Category Archives: Economics

Have a Heart…

Have A HeartToday I tuned into National Public Radio (yes, dammit, I listen to NPR.  For the articles) and was blessed with a story about the Framingham Heart Study.  Conceived in the late 1940s, the NPR story credited this study with creating the body of medical knowledge that has lead to a 70% reduction in deaths by heart disease.

For over 60 years, the study, funded by the Federal government has chugged along, giving residents of Framingham Massachusetts yearly physicals.  Successive generations of Framingham residents have dutifully shown up to be poked, prodded and interviewed about their lifestyle.  Collected by doctors, these firsthand accounts from modern physicians are indeed a magnificent treasure trove of data. Continue reading

Will America Collapse?

For many in America – myself included – the “fiscal cliff” is a forgone conclusion. We are going over. Exit polls in November showed a substantial number of Obama voters still blame President Bush for economic troubles and America voted for more of Obama’s medicine. The GOP was wrecked by FDR for decades, even though the Great Depression ground on despite (or because of) the New Deal. Post-cliff deprivations might be worth it to the President for a new Progressive hegemony. It’s not like any of his friends will go hungry.

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Is Reagan Responsible for Massive Government Debt?

Lately, I’ve noticed some folks of a leftist persuasion making the point that President Reagan really ballooned the deficit. They even have a nifty chart showing how Democrats were minding their own business and only passed the budget that Reagan asked for.

Gather ‘round kiddies, PeePaw wants to tell you a story. You may not realize this, but once upon a time the President had to work with members of Congress to pass a budget. Why, back in your old PeePaw’s day, the President had to cut deals with congress to get his agenda funded.

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The Curley Effect

Can wrecking the economy be a successful strategy for ensuring political success?  According to scholars who describe the Curley Effect, it can (see this article on Forbes).  Named after James Michael Curley a former mayor of Boston, the label is applied to efforts to use the power of the state to create economic dependency for the purpose of retaining political power.

Constituent groups give wholehearted support to politicians who use the power to tax and regulate to give their competitors a disadvantage, or simply pay off such groups with benefits paid for by taxpayers.  Public sector unions enjoy generous wages and benefits.  Private sector unions enjoy a playing field cleared of non-union competition.  Corporations with the right connections enjoy tax abatements.

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Exploiting Youthful Ignorance

Voters under 30 years old voted for President Obama, 60% to 36% in the 2012 election, providing a critical boost to put him over the top and serve four more years.

These voters 18-30 are facing an economy that at best could be considered in the doldrums. They are saddled with enormous involuntary debt heaped upon them by Federal spending. Every one of these voters who becomes a taxpayer somehow will owe north of $140,000. This 140K worth of liability looms before they pay for college, buy a car or own a home.

I know that these debts have consequences. I am sixteen years older than this cohort, and in my years have developed a very cynical view of the government’s competence. Other than killing people and breaking things, the Federal government is generally incapable of finding its ass with both hands. I think many of the things it attempts to do are worth doing, but by someone who will not spend $100 to deliver $4 worth of help. Continue reading

If They will Buy it, Let Them Break It

The GOP is in a death spiral and they are taking conservative ideas along for the ride. The much-maligned Hoover was a progressive, and while his progressive policies are at the root of the Great Depression, and FDR’s progressive policies are at the root of the duration of the Great Depression, Hoover is stuck with the blame along with the GOP.

In my lifetime, only Carter got blame for the economy sucking, and Only Reagan got credit for the good times after taxes were lowered.

If Newt Gingrich had not been the speaker of the house, Bill Clinton would not have even tried to balance the budget. However, Clinton is given credit for the 90s boom, and has no blame for the slowdown he brought upon the country when he raised taxes.

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Teaching Kids that Money = Labor

I have many grandchildren, so many in fact that in moments of confusion I refer to them by number, especially the string of boys all of whom have a name starting with the hard “c” sound.  Number six and I were enjoying “Just Grandpa And Me” dinner at Panera bread and the subject of money came up.

“Do you know how your daddy makes money?” I asked Six.

He paused, sensing a trick question. “He works” was his response.

“That’s right – your daddy works very hard.  As you grow up you work, and people pay you for the work you do”  I replied.  “Anytime we buy something, we trade our work for their work.”

Six was toiling to tear the crusty bread bowl, now emptied of its creamy soup, into manageable chunks.  I continued.  “How much was our dinner?”

Earlier, Six had been looking over the receipt. “About twenty dollars.”

“OK.  So, when you and I placed our order, the nice lady behind the counter wanted us to trade twenty dollars worth of labor for our dinner.  Does that make sense?”

He looked perplexed.

“If Grampa paid you twenty dollars to mow my lawn, and it took you two hours, how much labor would dinner cost you?”

“Labor?” he asked quizzically.

“Yes, labor is work.  When you mow the grass, you are performing work, or labor.”

He thought for a moment.  Six hates to be wrong.  He would rather not answer than not get the question right.  “Remember, you ‘labored’ for two hours and Grandpa paid you twenty bucks.  If you bought dinner, how much labor would it cost you?”

“Two hours?”

“That’s right!  About the time it takes to watch a movie.”

Six smiled, and went back to consuming his bread bowl.  He looked back up to me and I continued the lecture.

“So, how would you prove to the lady that you had really done twenty dollars worth of work and that she should give you twenty dollars worth of her work?”

“She gave us dinner, she didn’t work for us.” he objected.

“Actually, farmers, truckers, bakers and servers all worked to make us dinner.  We are always trading labor for labor.  Without labor wheat isn’t planted, flour isn’t ground, bread isn’t baked and dinner isn’t served.  Does that make sense?”  Six nodded, though not with confidence.

Moving along, I pulled out a twenty dollar bill.  “How long did you have to mow my grass to earn this?” I asked.

“Two hours.”

“So, if I give you this twenty dollar bill, its a way of proving that you performed twenty dollars worth of work, right?”

“Yeah”

“So, when the lady asks us to trade dinner with 20 dollars worth of labor, we use this to show her we have done 20 dollars worth of work.  Understand?”

Six nodded assent.  Then he shifted in his seat and said. “But you paid for it with your credit card.”

I smiled, “That’s another discussion, buddy.”

Children and National Debt

What would you think of me if I told you that I applied for a credit card in the name of my grandson, and secured a $140,000 limit.

Outraged?  Why?  I did good things with it!  I gave several college students a couple thousand dollars each toward their tuition.  I gave many unemployed persons several hundred dollars each.  I gave many thousands of dollars to major corporations to shore up their bottom line and keep their employees on the line.  I invested the rest in helping farmers turn crops we can eat into fuel so we no longer have to use stuff we cannot eat as fuel.

Most Americans do not recognize that our national debt which is the product of deficit spending.  Whoever it is that is buying American debt in the form of treasury bonds is someday going to want to get paid back.  As of this writing, each and every citizen (children and adults) owe $51,000.  Taxpayers owe $140,000.  I expect my grandkids will be taxpayers.  By the time they get their first job, their part of the national debt could be over $200,000.

Even if I agreed that all the wonderful things the Federal government is going into debt to do were good ideas, it would still be immoral to go into debt to do them.  If the average per-year income is $50,000, it would take four years of work for a young worker to pay off their part of the national debt.  Is it fair to lay claim to four years of someone’s work before they are even in school?

Uncle Sam can print money, which it is doing now and will do in greater amounts at some point in the near future once other nations decide to quit buying our debt.  Once the printing presses are fired up, inflation will come, wrecking the buying power of Americans.  High unemployment and rising prices will rob my grandkids of the opportunity sound fiscal policy would afford.

Happier times when their share of the debt was $10,000 less.

Our children will pay for our profligate, wasteful spending.  They will either pay it back with wealth they are creating or pay for it through lost opportunity, but gone it will inevitably be.

It is a rare thing to hear national debt to be discussed in moral terms as it is weighed against the needs of future generations who are going to have to pay it off.  We hear plenty about the needs of the auto industry, the unemployed, college students and dozens of other worthy folk to whom borrowed Federal dollars flow, but we are not considering the enormous cost being heaped upon our children and grandchildren.

It is horrible to think about how we are mortgaging the lives of our children. We do not allow parents to take out loans against the future earnings of their children, but every day we allow the Federal government to do EXACTLY that.

Why I Am Sad for America – Part 1

Being a Christian is a melancholy existence.

Without going too deep into the theological details, I know that any hardship our family might endure from whatever depredations are over the horizon are borne with Christ right alongside us.  I know that whatever the pain I might suffer is bearable, because the Almighty has promised it would never be more than I can bear.

It is impossible to explain the feeling of peace one can get meditating on God’s love and provision at any time, but especially in the midst of a trial.

Temporally, I am a citizen of the United States of America, and I love my country.  I love it because there is hardly a place in the 50 states where you cannot find a kind and generous person who will put themselves to great trouble to help you.  We have been the liberators of the 20th century.  We are the go-to people when there is disaster in the world.  I am proud of America.  I am blessed to be an American.

That said, eternally I am a citizen of Heaven.  As His ambassador, I have all of Heaven looking out for me. No matter what comes, I am secure.

I am very sad to see what my fellow citizens are determined to do to themselves.  The pain of an illness or destruction following a natural disaster somehow seems less painful to witness than when someone falls into addiction or gives into their baser instincts.  If you care for them, your self-righteousness ought to be short-lived.  Self-imposed suffering is still suffering, and it ought to break the Christian’s heart.

America is heading for a fiscal cliff, brought on because Americans want a lifestyle they cannot afford.  The 2012 election was between a candidate who promised fiscal discipline and one who eschews it.  We borrowed six trillion dollars over four years, and enjoyed just under one trillion in economic growth.  No business could do that indefinitely, eventually nobody is stupid enough to lend you money.

It is only a matter of time before the game collapses and the lifestyle provided by the governmental Bernie Madoffs is reduced to ashes.  We know what things like hyper-inflation looks like in third-world economies.  Billion dollar notes, skyrocketing prices. Savers quit saving which destroys capital markets that in turn retard economic growth.  Food rotting in the field because farmers cannot afford the fuel to harvest it.  Hunger. Anger. Envy.  The pathologies that made the election and re-election of Obama possible will metastasize.

Katrina, Joplin, Mt. St. Helen’s – nothing could precisely predict the severity of the destruction.  This disaster is coming and it will be the most well-predicted economic disaster in all of recorded history as well as the most preventable.
We’ll have to pray for the generations that will follow that they will rediscover faith and liberty.  It will be after a long, slow spiral.

The Teflon Progressives

In working through thoughts about the staggering defeat the GOP suffered in Missouri, my mind turned to Todd Akin and the gaff that stank up the whole party.  I know Akin is a good man, a sincere and pious man.  Without rehashing the details of his needless self-immolation, the fact of the matter is that while a Democrat gaffe machine like Joe Biden can say the most gawd-awful things and emerge from the fray smooth and soft as a baby’s hiney, Republicans seem to be coated with a thick layer of high-strength, high-tack adhesive that instantly bonds any mistake to their career.

This effect seems to extend to progressive policies as well.  The Hoover administration did little that was not on the agenda of the Roosevelt administration – back then everyone was a big-government progressive.  However, only Hoover the Republican had the depression hung on his neck.  FDR was the savior of the nation though the Keynesian pump-priming that ended the Great Depression went to mobilizing all of America into war, absorbing horrible casualties among our fighting men, killing millions of men and women worldwide and destroying the industrial capacity of all our trade competitors.  Even President Obama could lead us out a depression if America had been the only country with the ability to manufacture so much as a bicycle.

However, the high tax, high regulation, centrally planned redistributionist policies of the progressives never accrue the tiniest barnacle of failure.  Billions spent on green energy projects are nothing more than vapor, but these and myriad other failures of central planning and government subsidies will hardly ever cost a Democrat his or her job.

The 2008 economic collapse was a failure of progressive redistributionist policies.  A combination of requiring banks to loan money for houses to people who could not afford them and poisoning the bloodstream of banks with trillions of dollars in bad debt.  This one-two punch wrecked the market where many Americans stored their wealth.  Had the wisdom of decades of mortgage underwriting not been altered with by the Community Reinvestment Act and the lending market distorted by Fannie and Freddie, n
o 2008 collapse.

Following the spectacular flameout of this very progressive program, the architects of the collapse – Democrats Chris Dodd and Barney Frank – were given fresh pencils and clean sheets of drafting paper to engineer regulations to create the next collapse.  George W. Bush, who is the only president to even attempt reforms has had the 2008 collapse welded to his legacy, much like what was done to Hoover.

There are many factors that might be at the root of this problem.  Economic illiteracy, media mendacity. Americans seem to lack the skills with which one will actually get to the bottom of things and identify the culprits.  Jurors do it all the time, but nobody is willing to lock themselves in a room with 12 people to figure it out.