Noticing the Recession and Finding the Cure

Good thing to do, because the one that started in 2007 kind of sneaked up on us in 2008, right?  Well, my bet is that the renewed (double-dip) recession began in April or May of this year and rather than wait until 2012 when it is plain as a pikestaff, why not dig around for the indicators that its already here?  The bad news here is that I’m not skilled enough to do that – but Tony Pallotta over at Zero Hedge, is:

The consumer driven recession has begun. Keeping it very simple of the four GDP components (consumer, fixed investment, government and net trade) the consumer has simply rolled over. In Q1 2011 the consumer contributed 1.46% to the 0.4% total GDP. In other words if it was not for consumer growth or even if .5% of that growth was removed the economy contracted in Q1 2011.

Fast forward to Q2 where the consumer component is now 0.3%. In other words the trend of the consumer is deteriorating. Representing roughly 70% of total GDP the consumer is the economy. Confidence drives the consumer, the consumer drives demand and demand drives the economy…

Which is why, by the way, we need to shift our economy from consumerism to wealth creation.  We have used debt to finance consumer spending – and now the debts are too high and the consumer is tapped out.  There is no way for consumer spending to lead us out of recession.  Rather than buying gadgets from China and calling that “growth”, we need an economy which will make things here in the United States.  The reality is that the only things of genuine economic value are things which are made, mined and grown…if what you’re doing doesn’t do or facilitate such actions, then it just isn’t that important to the economy.  Doesn’t mean it shouldn’t happen but it is just not something we need to be concentrating on.

The trouble is that our current government doesn’t recognize this.  Obama and Co (and quite a few Republicans, too) figure that we can some how, some way, keep things going as they have been for the last 30 years (and especially the last 20).  The thinking is that we can re-inflate asset bubbles, give people a sensation of being rich and convince them to plunge even further in to debt to buy things increasingly made overseas but which generate profits here in the United States.  Sorry to say, but it just can’t work like that any more…ultimately, if you want to buy something from a foreign country, you have to exchange wealth for it…the way we’ve been paying for the stuff we get is to sell off, as it were, our capacity to make, mine and grow things.  Essentially, in return for that cool cell phone, you gave China a factory, Mexico a farm and Chile a mine.  But now you’ve got no more mines, farms and factories to hand over to them…so how do you pay for your next cell phone?  That, essentially, is the problem we have.

A course of balanced budgets, regulatory relief, corporate reform (Big Corporation is nearly as bad as Big Government…such corporations tend to work for a restraint of trade nearly as much as unions do…and we need to figure out a system which ensures that small and mid-sized players can compete against the big boys), tax adjustments to ensure no foreign enterprise has a tax advantage over us and a general insistence that work replace welfare will fix what is wrong with us.  Not overnight.  It took many years to get in to this mess and it will take quite a while to get out of it.  The good news is that we can still fix it – there is still enough genuine American spirit in the United States to overcome the debt and the laziness and the consumerism of the past.   The bad news is that the window of opportunity is closing fast…if we don’t get our house in order soon then we will condemn ourselves to permanent decline.

2012 is that important – who we choose to give power to next year will determine, for good, the fate of our nation.  We’ll either do what is right and restore American greatness, or we’ll slink away in a cowardly surrender and insist upon a Big Government shroud for our national funeral.  We’ll see how we choose.

 

Abuse of the Welfare State

Writ large in Michigan – from Detroit News:

…Here we go again — the cold-harded GOP elitists are balancing the budget on the back of the poor.

More than 11,000 people will see their welfare benefits end on Oct. 1.

What will they do? Well, most haven’t considered working as an option.

The Department of Human Services sent letters to 11,062 welfare recipients, notifying them their checks are coming to an end. Included was a toll-free number people could call for information and assistance.

The hotline got 1,401 calls. Of that number, only eight callers requested help in finding a job.

Many of those being cut off have been on public assistance for 14 years. That’s not a safety net; it’s a hammock…

Except for those actually incapable of work – and, remember, I have an exceptionally high bar for that – all people must work.  I don’t care if its just picking up trash in the city streets, no one should ever be allowed to sit on their rear and collect any sort of government benefit.  Furthermore, in order to ensure that the search for work is diligent, welfare should never pay more 80% of a minimum wage job.  Any job, any where – even those “jobs Americans won’t do” and are thus filled by illegals – should pay more than government assistance.  Welfare should only be just enough to keep body and soul together until the recipient finds a job.

The best estimate that I have found of non-health care, non-Social Security welfare spending by the United States government is in the range of $350 to $500 billion per year (its hard to tell because Uncle Sam – determined to not make it easy for us – doesn’t have a category of spending called “welfare”…you have to dig around for it).  I’ll bet that State and local welfare spending adds at least 25% to that figure (and it is probably higher)…even at the low end, we’re talking more than $400 billion per year spent by government in various transfer payments to people who didn’t pay any “input” taxes (in other words, didn’t pay SS taxes, didn’t pay taxes which fund unemployment, etc).  I’ll bet that three quarters (at least) of that money is going to people who can work, but choose not to.

Add in the waste and fraud in Social Security disability, the number of people who get healthcare on the public dime without putting in anything, the drain caused by illegal immigration, and the money spent on worthless aspects of education (what is that?  Worthwhile education spending:  education spending which results in an engineer, teacher or doctor.  Worthless education:  spending which results in diversity coordinators, corporate bureaucrats and lawyers) and you’re probably getting in to the range of a trillion dollars per year of drain on the economy…money which is spent that has no net, positive benefit.  Money which just goes to leeches.

This has to change – and the welfare reform in Michigan shows why:  some people are so long on the public dime that they simply have no desire to get off it.  They must be forced off – work, or starve.  A complete audit of all recipients of government money must be done…and all able-bodied people with no minor children must be kicked off of government support; those with children must be forced to do at least some work in payment for their welfare; only those absolutely incapable of working (or on a program they directly paid in to over the years) should be allowed to remain.

There is still plenty of work on the low end in the United States…work which doesn’t need even a high school diploma (how many from the backwaters of Mexico and the third world who come here illegally have such?).  It is, often, hard and dirty work…but work is honorable, and all honest work creates personal dignity.  Better to be poor digging a ditch than poor watching daytime television.  Mind you, I’ll go ten thousand extra miles to help out anyone who is working hard and still not able to make ends meet…you put in your 40 hours and you’re still short, you can count on me to either work it through charity or, if need be, enact laws to ensure that you and your family have decent food, housing, clothing and basic health care…but the first step is that 40 hours of work.

We must become a nation of hard work, thrift and careful investment…massive reforms need to be undertaken, and none of them can really be done in isolation.  Big Corporation also needs to feel the hammer; Big government, naturally; all of us have to stand up and do what is right…after generations of coasting on  borrowed money.  The only way we keep our nation is if we work for it.  Period, end of story.  Anyone who says otherwise is simply not understanding the nature of life.

 

How to Fix the Economy

I’ve been yammering on about it for years, so maybe you’re tired of reading my views…so, here’s someone else to say it.  Victor Davis Hanson over at NRO’s The Corner:

…If the government were an individual household, the only way out would be to cut spending and find new sources of wealth. Given worldwide demand for food and fuel, and given recent quite astounding new finds of natural gas and oil in the Dakotas, the eastern seaboard, offshore, the American west, Alaska, and Canada, it seems that we should be hell-bent on recovering these high-value fuels through new drilling, refineries, and pipelines, including ways to power our heavy trucks and equipment on natural gas. We should be planting acre to acre and end nonsensical biofuel subsidies and artificial limitations on irrigation deliveries to California’s West Side and elsewhere in the West. We need a national manufacturing policy that prunes regulations and encourages investment here in the U.S., ceases talk of new taxes, repeals the trillion-dollar take-over of the health-care industry, and stops hectoring Boeing about opening a new facility or trying to shut down energy generation plants…

As I’ve been saying – make, mine and grow more of our own stuff.  That is the only way out of this…we have to start creating wealth again.  Of course, this does require hard work, does require getting a little dirty and doesn’t allow for nearly the current number of government bureaucrats, mid-level managers and diversity coordinators, but that is just some of the heavy sacrifices we’ll have to make.

I believe it was Reagan who once said there are no easy solutions, but there are simple ones.  Getting our nation back on track will not be easy, but it is quite simple.  Ditch the idiot liberalism of the past few decades, insist everyone pull their weight and just get to work.  It’ll all be ok, if we do that…no easily; not with out a lot of tears and sweat, but it’ll all be ok.

Capitalism or Socialism?

Donald Byrne over at Catholic Journal has an excellent look at both our horrid fiscal situation (yes, we really are going bankrupt) and points out that that in our most-desired goals (prosperity and equity), free market capitalism does much better than State socialism.  Essentially, the imposition of socialistic policies in the United States have exacerbated wealth disparities – if Obama’s goal was really to “spread the wealth around”, he’d be reading Hayek and changing course.  Byrne concludes:

…The goals that competitive free market capitalism brings society toward are efficiency and equity on the microeconomic level and high employment and a reasonable degree of price level stability as well as a consensus driven rate of economic growth.  The decisions of the many, NOT the few, dictate what an economy will produce in the way of goods and services, in what manner those goods will be produced and in distribution of income (the reward of the goods and services produced) with maximum freedom to the people as consumers and productive resources.  It is an economic system that is based on the principle of subsidiarity, again, where the decision-making is driven down to the lowest level possible…after all, who knows/understands better than the individual (in most cases) what is best for them?

And there’s that word I keep using – “subsidiarity”.  Remember, in the end all our fights are to secure for us “subsidiarity” – the right of individuals and localities to decide for themselves the best means of living their lives.  It is at the core of American political morality – it is why our Declaration asserts that government’s must rule by consent, and why the 9th and 10th amendments were added to the Constitution.  It is doubtful that many of the Founders had read deeply in to Catholic social teaching, but in this case they didn’t have to….anyone with a bit of wisdom will swiftly understand his inability to dictate to others, and others far away from his own community.

Obama’s crime against Americanism (because that is what is amounts to) is to suppose that he and those in power with him can determine what is best for everyone.  That they can justly “spread the wealth around” and come to a superior outcome than the individuals, themselves, could achieve.  Not only is this wrong philosophically, it is also wrong in strictly practical terms.  The erosion of the middle class, the destruction of America’s ability to make, mine and grow things, the bankrupting of our nation and the moral decline of the populace are directly traceable to socialistic attempts to decree an outcome, rather than allow things two work themselves out through the interplay of free people.

The only quibble I have with Byrne is over the use of the word “capitalism”.  We should more emphasize the term “free market” than the word “capitalism” because capitalism has come to mean in the public mind a collection of Ivy League educated board room trolls, and the government-subsidized crony-capitalist.  Our fight is not to make the world safe for GE; not to make smooth the path of Government Motors…but to free up the market so that average men and women can enter it, using their own means of production, to create wealth for themselves, their families and their communities.

In practical, political terms I think we’d do much better this way.  What we have growing in the United States is a populist revolt against the Ruling Class.  Sickened by the corruption of politics and the economy, the people are demanding that those who have ruined things be tossed out, while those who are willing to work obtain the greatest reward.  We’ll go further – obtain more power to reform, that is – if we hitch ourselves to this popular revolt, and we can best do that by clearly identifying ourselves in complete opposition to what is currently wrong.

As we enter the Great Debate of 2012, we’ll have Obama telling everyone that a victory for free markets means granny being thrown over the cliff.  Allied with Obama will be those crony capitalists who will warn that failure to support “too big to fail” corporations will be a disaster.  We must expose these lies – we must present a vision of America free and prosperous, and explain that all socialist plans (regardless of what label they are given) will lead to poverty, dependence and a divided, dysfunctional America sliding towards tyranny.  Our question must be – who do you trust:  Obama or yourself?  Make that the issue of 2012 and we’ll win so big a victory that liberalism will not trouble us again for 20 years.

The Argument for Gold Currency

In video form:

The author does make some rather outlandish claims – World War One is probably the one war in human history which no human action could stop.  And it would have been fought just as bitterly and as long even if everyone had to use gold for all transactions.  But the basic thrust is true – fiat money allows irresponsibility.  And both in government and private transactions.  You don’t fret about fake money which will lose its value…so you are easily swayed to spend it on all manner of stupid things.  Things of real value, on the other hand, tend to be carefully husbanded.

But we can’t go back to gold!  So goes the consensus.  But I wonder why anyone believes this – if anyone can come up with a good reason, I’m all ears.  But for me, it is a very simple operation.

You pick a date and say on that date all US currency will be revalued at a 100-1 ratio:  for each 100 fiat dollars, you now have 1 gold dollar.  This is done universally:  you’re $20 an hour wage now becomes 20 cents an hour.  Your $200,000 house now becomes a $2,000 house, and so on.  The $1,600 ounce of gold now becomes $16.  Hey, presto, we can make a $20 gold piece, again.  You know, like we used to.

Gold for the higher denominations ($20 and up), silver and copper for the lower ($10 on down, with real copper used for pennies; though we’d probably have to start minting half-pennies, too).  Paper currency could still be issued, but it would be chained like iron to the amount of gold and silver in the treasury.  The nature of finance dictates you can issue more paper currency than there is gold and silver, but you can’t go too far…if you do, the value of the paper currency becomes worthless as people hoard their gold currency and start using the paper for other purposes.  There can still be chicanery, but not on such a grand scale that 98% of the people’s money is stolen.

Gold and silver are decreed as the currency of mankind – fiat money is the currency of con artists.  A free people cannot long endure money men using fake money to steal the wealth of a nation.  We must know that when we labor and earn a dollar that the dollar will remain constant in value…even if we just stick it in a coffee can for 50 years.  For nearly 200 years America grew and thrived under gold currency – for 40 years we have weakened and shriveled under fiat currency.  Time to change – and as we are genuinely conservative, our best bet is to change back to where we were, rather than trying to “conserve” the fiat currency of liberalism.

HAT TIPMish’s