Who Cares About the National Debt?

I view myself as a fiscal conservative and believe when our debt level exceeds our ability to pay for it, or other nations lose confidence in our ability to repay -- the government will fail.  But that is not a view held by either party in our Federal Government, so why bother talking about the national debt at all?

For eight years the Republican’s complained about the Obama administrations debt spending, yet once they controlled both the legislature and executive they have done precisely as the past administration.  Over the past six months, I think they increased the national debt by $1,000,000,000,000.92, all while blaming the villainous Democrats.  Of course, the Democrats helped all this with their Trumpmania conspiracy theories that fill the news cycles.

Let’s get real.  You don’t get to govern and then complain about how those other guys are making you spend all this money.  The only question between the Democrats and the Republicans is who gets to benefit from the spending? 

In the past administration, despite all its allusions, deflections and pointless rhetoric about protecting the poorest, it was Wall Street, insurance companies, internet giants, and the bankers who made out like bandits.  Savings accounts earned next to nothing, welfare was pretty much on autopilot, and the unemployment rates slowly came down as people abandoned the workplace.

In this administration, it seems to be the military-industrial complex, the insurance companies, bankers and investment firms that will make all the money despite the allusions, deflections and pointless rhetoric about returning money to the middle class.

I will never again believe a Republican when he or she says they are concerned with the national debt.  The number is, as the Democrats have pointed out, a self-imposed value serving solely as a club to beat over the head and shoulders of your political rival.

In the immortal words of that great economist, social commentator, and philosopher Stan Lee - ‘nough said!

Economic Theory

So, when Bernie is President and directs the states to raise the minimum wage for the unskilled work force of the United States how exactly will that work?  Will he, as the Chief Socialist, mandate the increase through executive order, forcing the states to bend to his will, will he use his populist appeal to persuade the many states to institute social change, or will he persuade the Congress to implement a new national standard?  Regardless of the route, what will be the wonderful social benefit?

Memegenerator.net

Will the number of jobs increase?  Will the overall prosperity of the middle class increase?  Will outsourcing of US manufacturing, returning to our country all those jobs we have sent to the impoverished third world countries end?  Will there be a trickle up windfall, where skilled middle class workers will see proportional wage increases?  Will the poor suddenly collectively rise out of poverty and shed the burden of being poor?  Will the nation embrace the benefits of paying more for day to day commodities like food, energy, transportation, and taxes to reverse the number one threat to national security – and green up America by eliminating our carbon foot print through the more expensive green energy sources?

Forgive me but I am at a loss at how this will do anything more than make Mr. Sanders and his supporters feel good, and briefly provide disposable income from those who have demonstrated an inability look beyond today and progress beyond the poverty level.  Experience with minimum wage legislation shows it provides only a short-term benefit and does nothing to actually improve the quality of life for those who work the jobs that earn only minimum wage.  It will in all likelihood make the overall cost of living go up for both the poor and the middle class.  The rich?  Well they don’t spend most of their money on disposable purchases anyway so they’ll be okay.

I can remember when the Republican candidate for President, was roundly condemned by the left for his “trickle down” theory of wealth creation.  At the time I placed as much credence in candidate Reagan as I do in candidate Sanders.  The difference is Reagan promised to make government smaller.  He broke that promise but did win the cold war without firing a shot.  My fear with candidate Sanders is he promises to make government bigger, that is a pretty easy promise to keep and I’m afraid he will suceed. 

Yet here we are now some 30 years later with the traditional arguments of socialism versus capitalism as if the involvement of the government is somehow not at fault for the the income disparity.  According to the Democrats, and their enlightened spokespeople, it is a single parties fault.  I am sorry, but simple observation proves otherwise.  Each time our government involves itself in social engineering and economic “fine tuning” we see a shift towards greater economic disparity.  It really doesn’t matter if it is the Congress’s fault through legislation, a result Presidential fiat, or the Federal Reserve’s regulation.  It doesn’t matter if the motivation comes from capitalist or socialist influence, in the end the results are the same.  The poor become more dependent on social welfare, the rich find ways to shelter their wealth, and the middle class is caught between the two.

Wouldn’t it be far better to focus on eliminating wage disparity within the specific social groups.  For example, should a tenured university professor have a better life than an inner city kindergarten teacher challenged to instill the fundamentals of language, math and science to children who’ve never see the printed word, or come from a single parent home with no resources?  Who, ultimately, will have the greater influence on our next generation?  Both have college degrees, both have families, both have obligations and expectations yet one earns between $30,000 and (if lucky $60,000) while the other may bring in over $200,000.  This fact alone is one of the reasons college education has become so expensive.  If as Senator Sanders suggests, we are to have free college then the only way to accomplish that is to pay college professors and administers a “living wage” of $15.00 an hour.  I wonder what kind of education system that would provide?

Thoughts on a Minimum Wage

The beautiful thing about not being an expert at something is your opinions of stuff you know little about are quiet easy to form.  I was reminded of this the other day when it was pointed out something like 46 million Americans (roughly 15% of the population) are living in poverty, and a respondent said if we upped the minimum wage we could end poverty.  Of course poverty is a terrible thing, and it would be wonderful to end it, the only question is would increasing the minimum wage end poverty or only increase the number of people on it, by more rapidly increasing the cost of living?

Of course the definition of the poverty level is an arbitrary one, set by the government for its accounting purposes, and it is maintained by the Census Bureau.  In reading the Characteristics of the Population Below the Poverty Level: 1980,  issued by the Census Bureau in 1982, as part of its Current Population Reports, Series P-60, No. 133, you find that between 1979 and 1980 they reported an increase in the population below the poverty level rose from 11.7% to 13%, and blacks had a disproportionate rate of 32%.  Even though they constituted only 12% of the general population they accounted for 29% of the population living below the poverty level as it was then defined.

Now as we look forward to 2011 how has this demographic changed?  What I see in the current census data is minorities (Black, Hispanic, and Native American) continue to show greater than 20% of their populations are below the poverty level while Whites and Asians remain in the neighborhood of 10%, my takeaway is very little seems to have changed in the demographics since 1980, just the amount of dollars that defines what the poverty level is.

So we can speculate as to what are the differences between the populations, and without a doubt some will reflect on the racial implications, but I wonder, is the pursuit of a minimum wage job perhaps a factor, or is it the diminishing need for unskilled labor and an overabundance of college graduates that block any upward mobility?  As we move from a manufacturing economy to a service economy exactly how will the worth of a worker be measured?  In a world of supply and demand, where automation is taking over the mundane tasks, and thus making more and more people an unnecessary part of the labor force, will the artificial inflation of wages lead to a quality of life improvement for those without the technical skills necessary, or will it further hurt their economic outlook?

So please tell me, all those who so ardently support an increase in the minimum wage, how will this improve the lot in life of those who are paid these wages?  How will you control prices so that this new wage actually results in increased buying power, and not just fuel price increases that in the end maintain the current equilibrium, or in fact make life worse for whose who sustain themselves on these jobs?  Will you encourage automation so fewer people are hired or will you mandate acceptable profit levels for the industries that employ these minimum wage employees?  What is your path to improvement?

How about those who are making just above minimum wage?  Will there be an expectation they too receive wage increases, or will you accept the new minimum for a greater number of people there by increasing the numbers of Americans below the poverty level? 

Can anyone explain how an increase in the minimum wage will improve the long term outlook of those who earn it?  Can someone put all the pieces together to show how the economy is improved or sustained by this move?  I would like to know how it will actually reduce poverty and improve the lives of those who are being paid these low wages with little hope for advancement for more than just a couple of months when the cost of living again shoots past it.

Caught Between Realities

The way the news is spun to fit the audience is interesting.  The way economists tailor opinions to fit their social belief is also interesting.  But whether we like to admit it, or not, there are some inescapable hard facts that even the most ardent social engineers cannot just wish away.

The first is unless you are allowed to print your own money, at some point all your bills will come due and you cannot escape your creditor.  There will come a time you will no longer be able to borrow money to pay your bills.  Creditors will be forced to stop lending you money, and/or they will seek judicial help to recover their investments.  If a city, over the long term, is paying more of its tax dollars out than it has coming in - it will fail.  Maybe not at first, not right away, but eventually it will happen.  It really doesn’t matter if you think this fair or not, it is a straight forward cause-effect relationship. 

As the infrastructure decays, and funds are diverted to meet the social demands the cities seem to enter into a kind of death spiral.  Businesses move out, jobs move away, and the poor need more help, drawing more money from the government, increasing the need to borrow.  It is true some cities have escaped this, through sound investment, good corporate management, or changing tax structures to encourage investment or growth.  All these choices counter the balance of income versus outgo.  But where a city chooses to increase its social engineering to put more people on a public dole, allow infrastructure to decay and pay rich contracts to connected people, bankruptcy seems an inevitable consequence.

Those who support the social engineering and the redistribution of wealth can find a number of villains to hold up and deflect the discussion, but at the end of the day it is all comes down to simple math.  If a city must pay its bills, like any family is expected to, then at some point the interest payments will exceed its ability to pay.   At some point they will default.  Mayors and City Councils can choose to ignore this reality, and for a number of terms they will get away with it, but the result is unavoidable. When this happens it is not the politicians that are hurt, it is the very citizens who placed their trust in those politicians.  Those human beings who thought their politicians were looking out for their best interests will all the sudden find their pensions gone, their security gone, and their lives thrown out of kilter.

Our politicians and voters seem incapable of learning this simple economic principle that $ in must be equal to or greater than $ out, or at some point the weight of the debt will crush everything else. 

I know we will continue to live in that delusional place between the reality of economic stability and the alternate reality of free money.  At the end of the day it will be the millennials and younger who will pay the price, for we have chosen to pursue the easy path and are passing on an unsustainable vision.

Hmmmm, I wonder

We are on the brink of dramatic change.  I wonder if it has always been this way?  I suspect it has, and we as humans seem destined always to be on the brink of some dramatic change.  I wonder about the next big change and whether we can stop it, especially when the topic is galvanized by emotion and political agenda?

Now as our government stumbles and bumbles toward a dramatic shift in spending, income, and effective government; I wonder what will come from it?  I see nothing from the President’s party that suggests he is willing to compromise, and I see nothing from the other side to suggest they are either.  With increasing fervor the extremes of both side argue to let it happen.  As we approach this economic milestone the question is not will it affect the economy, but how much of it will it destroy as leaders in both parties, and the President cling to their dogma?

When this nation was born, it was not because the population raised up as one, united in their hatred of the King.  It was because a few men were rebuffed in their attempts to influence the King and Parliament to establish and improve home rule.  If the King had listened then the extremists would not have prevailed, but alas, this small band, and the heavy-handed arrogance of England, galvanized the majority to support the revolution.  Now as free men and woman, we hear voices rising up to question how the government can continue to operate beyond its means, to spend more than it takes in, to no longer try and find balance.  On the other side we hear allegations that it is the fault of the wealthy, the corporations, or perhaps a brother or two.  To the Democratic machine these voices are just useful puppets to protect the wealthy and are dismissed as zealous fools.  We have seen the President initiate a political strategy that pits Americans against Americans by denigrating the top 1% for not paying to the government what he thinks they should.  As the last election showed, this is a story line that plays well with a population that asks what can the government do for me?

I wonder how will the next revolution occur?  How will those who believe they no longer have a say in their government choose to act?  Will we reach a point where the Republican Party collapses and our government becomes a one party state like so much of the rest of the world, or will the government collapse of its own weight?  Will the Democrats be able to stop it, as they spend more and more money they don’t have to gain party faithful support?

In this time of ME, where every choice, every decision, every option evolves around the question, what does it do for me? Do we have the will to put our selfishness aside and find ways to work together?  Will our politicians put their pride and arrogance aside and work for a greater America?  What is a greater America?  I wonder?

Start with the Idea of Right and Wrong

Recently a friend and I exchanged some thoughts on the Hostess Company bankruptcy.  He noted that bankruptcy seems to be used more frequently as a tool by corporations who want to walk away from a negotiated deal.  When I asked what alternative he would propose, his answer was “start with the idea of right and wrong.”

I’ve been thinking about that statement, and how easy it is to suggest, but perhaps how impossible it would be to achieve, especially if we expect to hold corporations, or individuals to such a standard then don’t we need a common understanding of what is right or what is wrong?

So what is right? (I focus only on right for if we can define it then wrong would be its opposite.)  For some they look to the bible for guidance.  At one time we were principally a Judeo-Christian nation and would look to the Old Testament and draw on the commandments as a basis for the beginning of a common understanding.  From it we also take what is known as the golden rule as described in Matthew 7:12 “Treat others the way you would have them treat you: this sums up the law and the prophets.”  But not everyone believes or accepts the Judeo-Christian theology; there are those who actively reject the teachings of the Church, and view those who believe in its teachings as superstitious fools. So for them their basis of determination of right must be different.

I will admit to a limited, and that is being kind, understanding of the teachings of Islam, but I do know it forms both the moral and legal basis for the societies it dominates.  This link provides a good synopsis for those interested in a better understanding.  One of the things I take from the article is that the expectations for behavior under Shari’ah law are not the same as we have in Western culture.  What I couldn’t find was a simple definition of right.  I am left with the impression that just as in the west, many look to their Mullah’s to interpret Allah’s word into the daily expectations of their lives.  That suggests to me that right is flavored by the personality and opinion of the teacher and if so, cannot be uniquely common across Islam.

How about Buddhism?  Buddhism Beliefs, describes 18 foundational beliefs, but as close as I come to understanding definition of right is in the description of Karma, where it is good to be good, but again I don’t know the religion well enough to know if there is a singular understanding of what is good and therefore right?

I talk about the various theologies only to show that there is not a universal definition of right to be found in religion, and even if there were, could that form the basis for doing what is right in the United States?  Based on the concerns of our founding fathers that if one church were to gain favored status – as in the Church of England, or the Catholic domination of much of Europe, then the freedom of our citizens to worship, as they believe best, or not to worship at all, would be lost.  As in any doctrine, there are various understandings, but the one that seems to withstand the test of time can be traced back to President Jefferson’s letter to the Danbury Baptist Association.  This is the original draft; I have emphasized the key line.  The final letter removed the word eternal.

To messers Nehemiah Dodge, Ephraim Robbins, & Stephen S. Nelson, a committee of the Danbury Baptist association in the state of Connecticut.

Gentlemen The affectionate sentiments of esteem & approbation which you are so good as to express towards me, on behalf of the Danbury Baptist association, give me the highest satisfaction. my duties dictate a faithful & zealous pursuit of the interests of my constituents, and, in proportion as they are persuaded of my fidelity to those duties, the discharge of them becomes more & more pleasing. Believing with you that religion is a matter which lies solely between man & his god, that he owes account to none other for his faith or his worship, that the legitimate powers of government reach actions only and not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should "make no law respecting an establishment of religion, or prohibiting the free exercise thereof;" thus building a wall of eternal separation between Church & State. Congress thus inhibited from acts respecting religion, and the Executive authorised only to execute their acts, I have refrained from prescribing even those occasional performances of devotion, practiced indeed by the Executive of another nation as the legal head of its church, but subject here, as religious exercises only to the voluntary regulations and discipline of each respective sect, [Jefferson first wrote: "confining myself therefore to the duties of my station, which are merely temporal, be assured that your religious rights shall never be infringed by any act of mine and that." These lines he crossed out and then wrote: "concurring with"; having crossed out these two words, he wrote: "Adhering to this great act of national legislation in behalf of the rights of conscience"; next he crossed out these words and wrote: "Adhering to this expression of the supreme will of the nation in behalf of the rights of conscience I shall see with friendly dispositions the progress of those sentiments which tend to restore to man all his natural rights, convinced that he has no natural rights in opposition to his social duties."] I reciprocate your kind prayers for the protection & blessing of the common father and creator of man, and tender you for yourselves & the Danbury Baptist [your religious] association assurances of my high respect & esteem. Th Jefferson                        Jan. 1. 1802.

So we as a nation cannot apply church teaching to the governing of our society. But, in the United States we are a nation of laws and those laws, and the courts application of those laws, are the only thing we have to insure justice.  Unfortunately, justice is not the same as right. 

I know what I believe to be right or wrong, but I am not so arrogant to think everyone agrees with me, or even that my understanding is completely correct.  I know that others operate with different value sets, and the twin ideas of honor and responsibility have wide variance in the general population.  So how do we address the issue of corporations declaring bankruptcy, paying the executives huge bonuses, and dumping employee pensions on the Government? 

For many the simple answer would be to write a law to require that executive bonuses be forfeit, but how do you write a law that would not create more problems than it solves?  For example, didn’t we write a law to protect employee pensions for companies that were in bankruptcy and now we see companies shedding those pensions to the government, and the money those employees paid into their retirement funds are lost.  Didn’t we write a law that said everyone should be eligible for a mortgage, whether or not they could afford it, and didn’t that law ultimately lead to a crash in the housing bubble?  Didn’t we write a law that said our payments into social security should go into a LOCKBOX and the government should care for that money and disperse it to those who’ve paid in upon their retirement, and for years Congress has taken from that mythical lockbox to fund the more immediate desires?  The one constant I do see is that every time the federal government gets involved in social engineering something new gets screwed up, and one more tentacle of the government is created.

At the end of the day, I still don’t have an answer for how we solve the human problems of greed, and selfishness, or what we should do when a company, through irresponsible management, diminishing revenue, worker protest, or other market forces can no longer pay its bills.  I don’t see a way to end the possibilities of individual savings being wiped out when those funds are invested in stocks and bonds that carry an inherent risk of loss through company failure.  But I am certainly open to suggestions if someone could show me a way to change the nature of man without taking away my freedom.