Tuesday, January 31, 2012

A Healthy Economy

     The ideas presented here are excerpted from the book, “The Price Of Civilization” by Jeffrey D. Sachs. I highly recommend reading the entire book.

      Not surprisingly, President Obama's recent State of the Union Address was his opening shot across the bow of the presidential campaign, but if examined from a high enough level of abstraction, it spelled out the requirements of a healthy economic system. I hate to think the whole thing was just campaign rhetoric, but based on his past performance I am inclined to take a “wait and see” attitude concerning progress in that direction.
     Generally speaking, there are three major attributes of such a system: efficiency, fairness and sustainability.


     Ronald Reagan was partly right – too much government control of the economy causes problems, but he was also partly wrong – uncontrolled free markets also lead to trouble.
     The relationship between government and free markets is not one of opposition – it should be complementary. If both limit themselves to performing those jobs they are best equipped to handle, overall efficiency is promoted. Where there are many customers and many suppliers for products, the free markets, by means of Adam Smith's “invisible hand,” will weed out the inefficient and reward the efficient. At the same time the customers will receive the benefit of lower prices through competition.
     But the free market model breaks down in other situations, e.g., take the case in which a single product or service is required for many customers. Society does not need competing armies, courts and legal systems, police forces, power grids or highways. These are tailor-made for government control.
     While free market entrepreneurs provide financing for “applied” research, “basic” research is a function best performed by the government. The United States will be competing with China and others in technologies that may presently be on the drawing board, and the free market does not normally invest in such areas. In addition, some are so expensive, e.g., space technology and nuclear physics, that no private enterprise could afford to finance them.
     As long as the major incentive for the market is the bottom line, certain aspects will require some oversight. Such things as toxic waste disposition and the emission of climate-changing fumes, e.g. carbon dioxide, must be controlled, and the free market cannot be expected to police itself.
     Lastly, sellers often have information that is not available to buyers, which is a recipe for fraud and waste. Doctors can run unnecessary tests to increase fees, and wall street financiers can sell “toxic” assets to unsuspecting investors. For these and other reasons, government and free markets need to perform functions which they are best equipped to perform.


      Of course, one aspect of fairness is in the way the government treats its citizens, including levying taxes, awarding contracts, distributing transfers, etc. Fairness requires that the rule of law treats all citizens fairly; money should not buy justice.
     Fairness also refers to the distribution of income and well-being within the general population. According to a recent poll by the Pew Research Center of the People and the Press, 63 percent of Americans agree with the statement, “It is the responsibility of government to take care of people who can't take care of themselves.” It is unfair that some people are super-rich while others are homeless and children are starving.
     This is not to say that assets should be confiscated from the rich and given to the poor, a la Robin Hood. Whether by taxation or other means, such transfers need to be made under due process. But with our resources, no one in the United States should be homeless, and no child should go to bed hungry.


      Sustainability requires that resources should be available not only for the current generation, but for generations to come. Society should not rape the earth to the detriment of our descendants' well-being; it should not foul their air with poisonous gases, nor their waterways with toxic chemicals. Sustainability requires stewardship. It is the product of a healthy society – a society which cares about the future inhabitants of planet Earth.
     Can we create such a society? Only if we can break the cycle of sending money to Washington in exchange for power, and using the power to send money back to those who already have plenty.
     My books, “There Are Only Seven Jokes” and “The Spirit Runs Through It” are available in paperback, or at the Kindle Store.

Saturday, January 21, 2012

Forget Foreign Affairs

    The Associated Press recently printed an article entitled “Positions of the Candidates”, which outlined the opinions of five Emmett Kelly understudies, Newt Gingrich, Ron Paul, Rick Perry, Mitt Romney and Rick Santorum, on various campaign issues. (For younger readers, Emmett Kelly, who based his sad faced “Weary Willie” on depression era hobos, was perhaps the most famous clown in circus history.)
    The issues discussed were Abortion, the Economy, Education, Energy, the Environment, Health Care, Taxes and Terrorism. No mention was made of what is probably the most important of all presidential responsibilities: Foreign Affairs. Why would that be?
     Here are a few possibilities:
  • Not even one of the greatest group of comedians in history thinks that management of foreign affairs is as important as these other “hot button” issues.
  • Newt understands the meaning of the word “affairs” only when it is not preceded by any modifiers.
  • They think that their knowledge of the subject is so far above the intelligence of the voters that the electorate would not understand it.
  • They believe the voters do not care about the relationship between the United States and the rest of the world.
  • They think that the subject became superfluous after the deaths of Sadam Hussein and Osama bin Laden.
     Of course, the simple explanation is that someone at the AP decided not to include the subject in the article. As usual, the media always decides what the public wants to know.
     But really, if the voters are not interested in the candidates' thoughts on Foreign Affairs, we are in really bad shape.
     My books, “There Are Only Seven Jokes” and “The Spirit Runs Through It” are available in paperback, or at the Kindle Store.

Tuesday, January 17, 2012

Corporate Influence On Elections

     On October 24, 2011, I wrote about the ridiculous decision of the Supreme Court in the case of Citizens United v. Federal Elections Commission, “In January 2010, using a logic that defied common sense, in the case of Citizens United v. Federal Elections Commission five Supreme Court Justices suddenly transformed corporations into human beings, with a power that flesh and blood humans do not have: they can spend unlimited amounts of money in order to buy elections.”
     Although most of the comments I have received have been favorable, I have been taken to task by “Pennsylvania's #1 Conservative Jungle Cat,” Phil Gruber. According to him, “American law has long held that corporations should be treated as people in the eyes of the law. After all, a corporation is just a group of people who use shared capital to make a profit. Grunenberger simply feels broadsided by facts he did not know.”
     While it is true that from a legal standpoint, corporations can do many of the same things that natural persons do – buy and sell property, hire and fire, sue and be sued, and so on – there are limits. Among other things, they cannot vote in any elections, run for office, go to jail or testify in court. Why? Because they are “artificial” persons for the purpose of conducting a business.
     After the American Revolution, corporations remained small institutions, chartered at the state level for specific public purposes, such as banking, education, religion, helping the poor, constructing roads or canals, etc. Corporations could only exist for a limited time, could not make any political contributions, and could not own stock in other companies. Their owners were responsible for criminal acts committed by the corporation, and the doctrine of limited liability for shareholders did not yet exist. Governments kept a close watch on how these corporations were being run, regularly revoking charters if corporations were not serving the public interest.
     Slowly though, corporations were gaining power. Arising out of the Industrial Revolution, a new wealthy class began influencing policy making, changing the rules governing the corporations they owned. Charters grew longer and less restrictive. The doctrine of limited liability – allowing corporate owners and managers to avoid responsibility for harm and losses caused by the corporation – began to appear in state corporate laws. Charter revocation became less frequent, and government functions shifted from keeping a close watch on corporations to encouraging their growth.
     Now we are in the midst of the first Presidential race since the power of unlimited political contributions was granted to corporations. How is it working out?
     A Las Vegas casino mogul has pledged $5.0 million to a Super PAC for Newt Gingrich. That PAC, Winning Our Future, intends to spend $3.4 million on an ad campaign attacking Romney’s role in eliminating jobs when the private investment group he once led — Bain Capital — bought and sold companies.
     The Factchecker gave the Bain documentary from which this ad was drawn Four Pinocchios: “[W]ithout evidence, the film claims that “tens of thousands” of people have lost their jobs because of actions taken by Romney and Bain Capital. ... Only one of the four case studies directly involves Romney and his decision-making, while at least two are completely off point.”
     The point I want to make is that one corporation's contribution can have an influence mega-times the influence of a natural person, and it need not be based on facts! No one is responsible! If a corporate board wants to back a candidate who will favor, say, not levying an extraction tax on natural gas, it can contribute many times $5.0 million to back his campaign without having to account to anyone.
     It seems to me that if a corporation really is to be considered a natural person, its contribution should be limited to the same amount as that of a natural person: $2,500.
     My books, “There Are Only Seven Jokes” and “The Spirit Runs Through It” are available in paperback, or at the Kindle Store.

Thursday, January 5, 2012

Suppose The Mayans Got It Right

     Let's imagine for a minute that scientists discovered that the Mayans got it right – the world is going to end on December 21, 2012. How would you want to spend your time until that day? The answers would probably run the gamut from “party unceasingly” to “pray unceasingly.”
     As for me, I would probably come down somewhere in the middle. I am pretty happy with the way things are now, and I would want to continue as is with one addition: my immediate family is spread across the country, and I would like to get them all together for a visit – kids, grandkids and great-grandkids. If I have wronged anyone over the years, I would ask for their forgiveness, and anyone who has done me dirty, I would forgive you. There is a saying, “The best revenge is to live well.” I've done that.
     Come to think about it these are good ideas, at least for me, even if the Mayans are wrong.
     I think it would be a good exercise to ask yourself what you would do. Then perhaps you should do it.
My books, “There Are Only Seven Jokes” and “The Spirit Runs Through It” are available in paperback, or at the Kindle Store.

Tuesday, January 3, 2012

Things It Would Be Nice To See In 2012

Although 2011 was not a very good year for planet earth, at least for the humans living there, if I am going to be truthful, it was an average year for me personally. Except for climbing stairs, or even walking uphill, I do not think my physical condition is much worse than it was a year ago. (Of course, it's definitely not any better.) But I have been warm and well fed, and the fun times have outnumbered the other kind many times over. But as with most old accountants, in order to keep from losing my balance I need to formally close the books on the old year, and set things up for the new. Literally!
We keep reasonably accurate financial records throughout the year, and I like to use them to get some idea what to expect in the new year. For example, the Social Security Cost Of Living Adjustment (COLA) amounts to 3.6%. That's not bad, although considering there has not been an increase since 2009, it's not really a world-beater. The government said inflation was not a factor in the base years. Really? Apparently the government does not buy gasoline or prescription drugs or any one of a number of things that we post-youths consider necessities.
But I digress. Assuming that things do not go too far out of whack, we will probably break even in 2012. One has to believe, doesn't one?
As for New Year's Resolutions, I have resolved not to make any. I guess in order to avoid a self-referential paradox I should rephrase that: I am not going to make any formal resolutions. But there are a few things I am hoping to see in 2012.
For example, I hope to finally get around to tossing out anything we have not used since we moved in here five years ago. Chances are good that we will not ever need it, and it would be nice to be able to get the car in the garage without having to be exactly centered so that we can get the doors open on both sides. Perhaps I can utilize (1) the Dumpster, and (2) some nice shelving.
I am hoping to witness some measure of cooperation and common sense among our elected “representatives.” I do not feel that any person or party that makes it the number one priority to hold any president to one term deserves to be in office. This is particularly true when it appears the wheels have fallen off of the world's economic systems. There is important work to be done – petty crap should go the way of the Edsel.
Speaking of the wheels coming off, today is caucus day in Iowa; this is the first step toward final selection of a nominee for the GOP residential race. I shall be very happy when the convention makes the final choice. After that the rest of the clowns can go back to where they belong: Ringling Brothers Barnum and Bailey's Greatest Show On Earth.
I am not optimistic about the possibility of getting out of Afghanistan, but it would be nice to see a little progress. As I recall, our mission there was to get Osama bin Laden. We got him, what's the problem?
Oh, I know, the Afghans are in no position to govern themselves, but neither are they going to be governed by anyone else – a fact that Alexander the Great, the Mongols (twice), the British (Twice) and the Soviets have long ago absorbed. There is a saying, “A fool learns from his mistakes, a wise man learns from the mistakes of others.” Take note, Washington.
One other little thing – let's break the money strings between the puppets in government and the puppet-masters on Wall Street and in the corporate towers. If we don't, I am very concerned for the future of our country. Any danger we face from a nuclear-armed Iran is minor compared to the danger from our inner confrontation of the classes.
I hesitate to put world peace on my list of things to hope for, because I am afraid that the only way that will happen is to eliminate its only obstacle: the human race.
Happy New Year.
My books, “There Are Only Seven Jokes” and “The Spirit Runs Through It” are available in paperback, or at the Kindle Store.