Saturday, March 1, 2014

Government Controlled Economics – A Failure

With the US economy trying to dig its way out of what has been erroneously called the Great Recession – we sit and watch the happenings in Washington. We recently heard a speech by the president reaffirming his desire to defeat climate change. Carbon emissions seem to be the number one item on the Washington agenda. While Congress sleeps the EPA and other agencies expand their regulatory power.

The American people elected a president who promised to destroy the coal industry. He has the desire to make the coal industry a thing of the past. While use of coal in the USA has dropped, exports to Europe were up 92% in 2010-11, according to Platts. Electrical rates are expected to increase dramatically because of mandates for closing coal powered generation plants. The president said, “Electrical rates will necessarily dramatically increase.” This is all in the name of saving the planet from climate warming that isn't currently happening and was never proven to be caused by humans.

How many of you have taken a cruise? If so, how many of them flew the American flag? There is only one cruise ship operating under American registration, the American Pride. The reasons are simple that this profitable industry operates offshore – US regulations. These regulations are wide spread – everything from labor laws, environmental regulations, to health inspections.

If anyone wishes to see America's future they have only to look at the cruise industry. If government regulations can destroy one popular American pastime from operating within our own borders, they can do the same for many others.

In the past we watched the US government, because of pressure from environmental lobby groups, nearly destroy the nuclear power industry. For the most part of half a century no new nuclear power plant licenses were granted. With the government forced demise of coal powered electrical generation and the failure of wind and solar to become an adequate replacement – government and the environmental lobby have changed their minds when it comes to nuclear power. Nuclear energy that was once decried as evil is now the savior.

The point is to say that government has a poor record of picking winners and losers. Solyndra solar company has become the banner of government failing to pick winners. We are told over and over how the free market has failed. Few realize there has not been a free market in this country since the days of the wild west where there was little or no government.

People confuse cronyism with the free market. We have a government that is easily bought and sold by corporations and public lobby groups. It is impossible to say at this time one is more dangerous than the other. We have the environmental lobby that has dramatically increased gasoline prices—because of ethanol mandates—and nearly destroyed the nuclear power industry. We have the corporate lobby that buys government in order to create monopolies.

When is the last time you had to deal with one of these corporations? If you have you will find that many have grown so large that they have become terribly inefficient and customer unfriendly. It is rare when you can call one of these companies and talk to a human, and when you finally do we find they are incompetent. This is in part due to government created monopolies. Because the mom and pop business cannot afford to buy regulations and subsidies, they can never grow beyond a certain point. When a corporation cannot, or will not buy favoritism, they move offshore.

Recently there was a report that because of the resurgence in home building there is a shortage of apprentice carpenters. Government can be blamed for the decline in the housing industry, but that's an article unto itself. According to South Bend School the average wage of an apprentice is about $17,000 annually while other sources have it as high as $31,000 annually. I have found from experience that the type and location of construction can affect wages. A carpenter's helper/apprentice is hard work. Many American youth who have become soft will often choose to go into debt for college rather than seek apprenticeships.

Today we find many of these jobs filled by immigrants, both legal and illegal. This is because many of these people are familiar with hard work and low pay. They also know how to save and to live a frugal life. This is why government looks to pass some type of immigration bill that will provide amnesty for those who came illegally or overstayed visas. In addition, politicians want to give token punishments to those who have failed to pay taxes or have stolen identities.

If we look at most of our economic problems we will find government involvement. Government mandated minimum wages have made young people choose fast food jobs over those in construction that are labor intensive, in harsh weather conditions. The carpenter helper will someday leave the job having learned a skill set, while the fast food worker will walk away smelling like hamburger. Because of government involvement the fast food worker makes the same as the more labor intensive carpenter helper. If we let the free market decide wages then American youth will often choose that job with the highest pay.

Government has a horrible track record at controlling economies. Most of the people elected to office are lawyers and not economists. There are many business people who are elected to office and they use that time to learn how to buy favors. They then go back to the private sector and teach other corporate owners how to play the game. This game must end and the only way that can be done is to take away government's power to play. Those on the left think the game can be controlled by giving the government more power. That's like giving the addict more heroin.

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