Humor from the Patriot Post

from Patriot Post. Enjoy.

Going "Green" Means Going "Red"?

Cato Institute's "techknowledge" newsletter reminds us that the whole "going green" approach by the federal (and state) governments will likely lead to more "going red" in two ways:

1. Increasingly socialist political manipulation of the economy, and
   
   
2. Increasing government debt (and taxes) as the politicians push agendas that are counter to growth, productivity and private investment.

One of the problems with the government throwing money at "green" initiatives is that some businesses will be incented to participate simply because they will benefit from the federal monies in the program. They will do this for short-term gain, even though the net and long-term effect on the general economy may be negative.

Take for example the foolishness of making our machines competitors for our food supply via the government-back ethanol subsidy programs. The corn supply -- a staple in the food chain -- is being diverted to provide fuel while there is a severe shortage of corn for food products such as livestock feed (leading to increased prices for meats), corn meal, corn syrup, and more.

Despite this craziness, major players like ADM and others are participating in the ethanol market simply because it is presently beneficial for them to do so. The problem is, on the one side, ADM's willingness to sacrifice the larger marketplace "good" for short-term gain. However, if the governments (state and federal) were not throwing non-market-driven money into the arena and distorting the market value, this foolishness would be entirely unsustainable.

Think about it.

Bailout Parade Panic and the Benefits of Bankruptcy

Let's not allow Congress and members of the bailout parade panic us into allowing them to do things, as was done in the 1930s, that would convert a mild economic downturn into a true calamity. Right now the Big Three auto companies, and their unions, are asking Congress for a $25 billion bailout to avoid bankruptcy. Let's think about that a bit.

What happens when a company goes bankrupt? One thing that does not happen is their productive assets go poof and disappear into thin air. In other words, if GM goes bankrupt, the assembly lines, robots, buildings and other tools don't evaporate. What bankruptcy means is the title to those assets change. People who think they can manage those assets better purchase them.

Chapter 11 of the U.S. Bankruptcy Code, where the control of its business operations are subject to the oversight and jurisdiction of the court, gives companies a chance to reorganize. The court can permit complete or partial relief from the company's debts and its labor union contracts.

A large part of the problem is the Big Three's cozy relationship with the United Auto Workers union (UAW). GM has a $73 hourly wage cost including benefits and overtime. Toyota has five major assembly plants in the U.S. Its hourly wage cost plus benefits is $48. It doesn't take rocket science to figure out which company will be at a competitive disadvantage. Then there's the "jobs bank" feature of the UAW contract where workers who are laid off workers get 95 percent of their base pay and all their benefits. Right now there's a two-year limit but in the past workers could stay in the "jobs bank" forever unless they turned down two job offers within 50 miles of their factory. At one time job bank membership exceeded 7,000 "workers." GM, Ford and Chrysler face other problems that range from poor corporate management and marketing, not to mention costly government regulations.

Two vital marketplace signals are the profits that come with success and the losses that come with failure. When these two signals are not allowed to freely function, markets operate less efficiently. To be successful a business must take in enough revenue not only to cover wages, rents and interest but profits as well. In order to accomplish that feat executives must not only satisfy customers but they must do it in a manner that efficiently utilizes all of their resources. If they fail to cover costs, it means that resources are not being used efficiently and/or consumers don't value the good being produced relative to some other alternative. When a firm routinely fails to turn a profit, there are bankruptcy pressures. The firm's resources, workers, building and capital become available to someone else who might put them to better use. When government steps in with a bailout, it enables executives to continue mismanaging resources.

How much congressional involvement do we want with the Big Three auto companies? I'd say none. Congressmen and federal bureaucrats, including those at the Federal Reserve Board, don't know anymore about the automobile business than they know about the banking and financial businesses that they've turned into a mess. Just look at the idiotic focus of congressmen when the three auto company chief executives appeared before them. They questioned whether the executives should have driven to Congress rather than flown in on corporate jets. They focused on executive pay, which is a tiny fraction of costs compared to $73 hourly compensation to 250,000 autoworkers. The belief that Congress poses the major threat to our liberty and well-being is why the founders gave them limited enumerated powers. To our detriment, today's Americans have given them unlimited powers.

-- by Walter E. Williams

Found at: Capitalism Magazine (online)

Born in Philadelphia in 1936, Walter E. Williams holds a bachelor's degree in economics from California State University (1965) and a master's degree (1967) and doctorate (1972) in economics from the University of California at Los Angeles.

Are U.S. Automakers and Congress Telling the Truth About Jobs?

“The auto industry supports one of every 10 jobs in the United States,” Michigan Governor Jennifer M. Granholm has said multiple times in her pleas for a bailout of the Detroit Three.

Is it true?

Click here for the real story!

A Warning from Alexander Hamilton - The Federalist Papers #1

It was Alexander Hamilton that warned citizens so many years ago that we must be watchful, for he said, "... dangerous ambition more often lurks behind the specious mask of zeal for the rights of the people than under the forbidding appearance of zeal for the firmness and efficiency of government. History will teach us that the former has been found a much more certain road to the introduction of despotism than the latter, and that of those men who have overturned the liberties of republics, the greatest number have begun their career by paying obsequious court to the people; commencing demagogues and ending tyrants."

It was just such speech as Hamilton describes that has been the ladder upon which every socialist and communistic threat to the liberties of the people first climbed within reach of their despotic control.

We must beware lest obsequious speech and the promise to "rescue us" in the time of economy emergency become also the steps by which our American liberties are overrun by liberal politicians hungry for ever larger governments and ever more control over the economy.

Gamble with Social Security?

In my mail when I got home today, there was a political advertisement from the Minnesota DFL State Committee. The front page headline read, "Do you want to take a gamble on Social Security?" The back cover showed a Dow Jones Industrial Average chart covering the dates 22 September through 3 October 2008. The headline reads: "What if Bush and McCain invested your future Social Security savings in today's plummeting stock market?"

Of course, this is nothing more than a scare tactic on the part of the Democrat party that wholly conceals the facts about the true state of the Social Security system altogether.

More than eight years ago, President George W. Bush’s Commission to Strengthen Social Security (a commission headed by liberal Democrat and former Senator Patrick Moynihan) proposed three specific reform plans. Even so, it has been primarily liberal Democrats -- like those that populate Minnesota's DFL Party -- that have made certain that no real reform comes to the system that is already in worse shape than Wall Street is today!

The real secret concealed by Democrat demagoguery about Social Security and their unconscionable scare tactics at every election cycle is that it is the Democrat leadership that has no real plan to deal with the impending collapse of the Social Security financial system.

Allow me to remind you that it was Democrat party-line votes that quashed every attempt over the last several years to do anything about the mounting crisis being fostered by Democrat-instituted policies and Democrat-appointed leadership at Fannie-Mae and Freddy-Mac. This despite warnings from policy think-tanks as long ago as 1997 -- more than a decade -- indicating that policies and procedures at these two quasi-governmental agencies would invariably lead to serious economic consequences.

It was the Democrat party's unwillingness to take any action to protect our economy from happenings at Fannie-Mae and Freddy-Mac that contributed in large part to the very market collapse they, in turn, depicted on their political flyer opposing John McCain.

So, which is worse? Gambling your retirement funds on Wall Street, where at least you have a hope of some gain, or leaving your Social Security in the hands of the Democrat politicians that already know the system is destined to collapse and they are unwilling to muster the courage to do anything about it?

Maybe it's just that "doing something about it" means two things that Democrats are loathe to do:

1. Surrender any part of their control to the public sector, and
   
2. Admit what they've done to damage Social Security as an "investment" over the years that they have administered it.

Think about it.

-- Richard