Obama Economy

August 8, 2010 at 8:54 am

Interesting video on unemployment growth in the era of Obama big government statism. Note that this dose not include those who have given up looking for work. (Click on the full screen icon for larger view.)

July Hayek Dinner: State of the Economy

July 21, 2010 at 12:58 pm

Our thanks to Tom Cargill for the excellent presentation last evening and to Jerry O’Driscoll for arranging the meeting in my absence.

Jerry opened with a snapshot on employment trends from selected countries since 2008. The US is at the bottom of the pile and trending down!

Tom picked it up from there with a quick look back on the first decade of this century focusing on four remarkable points: 1. US homeland is vulnerable to attack since 911; the first since the war of 1812. 2. Critics of the market are strong despite the increase in standard of living in the last quarter century. 3. Failures of the welfare state notwithstanding, the US is moving toward socialism. And, 4. the political force toward socialism can be traced to our current great recession.

Technically, the recession is still in full force. The question is what kind of recovery will come, weak flat “U” or “J,” or a double dip.  Ten key points are apparent:

  • the US has not seen more economic, financial, and political distress since the Great Depression.
  • our recession was not caused by market failure but mainly by government failure, both monetary with low rates too long and fiscally with housing policies of Fannie-Freddie.
  • yet, the public hypnotized by Obama rhetoric believes market failure was the cause.
  • admittedly, the $700 billion financial bailout was necessary to prevent a liquidity crisis.
  • but the five “stimulus” packages ignored history and had a negative effect, negative Keynesian multiplier, on the GDP. Wasteful spending directed to leftist programs.
  • while we now see some GDP growth, the private sector is not creating jobs and budget pressures will force a decline in public sector employment.
  • the private market is not creating jobs due to the great uncertainty of the rules of the game; we are going to state directed allocation of resources not market directed allocation.
  • Adam Smith calls man an economic animal, “truck, barter, and exchange” but the uncertainty of the rules creates inefficiencies that lower growth potential.
  • the economic game becomes even more uncertain because of the greater role of government; what happens to the chess game if it is announced in the middle of the game that there will be a rule change; Obama is regularly announcing rule changes to come!
  • QED, the most likely “recovery” is a flat “J” over the next several years with a chance of a double dip.

Tom now thinks the chance of a double dip is 50/50, an increase from his earlier thinking. Potential economic shocks which will push toward a double dip are: the dramatic increase in taxes next year, and the questionable stability of the European Union. The current divergence in fiscal policy between the overspending US and the rapid austerity in Europe may well be a third negative shock. Tom concluded saying that only a change in the US congress and administration will offer hope of a solid recovery.

We thank Beth Powers and her crew for her comments and patriotic efforts with LibertyInAmerica.org. Please consider a donation to help continue the fine bus treck.

John Dunn provided a positive report on Yucca mountain efforts, see NV4CFE.org.

Finally, our thanks to Mike Herring for treating the group to dinner and drinks, this an an inducement to make contributions to Sharron Angle’s campaign to retire Dirty Harry.

Job Wanted

April 9, 2010 at 7:42 pm

Please, don’t anyone make waves. I desperately need employment, just ask my wife. I am applying for a position on # 3 below. Wish me luck.

NEW Boards and Commissions created under the new health care law

1. Grant program for consumer assistance offices (Section 1002, p. 37)
2. Grant program for states to monitor premium increases (Section 1003, p. 42)
3. Committee to review administrative simplification standards (Section 1104, p. 71)
4. Demonstration program for state wellness programs (Section 1201, p. 93)
5. Grant program to establish state Exchanges (Section 1311(a), p. 130)
6. State American Health Benefit Exchanges (Section 1311(b), p. 131)
7. Exchange grants to establish consumer navigator programs (Section 1311(i), p. 150)
8. Grant program for state cooperatives (Section 1322, p. 169)
9. Advisory board for state cooperatives (Section 1322(b)(3), p. 173)
10. Private purchasing council for state cooperatives (Section 1322(d), p. 177)
155. Indian Health Service program for treatment of child sexual abuse victims (S. 1790, Section 181, p. 192)*……………………………..

…………………………156. Indian Health Service program for treatment of domestic violence and sexual abuse (S. 1790, Section 181, p. 194)*
157. Indian youth telemental health demonstration project (S. 1790, Section 181, p. 204)*
158. Indian youth life skills demonstration project (S. 1790, Section 181, p. 220)*
159. Indian Health Service Director of HIV/AIDS Prevention and Treatment (S. 1790, Section 199B, p. 258)*
*Section 10221, page 2173 of H.R. 3590 deems that S. 1790 shall be deemed as passed with certain amendments

Unions Cost Taxpayers Money

March 10, 2010 at 11:02 am

Representative Steve King from Iowa has a hell of an idea on How to Save $11.4 Billion This Year, posted March 4th in The American Spectator. Repeal the Depression-era Davis-Bacon Act, a subsidy designed to protect American blacks from being barred from construction jobs by mandating “prevailing wages” in public contracts. In practice prevailing wages are inflated union wages. As King points out, “Davis-Bacon wage rates are on average 22% higher than the standard wage rate in an area. Similar Heritage research revealed that, under Davis-Bacon law, the government pays four workers artificially inflated wages the same price it could pay five workers the local market rate.” So Obama’s “stimulus” which requires Davis-Bacon wages either costs the taxpayers a 22% wage subsidy premium or decreases construction employment by 20%!

So you would hope that given the serious deficit and 9+% unemployment, Obama would embrace this practical idea. Alas, you would be wrong. As pointed out editorially in yesterday’s WSJ, the White House is all about, Procuring the Union Agenda. Seems that Joe Biden’s “Middle Class Task Force” is drafting an Executive Order for Obama that would “oblige government procurement agencies to give contracts to “responsible contractors” who pay workers well and offer higher health, pension, sick leave and other benefits. These new mandated labor standards would have to be enforced across a company, not just at the unit bidding for a contract.” It is this new twist that puts the Davis-Bacon Act on steroids!

Unlike the disjunctive, “EITHER inflate taxpayer costs OR decrease employment” of Davis-Bacon, this executive order by expanding Davis-Bacon beyond the bidding unit will “BOTH inflate costs AND decrease employment.” The greatest adverse impact here is on small businesses, formerly the job creation engines of this economy!

So instead of competitive bidding to get the best quality at the best price, we have the Obama administration doing the unions’ bidding. Obama is owned by the unions; at least they own the biggest part of him!

Tom Motherway

We Need Jobs–Let’s Import Them

March 9, 2010 at 12:30 pm

Robert Litan’s article in the March 8th WSJ, Visas for the Next Sergey Brin, makes a good point: “to create more jobs, let’s import employers.? Given the anti-job, anti-capital stance of the Obama administration, our 9+% stated unemployment rate will by administration forecasts not fall to the 5% area for at least another decade. As we are well aware the true rate is over 15% when the “given-ups” and underemployed are taken into account. And Obama has no intent to decrease the size of the socialist state or reform the ever expanding, deficit producing welfare programs.

So what do we need? We need wealth, capital willing to take risks and create jobs in the process. We need entrepreneurs to translate that risk capital into successful businesses and create jobs in the process. Thus the article’s title character: Sergey Brin the Soviet-born American who founded Google!

Litan treats the “Startup Visa Act” jointly introduced by Senators Kerry and Lugar which would create a new, two-year visa for immigrant entrepreneurs who attract at least $250,000 venture financing in America. The visa would become permanent if the firm adds at least five non-family employees, attracts $1M in financing, or earns $1M in revenue. Fully 25% of the technology companies in the U.S. were founded by immigrants.

The idea is a good one but as the article points out could use some improvement. Why set such a high capital raising bar? A lot of tech companies were started with family money and credit card debt! And why limit the capital to U.S. sources? Don’t we want foreign investment that creates U.S. jobs? Finally isn’t immigration that brings mere wealth to the country beneficial to job creation? So why not issue visas based on permanent residence and at least $5M of new capital invested in U.S. businesses?

The H-1B visas–applicable to high skilled immigrants–are strictly limited, 65,000 in 2010 down from 195,000 in 2003. Tech firms have long complained about this limitation. As the article points out these visas are a likely source of the entrepreneurs that will start the next Google.

Intelligent immigration policy can create jobs, improved technology, capital, and favorable demographic patterns to boot. Hopefully Obama’s union bosses won’t object!

Tom Motherway