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Saturday, January 2, 2010

Dangerous, Dysfunctional Intellectual Elitists

On December 21, 2009, Paul Krugman wrote in his NY Times Op Ed, Dangerous, dysfunctional government, “Unless some legislator pulls off a last-minute double-cross, health care reform will pass the senate this week. Count me among those who consider this an awesome achievement. It’s a seriously flawed bill, and we’ll spend years if not decades fixing it, but it’s nonetheless a huge step forward.” [Emphasis mine] Makes one wonder what he thinks is the “huge step forward.” The only thing that is seriously flawed is Paul Krugman’s world view and his fundamental understanding of the Constitution.

In this moment of progressive (some would say socialist or Marxist) elation, Krugman, a Nobel prize winning economist (that may say it all), columnist, and author, gives us a rare glimpse into the “progressive” thinking that is going on behind the Wizard-of-Oz like curtain we call Washington, DC. Though thinly veiled, his comments suggest that passage of the most recent senate verison of the health care bill is not about improving health care: it is about promoting a socialist agenda in which individual rights flow from the state and individual freedom is replaced by economic slavery. It is about making the Constitution irrelevant.

Consider the following statements from Krugman’s article:

· “… the fact that it was such a close thing shows that the Senate – and, therefore, the US government as a whole – has become ominously dysfunctional.”
· “Democrats won big last year. In any other advanced democracy, this would have given them the mandate and the ability to make major changes. But the need for 60 votes to cut off Senate debate and end a filibuster – a requirement that appears nowhere in the Constitution … gave a handful of wavering senators extraordinary power to shape the bill.”
· “We need fundamental financial reform … climate change … long-term budget deficit [reduction]. What are the chances we can do all of that – or any of that – if doing anything requires 60 votes in a deeply polarized Senate?”

Krugman continues his blathering, quoting Barbara Sinclair – a professor of political science at the “ultra conservative” University of California Los Angeles -- that she finds extended-debate-related problems affected only 8% of major legislation in the 1960s, 27 % in the 1980s, and 70% after 2006. Wow! What about the 1970s, the 1990s, or all of the 2000s? Sounds like data cherry picking to me. But, you have to love his conclusion, and I quote “… Bush-era Democrats weren’t as nearly determined to frustrate the majority party, at any cost, as Obama-era Republicans. Certainly, Democrats never did anything like what Republicans did last week: GOP senators held up spending for the Defense Department in an attempt to delay action on health care.”

Actually, they did worse, according to my recollection of that period: as a minority party, the Democrats attempted to use this 60 vote majority rule to preclude George Bush from bringing his Supreme Court chief justice nomination to the floor. They effectively used their minority power to preclude enacting Bush era health care, immigration, and energy policies, which passed in the House, but were denied seeing the light of day in the Senate.

But let’s not dwell on this tit-for-tat childishness, even though I might remind Krugman his beloved Social Democrats hold a supermajority in the House, in the Senate, AND control the presidency. Instead let’s focus on his conclusion: “But if such legislation is itself blocked by a filibuster, reformers [emphasis mine] should turn to other means [emphasis mine]. Remember the constitution sets up the Senate as a body with majority – not supermajority – rule. So the rule of 60 can be changed.”

I guess Krugman has selective memory. When the Social Democrats tried to filibuster Bush’s nomination of John Roberts as Chief Justice, the Republican’s stated they were prepared to “go nuclear” [Democrats actually coined that phrase] – eliminate the 60 vote supermajority rule. The social Democrats howled – it took away the minority’s rights, they claimed. Cooler heads prevailed and the moderates came forward. What they realized – and apparently Krugman and his other socialist/ Marxist friends do not want to admit – is the United States is not a democracy, as he asserts, in which the majority necessarily rules. It is a republic that operates on the rule of law and, in many cases, requires supermajorities to get things done, like amend the constitution. Therefore, the senate 60 vote rule to move major legislation to the floor, even though it does not “appear in the Constitution,” is consistent with the founding fathers’ principle that in a republic – when 100 people are going to determine the fate of the republic – it is sometimes better to have legislation vetted by a supermajority before it is put to a majority vote. It gives the minority some leverage in decision making.

Similar thinking pervades our whole legal framework. Suppose you were a member of a posse and you captured a cattle rustler. In a democracy, a simple majority of the posse could vote to hang the rustler. In a republic, the majority has no such rights: the rustler is turned over to the sheriff who arrests him. The rustler has a right to a trial and jury of twelve peers. In a death penalty case, he must be found guilty unanimously by all twelve jurors not a simple majority. If the verdict is not unanimous, then he is let go.

Krugman’s argument rings hollow. However, it does clearly illustrate the Social Democrats’ strategy: legislate us into economic slavery through growing big government at the expense of personal liberty and the rule of law. The government currently controls 30% of the economy. With health care, no matter how bad the bill is, they will control an additional 17% of the economy’s spending – or a total of 47%. For them it is a tipping point. With fully 43% to 47% of all Americans currently not paying any federal income tax, the final nail in the coffin is to make us all dependent on the government for the most fundamental of all rights: our health. In effect, if they control our health and our wealth, they control everything.

To paraphrase Admiral Farragut at the battle of Mobile Bay, their battle cry is: “Damn the Constitution, full speed ahead.”

Unemployment: You Do the Math

In the Wall Street Journal article, Labor Market Shows Signs of Progress, by Luca Di Leo and Sarah N. Lynch, (Jan 2, 2010), the authors claim “The number of people filing new claims for unemployment benefits in the U.S. fell in the latest week to its lowest level in nearly 18 months, a sign the labor market may be turning the corner.” They illustrate their claim with a graph showing a steady state initial jobless claim rate in 2007 of 300,000, a peak in the rate in early 2009 of 650,000, and a current rate of 460,000. They also stated that 4.8M people had been collecting jobless benefits for more than a week.

I am not a research analyst, just a guy trying to find a job and feed my family, so my research resources and time are limited. However, even a person like me, with a government (public) high school education, can do the math.

According to Wikipedia, the United States employs a total of 155M workers. According to news reports, 10% of the workforce is unemployed or 15.5M. Assume in the best of times, 5% unemployment is the norm and monthly initial claims are 300,000 (WSJ data). That means approximately 7.5M people need to be put to work. According to the WSJ data, 4.8M are drawing unemployment for at least a week, which means that 2.7M are long term unemployed who have given up looking, an assumption we will come back to later.

According to the Bureau of Labor Statistics over the last decade (1999 – 2008), JOB CREATION has averaged approximately 65,000 jobs per month. This means that at historical job creation rates AND at a stable initial claims rate (300,000), it will take 115 months to regain the 7.5M jobs that represent 5% unemployment. The truth is that initial claims rates are still at 450,000 per month (we are losing jobs but at a lesser rate), two-thirds of the jobs CREATED OR SAVED (I love that term ... another Obama sleight of hand) are GOVERNMENT (read OVERHEAD) jobs, AND there is no guarantee that the jobs even exist to be filled because companies may choose not to rehire because they have realized PRODUCTIVITY INCREASES THROUGH AUTOMATION over the past 10 years and the future in an Obama world is extremely risky from a regulatory and tax perspective.

For those political hacks that believe I chose my data to help George Bush, note that I did include 1999, a Clinton year (average 264,000 jobs per month) AND I did not include 2009, a bad year for Obama (-340,000 jobs per month). I know, I know, political ideologists would claim 2009 was Bush’s fault. My rebuttal to that is to get a meaningful mathematical result, one must treat the data between presidencies consistently. Therefore, perhaps a better way to treat the data is to assume that the market discounts the jobless rate by ANTICIPATING changes in policies between administrations so that an administration’s impact actually starts in the year preceding its actual election or re- election. Under this theory, 1999 (264,000 jobs per month) was really Bush’s first year and not Clinton’s last year and 2008 (-265,000 jobs per month) was Obama’s first year and not Bush’s last year. As a laymen statistician, I can find some support for this argument by noting the inverse correlation between Obama’s popularity in the polls, starting in the April – May 2008 timeframe, and the gains and losses in the stock market. Another interesting analysis might be to focus on who controls congress rather than who is president. Ahhh, this is an analysis for a different day. As they say, so little time and so little money!

Assuming you and I disagree on the preceding analysis, let’s examine what happens if we split the difference. In that case the average job creation rate across the Bush and Clinton Administrations AND eliminating 2009 as an anomalous year, results in an average monthly job creation rate of 82,000. If we agree on the other numbers and relax all my prior assumptions and constraints, then the best we can expect from the economy is recovery in 91 months, assuming 7.5M unemployed or 58 months if you assume 4.8M unemployed.

No matter how you cut it, the picture is not as rosy as the social progressives (Social Democrats) want you to believe. The only way to stimulate the economy is to reduce the size of the government and its need for taxes and let American innovation in the free market do the rest.

Those who think the government is going to fix this are relying on a false god.

Remember ...

"You're entitled to your own opinion, but you're not entitled to your own facts," Sen. Daniel Patrick Moynihan.

"Against public stupidity, the gods themselves are powerless." Schiller.

“Who controls the past controls the future. Who controls the present controls the past.” – George Orwell, 1984

"Statistics are no substitute for judgement," Henry Clay

"The problem with socialism is that you eventually run out of other peoples' money," Margaret Thatcher