Friday, December 27, 2013

Do Nothing Congress – A Good Thing?

I have to begin by asking – are we worse off if congress never showed up for work? The 113th Congress is being touted as the least productive in history. If that is the case then I declare a partial victory for America. A good year for congress would be if no new laws were passed and many were repealed. Speaker Boehner said much the same thing, but his actions tell us otherwise.

The Constitution requires only that each house of Congress meet once per year. Congress was never intended to be in session for most of the year. Being a Senator or Representative was never intended to be a full time job. It is because governing has become a full time job that they become corrupt. Politicians spend more time in Washington, DC than they do in their home districts. This is why they lose touch with the people for whom they were elected to represent.

Because they continuously live and work in DC, the Lobbyist become their friends and a part of social groups. It has reached the point that Congress is judged by how long they are in session and and by the number of new laws passed. With each Congress government grows. For those who want central planning this is a good thing. For those of us who want more power reserved for the states as designed by the Constitution – more Congress is a bad thing.

Thursday, December 26, 2013

Government Command and Control Farming

Belgium dairy farmers dumping milk in protest.
As Europe clawed its way out from under the ravages of World War 2 the one thing they desperately needed was food. Farmers had to reclaim farm lands and put it back into production. In an effort to speed the process European governments began giving financial support to farmers. Their plan worked and they managed to rapidly end hunger.

Seventy years later, and long after formation of the 27 nation European Union, the practice continues. Through subsidies and tight regulation the EU has been able to produce cheap affordable food. Enter 2013 and we find Belgium farmers dumping milk on fields in protest of too low milk prices. Unless something is done many EU farms are threatened by bankruptcy.

By the 90's EU farms were over producing. Reports of wine lakes and mountains of butter – as described by the EU press – made some think it was time to have a more free market approach to agriculture. When the world wide recession hit, and driven unnecessarily deeper by the US government created housing bubble, world food prices dropped dramatically because people were buying less.

Progressive types believe they can control the economy by thinking they know what's best for everyone. Simply because someone is elected to office doesn't make them effective economists. It is only when faced with disaster such as the one in Europe will government back away from certain practices. A looming disaster is forcing EU officials to rethink their policies and follow a more free market approach.

A command and control economy has never worked. It was this command and control thinking that created the housing bubble, which resulted in the 2007 recession. Recessions are a normal part of a free market economy. You will always find up and down turns in an economy. Many times attempts to control an economy out of a recession only extends the down turn. The Great Depression is a prime example, as is the 2007 recession.

A command and control economy is based on one thing – a consistent government. Government is always in a state of flux. It is never a single mind. With each change comes a different way of doing things. These changes can be a result of cronyism or simply a lack of knowledge. When you live in a region where everyone has exactly the same government controlled education, thinking will tend to follow a narrow path.

Europe is often amazed by political differences in the USA. They don't understand why so many are constantly talking about politics. The reason is simple, education is a local decision. Each region typically teaches a variety of ethics and pushes the mind in many directions. For good or bad this allows people too look at a single problem from many different perspectives. The more possible solutions the better chance of finding one best suited for that situation.

Each day situations change, especially in economics. The simple trip to work can often require many different decisions each day. Traffic is always in a state of change. The government sets speed limits and lines the roads with signs in an effort to direct traffic flow. A roadway is probably the single thing in the country that has the most government control. Despite that control there are massive traffic jams. You can travel that same route the next day and traffic zooms along normally.

An economy is much the same as a road system. Farm production varies greatly from season to season. The farmer makes many decisions based on weather and what their neighbors grow. Farming is maybe the most unpredictable market supplier. It is usually impossible to predict accurately the annual yield. For something to be tightly controlled results must be fairly predictable. Traffic counters predict road use. Crop history is used to predict outputs. On roadways a traffic jam is typically simply annoying. When agriculture hits a jam it can affect the lives of millions.

We then have another variable and that's the consumer. One season beef can be in vogue and it seems everyone wants red meat. The next year something happens that causes people to become a little more health conscious and they switch to chicken and fish. One year green beans might be in huge demand, while the next it's spinach.

The producers must be free to change direction quickly to supply the variable market. Government is much like an aircraft carrier, it takes a long time for it to change direction – only with government it can take years or even decades for these changes to come. There is no problem when government builds a road on which the economy can travel, but if they clog it with signs and traffic lights it tends to slow. If there is an exit only every 100 miles it can take too long for the economy to correct course.

It's easy to have the European and progressive attitude that everyone has a right to food. Food and water are requirements for sustaining life. People will find food no matter if it's through natural economic action, by theft, or salvaging food discarded by others. It would be wonderful if all food was free – such as a place where rich and poor alike could walk in and take all they want. We know in such a scenario there would be hoarders and those who waste enormous amounts, which would create shortages. It would be impossible for government to predict behavior on that scale.

We could simply have government distribute food according to need. Government is supposedly doing that now with food stamps. How many times have we been in the grocery store to see those with far more food than you could afford and then pay with a government EBT card. In other cases government will allot a family far less than is needed. History shows us that a central government is a poor distributor of goods. If food was to be distributed, it would have to be on a more local level. We also know there is a black market for food stamps. Too often government control creates a black market that often comes with a criminal element. Alcohol and drug prohibitions are great examples.

The economics of food, because it's a necessity, is one with which we must give the most trust. Food prices vary according to the local economy and the distance it must travel from point of production to the consumer. This applies to all goods, but with food much of it is perishable and must – at least more desirable – be produced close to the market. Food is also the only commodity that an average American or European can produce themselves. Kitchens all over the world have herb plants within reach. A patio can contain a single tomato plant. In summer it's impossible to predict the number of home vegetable gardens.

Family farms in American are disappearing because of government control and taxes. Each year there is some new regulation that can increase the cost of farming, but controls on production don't allow for these added expenses. Because of federal crop insurance some risk is negated. But this doesn't offset all the other cost of government encroachment onto the farm. This article cannot end without mentioning what's maybe the most destructive force on the family farm, and that's the death tax.

Wednesday, December 25, 2013

Slavery, Yesterday and Today

I was just reminded about Irish slavery, something about which history rarely speaks. Slavery is alive and well in today's world. We all know about Uganda slaves, but the largest slave market might currently be the one for women and children. This is typically known as the white slave or sex trade.

I can never forget the tale of a Russian teen during the 90's. She had dreams of being a European model. The young beauty signed with some company and managed a visa to leave Russia. She arrived at the address given to her and was immediately taken into captivity. For some time she was used as a prostitute in Europe. She was eventually sold to someone in the USA. Her captives planned to bring her through the southern border with fake documentation. She sat nervously in the back seat as they were questioned at a border checkpoint. Finally one of the border guards looked at her paperwork and ask the Russian captive a question. Despite speaking fluent English, she decided to reply in Russian. The cold war was still fresh enough in everyone's mind that this made them look more closely at her and the paperwork. The guards took her from the car to some place where she could be questioned alone. It was then she revealed to them who she was and that she had been kidnapped. The kidnappers were arrested and and she was given asylum in the USA.

Sunday, December 22, 2013

Manipulation of Economic Figures

I follow many different people on twitter, some of which are progressives. I find it informative to know all sides of the conversations. Occasionally something comes my way that I find amazing. Someone posted an article bragging about how the democrats have brought down the deficits leaving the Tea Party and GOP without a platform on which to run.

To the left you find one of those charts. I first noticed that it's inverted. In typical charts high figures are at the top. Although the chart is correct math-wise, the brain can often get the opposite impression. Now let's look at the labels. We must first note that it's a graph of debt per GDP(Gross Domestic Product). If the deficit remains steady or increases at a slow rate, and the GDP grows, the percentage will drop. As of 2012 the GDP was $15.6 trillion. At the end of the same period the total deficit was approximately $16 trillion. This would put the deficit at nearly 100% of GDP.

Looking at the charts we will see a slight decline of debt to GDP ratio. This is because debt has been growing annually at a pace lower than GDP growth. Sounds great, right? Let's look at actual debt. At the end of 2013 we now have more than $17 trillion in debt. Now let's look to why debt is growing at a lower pace. Budget spending has increased only 1.4% annually since 2009. This is because of T.A.R.P.(Toxic Asset Relief Program) that was placed into the 2009 budget. This alone increased the budget by $700 billion.

There hasn't been a budget passed since 2009. Each year government has practiced baseline budgeting – meaning discretionary spending of the current budget is increased 5%. This accounting trick made it look like annual spending increased only 1.4%. By doing this they were able to keep T.A.R.P. level spending while making the numbers look good. Because of budget Continuing Resolution battles deficit spending has dropped somewhat, but deficits still range from $500 billion to $1.5 trillion in 2009 as a result of T.A.R.P.

Saturday, December 21, 2013

Duck Phil Platypus

Duck Phil Platypus is the perfect title for this article because the Phil Robertson story is one of the ugliest I have seen in a very long time. I'm not sure if by the time this fades into the twilight of news that anyone will have been correct. For the most part this is much ado about nothing. But since it has become something there is a lot that needs to be said.

Let's start by quoting some of his comments:

Phil On Growing Up in Pre-Civil-Rights-Era Louisiana
“I never, with my eyes, saw the mistreatment of any black person. Not once. Where we lived was all farmers. The blacks worked for the farmers. I hoed cotton with them. I’m with the blacks, because we’re white trash. We’re going across the field.... They’re singing and happy. I never heard one of them, one black person, say, ‘I tell you what: These doggone white people’—not a word!... Pre-entitlement, pre-welfare, you say: Were they happy? They were godly; they were happy; no one was singing the blues.”

Phil is referring to the days of share croppers and where blacks lived on the farms where they worked. Farms varied greatly, as did the houses in which the black workers lived. Some houses were relatively nice, while some were no more than roughly built shacks. This sounds to also be during the days of Jim Crow laws. Were southern blacks happy? Likely for the most part, but we must ask – Were they equal? Not even close.

Friday, December 20, 2013

Quantitative Easing and Inflation

Recently I was looking at inflation rates and reading what some progressives had to say on economics. I knew inflation rates were low and in part that was due to cheap imports. Imports alone couldn't account for $4 trillion in Quantitative Easing inflation dollars. For the past few days I've been looking for these answers and here are my conclusions.

The answer is far simpler than I imagined, and it also answers a question I had last year. Where are the missing $3 trillion Fed dollars? Today that question would now have to be changed to—Where are the missing $4 trillion fed dollars? The answer is that it's stored at the Federal Reserve in the form of bonds, or at least should be.

The US government has been attempting to practice Keynesian economics. The basic principle of John Keynes economics is that the government pumps money into the economy. That money can come from either borrowing or printing. In the age of computers that money can be created through digital information. It's not important how the Fed got the money for QE. What's important is what happens to all that money.

Right now the Fed is sitting on $4 trillion in bonds accumulated over almost five years of Quantitative Easing. It's hard to determine what the value of those bonds will be at the time they are sold. The eventual problem will be how to inject that money back into the economy without causing hyper inflation. The Fed could simply hand over that money to the US Treasury and placed into the general fund. The Fed banks could simply keep the money and pay the US government their 6% interest as determined by the Federal Reserve Act.

Saturday, December 14, 2013

America The Offended

Everyday I face a world where I find person after person who is offended over this or that. The political right often points to the left as examples of those most using offensiveness. I find that no political ideology has a monopoly on being offended.

Eric Bolling of Fox News interviewed the head of an Atheist organization. Bolling repeatedly stated how he was offended by the billboard pictured to the left. It's fair to state when you are offended by something, even though the billboard wasn't directed at Bolling personally. It becomes hypocritical when you often demand others not be offended. Free speech demands we have a thick skin and stop being offended by another person's free expression.

This is no different from the attacks on Megyn Kelly for saying that Santa Claus was white. The origins of the jolly fat man comes from the Nordic culture. Sorry, but those people were and are white. Santa has been depicted as white since the jolly old man's inception. This doesn't mean you can't have a black, Indian or Arabian Santa. It's a free country, decorate your home as you please. Have whatever Santa you want in your places of gathering. What must stop is being offended and using offensiveness to attack others.

Religion, holidays, flesh color, heritage, lifestyle, and many other things are being used to divide us for political and profitable gain. We are all forced to live on this ball of rock and must find ways to get along. I have spent hours watching Atheist and Christians argue over who is correct. It's insanity to believe either person is going to change their mind. Belief or non-belief isn't wrong as long as it's not used to harm or forced on another. Each have reasons for strongly embracing their belief or non-belief.

Thursday, December 12, 2013

Economic Truths

Today we hear a lot about economic and social justice. There seems to always be talk of raising the minimum wage in order to have it keep up with inflation. We hear about the great wealth divide where the gap between wealthy and poor widens. This is spoken as if there is a limited numbers of dollars and if one person gets wealthy they must be taking it from someone at the bottom. This is a fallacy.

Today we have a global market. There is massive trade between countries. Goods and services are exchanged between countries. I could give you the total global accumulated wealth, but that changes daily. The amount of a country's currency changes daily. The USA is creating $84 billion a month. This doesn't include dollars created out of thin air that is loaned to banks. Even if that currency is temporary, it becomes temporally a part of total currency. Gold and other commodities are converted to cash through Rehypothification in the form of bonds.

Each day wealth is taken and returned to the government. Currently the death tax (estate tax) is 40% of assets above $5.5 million. When the government takes that money it's often returned to the economy in various ways. Eventually that money becomes available to be earned once more. To be sure, this isn't in support of the death tax, but just an explanation of how currency moves. This does show, especially under the current taxing system, rich cannot accumulate wealth to the point that the poor can have no chance of moving to the middle class.

Death isn't the only way that wealth trickles down to the poor. Much of the wealth lies with business – be it small or large. Most businesses are always looking to expand. They will spend money on building facilities in which to produce more products or services. When expansion happens more workers are hired. Careful thought is given to the number of employees needed. In order to make that decision they must look to see how much of their budget can be set aside for labor. They then look at the labor market and decide what is the lowest wage that can be offered and attract the necessary labor. Skilled labor always comes at a premium, while manual labor is usually easier to find.

Sunday, December 8, 2013

Anarchical Societies vs Libertarianism

Anarchist Utopian is an oxymoron if there ever was one, right?  Maybe not as much as one thinks. Utopia was this fictional society where everything was perfect. Typically we think of communist or socialist societies as false Utopias. I think to expand the definition to any society that is filled with absolutes and infringes on the liberties of others.

We must ask. Can an Anarchical society that believes in absolute individual liberty infringe on the liberties of others? Any society that deals in absolutes forces their beliefs on others. To understand this we must understand why we have towns and cities. We can start this with “Once upon a time.” Yes – we go that far back. The earliest humans were by nature social creatures.   Unlike animals, they don't abandon their family once grown. Because of this nurturing instinct humans began to share common resources.

In time they found that forming close knit societies helped them survive the ravages of nature and enemies. As time went on and the small communities grew they found that it helped if they had a few to make some of the decisions for all. They would select villagers thought to be the wisest and most educated to make decisions for the community. People found they couldn't leave fields to vote on each small decision needed to be made. Of course there were some who didn't agree with the decisions and they would leave the community. They would sometimes form their own communities with a different set of rules. There was one thing all communities had in common, they had an individual or group to make decisions for the collective.

Friday, December 6, 2013

The War on Monsanto

Freedom Tax

Most days I get at least one tweet or Facebook post telling me about the evils of Monsanto and GMO (Genetically Modified Organisms ). It usually accompanies a link to one of the conspiracy sites. When I research something I look for education websites or journalist I trust. I have spent the past decade trying to learn as much as possible about climate change. I must admit that I haven't put as much time into researching Genetically Modified Organisms. I do try to understand enough to know if the foods I'm eating are killing me. I'm sure most things we do in life affect life span in some way.

The one thing we know for certain is that people are living longer than ever. We also know that is mostly due to hygiene, medical care, home environment, and an abundance of food. I'm sure most of us learned in history about the 1930's dust bowl. That was when a large portion of the plains states were trapped in cloud of dust because of bad farming techniques and a drought.

A dust bowl of today is much less likely, not because there aren't droughts, but because of better farming techniques and drought resistant crops. Some of those crops are a result of hybridization and some from genetic modification. Because of hybridization and genetic modifications we can grow far more food per acre than in the dust bowl era.

Wednesday, December 4, 2013

Dog and Pony Show Revisited (DAPS)

I have written before about the dog and pony show that plays out before us each day. If the problem of the day is Obamacare, the media and the democrats will talk about immigration. Each problem is huge and blown out of proportion. Once again we were faced with shutdown of government and once again it was going to be a huge disaster. In the latest one I had driven 4,000 miles to see the Grand Canyon and wasn't sure I would be allowed in. (They did open it three days before I arrived.)

Each time they want the debt limit raised we are told the government will default on our debt if they don't get their way. While a few political and economic junkies know this is a lie, the rest of the country isn't sure. Most of the country has become numbed by the constant flow of lies. A few cling to the lies of their favorite party and happily pass them along to anyone who will listen. Too many, either out of ignorance or just happy to tow the party line, are willing participants in the dog and pony show.

Today one of the top stories is about an 11 year old girl that was selling mistletoe in a Portland, Oregon park. Yes, it is a heart warming story about the entrepreneurial spirit of a young American. The story is used to imply the young girl was treated harshly or unfairly. It is made to look like the entrepreneurial spirit is bad and begging is okay. Park officials stated correctly, begging is free speech, which has been upheld by the courts. New York has tried to ban panhandling in the past and has been successful in only limiting aggressive begging or for reasons of safety.