Free Markets, Free People

Daily Archives: August 9, 2010

Dale’s Observations For 2010-08-09

Russian man dies in searing heat at sauna contest. There's a world championship of…sauna? http://usat.me?39617852 #

Castiglioni completes his rape of Harley-Davidson. http://bit.ly/98Xnd0 #

DNC Chair Tim Kaine is complaining that Michelle Obama's Spanish trip is being politicized. Cry me a river, Weepy. http://bit.ly/98h5Iw #

Mike Pence admits Republicans have "credibility problem" on deficits. http://bit.ly/b792e6 #

Did he really say that?

Does everything have to be about race today?

Juan Williams, who I have always thought was a somewhat sane liberal, had this to say about the Missouri vote on health care while speaking with Chris Wallace on "Fox News Sunday":

WILLIAMS: Look, I think this is, and as far as the Missouri vote, you get 70 percent inside an echo chamber of older white people, no not in St. Louis not in Kansas City, saying, "Oh yeah, we don’t like a requirement that everybody has to have healthcare even though the hospitals in Missouri say it’s gonna drive up our costs, everyone is just going to run to the emergency rooms when they have their accidents."

Sort of stunning isn’t it?

Well, because a bunch of old white folks in an "echo chamber" decided they didn’t care to be forced into a system they didn’t want, so it really doesn’t mean anything.

He goes on to make it worse:

WALLACE: What happened to respect for democracy?

WILLIAMS: I have tremendous respect for democracy, but as Ted Olson…

WALLACE: The proposition was on the ballot…

WILLIAMS: Yes.

WALLACE: …and 71 percent voted in favor of it.

WILLIAMS: That’s who’s energized. The unions didn’t participate and they didn’t get out there…

WALLACE: Well, that’s their problem, isn’t it?

It is indeed. But using Williams argument, the last presidential election doesn’t mean anything because the side that voted for Obama was "who’s energized" at that time.  But this is the first time I’ve seen “who’s energized” as a basis of dismissing the result.

This is how the left writes you off.  They categorize you, make up nonsensical claims about legitimacy or illegitimacy, try to make it about race or pseudo-rights and then dismiss the result.

That, in a nutshell, is why they’re going to get shellacked in November.  And they haven’t a clue as to “why”.  They think you dumbass white folks, or tea partiers or angry white men or grouchy senior citizens don’t know what you’re talking about.  So you turn out, after being duped in the “echo chamber” and go through your preprogrammed vote. Thus they, and their vote, are irrelevant.

It is an amazing bit of self-delusion, but there you have a perfect example found in the words of Juan Williams.

~McQ

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The Economy In An Anecdote

I think this entire article entitled “Why I’m Not Hiring” could qualify as the QOTD. It neatly explains why businesses are so reluctant to hire anyone right now.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

[…]

Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay … When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.

There is no grand revelation in Mr. Fleischer’s explanatory essay. Just hard cold reality: make the costs of hiring more expensive, and less hiring will happen.

Some may argue that just because Mr. Fleischer’s company isn’t hiring for these reasons, that doesn’t mean that other companies are refraining on the same basis. True, but what are the other possible reasons then? Logan Penza summarizes some of the arguments:

It’s those Evil, Greedy Corporations.

That’s the simple explanation most of the talking heads have for the continuing high unemployment numbers. Those Evil, Greedy Corporations horde their money and refuse to hire anyone. When they do hire someone, they don’t pay them enough, don’t offer them enough benefits, don’t pay enough taxes, pollute the planet, steal candy from babies, kick puppies, and make obscene gestures at your auntie. Evil, Greedy Corporations are offered up as cartoon villains, detestable and vile and without any redeeming value.

The trouble with cartoon villains is that they are fictional.

Well, yeah, but it’s so much easier to blame fictional bogeymen then to address what the real businesses say.

Another argument I’ve seen advanced is that the marketplace is inherently uncertain, and that businesses who can’t cope with changes in the law are simply unfit to survive. There is a certain laissez-faire appeal to this argument, but ultimately it doesn’t make sense.

The fact of the matter is that the types of market risk that businesses can and do adjust to, aside from increased competition, are changes in demand and supply, natural disasters and war. The more savvy, efficient and customer-sensitive businesses do survive these sorts of uncertainties and ultimately enhance the economy when they do.

In contrast, when the government continually raises the costs of doing business in the first place (or threatens to do so), the only ones who really survive are either the politically connected or the very wealthy (yes, they are often the same thing). That doesn’t have anything to do with building a better mousetrap, as it were, or growing the economy. And it certainly doesn’t do anything to raise everyone’s standard of living. Instead, all it does is reward those closest to the rule-makers, thus creating more competition to be closest to the King rather than satisfying the marketplace. It is exactly the sort of crony-capitalism we claim to detest.

As Mr. Fleischer summarizes:

A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government’s message is unmistakable: Creating a new job carries a punishing price.

Perhaps instead of punishing business, the government could get out of the way. Maybe then we could get some of that job growth we’ve all been looking for. Unfortunately, it seems that few in Washington are listening, or worse, that they don’t really care.

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Zombie climate-change – administration says still possible during lame-duck session

Yes, yes, we were assured that the “climate change” portion of any energy bill was dead in this Congress.  More popularly known as the “cap-and-trade” portion of such a bill, we were assured by Democratic leaders that it just wasn’t something that was possible or probable during this session of Congress.

Well, like most things they tell us, don’t ever believe anything:

Carol Browner, the White House’s top energy and environmental adviser, refused on Sunday to shut the door on passing climate change legislation this year — even though Senate Democratic leaders have conceded they lack the votes and have punted on the volatile issue.

Browner said on NBC’s "Meet the Press" that President Barack Obama is still committed to pushing the bill through the Senate, and that there was "potential" for the bill to come up in a post-election, lame-duck session of Congress.

Browner’s remarks will almost certainly give ammunition to Republicans who say Democrats are plotting to do mischief in a lame-duck session — even though top congressional Democrats have thrown cold water on an overly ambitious lame-duck agenda.

Agenda politics is agenda politics and the power shifts to the loser with a majority if in fact Democrats get drubbed in November.  I mean, what do they have to lose at that point.  So it will truly become more about agenda and party  (and not what is best for America) – even more so than it is now.

Never, ever, ever think or believe the left is done with something they want badly.  Ever.  Even though the economics of an additional tax on energy at the height of a recession is absolutely the dumbest thing one can imagine doing, that won’t deter the ideologues from their agenda.

By the way, the EPA is attempting to do by fiat and interpretive regulation what the Congress hasn’t yet been able to do by law.  And, God bless ‘em, Texas has told them to go pound sand.

~McQ

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Political fiction of "Trustees’ report" too much for CMS actuary

You remember last week when the supposed “good news” was released – Social Security wasn’t in as dire shape as we’d been told and Medicare was going to be fine too?  Yeah, since ObamaCare passed and the doc fix was sure to be implemented, not to mention the half trillion in cuts to Medicare, why we were on the road not only to solvency but to deficit reduction.

And the yearly bit of political theater played out as planned:

The normal process with the annual Trustees’ Reports is for the Trustees to develop and publish the best available projections for the future finances of Social Security and Medicare. The respective Social Security and Medicare actuaries then sign a pro forma blessing of those projections, which is tacked to the back of the report when released to the public.

“Pro forma” is the key.  Usually, whether they believe the rosy projections or not, their signatures appear on the report.

But this year, one of them just couldn’t do it in good conscience.  The Medicare Chief Actuary just couldn’t sign his name to the fiction without adding a memo of his own.

The actuary’s alternative memo explains that “the projections in the report do not represent the ‘best estimate’ of actual future Medicare expenditures.” Worse than that, they are not even in the ballpark of reasonability. The official 2010 Trustees’ Report tells us that total Medicare expenses will be total 6.37% of GDP by 2080. The CMS actuary’s alternative memorandum explains that 10.70% of GDP is a more reasonable estimate for that year – though one that is roughly 68% higher.

The two reasons the actuary cites are the “doc fix” – a formula the actuary describes as "clearly unworkable and almost certain to be overridden by Congress” (both the Obama administration and leaders in Congress are on record opposing them – yet there they are in the report on the “plus” side of the ledger).

The other assumption the actuary dismisses as unrealistic is the assumption that future program cost will be contained by “downward adjustments in annual price updates reflecting in turn the assumption that health service productivity growth will parallel “economy-wide productivity.”  The actuary flatly states there is no evidence to support this assumption and, on the contrary, much to call it deeply into question.

E21 notes:

This is a key point; the glowingly optimistic projections in the official Trustees’ Report assume that we as a nation will be content to have 40% of our medical facilities go under within the next 40 years, and that we will happily accept these severe constraints upon beneficiaries’ access to health care. If that is not in fact the societal will after the enactment of health care reform, then the official cost estimates should be tossed into the nearest receptacle.

Bad though all of this is, none of it is actually the worst gimmick in the official report’s advertised improvement in Medicare solvency. That involves the double-counting of Medicare savings. Earlier this year, Congress passed a health care bill containing various new Medicare taxes and constraints on program expenditures. Such savings are assumed in the official report to extend the solvency of Medicare. But Congress chose instead to spend the savings on a new health care entitlement.

Remember, the Trustees’ report, like CBO projections, must be based on current law.  So they must include the assumptions contained within those laws.  What the actuary says very bluntly is the assumptions are a fantasy and that the reality of the situation is far from that included in the report.

“(T)he financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range. . . or the long range. . . . I encourage readers to review the ‘illustrative alternative’ projections that are based on more sustainable assumptions for physician and other Medicare price updates.

You can read that “illustrative alternative” here.  Needless to say the Trustees’ report, as published, belongs on the same shelf in your library as “The Wizard of Oz.”

~McQ

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