The Obligatory ‘Mitt Is In’ Post

Dashing my last hope that he’d change his mind, former Governor Mitt Romney (R-MA) officially announced his candidacy for the Presidency of the United States today.

Read the speech here.

Apparently this is his first official campaign vid.

June 2, 1774

The Quartering Act went into effect in the American colonies. This was one of the Intolerable Acts leading to the American Revolution.

This act was directly mentioned in the Declaration of Independence, and is the reason behind the 3rd Amendment to the United States Constitution.

He has combined with people others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For quartering large bodies of armed troops among us.

No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.

Government Doesn’t Create Demand

I mentioned this in a recent post, but I feel that this deserves more attention than a simple one liner.

First, a true recovery from a recession requires lower unemployment. Lower unemployment means that more people have more money to consume more goods and services which enables more producers to hire more people. Lather, rinse, repeat.

So, while all the media will constantly remind you (during a Democrat Presidency anyway) that unemployment is a lagging indicator on recovery, it’s the most important indicator. Especially for the unemployed or for those fearing unemployment.

Therefore, you’ll notice that almost all government interventions in recessions involve trying to encourage hiring. The few that don’t tend to encourage spending, which hopefully also encourages hiring.

Now, the best way to do this, and arguably the only successful way to do this is to reduce restrictions on businesses. You can do this by lowering taxes, removing burdensome regulations, or doing similar things for investors, allowing them to invest in businesses, giving them a funding shot in the arm.

If you reduce the cost of doing business, businesses can lower their prices to the appropriate demand point, and increase sales. They can also hire more people, enabling them to produce up to the demand level (assuming they are behind), and also increase sales.

So, doing this increases demand for employment, and demand for goods and services, and the economy marches forward. Success.

This only works if there’s no inventory glut, which does often happen with big ticket items in a recession. However, the first part helps even with an inventory glut. Reducing cost of doing business enables businesses to better handle the lower profit margins of an inventory glut, and stay in business. You can also make adjustments to taxation to lower the taxes on companies with high inventory.

This may or may not allow the businesses with glut to lower their price points to the appropriate demand point, and yet still make enough money to stay in business. This is not necessarily a bad thing. Often inventory gluts are caused by being unresponsive to a changing marketplace. If the business goes out of business due to their inventory glut, then the business was not needed anyway. If the good or service produced by that business is needed, someone else will produce it, or buy out the inventory and resell it. So, the end result is that in this case, demand is not increased, but that production is lowered to match demand. The remaining producers now get a bigger piece of the overall pie, and can once again grow their business. Again, success. Probably at a slower rate than the businesses that didn’t have a glut, but still success.

It’s also worthwhile pointing out that these big ticket items with an inventory glut are often dealing with the glut because people have delayed purchases due to employment concerns. If their employment situation stabilizes due to their business being able to save money, there will be increased demand for the big ticket items. No more glut. Success.

So, no matter how you slice it, getting out of the way of business succeeds when trying to get out of a recession. And it does it by increasing demand for employees and for goods and services.

And that’s what we’ve generally done in previous recessions.

Now, let’s look at the current recession.

First, we sent a lot of funding to public sector projects, rather than private sector ones. For example, in some states, school systems and first responders got a ton of money from the Federal government, but were required to use a large portion of that money to hire people. Note that the government didn’t do anything to create demand. They just gave out money to hire people. And they paid the salaries for two years. Guess what? The two years is up, and the states are discovering that they can’t afford to pay those people anymore. A lot of them are going to get the axe. Oops. Projects like these only succeed in lowering unemployment as long as the government dollars are paying for them. At taxpayers expense.

Second, the government handed out tens (hundreds?) of billions of dollars to companies suffering from inventory glut. They didn’t originally do anything to deal with the glut itself (more on that later), they just gave them money so they could keep their employees around and produce more goods in a market that was already saturated. In other words, companies were rewarded for not being able to respond to a changing marketplace. It’s not hard to see that this can’t turn out well. Also it sets a precedent that if you’re a large enough company and you’re too big to fail, then you don’t have to worry about failure. Go ahead and make whatever bad decisions you want. The government will always be there to rescue you. At taxpayers expense. No need to worry about demand. You’ve got the government. And still no demand.

Third, the government interfered in the free market, and instead of reducing expenses for business across the board, they created rules allowing greener industries to create green products and services at less costs. Or they gave one time tax breaks to consumers of these green products and services. This creates demand, but it’s artificial demand and is unsustainable. If a product or service can’t succeed in the free market without government intrusion, then it won’t continue to succeed once that intrusion is taken away. Thus, either the government has to keep on funding these green industries at taxpayer expense, or watch them die. The demand created here is temporary at best.

Fourth, the government finally realized that it needed to do something about demand for the inventory glut on these big ticket items, particularly houses and cars. So, we got some big short term tax breaks for new home buyers and the Cash for Clunkers program.

The tax breaks for home buyers was nice, but it didn’t do anything to create a bigger market of buyers, it just enabled people on the fence for buying to buy a bit sooner. And since there was already a glut, it didn’t put home builders back to work, because the tax incentives went away before the glut had been consumed. In fact, there’s still a glut. And no demand for new homes, or new home builders.

The Cash for Clunkers program was a disaster. It enabled people to get some nice incentives to trade in their old fuel inefficient car for a brand new more efficient car. Again though, this is a case of the government picking winners and losers. You couldn’t trade in your clunker on a nice new full-sized SUV. You had to get a fuel efficient vehicle. So, didn’t help that SUV glut at all. Furthermore, the clunkers were destroyed rather than join the used car market, so a big chunk of the used car market was destroyed. So here, not only did we not create demand, but we decreased supply. Low income earners could no longer afford to buy used cars. Brilliant. And not only that, just like with the home buyer tax credits, once the program was over, new car sales declined again. Because demand wasn’t created, just pushed forward. Once again, these programs create either no growth or unsustainable growth. The growth can only be maintained as long as the program is maintained. At taxpayer expense.

Fifth, and finally, not only did the government not get out of the way of business, it did just the opposite. It created a huge new healthcare program with lots of regulations and compliance expenses for every business. President Barack Obama’s (D-USA) administration wanted to increase taxes on all small business as well, but this was eventually defeated by the GOP, by forcing the President to sign the extension of the Bush tax cuts. The uncertainty over this caused many businesses to delay hiring. Also, this uncertainty caused investors to delay their investments or put their money elsewhere. They may finally start hiring and investing now, but they still have to deal with burdensome regulations and ObamaCare.

Speaking of which, we also get the EPA imposing higher CAFE standards, the FCC imposing Net Neutrality rules, the NLRB interfering with business rights to expand where they want, and literally hundreds of other agencies doing everything they can to restrict business. All of these increase the cost of doing business, and therefore make it harder for business to hire new people. In other words, the exact opposite of what is necessary to create demand for employment.

And without demand for employment there is no recovery.

The government can’t create demand. All it can do is fake it for a while, or destroy it altogether.

Happy Birthday, Norma Jean

An incredibly beautiful and tragic figure.

And I can’t say happy birthday to this woman without including this:

What, you thought it was going to be something else?

 

Oh yeah, happy birthday wishes to CNN, too.

Things That Make You Go, “Hmmm.”

President Barack Obama seems to be maintaining his bin Laden bounce. Yes, there’s some skewed polling going on, but regardless, his approval/disapproval numbers are the highest they’ve been in over a year.

His RealClearPolitics average is currently 51.2/45.0 and has been consistently above 50 since the first batch of polls following the bin Laden raid. Before that he was hovering around 45-47%. Eric Boehlert over at Media Matters for America can’t stop tweeting about it. I don’t think I’ve ever seen him this happy. And, he has a point. These numbers should be disconcerting to potential GOP foes.

Of course, the election is still 17 months away. A lot can change between now and then. And probably will.

But the poll figures themselves are surprising, and frankly, confusing. I believe America must be starting to buy into the Obama mystique again. And that’s a bad thing. But it’s the only way I can explain it. Because his approval/disapproval numbers don’t seem to have any basis in reality.

Also at RCP, the right track/wrong track numbers are 34.5/56.8. Those are very bad numbers for the President. Admittedly, they’re still better than they have been in months, but I don’t understand how a President can be above 50% with numbers like these.

And the right track/wrong track numbers aren’t an aberration.

Consumer confidence is at 60.8. A six month low.

"Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects," said Lynn Franco, director of The Conference Board Consumer Research Center. She said fears of inflation that had eased in April picked up again in May.

The index, released Tuesday, is still far from the reading of 90 that indicates a healthy economy. It hasn't approached that level since the recession began in December 2007.

90 represents a healthy economy. We’re 50% below that. Again, I don’t see how a President can be above 50% in the third year of his term with numbers like that.

Only 35% of people think America’s best days lie ahead, and 55% of Americans describe the economy as being in a recession or depression. And worse news…

More than half of Americans (55%) describe the U.S. economy as being in a recession or depression, even as the Federal Open Market Committee (FOMC) reports that "the economic recovery is proceeding at a moderate pace." Another 16% of Americans say the economy is "slowing down," and 27% believe it is growing.

So, that’s 70% of America that basically believe we’re in a recession or heading towards one. And Obama is polling above 50%.

I honestly can’t tell you what it means. As I said above, I believe that it means he’s getting some of his mojo back, and people are once again buying into the Obama mystique. Can it last? Your guess is as good as mine.

I would hope that by next April or so, when we know the GOP nominee, things might start to happen. Hopefully whoever that person is will be out campaigning and hammering Obama every day. Hopefully s/he will be reminding the voters of the Hope that they voted for and the Change they got instead.

Hopefully. Right now I’m more than a little worried. I don’t see how any incumbent President can be re-elected with numbers like these. In fact, it shouldn’t even be close. And yet…51.2%.

Wake up America! Time is running out!

New Vids from Cain & Pawlenty

Cain:

 

Nice to see him solidly back on the FairTax bandwagon. His support had seemed a little shaky lately.

Pawlenty:

 

Pawlenty’s vid is a little weak, but overall I’m still impressed with his campaign—so far. He’s not a perfect candidate, by any means, and he might still be left of me, but at least he’s in the same ballpark, and he understands the problems America is facing. I want to see more attacking from him and less touchy-feely stuff like this video though.

Happy 81st Birthday, Clint Eastwood!

 

"Everybody wonders why I continue working at this stage. I keep working because there's always new stories. ... And as long as people want me to tell them, I'll be there doing them."

—Eastwood, reflecting on his later career^[233]

Paul Krugman: Hey, Let’s Spend More Money On Failed Programs

Nobel Laureate Dr. Paul Krugman penned another winner for the New York Times this weekend, entitled Against Learned Helplessness. I understand helplessness, but it’s pretty arrogant for Krugman to use the word “learned” in any article he writes. The man hasn’t learned anything since 1956. But I digress.

He starts out well. He identifies part of the problem:

Unemployment is a terrible scourge across much of the Western world. Almost 14 million Americans are jobless, and millions more are stuck with part-time work or jobs that fail to use their skills. Some European countries have it even worse: 21 percent of Spanish workers are unemployed.

Nor is the situation showing rapid improvement. This is a continuing tragedy, and in a rational world bringing an end to this tragedy would be our top economic priority.

This being Krugman, he’s incapable of understanding why the situation is not showing rapid improvement, the failed economic policies of the last few years.

I doubt he reads this blog, but just in case he does, I’ll provide a helpful chart.

I think I’ve shown this chart before, or a similar one. The red line is the current recession in terms of employment. The other lines represent the previous recessions, post WWII. Personally, I would have liked to see the Great Depression on this chart as well, because I think it would be instructive. Anyway, you’ll notice that this recession has been longer and deeper than any other. Well, yeah, kind of figured that part out already. But you should also notice that the recovery rate was much faster after all other deep recessions. Only the very shallow recessions tended to have long recovery, and this isn’t a shallow one.

So, why did we recover so much quicker after the other recessions? Because government did the right thing. They created incentives for business to hire and to create products and services, and they got out of the way of business. During this recession, we have done the exact opposite. We haven’t cut taxes. We’ve created huge new burdensome government programs and regulations, and we have the NLRB trying to prevent companies from expanding. Finally, we spent trillions of dollars on political favors which accomplished nothing, but created a crushing public debt load which is also limiting growth.

I firmly believe that every single economic decision that President Barack Obama (D-USA) has made has been wrong. He should be channeling George Costanza.

 

If he had, he’d be cruising towards re-election and no one would be talking about the economy. Our President could learn a lot from George. And so could Krugman. Which brings me back to my point.

More from Dr. Krugman:

So someone needs to say the obvious: inventing reasons not to put the unemployed back to work is neither wise nor responsible. It is, instead, a grotesque abdication of responsibility.

[…]

So what did the O.E.C.D. have to say about high unemployment in its member countries? “The room for macroeconomic policies to address these complex challenges is largely exhausted,” declared the organization’s secretary general, who called on countries instead to “go structural” — that is, to focus on long-run reforms that would have little impact on the current employment situation.

And how do we know that there’s no room for policies to put the unemployed back to work? The secretary general didn’t say — and the report itself never even suggests possible solutions to the employment crisis. All it does is highlight the risks, as it sees them, of any departure from orthodox policy.

Yes, someone needs to state the obvious. Dr. Krugman, you’re an idiot. Using the government to put people back to work is always destined to fail. Where have you been the last few years? It fails for more reasons than I can count, but let’s start with three simple ones. Government programs have long start up times and delayed payouts, and they don’t create demand. The last is the most important. When you allow the private sector to produce, that creates demand for employment, because it creates a produce-spend-consume cycle. Government programs don’t create such cycles unless they’re continually fed with other people’s money.

As for how we know that there’s no money to put these people back to work, I present another chart for you.

 

Or vs. GDP:

That’s how we know.

More from the Doc:

The core of our economic problem is, instead, the debt — mainly mortgage debt — that households ran up during the bubble years of the last decade. Now that the bubble has burst, that debt is acting as a persistent drag on the economy, preventing any real recovery in employment. And once you realize that the overhang of private debt is the problem, you realize that there are a number of things that could be done about it.

For example, we could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. We could have a serious program of mortgage modification, reducing the debts of troubled homeowners. We could try to get inflation back up to the 4 percent rate that prevailed during Ronald Reagan’s second term, which would help to reduce the real burden of debt.

The W.P.A. was the cornerstone of President Franklin Delano Roosevelt’s (D-USA) policies to end the Great Depression. Most rational economists now realize that FDR’s policies extended the Great Depression, not ended it. What ended the Great Depression was WWII, and in one of Krugman’s few moments of clarity, he even admitted that in 2008.

 

Unsurprisingly, today’s Krugman does not have this clarity. Instead, he wants to try policies that he knows do not work, because his core philosophy is based entirely on Keynesian economics, and introspection is not an option for him. His ego will not allow him to admit that he’s wrong and that Keynesian economics has failed. So, instead he continues to push failed policies, and since he’s the the most favorite living economist, his words matter. His influence matters. And we all pay the price.

Hat Tip: NewsBusters

The Laughable-And Predictable-Weinerquiddick Reaction From The Left

Yes, I’m calling it Weinerquiddick, not Weinergate. I caught a tweet in passing yesterday that said:

And I suddenly realized what good advice that was. Henceforth, I will label no scandal with the suffix “gate”. I prefer “quiddick” over “aquiddick”, though. Seems to flow a little better. Hence, Weinerquiddick.

If you were out, I don’t know, having a life, this weekend, you missed Weinerquiddick, so I’ll summarize. Someone sent a lewd picture from Congressman Anthony Weiner’s (D-NY-09) twitter account to a young woman in Washington state. Weiner claims his account was hacked, but the improbability bar seems pretty high on that one. If you’re interested in who sent the pic, to whom, why, and how, start with the links I’ve posted and do some digging.

At this moment, I’m more interested in the reaction by the left and by the MSM (I know, I repeat myself) to this emerging story. It’s made me laugh and cry all at the same time, more than once. The reaction from the MSM has been to largely ignore the story. It took almost 24 hours for the AP to release anything on the story, and it looks like only CBS has run with the AP story. At least according to my Bing search as of this minute.

As for the left-wing blogosphere, they have gone ballistic over the story, but not attacking Congressman Weiner, begging him to come clean. No, the source of their anger is the Twitterer who caught the offending tweet, and Andrew Breitbart, for daring to publish the information about it.

I won’t say that Weiner definitely did this. His story is not completely impossible, just incredibly implausible. But this reaction, as I implied in my title, is typical of the left. When a scandal emerges regarding one of their own, the MSM suddenly becomes like The Three Wise Monkeys:

MoveOn, nothing to see here, nothing to hear, nothing to talk about.

Meanwhile,  the left wing attack dogs go after the source, trying to destroy the credibility of a Twitterer and a respected right wing journalism site. They have their Alinsky playbook out and they’re following it step-by-step. At this point, it’s become as easy to them as color by numbers.

Think this is a one time thing? Do you remember John Edwards? The MSM ignored that story for as long as they possibly could, trying very hard to pretend it didn’t exist so it would go away. Meanwhile, the left wing blogosphere did everything possible to discredit the source of the story, the National Enquirer. Now, I’m not saying that the Enquirer should be at the top of anyone’s “reliable sources” list. They predicted the imminent breakup of President George W. Bush (R-USA) and Laura more times than I can count. But they are capable of getting a story right. And it was evident from the very beginning, to anyone who bothered following up on the story, that the Enquirer had something. It just wasn’t absolutely certain what exactly they had. There was a ton of smoke, and some fire there. But the MSM was not interested in following up. Even such new media sites as Wikipedia were circling the wagons. I remember monitoring Edwards’ Wikipedia page during that time and arguing vehemently that, at the very least, the story about the scandal should appear in his bio, as it was relevant to his VP consideration. The editors were adamant that not one word would appear.

Now, consider a right wing “scandal”. I’ll just pick one, a prominent one, and how it was handled.

The New York Times ran a front page exposé on an alleged affair between John McCain and a staffer, on considerably less evidence (in fact, none) than either the John Edwards incident or this Weiner one. So little evidence that they were later forced to retract a page one story.

As I keep saying, there is a possibility that Weiner is telling the truth. And frankly, it wouldn’t take much in the way of good investigative journalism to get some more details and find out. Go talk to some people in Seattle, talk to Weiner himself, find out how his account was compromised, and what he did to secure it afterwards. Talk to his aides. Pass around a few pictures of Benjamin Franklin. People will talk. They always do.

However, I have little confidence that this will happen. The MSM could have done all this during the Edwards affair. They could have done it with McCain before running a front page piece that they would later have to admit was a lie. They could have done all these things, and they could do the right things in this case. But they won’t. The MSM is no longer interested in journalism or objective reporting. They’re interested in protecting the left and attacking the right. They are the PR wing of the Democratic party. If these three incidents don’t prove that to you, nothing will. And, sadly, I could probably spend two days on research and come up with over 100 more examples. It wouldn’t be that hard.

In Memoriam

 

Please click through to this link, and remember the fallen heroes that made today’s backyard barbecue possible.

Thank you for your service to our country, servicemen. Whether you’re living, dead, KIA, MIA, POW, I salute you, and honor you, today and every day.