American Elephants

The Marvelous Michael Ramirez And Obama’s Notion’s of “Compromise” by The Elephant's Child

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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.


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.

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