Search This Blog

Monday, September 17, 2012

Welfare? Whose Problem Is It.

       One has to wonder what the word "Welfare" means in the context of the United States Constitution.  It is mentioned a couple of times.  It does not mean food stamps and unemployment checks I am sure.  With one out of every six Americans on food stamps it might be something to look at.  The Preamble to the Constitution states as follows.
 
      We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

      Based on the Preamble,  providing for the general Welfare is one reason the Constitution was created. It certainly must not have been Welfare in the sense it is understood in this day and age.  Welfare in this day and age is almost a curse word.  When people talk about Welfare they are talking about something low down and almost sinister and certainly not something our Constitution should be concerned with.  Yet when you read the writings of Paine, Franklin and Jefferson it is clear they felt society had a duty to care for its own.  Of course they lived in an era when everyone was expected to pull his own weight.

    When I think of Welfare in the framework of my family it means providing shelter, education. clothing, food, safety, healthcare and any other of the necessities of life.  It is a duty of a parent to provide for his family and those who fail to do so are looked down on.  Is a nation any less responsible to its citizens.  Why did the Founding Father's even mention Welfare if that is not what they meant.  I have come to my own conclusions from what I have read of the Constitution. Article 1, Section 8 lays out the duties of Congress.  The parts prior to Section 8 basically lay out who is to do what and how they will be appointed to the positions in Government.  So what are the duties of Congress.

Section 8 1:  The Congress shall have Power To lay and collect Taxes, DutiesImposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all DutiesImposts and Excises shall be uniform throughout the United States;

    Reading and applying what the Constitution says should be pretty simple.  It says what it means and means what it says. The Congress is to handle the financial obligations, provide for the Defense and General Welfare of the United States.  Notice they are all in the same sentence so they all have equal importance and obligation under the Constitution. 

      Based on that simple understanding Congress has failed the country and not done their job.  They have definitely not managed the finances in a responsible manner.  They have abdicated their duty to provide for the defense of the United States by allowing the Presidents to commit America's military.  Finally they have also failed to provide for the General Welfare. If you read all the duties in Section 8 it is a Congressional duty to provide for the infrastructure and its upkeep. 

  The job problems we have today are because of the failure of Congress to perform its duties.  If they were taking care of the "Infrastructure as they are supposed to, it would create jobs.  Contrary to Mitt Romney's claim that government does not create jobs.  He is full of nice warm fertilizer.  The government creates thousands upon thousands of jobs. They are not directly created, but come from government duties and mandates.  The military and the contractors that are jobs created by the government.   The interstate and highway systems in America were created and funded by government mandate.   So was the internet system that so many business participate in and which has created so many billionaires.  No they are not government jobs, but they were created by government decree.

     The poor in America today and the welfare programs are not the problem with America.  The failure of Congress to do what it is suppose to do is the problem.  Those who are suppose to be in positions of leadership in America have no clue what the Constitution says.  They are to busy lining their pockets and trying to make sure they keep their jobs to worry about the citizens.  

    As for Ryan, and please note I am a Ryan also, is a nutcase from the same state as Joe McCarthy and makes about as much sense.  The Republican attitude of stripping the poor of their benefits and ending social security as we know it are asinine.  He says he wants to save his "Mother's" benefits as they are, but he wants to strip the next generation.  My kids already accept that there will be nothing left for them unless things change and change drastically.  

    Do not think that I am for Obama just because I am not for Romney and Ryan.  We have not had a true choice of a person to vote for since Reagan left office.  The last several elections have been about choosing the lesser of two evils.  The Democrats have never seen a program they did not want to adopt. They spend every cent they can get their hands on.  Yet they at least appropriate the money to pay for the programs they create.  The Republicans start wars and spend money like drunken sailors, but they then cut taxes and try to put the cost of their stupidity on the backs of the poor.

     The definition of insanity is doing the same thing, the same way, over and over and expecting to get a different outcome.  The Democrats do something and then the Republicans want to undo what the Democrats did.  They do not want to create a better system.  However, stupidity is not limited to the Republicans.  The Obama administration says it is all for renewable energy and making it grow and creating American energy independence.  Yet they have created tariffs and duties to keep China out of the American solar markets.  Their efforts have almost put companies they showed off as examples of American enterprise out of business.  

    They supposedly want a level playing field, yet they are stacking the deck in favor of American companies.  That is not a level playing field.  Two of the largest companies in the world thrive on beating the competition through lower prices. Wal-Mart and McDonald's are both expanding while the world markets are on the verge of crashing.  Maybe Congress needs to go to these companies and take some lessons.   When politicians stack the deck in favor of American companies they are making American consumers pay the price for American businesses inability to compete.

     America can compete on world markets.  That can be proven by looking at all the foreign car manufacturers that have moved their plants to the U.S.A.  Sure they did it to avoid tariffs and taxes, but they use American labor.  There is nothing wrong with American labor.  The problem is with American management and American government.  Having run my own business I know that the government regulations are a burden that many small businesses do not have the means to cope with.  Regulations create hardships that cost more than many businesses can charge and still be competitive.

   The only thing I hear either party saying that is right, and that is not from the ones still standing, is that we need to reform the tax code and make a level playing field.  No business should get a tax break or a subsidy.  If they can not compete with the world markets they need to go out of business and start something that can compete in the world markets.  Innovation and creativity are the hallmarks of America.  We have always rose to the challenge and if the government would get out of the way or lead by creating infrastructure jobs we can be leaders again.

    At the start of the Great Depression the National Debt was only 38% of the GDP.  Yet America failed to stay in business.  It was a cycle that had reached its peak and we are in the middle of another cycle.  Yet at the end of World War II the national debt had risen to 122% of the GDP.  The economy did not collapse when the World War ended.  It took off.  All the damaged infrastructure overseas needed rebuilt and the only ones who were still in a position to supply the materials to rebuild was America.  That carried  us clear up into the seventies.  Then the balances started to shift.  The key to surviving and bringing America back is restructuring and rebuilding American industry and infrastructure to compete in the 21st century.

    The solution is not starting wars.  Which seems to be the mindset in this day and age.  The wars today do not cause enough destruction to justify the cost.  That may sound crude but it is the truth.  As I said earlier foreign car manufacturers have moved their plants here to get a piece of our market.  It is their financial war strategy.  The shooting war may be over but they are still trying to destroy us.  Many American businesses have moved manufacturing out of the country trying to increase their profits.  They have unwittingly or intentionally joined the enemy.  My last few years in trucking I hauled many factories to the Mexican border and the plants were taken into Mexico.  The irony was that just before I retired many of the same factories were coming back north because they could not get the quality of labor they needed to run the equipment or manage their plants to be competitive.

    It is my opinion that the renewable energy industries offer great opportunities to compete in world markets.  Just take a trip to You Tube and look at renewable energy projects, fish farms and gardening.  Americans are moving toward self sustaining industries that may not get them rich but will enable them to survive.  Anytime the economy creates hardship it creates bartering and off the grid enterprises that sustain those who can not make it in the regular markets.  After awhile it becomes a lifestyle.  In my estimation that is a part of where the several hundred thousand people have gone that dropped out of the job market.  Thanks to America's experience in the Great Depression many people have learned to take care of themselves. That is why the recession does not feel as bad as it sounds.

     Many people are paying off their debt and accumulating no knew debt. They have awakened to the fact that if you have no debt, you do not need as much to get by.  They no longer want to be bled by the system.  They no longer want to support those who are bleeding the system and it is slowly creating a very divided and different America.  The sad or good part, depending on how you look at it, is that the politicians and leaders do not have a clue as to what is going on. 

     They do not understand that economic slowdowns do not start from the top down.  They start from the bottom up.  Those who have the least learn to adapt and get by on what little they have.  They suddenly quit spending and buying in the markets.  Why not trade or barter for a second hand item instead of spending what little you have.  As long as both parties are happy.  When the lower end consumers quit consuming things start slowing down. It is a fact of life.

     The one truth in the whole political and economic picture that is a fact is that without jobs there will be no recovery.  So the government better start making it attractive to start a business and hire a person.  They better start giving incentives and tax breaks.  Not to big business, but to the little businesses that create the majority of the jobs in America and that make the wheels of commerce spin.  If they do not take some kind of action America is headed for the recycle bin. 


     The average American will learn how to survive and provide for his own and his families welfare.  It is an American tradition. The failure of the government to provide for the Welfare of the nation will determine whether we stand or fall as a nation.  The only solution I see that may save the day is a Constitutionally based third party or it may turn into a nation of anarchy.  That is a scary thought but we may find out which way it is going by the time America gets to the edge of the financial abyss in January or February of next year.  

     If you would like to see a way jobs could be created and a possible worst case scenario you might read my blog of 4/25/2012 America Under A Threat Worse Than Katrina.  It is not meant to be scary.  It is meant to show how preparing can save lives and help the economy at the same time.                                                                                                                                              

     

Friday, September 14, 2012

Deadhead? Or Not? How to Judge.

      Sometimes things are not cut and dried.  It can be difficult to decide which is the least costly, sitting or deadheading.  As an owner operator I had to come up with my own decision of what was acceptable. When I started trucking over the road.  I worked for a union flat bed company.  We were paid a percentage of whatever the load paid.   That means if you were running empty, you were making nothing.  You do not get paid for your deadheading.  We used to do a lot of it and I had issues with it.  After a particularly bad week of deadheading I just happened to get an opportunity to talk to the owner of the company.  As I was fueling up my truck before parking it he showed up on the fuel island.  He asked me how I was doing.  "I told him fine, but I had a question about why we deadheaded so much?"

      His reply shaped my whole trucking career and over the years probably kept me in business.  It worked for him and he had over a 150 trucks running at any given time.  He answered, "It is really pretty simple.  If a truck is not moving, it is not making money.  If a truck is sitting, it is still costing money.   So if the freight is not moving where you are at, you move to where the freight is moving." Over the next three years I watched pieces of that logic come into play.

      On any given Monday we would have as many as fifteen to twenty trucks on the East Coast in the area of New York City.  Our dispatch was first empty, first choice. The exception to that rule was Fridays and weekends which were seniority first.  There would usually be far fewer loads available than trucks.  The key to getting a load was getting empty first.  A couple times I thought I would have to deadhead because a couple other people emptied before me.  However, on a couple of occasions, the first empty guys passed and did not take a load.  They then had to deadhead to the Pittsburgh area.  All the loads had to be covered and when it got to the point all they had was five loads and five trucks you did not get a choice.  You had to take one.  The more senior drivers were passing on the cheap East Coast freight and deadheading the 400 miles to Pittsburgh.

     After a couple of years I figured out why. The loads on the East Coast were cheap and heavy.  They also usually did not load till late in the day or evening and had to be tarped.  One of the chief loads we hauled were "slinkies" out of Raritan Steel in Perth Amboy, NJ.  They were coils of steel wire that resembled a slinky in appearance, hence the nickname.  After a couple years I figured out why the senior guys would deadhead to the Pittsburgh area.  The loads in that area paid a lot better and they usually took you to an area where the company had more "good" freight.  Usually you would have two and a half days tied up in the cheap load.  A day waiting to get it loaded.  A day hauling it.  Then you would get empty so late you had to wait till the next day to get reloaded.  You quickly learned that leaving the East Coast early let you load in the Pittsburgh area on Monday evening and deliver sometime Tuesday back in the Midwest.  Which was also in the good freight area.  So your weekly pay check could be better even though you deadheaded 400 miles at the start of the week.

     The second thing that influenced my view of deadheading was my last job before becoming an owner/operator.  I deadheaded to Alabama every Monday, Wednesday and Friday to pick up a load of chickens for the wholesale meat distributor I hauled for.  That job lasted five years and I made good money, but half of my income was from deadheading 500 miles to pick up the load of chicken.

      Those situations shaped my trucking attitude and career.  As my first boss pointed out to me.  It cost money to own a truck whether it is moving or sitting.  Even when it is sitting the payment on the truck and insurance is still going to come due.  The permits and fees are still going to come due.  Finally your personal bills are going to come due.  You can figure out how much you should make per month with a truck if all goes well.  The trick is figuring how much does a day sitting cost you.  If your truck payment is $2000 a month that is $66 a day whether it is running or parked.  Insurance and permits can easily add another $30 per day.  Then you have to eat whether you are running or sitting.  So either way the truck can be costing you $100 a day.  Notice we have not figured in your house payment, car payment, utilities, credit cards and etc.  Sitting is not cheap

      Theoretically if the truck is moving it is making money.  However sometimes through no fault of your own.  There is no freight where you are at.  So if you sit four or five days you have added up well over $500  dollars worth of expenses.  If you deadhead it may cut the amount of the sitting cost.  The determining factors are the availability of freight.  The companies you work with or for can be a big factor in this kind of decision.

       Throughout my trucking career I deadheaded from L.A., CA and Phoenix, AZ to Indiana more times than I care to admit.  The trick was that I was deadheading to a very good paying load.  It is a judgement call.  I knew of I sat very long the freight my companies hauled off the West Coast would not repay the cost of sitting and waiting for it.   I could have made shorter deadheads to maybe Oklahoma or Texas, but again the good freight for my company was in the Midwest.

      My last four years of trucking I hauled mostly kitchen cabinets to the New England area.  My loads paid very good revenue per mile.  They also paid stop pay and unloading pay.  Sometimes the loads with 20+ stops paid more for stops and unloading than they did for hauling.  When I emptied Wednesday morning I put it in the wind and went home to Indiana.  I would spend Thursday evening, Friday and half a day Saturday at home.  Then I would go pick up my preloaded trailer and head back to the East Coast to start delivering on Monday morning.

     Many people asked me why I would do that.   It was really pretty simple.  The good paying loads always shipped on Friday and Saturday with delivery starting on Monday.  If I spent time on the East Coast getting a cheap load as back haul sometimes I would miss the load going back east.  Also I would miss my at home time.  It was a decision I had to make, but I looked at what my previous employers had done. They made good money and so I just adapted their game plan to the way I operated and I survived.

      There were a couple other factors I figured into the equation of what to do.  Cabinets were light.  Usually a full load was under 10,000 pounds.  That meant better fuel mileage, less wear and tear on my truck, tires and other components.  In the long run and hindsight.  It all worked for me.  Each person has to decide what works for them.  Some people make a decent living hauling heavy freight and are home often.  Coal and gravel haulers are just a couple of examples.  Short runs like that do not appeal to me though.  I preferred the longer runs.  Each driver has to figure what works for him.  With fuel prices where they are at today.  I do not know for sure my tactics would work today.  I retired in January of 04 just as fuel prices were starting to get crazy.

    It is my hope this helps someone to figure out what works for them.  I watched a lot of guys go out of business when I was trucking because they would not deadhead for nothing.  They would sit in Dallas or L.A and still be there a week or two later when I returned with my next load.  My number one rule of thumb was that if I took a load into a cheap freight area,  it had to pay good enough to pay for the fuel to deadhead back out of the area to start with.   A couple of my other simple rules.  Do not haul cheap freight period.  Let it rot on the dock.  Do not haul heavy freight unless it pays good or takes you to where freight does pay good.  Have a good time and keep jamming.  If you see an old Chevy panel van with "Turtle" on the driver's side door.  Honk and say "HI"  I may be downsized a bit, but I still get out an go when I can.

Thursday, September 6, 2012

VOTE? The Lesser of Two Evils?

      The last time I had a choice of who to vote for was when Ronald Reagan ran for office.  Every since then is has been the lesser of two evils.  The 1980 election taught me that religion and politics do not mix well.  The  sitting President Jimmy Carter was a born again Christian.  His leadership and policies were leading America into an economic hole.  Reagan was an actor and came across as having the solutions.  He also claimed to be a Christian.  They may have both been Christians but they were polar opposites.  One was a turn the other cheek Christian and the other was a stand up for what you believe in Christian.  Thirty years later I see the same issues being replayed.  However neither of the candidates have all the values I expect a Christian to have.

       Actually it is not just the candidates but the parties that are neither one what they claim to be.  They are both made up of extremists.  The Republicans lean toward the extreme right and the Democrats toward the extreme left.  My problem is I like neither of those points of view.  I hate fence sitters.  The thing I am discovering is that the center is not necessarily fence sitting.  It is the path that sound judgment takes in all situations. It is the glue that holds our country together.

       Four years ago I was shocked and surprised to see Barack Obama win the Presidency.  It showed that there is truly a good side to America.  That America is big enough to do the right thing. Yet the last four years have shown that America is definitely not over its racial issues.  I consider myself an independent, but I lean toward the Republican party.  The last four years have shown me that the Christian Right is really a White Is Right point of view. People I thought were open minded have shown their pure hatred for Barack Obama.  It is a hate like I have never, ever seen in American politics.  They spit their hate out like rabid dogs.  The Republican leader in the Senate, two years ago, stated his only goal was to make sure Obama did not get reelected.  He could care about the problems facing the nation.  He would as soon destroy the American economy as see Obama get reelected.

      What I have discovered is that America needs a third party.  A Constitutionally based party that focuses on the foundations which this country was founded on.  The party I envision will not try to legislate morality.  Many of the issues today have no place even being in the political arena.  Abortion should be between a woman and her doctor.  The government should not even be involved.  Drugs should be taxed, not regulated.  It is not societies duty to pick and choose which vices should be okay.  Alcohol, tobacco and prescriptions drugs are okay.   Even though they destroy just as many lives as illegal drugs.  A drunk can get a year for killing someone in a car accident, but a pot head gets ten years in some states just for possession. Yet in the next state he may not even get a slap on the wrist. There is a problem here.  Addicts need treatment, not incarceration.  Taxing drugs makes far more sense that wasting money on a war that can not be won.  At least the abusers will be contributing to their own treatment.  As it is now law abiding taxpayers get hit with paying for both, the persecution and rehabilitation.

      Congress has totally failed in the three areas it was given the responsibility to manage.  They were/are responsible for the budget, establishing taxes and duties on imports and finally the Welfare of the country.  All three duties are in the same part of the Constitution.  Looking at the national debt the village idiot can tell they haven't a clue how to control a budget.  The second thing they were given to provide for the security of the nation.  The were to raise and control the use of an Army and a Navy.  Military spending and deployments are totally out of control.  The Monroe Doctrine was America's guiding principle for years.  Yet America is becoming a borderline imperialistic nation.  Yes we needed to retaliate for 9/11, but the war in Iraq was a total waste of American money and especially of American lives.  We need to bring our forces home and let the world take care of itself.

     Who cares if Iran gets a bomb. To use it would be suicide.  The solution to the problem in the Middle East is really simple.  We need to make it clear that an attack on Israel will be treated as an attack on American soil and will be treated and reacted to accordingly.  America has a habit of using sledgehammers to kill flies.  That is why we have been in two wars for so many years.  When we knew where Osama Been Shithead was at we should have let Russia and China know what we were going to do and nuked the side of that mountain.  It was and is a mountain in the middle of nowhere.  There would have been little collateral damage.  Yet it would have made a major statement.  Countries would have been rounding up al Qaeda and bringing them to us.  We would not have to be hunting them.  At a minimum we should have dropped a 1,000 pound bomb on the home of each one of the terrorists that were involved in 9/11.  That is evil, but it would have made a statement.  Don't tell us you are innocent when you back these evil people.  They know who the crazies are and they need to take care of them and keep them in line.  Now you can at least see I am not a peacenik.

     Getting back on track this election has no upside.  Let me do the Democrat side first.  Obama grew up being fed the American dream and that he could be and do anything he wanted to do.  He believed it, he pursued it and he succeeded in becoming President.  He proved the American dream still works and anyone determined and focused enough can become President.  The problem was and is that he had no clue what to do with it when he accomplished it.  Of course he did not expect to get it handed to him with a broken piggy bank, a massive IOU and a job market that was imploding at almost 800,000 jobs a month. A stock market that had fallen 56% at the time he took office and another 11% before he could get the brakes applied.  The country was on the verge of falling into an financial abyss equivalent to or worse than the Great Depression.  Unemployment went over 10% before he could get it slowed down.  If you consider that the Great Depression lost 89% of the market value, and unemployment hit 25% we came out okay.   The problem is that the economy has been teetering between falling farther and recovering.   Stocks are back up to 13,000 after hitting a bottom at 6,469 points.  After a fall from a high of 14,164points.  That is not all bad, but the job market is barely holding its own.

     So what are the Republicans offering us as hope.  An ex-Gov, businessman.  Uh I think those were the qualifications of the one that got us into this mess.  They plan to do a lot of cutting and downsizing, but I do not hear any plans about how or where they are going to get the money to fix the problems. Even the GAO says it can not be fixed only by cutting programs.  Revenue has to be raised to stop the bleeding.  Also they are talking about creating 12 million jobs.  From their past record I assume those jobs will be in China, India and Mexico.  I want to hear sound ideas about "HOW" they are going to create these jobs "HERE".  One thing they plan to do that I do not care for is changing the Social Security system.  It is working fine.  It would work better if they just past laws to leave it alone.

     From all I have heard so far, from both conventions I just want the party to win that can hold things together till concerned Americans can mobilize a third party to implement the repairs that need to be made to the budget and the government structure.  Both of them are pretty iffy as far as I can see.  The Republicans could not or did not even have their previous office holder show up.  Of course with his record I kind of understand.  Just based on what I have heard and seen so far.  The Democrats are making a far better case than the Republicans.  My personal view is that the Congressional races are the only ones that have hope of changing anything.  If the Republicans win in Congress and Obama wins the Presidency we are looking at four more years of nothing getting done.  If the Republicans win in both the Congress and the White House all I see is things getting undone.  That is all they are saying they are going to do.

      The Republicans need to quit asking the question. "Are you better off than you were four years ago?"  It may not seem it, but my wife retired after watching half her retirement being eaten by the market collapse. The job market was in free fall.  Yes gas was cheaper when Obama took office, but when I had to drive to the hospital every day in the spring of  2007 the price of gas was right at $4.00 a gallon.  I mean if that was the standard I measured things by I would have to leave the country.  When I started driving gas was 17 to 19 cents a gallon and 12 cents during gas wars.  The minimum wage was 50 cents an hour.  Pop and candy bars were 5 cents.  Oh! and you got two cents back on the glass pop bottle.  So yes there were better times in the past, but HEY!!!!We live in the here and now.  Deal with it.

     The real problem is the mandatory cuts and taxes.  They will push the economy the rest of the way off the cliff.   One foot is already hanging out in space.  If something is not done to head off the mandatory cuts and taxes the situation is inevitable.  The only cure is to mobilize a third party movement.  It has happened before. The only third party candidate ever to win the Presidency was Abraham Lincoln.  We know what happened then.  It something is not done we may be headed that way again.

   Like I said at the start.  The lesser of two evils. However if the world comes to an end on December 21st as it is supposed to.  What we decide will not mean much anyhow.  However, if the world just happens to keep on ticking we need to start looking toward a solution that works.  The definition of insanity is. "Doing the same thing, over and over, the same way and hoping to get different results."  If we continue down this two party road we can only hope the looney bin provides free meals, satellite TV and Wi-Fi.


   

Tuesday, September 4, 2012

Obama may Be Into Solar, But He's not To Bright

       Recently I was reading online and I am starting to understand why things are not going to get better if Obama stays in the White House.  He is supposedly for creating solar power, but he is putting small companies out of business by putting protective tariffs in place.  The sad part is one of the companies he showcased as an example is now a victim.  A company making solar powered attic fans to help reduce heating costs.  It is a small company from northern Indiana.  It makes all the components from locally procured materials.   All except the actual solar panel.  He uses a small panel about one foot by two foot.  He wants to use all American components, but has not been able to procure them.  At least ones that meet his standards.

      The problem for his business started when the major American panel makers convinced the government to put a tariff on imported solar panels.  The tariff made the materials he needed so high that he is no longer competitive in the market.  The big companies supposedly wanted a level playing field.  What they really wanted was to jack the prices up to make themselves competitive.  That is not a level playing field.

     The free enterprise system of business in America has always been about giving the best deal for the lowest price.  Sometimes the lowest price is not necessarily the best deal.  With the world markets on the verge of collapse two American companies are still growing.  They operate on the concept that they must be the most cost effective business in their markets.  Wal-Mart and McDonald's are still opening new facilities both in the USA and overseas.  Their game plan still works.  They are not complaining about a level playing field.  In China they might not be the cheapest but they are selling a product the locals want.  In India some American food chains are making meatless products, but they are adapting to the local markets and opening new facilities which creates jobs.

      What they are not doing is selling their products at a loss to gain market share.  A couple companies in the American solar market were/are selling their product at a loss to get market share.  They figure they can raise prices later when they are established.  They want a tariff to protect them from themselves.  They have no understanding of how to run a business.

      Having run my own businesses in the course of my life I know that the idea of selling at a loss is destined to fail.  Companies that are in business and stay in business know the markets they are dealing in.  They know what it takes to survive and charge accordingly.  The hearing aid industry is a perfect example.  A quality set of hearing aids are very expensive.  The reason is the business comes in cycles.  You have to have the income to weather the slow periods.  Sure you can buy cheap hearing aids.  As the saying goes you get what you pay for.  When the cheap one goes bad, where do you get it fixed.  The established dealers will be there to help you with your problems. The cut rate guy will be gone.

     The job situation in America is not that there are no jobs or opportunities to create them.  It is ignorance like the tariff I mentioned earlier.  The government is trying to influence markets that they have no understanding of.  That small manufacturer was on his way to creating quite a few jobs.  Now thanks to the Federal governments meddling in things they do not understand.  Businesses are closing instead of opening.  Lobbyists that say they are all for America are really only for lining their own pockets.  Lobbyists are not the friends of the American consumer.  They are the friends of those who can make their wallets fatter and do not care who they hurt in the process.

      The lobbyists push, steer and control politicians that have no concept of their duties under the American Constitution.  The recent demise of the American made light bulb is the perfect example.  That piece of legislation eliminated hundreds of thousands of jobs.  While there may be an energy savings in the mix.  The pollution that the new bulbs put in our landfills may be much more dangerous.  Simply switching off lights not being used would save more energy than any change in light bulbs.  Are street lights really necessary. Especially on interchanges in the middle of nowhere, in the middle of the night.  Cars do have lights and reflective signs can help cars as much as street lights.   Do you think the companies that make the new light bulbs might be benefiting from lobbying to get the competition off of the market.   They were lobbying to make themselves rich.

     Reducing emissions from coal powered plants is one thing.  Forcing them out of business is entirely another thing.  Nuclear is not the answer.  The earthquakes in Japan proved that.  A small leak can become a major problem.  Off shore drilling is just inviting another disaster to happen.  We can develop better cleaning systems for the coal plants and better ways of using all the heat that goes up the chimneys as a wasteful byproduct.  Why not put green houses and other industries near the plants to benefit from the heat that is being wasted.  Improvements is this way could create jobs.  Green houses all across the country make a lot more sense than trucking all of our produce from California, Mexico and Florida from one side of the country to the other.  You want to see a real threat to America read my 4/25/2012 blog "America Under A Threat, Worse Than Katrina."  I spent over 30 years in transportation and logistics and realized America is under a threat that makes the Katrina thing look like a cake walk.  It is not a matter of if it will happen, it is a matter of when it will happen.  Read it, then ponder how you will react to what I predict when it happens.  Sooner or later it will.  An ounce of prevention is worth a pound of cure.  My recommendations could not only create jobs and save lots of energy.   It could save hundreds of thousands of lives.

      Several years ago a local business pushed to get a law passed that required a certain percentage of any new construction to be spent on landscaping.  Guess what kind of business the guy pushing that rule through the city zoning board ran.  You betcha, a landscaping service.  That is almost standard practice anymore.  There is a need for jobs, but not by ripping off our fellow citizens or bankrupting the country.  It is not the governments job to create jobs, but it is not their duty to get in the way and eliminate jobs either.  I invite you to read 3 September 2012 blog and see that the debt issue is not the problem either.  The lack of jobs is the problem and cause of that is the Federal government.  They need to get out of the way and let Americans do what they do better than anyone else in the world.  Work and create jobs.


   

Monday, September 3, 2012

Labor, The Real Problem With Our Economy, It Is Not Labor

     Happy Labor Day.  I pray this finds you gainfully employed and able to celebrate this holiday.  Unfortunately many Americans are not employed.  The question is, is the lack of jobs the cause or an effect of America's economic problems.  As a history nut I can see a pattern in America's periodic recession's and depression's.  They always follow a time of prosperity.  The level of the national debt has nothing to do with the problem.  I can prove this by looking at the past and seeing proof. So what does cause the economy to slide into a negative position?  Hopefully I can show it in a simplistic way.  A way that will open people's eyes to the problem.  Seeing what the problem is gives us a path to fix it.  Most of us already know what the answer is.  We need to create jobs.  The question is why are jobs not being created.  Let me prove one thing before I go to the second.
 
      When the Great Depression started the total debt of the United States equaled about 38% of GDP. Yet the market collapsed and unemployment went up to 25% nationally.  Some cities and groups hit over 50% unemployment.  This did not really get much better till the start of World War II.  It was trying to get better in the mid to late 30's but kept hitting bumps and sliding back.   Yet when World War II ended the national debt equaled 122% of GDP.  The economy did not collapse even with all that debt.  By the logic going around today America should have fallen right back into depression.  It did not.  The economy took off and went mostly upward till the late 70's.  It was simply a matter of supply and demand.

      When there is demand the economy grows, but when demand stops so does the economy.  It is really simple.  As long as you, or the government, can make enough money to pay your bills you keep spending.
Even if it is on borrowed money.  However, when your spending exceeds both your income and your ability to pay your debt something has to give.  When you start loosing ground you tend to tighten the belt if  you are smart.

     Who tightens their belt first?  Those with the least amount of resources.  So recessions and depressions start from the bottom up, not the top down.  As a perpetual dieter I can tell you that when you start dieting the first place you usually feel it is in the belt.  Your pants get lose, so you tighten the belt.  Your shirts and coats still fit fine but the pants start getting loose fitting.  Eventually everything else starts getting loose fitting also.  That is when others start seeing the difference in you.  If you do not want to lose weight you resume eating the way you were.  However if it is because of a lack of money you start shifting your priorities and food comes first. You may not mind loosing a little, but you have no desire to starve to death.

      As you adjust to the reality of your situation your spending habits change.  When you quit buying things you can live without.  The businesses who were supplying you start feeling the pinch in their wallet and they start tightening their belt.  It is like a chain reaction.  The last one to feel it, or get it is the one with the most money.  That would be the government, but even they get it sooner or later.  People who have no income pay no taxes and the government starts feeling the problem.  Of course they do not want to tighten their belt. They want you to give them more.  If those running the government are smart, sooner or later, they wake up and see that there is a problem.

    The problem comes from the fact that the little guy is not going to let go of what little he has as long as he feels threatened.   You want to make him spend money, give him a job, or at least show him that the ability to get a job exists.  Until you do show him there is a light at the end of the tunnel he is not loosening his belt.  So what happened to all the jobs.  Well actually it is pretty simple.  Especially when you look at the long term.

     America had a Depression in the 1870's, then again in the 1890's and the 1920's with a few minor bumps between them.  What caused them though.  Each followed a period of boom.  New jobs created by new technology eliminated old jobs.  For awhile there was a transition from creative boom, but eventually many people were displaced by the downturn.  This is oversimplified, but it went something like this.

     In the 1860's great steps were made to support the war effort of the Civil War and there was not enough labor because so many went to fight the war.  Slowly the war spending and demand tapered off and it reached it's peak in the Depression of the 1870's,  slowly things started getting better as America started recovering from the war and moving west.  The railroads exploded creating demand for steel and to support the movement and expansion.  As steel technology advanced the need for labor was cut and jobs were eliminated which led to the Depression of the 1890's.  Slowly things started getting better especially with the advent of the automobile, the airplane and World War I.  Demand took off but hit a dive after WWI as the demand dropped and the newly invented tractor and assembly line production eliminated jobs. The dip started in the early twenties, but the upper half of the economy were to busy enjoying their new wealth to see the coming problems.  As the little guy tightened his belt again the economy started straining to survive.  It collapsed in 1929 and did not hit bottom till 1932.  Slowly it tried to take off as the government tried to create work programs.   When it seemed to be working they cut back and it all collapsed again and the only thing that pulled it all out of the hole was WWII.  The pent up demand and shortages caused by the war stimulated the economy for some time.

     In the 1970's America went off the gold standard and we had the oil crisis and the oil embargo all of which bought the economy to a halt by the late 70's.  Reagan came into office by promising to fix the problems.  Slowly things moved forward till the late 90's and the Dot Com Boom and Bust.  Also another round of oil problems hit America.  However what many did not see was the movement to robotics and computers in industry and the elimination of jobs.  Then after 9/11 the wars kind of kept things moving as they removed many of the unemployed by expansion of the military.  So now as the wars come to an end and soldiers return to the streets the job issue starts to grow again.

      The one thing I left out and the thing that pushed the debt cycle button was a bipartisan deal between Bill Clinton and Newt Gingrich which set in place the beginnings of the housing bubble and the explosion of the national debt.  Both were masked by the events that happened after and because of 9/11.  Now however they have come to the front as the economy almost collapsed in 2008. It can not seem to get restarted.
A big part of that is again the little guy is not getting off his wallet and he is not spending, because he does not feel secure.

      The only cure is to create jobs.  One way to do that is to create infrastructure repair and building jobs.  The government is not inclined to do that because it is considered government welfare.  What it really is, is a failure of Congress to do the duties given to it by the Constitution of the United States.  They have no problem with the creating money and taxing part, or the defend part. The third duty and equal to the first two was and is to provide for the Welfare of America.  I do not think they meant by giving away food stamps and unemployment checks.  They meant to maintain the country and its standard of living.  Later in Section 1, Article 8 of the Constitution they used that very authority to build the Capitol and the White House.  They also used it to rebuild after the War of 1812 when the British burnt them down.  So they have failed to provide for the care and maintenance which was and is their duty by command of the Constitution.  The second thing they can do is remove all government controls and regulations that hinder business from growing and developing.  Especially rules that give tax breaks to corporations at the expense of the American citizens.

    Finally they need to make the tax code fair across the board and that all get treated fairly and equally.  Those who benefit the most should pay the most.  It does not matter if it is individuals or corporations they should pay according to the benefits they receive.   People living below the poverty line should not even be taxed till they can afford the basics of life.  Implementing these few changes will make the economy take off like a rocket.  Many jobs that have been eliminated by technology are not coming back, but that does not mean Americans can not create new jobs.  They can and will when they know they will have enough to maintain a decent standard of living.

     So there is how to fix the problem.  Now it is time for Congress to get off their butts and fix it before it is to late.  It is not yet, but that time is coming fast.