich Has a Few Comments on the Republican Congress by The Elephant's Child

At the Daily Caller, Gini Thomas interviews former Speaker of the House Newt Gingrich for the Daily Caller News Foundation.

He says health care policy is “life and death.” “It is ten times more complicated than national defense and you can’t fix it with a handful of congressional staffers sitting in a room somewhere, thinking they’re smart.”

If the Republicans get health care wrong, he predicts, they will lose the House.

The former speaker, whose newest book “Understanding Trump” became his 15th New York Times bestseller, explains there are “two pressure cookers” that impact how Washington works. One is in Washington, but the other is the country. “The country is bigger. You can’t let the Washington pressure cooker make you do stupid things.”

It’s about 25 minutes long, but utterly fascinating. Newt is an old Washington hand and knows his way around Congress. He says he would focus 80 percent of his energy on communications if he were the chief of Staff to Trump. He added that as far as impeachment and a future President Mike Pence are concerned, he will likely be at Pence’s inauguration in 2025, but the Democrats’ efforts to impeach Trump will probably slow down when they realize that Vice President Pence is more conservative than Donald Trump.

 



Lightening the Burden of Excessive Regulation by The Elephant's Child

President Donald Trump has made a good beginning on the immense burden of excess regulation on the U.S. economy and on us personally. Experts believe the cost is close to $2 trillion a year on the economy. Eager progressives believed that the way to fix everything would be strong regulations from the wise elite in Washington D.C. Well, you and I know that the elite don’t seem to be exceptionally wise, and in many cases are definitely deficient.

There was a better way of regulating, according to Steve Forbes, back in (of all places) the Clinton administration. Regulators should state the goals, and let the industry figure out the best way of achieving them.

Rep. Jeff Denham, R-Calif., recently asked the right question in a hearing on improving our infrastructure: “Can performance-based regulations be more effective than command-and-control regulations in achieving safety goals while imposing less of a burden on industry?”

The answer, of course, is yes and there is now a bill before Congress that would codify this common sense approach, The Revamping American Infrastructure Act of 2017. The proposed legislation would call on federal bureaucrats to “identify those regulations, guidance and policies that in current form establish prescriptive requirements for regulated entities; and are able to be replaced, consistent with Federal law, with outcome-based performance standards.”

Thanks to deregulation in 1980, the [freight railroad] industry morphed from an inefficient, loss-ridden system into the finest, most efficient in the world. Nonetheless, the industry is still weighed down unnecessarily by countless, archaic operational mandates. It is ready to deploy new technologies for inspections such as drones, trackside detection systems and sophisticated X-ray machines that would provide crucial information in real time. Yet the industry must abide by a rigid set of procedures established by the Federal Railroad Administration (FRA) that seems to think the world is still dominated by those legendary steam engines of yore.

Federal regulators wanted to address the problem of accidents caused by human error. To fix it, they wanted to dictate to the railroads the number of of persons  in a crew,  without any data that supported the notion that a second person in the cab would actually reduce the number of human-error accidents. (You remember the goofy regulation that all ingredients,with their calorie count in all pizzas, had to be included in the big sign back of the cash register in all pizza parlors.)

The EPA’s jihad against fossil fuels resulted in their so-called haze rule, supposedly to improve visibility. The rule would have forced the closure of several coal-fired power plants and killed many jobs, with no noticeable improvement in visibility.

Sensible removal of excessive government regulation should be a boon to the economy, and perhaps even reduce the number of government regulators. So far, so good. The Trump administration has made a good start.

 




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