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October, 2011:

Restoring America’s Economy Isn’t Rocket Science

But, unfortunately, it requires educated voters and common sense, both of which are in short supply in today’s America. Thanks to the failed policies of people like Franklin Roosevelt, Lyndon Johnson, Jimmy Carter, Bill Clinton, George Bush II, and Barack Obama, America has been reduced to a nation of dependent morons.

America was founded on the basis of rugged individualism and free enterprise. It was founded on the principal that taxation without representation was abhorrent and to be rejected. Today, America is more indebted than almost any nation in the world. It is also a nation blighted by official unemployment at a level of slightly over 9%, while real unemployment is closer to 20%. America has almost 50 million people on food stamps! America has millions of people collecting unemployment benefits, and now, they are collecting it for up to 99 weeks. (And Obama will be extending those entitlements for an even longer period of time.) In some states, like Rhode Island, an unemployed person can collect up to $682  per week, and up to $996 per week if they have dependents, based on a salary when they were working of only $909 per week. Any guess how long these people will be unemployed? (In case you are extremely naive, or math  challenged, the answer is 99 weeks–or more if Obama extends unemployment benefits.) Why accept a job when you can make almost as much, or more, while staying home and watching TV, golfing, fishing, or whatever?

America has tens of millions on welfare. Most of them also get food stamps. Many of them also get subsidized housing, often complete with stainless steel appliances and granite counter tops. And, most of them have things like flat screen televisions, cable or satellite tv, microwave ovens, cars, and even cellular telephones, complete with text messaging and data plans. Something is wrong with this picture. If you are so irresponsible and lazy that you can’t even feed yourself, how can you afford (or be allowed to afford) luxuries like cell phones, high definition televisions, and cable or satellite television? The only “luxury” that they should be  allowed  is basic high speed internet. With that, they can learn and educate themselves, and keep up with world events. (But, of course, most of them probably use their high speed internet to play interactive video games and download videos, audios, and porn.) Also, they can get something like Skype or Magic Jack to get essentially free telephone service, which is important to have. Cell phones, however, are a luxury that they clearly cannot afford if they can’t even afford to put food in their mouths or a roof over their heads. (Of course, since many of these people are dealing drugs and making other money “under the table” to supplement their welfare and other entitlements, they might claim that they need the cell phone to set up their “deals”.)

I realize that millions of people are unemployed, or underemployed. But, the fact of the matter is that if you cannot find a new job in a couple of months, you are either not trying, or your expectations are way too high. Yes, I realize that you may not be able to get your old job back. But, in many cases that is because you worked in an industry like the auto industry where unions strong-armed the car companies  to pay outrageous salaries and fund ridiculous benefits packages. Now, because of those unnatural union policies, your company became totally uncompetitive and you are now out of work. It is now being reported that the United States Postal Service is going bankrupt, and will have to lay off over 100,000 employees and severely cut back, or even eliminate, service. Why? Primarily because of union imposed contracts that prohibit layoffs and force the postal service to pay unreasonably high wages and benefits. Thus, it, like many other industries that are dominated by unions, is uncompetitive and must cut back or go completely out of business. Thank your union, suck it up, and get a job! Yes, you will have to live on less, but at least you won’t be sucking off the government’s tit, which lives off the blood of successful, educated people who have jobs and who (unlike most, or almost most, Americans) pay taxes.

If Obama does further extend the unemployment entitlement, it will not create jobs. It will just ensure that the unemployment rate remains high while those on unemployment refuse to get new jobs as long as the unemployment check does not bounce. And, remember, unemployment benefits are based on the salary that you used to have; it has no relationship to what your skill-set (or lack thereof) is worth in today’s economy. Thus, while most receive less in unemployment than they used to receive, in many cases they receive more than they could receive, today. Eventually they are going to have to get the best paying job they can. The sooner they realize that, the sooner the country will get back to work. The longer the government enables them to put off that decision, the more bankrupt the United States will become, and the longer it will take to get America back to work.

Of course, another major problem in the United States is that the quality of the educational system has gone steadily down hill since the founding of the Department of Education in 1981. The first item in the budget cutting process should be to totally disband the Department of Education. It, the democratic party and the teacher’s union, have done more damage to the future of America than any other organizations. While America pays more for education than any other country, it produces some of the least educated students in the world. Sure, they have been brainwashed to believe that it is great that Suzy has two mommies and Billy has two daddies, and that evil corporations, and even their evil parents, are destroying the world  by using energy and heating their homes and driving their cars, thanks to the UN contrived rubric of Global Warming, but they can’t read, write, and do arithmetic at a level that is even basically competent, let alone well enough to get good jobs in today’s world. And, competence in the fields of math and science is going to be even  more vital in the coming decades. Of course, it is hard to blame the students who are incompetent in science when we have “leaders” who believe the earth is only 6000 years old, that someone was born of a virgin, and that evolution is “just a theory” and that nonsense like “intelligent design” should be taught in schools. In Texas, 45% of high school biology teachers believe the following statement to be definitely true or probably true: “Adam and Eve were the first human beings and were created by God.” In that same 1988 survey of Texas high school biology teachers (1), 19% believed that the following statement was definitely true or probably true: “Dinosaurs and humans lived at the same time.”  (The “yabba dabba do” theory.) I think it is safe to say that many of the Presidential candidates, especially on the republican side, believe in the “yabba dabba do” theory. That is scary!

Another thing that must be done to get America back on track is to scale back taxes (or even eliminate the income tax completely), and greatly reduce regulations. Corporate income taxes should be completely eliminated, since corporations do not pay income taxes. A tax, to them, is just another cost of production, like the plastic or metal parts or labor that goes into whatever they manufacture and  sell. To stay in business, they must simply add up all those costs, including taxes, add a profit margin, and that is the minimum price that they can sell the item for and stay in business. If another company, in another country (or state), pays a lower tax, or no tax, their cost will be lower, and thus their item will be priced more competitively, thus putting the highly taxed company at a disadvantage. In many cases, that higher cost basis puts the American company out of business. Or, as we see more and more in recent times, the American company is forced to relocate its factories to other countries so as to avoid the US taxes. That, of course, further reduces US jobs. But, it is a choice that they are forced to make if they are to stay in business because of the corporate income tax. Eliminate that tax, and companies can come back into the United States and bring their money back to the United States to be put to good use. As it stands right now, some companies have tens of billions of dollars in offshore accounts that they cannot bring back into the United States because the government will steal 35% of that money in income taxes!

If these  things are done, as well as simplifying regulations from bodies such as the EPA, companies will start putting their frozen capital back to work, jobs will be created, and we will again be able to compete in the world marketplace. Government spending of trillions of dollars does not work. Keynesian economics was a failure when FDR used it, it was a failure when Obama repeated FDR’s mistakes, and Keynesian economics will always fail. (Of course, Communism and Socialism always fail, too, but that does not make countries and people keep thinking that “this time it will be different”.) To see where the United States is going with its massive and totally irresponsible social welfare programs, all you have to do is look at Greece, Ireland, Spain, Portugal, and Italy. They have run out of the other person’s money, and the result is chaos and severe economic displacement. If they had not instituted unsustainable social welfare programs ranging from “free health care” to early retirement and others, they would be solvent today.

Of course, the primary cause of the economic turmoil over the last few years in the United States can be placed squarely at the feet of irresponsible social programs such as the Community Reinvestment Act. In the end, this program essentially forced banks to make loans to people who could not possibly afford the homes that they were encouraged to buy. (And the buyers were too stupid to be able to read and understand the mortgage applications that they were signing and understand what would happen when (not if) interest rates increased after the initial “teaser” period.) This glut of unqualified buyers eventually lead to a steep rise in housing prices and the eventual collapse of the housing market which precipitated the market meltdown.

And, what does the government do about these facts that should be absolutely embarrassing to it? It extends unemployment benefits and calls for higher taxes! It is no wonder that America is doomed! First of all, it has been proven, repeatedly, that raising taxes results in reduced tax revenues; if you raise taxes, the rich will find loopholes, and the “greedy” companies that are actually making money will simply move their taxable operations offshore, thus eliminating confiscatory income taxes and reducing US employment. The democrats can jump up and down and shout all they want, but the bottom line is that people and companies will seek out environments where they can maximize their profitability. Staying in the United States, today, is clearly a step toward corporate suicide. And, by extension, remaining in high tax states (or even the United States) spells individual financial suicide for successful people. Successful people are leaving high tax states like New York, Illinois, and California like rats jumping from a sinking ship, and well they should. Why live in a state that bleeds you to death, financially, if you are successful?

The nanny state started with Franklin  Roosevelt. He was a failure at everything that he tried, until he became President of the United States. He attempted many businesses, but failed at each. He would have divorced his wife, Elanor, but his mommy told him that she would cut off his allowance if he did that; thus, he stayed “married”, while screwing his lover (and the United States).

Now, we come to modern-day America. We have a nation that is nothing more than a bankrupt banana republic. (The only real difference between the United States and Greece is that the United States can print money; Greece cannot.) But we are not looking seriously at what needs to be done to save the nation. We need to cut taxes, cut regulations, re-instate Glass Stiegal to re-impose the separation of investment banks from commercial banks, re-institute the uptick rule to temper market drops, eliminate personal and corporate welfare, reduce the long term capital gains tax to zero to encourage investment, reduce corporate income taxes to zero, repeal Dodd-Frank, and repeal Sarbanes-Oxley. We need to make it clear that public funds will not be used to “bail out” banks and other businesses that make stupid bets and loose. We need to drop all consideration of “cap and trade”, since the portion of “global warming” that can be attributed to man is negligible and if there is any further long term warming, we can learn to adapt. (Recent developments strongly point to the sun, and cosmic rays, as the primary drivers of climate.) And, higher CO2 levels will increase plant production. We need to open up new areas for oil and gas exploration and encourage the use of alternative energy (but not force it on people and nations.) While alternative energy is a good thing for many reasons, it is not yet cost effective, and it simply cannot provide base load capacity. That can only be done with coal, oil, gas, and, preferably, nuclear, hydro, and geothermal power. We need to be realistic about entitlements, and face the fact that they must be cut back, drastically. Social Security must be privatized so that there really is a “trust fund” that really does earn interest so that benefits can be paid out in the future. (Currently Social Security receipts simply go into the treasury with all of the other tax revenues; it is not segregated and invested in some sort of “trust fund”, contrary to what some may believe.) Other entitlement programs must similarly be restructured or simply eliminated. The size of government must be scaled back by at least 50%, and more would be better. (And that would only take us back to the level that government was a decade or two ago.) Finally, Obamacare must be repealed and federal regulations drastically reduced to allow states and associations to come up with varied, innovative, and affordable insurance plans that fit the very diverse needs of Americans.

It is not going to be easy, but the sooner we recognize that we are on an unsustainable course and take massive action to reverse that course, the better. Global warming is not an imminent disaster; the complete collapse of the United States into insolvency is.

(1) “High School Biology Teachers and Pseudoscientific Belief: Passing It On?” by Raymond Eve and Dana Dunn, “The Skeptical Inquirer”, vol 13, Spring 1989, pp 260-263.