Free Markets, Free People


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The left wants so badly for socialism to work

And that’s why they were so enamored of Venezuela.  All the leftist illuminati waxed on and on about how Hugo Chavez was a champion of the people and how he was working an “economic miracle” there, as illustrated by the 2013 Salon article by David Sirota.  In it Sirota gloats about how wrong the right is concerning Venezuela.  Headlined “Hugo Chavez’s economic miracle”, the sub-headline on the piece is classic:”The Venezuelan leader was often marginalized as a radical. But his brand of socialism achieved real economic gains.”

In light of Venezuela’s imminent collapse, I’m sure Sirota is cringing today.  As usual, the “economic miracle” Chavez had wrought under his brand of socialism worked swimmingly until they ran out of other people’s money.  Then, well, same crap, different regime.

I had to laugh, in particular, at this paragraph from “gloaty-boy”:

When a country goes socialist and it craters, it is laughed off as a harmless and forgettable cautionary tale about the perils of command economics. When, by contrast, a country goes socialist and its economy does what Venezuela’s did, it is not perceived to be a laughing matter – and it is not so easy to write off or to ignore. It suddenly looks like a threat to the corporate capitalism, especially when said country has valuable oil resources that global powerhouses like the United States rely on.

Well, laughed at his silliness or is it perhaps willful ignorance in not understanding, even when he was calling Chavez’s Venezuela an “economic miracle” what was really going on there.  No one is laughing at the purely predictable and lamentable problems the citizens of Venezuela are going through now because of Chavez.  He sold them a bill of goods and now they’re suffering the consequences.

What’s frustrating though is the useful idiots like Sirota and gang who won’t take the time to learn why socialism doesn’t work and certainly won’t look too deeply into any regime, such as Chavez’s, that shows the possibility of their long held dream of collectivism and central planning working.

If, in fact, they’d do that, there wouldn’t be guys like me, 3 years after the fact, pointing a finger at them and laughing at something they wrote about an economy that was doomed from the beginning.  As most of us noted at the time of the Chavez takeover, it wasn’t a matter of “if” his plan would fail, but “when”.  “When” is now.

Look at the video and the pictures, Mr. Sirota.  They’re not pretty.  They’re not pretty at all.

How does it feel to have been a cheerleader for the kind of desperation and chaos Chavez’s “miracle” has brought?  How does it feel to have wished a stable and thriving nation (it had its problems, but nothing even close to those now) into the state it now endures?  And tell me again why Chavez’s daughter is worth 4 billion?

You must be so proud.


When government interferes in a market, results are predictable

And it is neck deep in health care.  So, with the passage of ObamaCare, what is the state of medicine?

Oh, just great:

The doctor is disappearing in America.

And by most projections, it’s only going to get worse — the U.S. could lose as many as 1 million doctors by 2025, according to a Association of American Medical Colleges report.

Primary-care physicians will account for as much as one-third of that shortage, meaning the doctor you likely interact with most often is also becoming much more difficult to see.

Now, 2025 is 9 years away and, the “primary-care physician” is the star of ObamaCare because he or she is the “gatekeeper”.  However, which doctor is the worst compensated of all doctors?

Why the gatekeeper of course.  And, that’s by design.  Government design:

Starting salaries in high-paying specialties can range from $354,000 (general surgery) to $488,000 (orthopedic surgery), while primary-care fields tend to bring a sub-$200,000 starting salary, from$188,000 (pediatrics) to $199,000 (family medicine), according to a Merritt Hawkins report.


The pay disparities reflect America’s “fee for service” health-care model, which compensates providers based on the number and type of services they complete, and which inherently favors specialists.

Anyone know what entity pushes the “fee for service” model?  Can you say “Medicare”?  And yes, the insurance companies follow their lead. Hence, we have doctors in the primary care field looking at specializing because as gatekeepers, they are mostly the chief “referrer” to the other medical specialties … the ones that get paid more.

Wow … what a surprise then that the field of primary care is looking at a future shortage.  It’s another one of those “human nature” things that central planners simply can’t wrap their brains around.

Then there’s the exacerbation of the problem by ObamaCare:

The shortage is one that’s been stewing for decades but of late was exacerbated by passage of the Affordable Care Act, which increased the number of insured people and along with that the demand for doctor access, experts say.

As we’ve mentioned countless times, having insurance does not equal having care.  And as the number of gatekeepers dwindles, that problem will become even more acute.

Of course everyone knows what the answer that will be put forth by our political leaders don’t they?  Why of course more government.  You know, like the UK, where the former head of the NHS just died because the operation she needed was postponed 4 times.


The age of job automation

It’s closer than you think.  Last Friday I put a bit up in Stray Voltage about Dominos testing a robot delivery service in New Zealand.  And I intimated that that sort of automation would be something that would displace labor if labor got too expensive – like $15 for the minimum wage.

Over the weekend I happened across a couple of more articles.  One featured the CEO of Hardee’s and Carl Jr.’s talking about an automated restaurant he’d seen in San Francisco.  And, sure enough, his focus was on labor savings ($15 minimum wages specifically):

The CEO of Carl’s Jr. and Hardee’s has visited the 100%-automated restaurant Eatsa — and it’s given him some ideas on how to deal with rising minimum wages.

“I want to try it,” CEO Andy Puzder told Business Insider of his automated restaurant plans. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

Pudzer’s interest in an employee-free restaurant, which he says would only be possible if the company found time as Hardee’s works on its northeastern expansion, has been driven by rising minimum wages across the US.

“With government driving up the cost of labour, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

Good old government.  Helping out again, aren’t they (another way to make you more dependent on them)?  As Pudzer says:

“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Pudzer. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”

Well no, it doesn’t. And then there’s this:

“If you’re making labour more expensive, and automation less expensive — this is not rocket science,” says Pudzer.

Well no, it’s not – er, except to Bernie supporters.  But then it isn’t necessarily easy to automate everyone’s jobs either.  But it is getting easier as technology develops.

Take the restaurant that Pudzer was talking about:

“I would call it different than a restaurant,” said David Friedberg, a software entrepreneur who founded Eatsa. “It’s more like a food delivery system.”

Last week, I was in a fast-moving line and browsed on a flat-screen monitor the menu of eight quinoa bowls, each costing $6.95 (burrito bowl, bento bowl, balsamic beet). Then I approached an iPad, where I tapped in my order, customized it and paid. My name, taken from my credit card, appeared on another screen, and when my food was ready, a number showed up next to it.

It corresponded to a cubby where my food would soon appear. The cubbies are behind transparent LCD screens that go black when the food is deposited, so no signs of human involvement are visible. With two taps of my finger, my cubby opened and my food was waiting.

The quinoa — stir-fried, with arugula, parsnips and red curry — tasted quite good.

And he saw no one other than other customers.  Says the author of the article:

Whether a restaurant that employs few people is good for the economy is another question. Restaurants, especially fast-food restaurants, have traditionally been a place where low-skilled workers can find employment. Most of the workers are not paid much, though in San Francisco employers of a certain size must pay health benefits and in 2018 a minimum wage of $15.

Ironic, isn’t it?  That the prototype “food delivery system” is established in a city in which government has decided it will set the wages.  The laws of economics, or “rocket science” for the Bernie supporters, begs to differ.  There’s no real advantage in terms of labor savings, if the market sets the minimum wage, but mandated wages?  Well, then it comes down to viable alternatives – and cost-wise, this is suddenly viable.  The lower wage job holders of America say – thanks government.

And beyond the obvious, there are advantages to automating:

By not hiring people to work in the front of the restaurant, he said, they save money on payroll and real estate. (There will always be at least one person available to help people navigate the iPads and to clean up.) The kitchen is also automated, though he declined to reveal how, and the company is experimenting with how to further automate food preparation and delivery.

And, fewer to call in sick, give benefits, sick days and paid vacations too.  Make an employer’s job easier, more efficient and more enjoyable and the employer will take that route every time.

“We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things.”

Consumers have a choice – spend more for the same thing to help someone else have more money or spend less for the same thing and have more to spend on other things they want or need.  Wal-Mart says they will choose the latter.  So do those pesky laws of economics.

The food industry isn’t the only industry that’s going to see this though:

Automation is transforming every industry. Business owners look to substitute machines for human labor. It happened to blue-collar workers in factories and white-collar workers in banks and even law firms. With self-driving vehicles, it may happen in the taxi and trucking industries. Robots and artificial intelligence machines are expected to transform health care.

Coming sooner rather than later … possibly sooner than we think.

Nowhere is the potential for job automation so obvious as it is in the on-demand economy, where many startups have grown fat with venture capital despite poor unit-economics. Uber is spending heavily to hasten the development of driverless cars. Instacart, Postmates, and other delivery-heavy startups are unlikely to stick with humans once machines—which don’t take sick days, need bathroom breaks, or threaten to unionize—can do the same jobs.

But even if you don’t work in the on-demand economy, chances are high that you or someone you know will eventually be in the same position as Fox-Hartin. Machines already exist that can flip burgers and prepare saladslearn and perform warehouse tasks, and check guests into hotels. Companies like WorkFusion offer software that observes and eventually automates repetitive tasks done by human workers. And automation has also crept into knowledge-based professions like law and reporting. When in 2013 researchers at Oxford assessed whether 702 different occupations could be computerized, they concluded that 47% of U.S. employment was at risk of being lost to machines.


Watching Twitter’s self destruction

And enjoying it (frankly, I’ve never been a fan of Twitter).

First and foremost I want to make it clear that Twitter’s decision to shadow ban and outright ban certain users has absolutely nothing to do with the right to free speech.  It’s a private company and they can ban and shadow ban anyone they want too.  Of course, being a private company and depending on “customers” they can screw the pooch anytime they want to as well, and that’s what they are in the middle of doing.

I say, “more power too them”.  They have to compete in a market with alternatives, unlike government, and they have to suffer the consequences of their decisions … also, for the most part, unlike government.

So, yeah, they’re not allowing certain conservative users to post on Twitter anymore.

Cool.  It’s not like Twitter didn’t have enough problems before this decision to monitor and ban users for arbitrary and biased reasons.  They were already under pressure to find a way to stop the declining numbers of users.

And their reaction?  Well, let’s put a “Trust and Safety Council” together to monitor what users say.  Oh, and let’s put a harpy from the extreme left wing of the political spectrum in charge and let her decide who can and can’t say “controversial things”.

How Orwellian can one get?  Well, the degree is still up for debate, but the hypocrisy isn’t.  Here’s Biz Stone, a Twitter co-founder in 2011:

[F]reedom of expression is essential. Some Tweets may facilitate positive change in a repressed country, some make us laugh, some make us think, some downright anger a vast majority of users. We don’t always agree with the things people choose to tweet, but we keep the information flowing irrespective of any view we may have about the content.

Except for now, when Twitter has decided that its “view” (or at least that of the “Truth and Safety Council”) is more important than the content.

Well done, Twitter.  You deserve everything you are now suffering.  It was all brought about by your policies and the decision that your customers weren’t the most important thing to your company.

That’s the beauty of markets.  They will speak.  And Twitter is presently being spoken too … harshly.


Who changed the deal?

That’s the question here.  Which entity decided, arbitrarily, to change the conditions of the agreement?

DC officials are furious as Walmart has reneged on a promise to build stores in lower-income areas of the city. Walmart announced last week that they will be shuttering 269 stores throughout the country. (The already-existing three DC stores will remain open.) The company cited the unexpectedly high building and labor costs as to why they would not move forward with the additional locations, but was more open in a meeting as to how DC’s labor laws, including its higher minimum wage, are making it harder to operate a business.

Let’s see.  Was raising the minimum wage to $15 an hour within the District a part of the deal?  Do you think Walmart would have agreed to build had it known that such a raise in labor costs was in the offing?  My guess is “no”.  Thus the citing of “unexpectedly” high … labor costs.   And obviously, it also costs more, then, to build the store in a union town, because when the lowest paid worker gets a raise such as this, guess what happens to the pay of the higher paid workers?  That’s why unions back the minimum wage.

The WaPo sheds some more light on the subject:

Evans said that, behind closed doors, Walmart officials were more frank about the reasons the company was downsizing. He said the company cited the District’s rising minimum wage, now at $11.50 an hour and possibly going to $15 an hour if a proposed ballot measure is successful in November. He also said a proposal for legislation requiring D.C. employers to pay into a fund for family and medical leave for employees, and another effort to require a minimum amount of hours for hourly workers were compounding costs and concerns for the retailer.

“They were saying, ‘How are we going to run the three stores we have, let alone build two more?’ ” Evans said.

Exactly!  When the government that made the deal then changes the conditions, it isn’t the company which is the problem.  It is the government assuming the power to set the labor cost for the company (plus this new fund that’s likely to pass into law) which is at fault.  If anyone should be “furious” it is the company and the citizens now denied the low cost of goods Walmart would have brought to those neighborhoods.  A perfect example of the government engaging in “bait and switch”.

So who, exactly, is it that gets hurt?

Why the very people they were purported to want to help.

The poor.

What a surprise.


The power of the market, proven again …

We were told that while oil prices were high, shale oil could be produced at enough of a profit to drill, but to expensive to continue if the prices dropped.

But efficiency and technical innovation have overcome that bit of conventional wisdom as Shale Energy Insider reports:

US shale companies have increased the number of rigs in the field for the first time in nearly seven months when oil prices were trading around $70 per barrel, compared to under $60 per barrel in the current market.

The number of rigs rose in almost every main shale basin across the US according to data gathered by Baker Hughes.

Industry experts have suggested that as a result of last year’s price crash, shale exploration firms have cut their break even costs by anything up to $20 per barrel.

As much as anything else, the rise this week is a testament to break-evens coming down just over the course of this year,” said James Williams, president of energy consultancy WTRG Economics.

Shale is a lot more resilient than we thought it was, and it means we’re going to be able to keep producing shale oil at a lower cost than we thought we could.”

Adding rigs is the primary way to gauge whether or not it is economically profitable for energy companies to drill for and pump the oil  According to one analyst, the companies have been able to streamline their operations to the point their breakeven costs have dropped by about $20 a barrel.  That’s huge:

A Bloomberg analyst suggested that the cost of drilling services have fallen between 20% and 50% with break even prices in parts of the Permian and Eagle Ford below $40 per barrel.

And what does it mean overall?

Director of upstream research for Wood Mackenzie, Scott Mitchell forecast that producers could add up to 100 oil rigs by the end of the year.

Drilling rigs and fracking require a quite specific technical workforce, and there were a lot of layoffs as a result of the drop in activity.

We may find the supply of people becomes short very quickly if activity ramps up, leading to price increases again,” he predicted.

That’s right … jobs and less expensive gas.  Of course, most if not all of the shale oil drilling has taken place on non-federal land, and the market has been able to function without a great deal of governmental interference.  It is providing both employment and a very important commodity at less expensive prices.  Additionally, as it lowers its breakeven point, it buffers us against volume drops as the price of oil comes lower and other sources stop producing oil.  With the lower breakeven point, they’ll continue to pump past the point where they’d have quit previously because doing so is still profitable for them.  That helps ensure lower prices at the pump will be more common and more stable.

The market … a wonder we need to allow to work without interference much more often than we do.


All around the cobbler’s bench …

The monkey and weasel are disgusted.


Baltimore Mayor Stephanie Rawlings-Blake is denying it, but a senior law enforcement source has told Fox Newsthat she gave an order for police to stand down as riots broke out Monday night.

“The source, who is involved in the enforcement efforts, confirmed to Fox News there was a direct order from the mayor to her police chief Monday night, effectively tying the hands of officers as they were pelted with rocks and bottles.

Asked directly if the mayor was the one who gave that order, the source said: “You are G*d damn right it was.””

This claim follows Rawlings-Blake’s comments on Sunday, when she said they were giving space to those who “wished to destroy.” On Monday, she tried (unsuccessfully) to walk that comment back.

Happy, happy … just let ’em do a little looting and trashing and all will be well.  Oh, and let’s redefine a few things shall we?

The mayor, in an interview with Fox News’ Bill Hemmer on Tuesday, denied any order was issued to hold back on Monday.

“You have to understand, it is not holding back. It is responding appropriately,” she said, saying there was no stand-down directive.

Responding appropriately?  I wonder how “appropriately” she’d have responded had it been, say, her house or business they were looting and trashing.  Absolutely no respect for private property.  None.  And nonsense excuse making to boot.

The big question:

Yes, the dirty little secret that no one wants to admit is that Baltimore, and so many other urban areas and inner city communities in America are a reflection of the abject failure of liberal progressive socialist policies as advanced by the Democrat party.

The preeminent question is whether or not those in Baltimore and other places will recognize who is truly responsible for their plight. Or will they continue to be manipulated and propagandized by the liberal progressive media and the poverty pimps like the one supposedly heading down from New York City.

Most of us can answer that question – “they continue to be manipulated and propagandized by the liberal progressive media and the poverty pimps like the one supposedly heading down from New York City.”  Oh, and the Republicans.  Just watch 2016.  The “plantation” has a huge hold.

Next question.

Apparently Ben Affleck is mortified by his ancestors:

This brings the total number of Affleck’s known slaveholding ancestors to 14, and the number of slaves either owned or “held” as a trustee or on behalf of an estate by these ancestors to 242.

It seems that this was discovered while doing a PBS program and Affleck asked they be, uh, unmentioned.  You see, he is ashamed of them.

Okay, I can understand that … however, why hide it?  Why not say, hey they were wrong, what they did was wrong and I certainly don’t support what they did.  Seems to me that would be much more powerful than trying to hide the past.  And, to quote Hillary Clinton – “what difference does it make”?!

Oh, liberal credentials of course.  And white guilt.  Dude has to hand in the credentials and burn with white guilt.  Pity.

Anyone wonder what Ben would have done if he’d been born during that era to one of his slaveholding ancestors?  Yeah, I think Ben wonders that as well.  Heh.

If you need another example of “crony capitalism” (and I put that in quotes because this is no more capitalism than lead is gold), it is playing out with the FDA and a couple of Senators … oh, and their corporate cronies:

People who are trying to do good for their families and the planet by living a simple life based on traditional skills are facing yet another assault. Artisanal soap makers say new regulations, proposed by Senator Dianne Feinstein (D-California) and Senator Susan Collins (R-Maine), will put them out of business. Many soap makers are rural “kitchen table” operations that rely on the income to fund their simple living lifestyle.  Some use milk from goats they raise and ingredients they harvest from the land.

The form includes a statement on behalf of handmade body care product makers that says, in part: “My products comply with FDA labeling requirements and the ingredients are commonly known (i.e, olive oil, oatmeal, sugar, coconut oil, etc).  My best customers are in my community. I cannot afford the user fees proposed in S. 1014. Further, my business has no capacity to do the reporting requirements for each product batch (10-50 units) as it could be several hundred FDA filings per month.” Those who sell online will also be affected.*

The view of Sen. Feinstein and her corporate backers (listed below) is that the Personal Care Products Safety Act (Senate Bill S.1014) will make the world a safer place by scrutinizing “everything from shampoo and hair dye to deodorant and lotion.” She introduced the amendment to the Committee on Health, Education, Labor, and Pensions, because of troubling negative health effects from chemicals used in personal care products.  She says the Federal Food, Drug, and Cosmetic Act should be more progressive like laws in Europe rather than antiquated US regulations in effect since the 1930s.

Yes, friends, having solved all the important problems of the world, our Senatorial nannies are going to back their corporate sponsors and attempt to regulate out of business this incredible threat to the American public.  And who are their Corporate sponsors?

Companies and brands that support the bill:
Johnson & Johnson, brands include Neutrogena, Aveeno, Clean & Clear, Lubriderm, Johnson’s baby products.
Procter & Gamble, including Pantene, Head & Shoulders, Clairol, Herbal Essences, Secret, Dolce & Gabbana, Gucci, Ivory, CoverGirl, Olay, Sebastian Professional, Vidal Sassoon.
Revlon, brands include Revlon, Almay, Mitchum
Esteee Lauder, brands include Esteee Lauder, Clinique, Origins, Tommy Hilfiger, MAC, La Mer, Bobbi Brown, Donna Karan, Aveda, Michael Kors.
Unilever, brands include Dove, Tresemme, Lever, St. Ives, Noxzema, Nexxus, Pond’s, Suave, Sunsilk, Vaseline, Degree.
L’Oreeal, brands include L’Oreeal Paris, Lancome, Giorgio Armani, Yves Saint Laurent, Kiehl’s, Essie, Garnier, Maybelline-New York, Vichy, La Roche-Posay, The Body Shop, Redken.
It almost makes you laugh, it is so transparantly obvious what is going on here.  But here’s the official justification:
Feinstein says her proposal is a “streamlined national system of oversight” and it won’t cost the taxpayer anything because it’s funded by industry user fees (until they pass the extra cost to the consumer, that is). Big multinational soap makers may be able to manage the increased fees and paperwork called for by Senate Bill S.1014 but the the Handmade Cosmetic Alliance says they will cripple their cottage industries. They tried to explain this to Feinstein without success.
Same old crap, different day.  Run the little guy out of business and, with additional fees, raise the price to the consumer.  Also note that while there is a period of “public input” the die seems to be cast.  No one is listening … it’s all pro-forma.
‘Merica … where it is important we be more like Europe, because they’ve done such a bang up job over there.

Politicians feel businesses work for government and their only function is a source of tax revenue

I’m not sure how else you interpret this “inversion” nonsense.

Burger King Worldwide Inc. is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc., a deal that would be structured as a so-called tax inversion and move the hamburger seller’s base to Canada.

The two sides are working on a deal that would create a new company, they said in a statement, confirming a report on the talks by The Wall Street Journal. The takeover would create the third-largest quick-service restaurant provider in the world, they said.

The point of this sort of a merger, beside the business aspect, is to move the headquarters of Burger King to a lower tax nation:

Inversion deals have been on the rise lately, and are facing stiff opposition in Washington given that they threaten to deplete U.S. government coffers. A move by Burger King to seal one is sure to intensify criticism of them, since it is such a well-known and distinctly American brand.

By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash stowed abroad, and in some cases lower their overall corporate rate. Even though many of the headline-grabbing inversion deals of late have involved European companies, Canada has also been the focal point for a number of them, given its proximity and similarity to the U.S. Canada’s federal corporate tax rate was lowered to 15% in 2012.

And surprise – Canada’s economy is picking up steam and corporations are eyeing it as a place to locate.  Imagine that.

Canada’s corporate tax rate in Ontario of 26.5% (the federal rate of 15% plus Ontario’s provincial corporate tax rate of 11.5%) is considerably favorable to the American corporate tax rate of 35% thanks in large part to the conservative Canadian government led by Stephen Harper. The Harper government lowered the federal tax rate to 15% in 2012 down originally from 28% since it took office in 2006.

In fact, a recent KPMG Report, Focus on Tax, ranked Canada as the #1 country with the most business-friendly tax structure among developed countries when adding up a wide range of tax costs to businesses from statutory labor costs to harmonized sales tax. When comparing developed countries to what companies pay in the U.S.; Canada came in at 53.6%, the U.K. came in at 66.6%, and the Netherlands at 74.5% of the U.S. corporate tax burden.

Meanwhile, our politicians are trying to find a way to prevent that, because, well because they apparently think corporations work for them and exist to pay whatever tax rate they deem necessary.  Of course, in a free country, this wouldn’t even be an issue.  Corporations, like people, have the right to move wherever they wish.  It is their call, not the government’s.

But, here that’s not the case:

Burger King’s possible merger to obtain the favorable Canadian corporate tax rate is a true reflection of the American corporate tax rate being the highest in the OECD. However, rather than taking the same stance on outright cutting the corporate tax rate as the Harper government did to keep the U.S. a competitive place to do business, President Obama calls tax inverting companies like Burger King “corporate deserters who renounce their citizenship to shield profits”. At the urging of President Obama, Congress is considering a bill to make it harder for companies to change addresses abroad. Treasury Secretary Jacob Lew called for a “new sense of economic patriotism,” asking Congress to pass curbs to inversions. The Treasury Department currently is also preparing options to deter or prevent corporate tax inversions potentially on its own.

“Corporate deserters”.  “Economic patriotism”.  It’s Orwellian Newspeak at its finest.  Imagine anyone trying to “shield profits” from a grasping and out-of-control government. It is also another, in a long line of indicators, that this is no longer a free country in the sense we used to believe it was.  It is now a country where every other entity is subservient to the needs or wants of intrusive, controlling government.


What good is a union if it can’t deliver the goods?

That’s kind of the $64,000 dollar question (yes, I’m showing my age … bite me) isn’t it?

You’ve seen the news about the fast food walkouts and claims that food service people should be paid $15 an hour?  That what the United Food and Commercial Workers union claims workers in that industry should have.  But what do workers they actually represent in that industry actually get?  Not much over minimum wage and union dues to pay out of that:

An examination of UFCW contracts shows that even senior union members are not receiving the wages that ROC and Jobs for Justice demand.

Consider a department manager at Kroger’s union shop in Michigan. She earns a maximum rate of $13.80, even after over half a decade on the job. If this is the highest wage the UFCW can negotiate for skilled, experienced workers, how can the union provide entry-level, low-skilled workers with $15 an hour?

It is not possible for them to accomplish this. Yet, receiving media coverage for the protests they sponsor is an effective way to increase membership and dues collections. The wage they demand is more than twice what similarly skilled union members are paid, namely $7.40 an hour for an entry-level cashier.

Courtesy clerks are paid a starting rate of $7.40 an hour and can work their way to up a wage ceiling of $7.45, after 12 months on the job. Fuel clerks do not fare much better; they start at the same $7.40 and can earn $7.80 an hour after three years of experience, barely over half of the $15 an hour wage worker centers supported by the UFCW demand. Specialty clerks also start at $7.40 an hour, but can earn up to $9.35 after six years. This amount is still 25 percent below the $12.50 an hour “living wage” Jobs for Justice claims all entry level workers should be paid. Read the full union contract between Kroger and the UFCW here.

The take-home pay is even lower once dues—and federal and state taxes—are removed. Dues are mandatory and usually take between $19 and $60 a month from members’ paychecks.

A non-union member could negotiate that without even trying hard.  So, what good is the union really done for those those it represents?  Other than pay it’s union staff very well?

It is expensive to run a union. The average total compensation for those employed by the UFCW—rather than represented by the UFCW—is $88,224 a year. This income is almost six times what the union negotiated for cashiers at Kroger’s. Joseph Hansen, the International President of UFCW, earns in excess of $350,000 a year—over twenty times the earnings of many of the workers he represents. The Executive Vice President and National President both earn over $300,000. Are entry-level union workers receiving benefits from paying dues out of their $7.40 an hour paychecks to fund these salaries?

But you know, it’s “management” that’s the problem, right?  I mean how could a cashier negotiate a $7.40 an hour paycheck without the union – and then give the union its “dues” out of that same paycheck?  Hey, the president of the union has to have his perks, right?

I know, I know, don’t look at the paycheck, look at the other benefits … like a pension, right?

The UFCW has one of the worst records for funding of union pension plans. The Labor Department has informed the UFCW that nine of its pension plans have reached “critical status,” meaning they are less than 65 percent funded. Many of these funds have been underfunded for six years. They have low chances of regaining sustainable financing unless they can convince more new members to join and pay dues without receiving similar benefits.


And, of course, there’s the political side of things … it is important to help fund the union’s political activities, no?

Some portion of dues goes towards political contributions. The UFCW contributed $11.6 million during the 2012 election cycle, of which nearly 100 percent went to Democrats.

Well of course it went to Democrats.  Democrats have been in the union’s pocket (and vice versa) since time began, apparently.  Put $11.6 in the pension fund?  What are you, a Republican?

Yes, it’s a crying shame people aren’t represented by this union … said no libertarian, ever.


Study: Government policy primarily the reason for sub-prime mortgage meltdown

Despite the attempt by government and particularly Democrats, to blame the financial meltdown we’ve endured on banks and unscrupulous investment companies, the buck stops with them according to a new study just released:

Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

But a new study by the respected National Bureau of Economic Research finds, “Yes, it did. We find that adherence to that act led to riskier lending by banks.”

Added NBER: “There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts,” or predominantly low-income and minority areas.

As we’ve mentioned previously any number of times, government policies can set and enforce preverse incentives.  And that has nothing to do with a free market.  That’s at best a mixed market.  So no, the problem wasn’t a “market failure”, it was the usual result of government intruding and setting preverse incentives that are contrary to good business practices and would likely not survive or succeed in an actual free market.

Here’d the bottom line:

The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.

CRA regulations are at the core of Fannie’s and Freddie’s so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.

It passed a law requiring the government-backed agencies to “assist insured depository institutions to meet their obligations under the (CRA).” The goal was to help banks meet lending quotas by buying their CRA loans.

But they had to loosen underwriting standards to do it. And that’s what they did.

Not only that, they guaranteed the bad loans with your money.  Why do you think so much money has had to be pumped into those two institutions?

You see the market had determined that certain standards protected their investments.  The government decided to ignore reality and push a social agenda using “race” as the basis for throwing out those standards and using their coercive power to implement the social agenda they preferred.

The result was predictable.

And the coverup as well.


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