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.

Health Care: The Next Round

Open Letter to Senators Warner and Webb

Thank you for voting against cloture on the Senate Health Care Bill. I do appreciate your willingness to vote against your party so that the American people and members of the Senate have some time to read the bill they will be voting on.

In prior communications, I have expressed my concerns around this unprecedented takeover by government of 17% of our economy. I am not in favor of the bill and do not share many of your views about its perceived benefit. In prior correspondence with you, I have outlined my suggestions for “reforming” health care, and will not repeat them here.

When voting on this matter, please take into consideration the actual “accomplishments” of government run programs:

· In 1965, the "Great Society" was created. Eight billion dollars was spent that year; today we are spending $500B annually.

· In 1977, the Department of Energy was created to "make us independent of foreign oil." Now it is a bureaucracy of 18,000 people with a $25B annual budget. We are still dependent on foreign oil, are not allowed to drill off our own shores (but foreign governments can), and have not built a new nuclear power plant since the late 1970s.

· In 1983, a Trust Fund was created to ensure that Social Security was sound for the retirement of baby boomers in 2011. After 25 years of increased payroll taxes, $2.5T was “borrowed” from that fund and every penny spent on something else. Now we want to” borrow” another $1T to "fix" health care while cutting Medicare entitlements to retiring seniors by $500B.

· In 2008, TARP and "stimulus" bills authorized another $1.5T, which is new debt, has not stimulated much of anything except "creating or saving" government – not private sector – jobs.

Not a good track record. I think you need to cut your losses and go back to old fashioned Keynesian economics. Harding / Coolidge in the mid-1020s, Kennedy in the mid-1960s, Reagan in the early 1980s, and Bush in his first administration – contrary to predictions by opponents – cut taxes and government income rose and economic activity and prosperity increased. Hong Kong became an economic powerhouse under a low flat tax. Estonia, Latvia, Lithuania, and Russia have adopted flat taxes ranging from 13% to 33%, all with very positive economic effects. These successes are being copied by the Ukraine and the Slovak Republics. Canada is starting to dismantle portions of its Universal Health Care system because it does not work. In contrast, Japan tried to “spend” its way out of its 1980 recession and it still has not recovered.

Our recent economic meltdown is not traceable to free enterprise run amok. Damage to large portions of our economy is traceable to government social programs and government regulation that create improper economic incentives: the Community Reinvestment Act’s emphasis on lending to unqualified borrowers; Department of Energy and the Environmental Protection Agency regulations, which are at cross purposes; and government graft and corruption (i.e., 13% graft in Medicare and Medicaid, as documented by independent watchdog agencies), to mention only a few.

The next “bubble” is going to be the American debt. Only capitalism – not socialism – will fix this problem, if it is fixable. To paraphrase Margaret Thatcher, “The problem with [the Democrats' ] socialism is, at some point, you run out of other peoples’ money.” The insertion is mine.

Which is More Dense: Solar Energy or Politicians?

In a prior article, (Cure for Energy Depression – More Sun?) , I conservatively estimated that 8,800 acres of solar collectors would be needed to replace the generating output of a 50 year old, 2259 Mw fossil plant that sits on 800 acres of land: 400 acres for generation and 400 acres of ecological preserve. Well, now the results are in: Florida Power and Light has just announced the opening of its Arcadia, Florida, DeSoto Next Generation Solar Energy Facility, at which Obama will preside and tout the benefits of solar energy.

According to FP&L information, the DeSoto Next Gen plant will produce 25 Mw, consists of 90,500 solar panels, and sits on 180 acres of land. It will produce “enough electricity for 3,000 homes.”

So, if my math is correct, for a modern, solar plant to produce 2,259 Mw of power, 16,265 acres of land are required (180 x (2,259/25)). If one corrects my original estimate of 8,800 acres by eliminating the fossil plant’s ecological preserve acreage from the calculation, the original calculation yields an estimated 17,600 acres of solar cells. In other words, the electricity need of the 2.7 million people in the Tampa Bay area will require more than 160,000 acres (250 square miles) of solar panels. Alternatively, ten fossil plants – 2,259 Mw capacity each – sitting on a total of 4,000 acres (6.2 square miles) will provide the electricity needs of 2.7 million people.

Okay, so “Next Gen” solar photovoltaic arrays are more efficient than I estimated, or perhaps the solar insolation in Florida is higher than I assumed in my calculation. Still, the estimate is pretty accurate AND it PROVES that solar energy is arguably less dense than most politicians and environmentalists. You will never smelt steel, produce semi-conductors, or manufacture any other high-technology, high energy density products using this form of energy BECAUSE you will run out of land. In fact, any right thinking (pardon the pun) individual, using the same logic an environmentalist would use, should be concerned about denuding large acreages of virgin swamp (or pristine forest, if that is more ecologically appealing to you) to produce “clean energy.”

So which is denser: solar energy or politicians? From an engineering science perspective, solar energy is less dense. From a political science perspective, politicians are less dense. Politicians are not concerned about the science or economics of the situation; they are only concerned about votes. And when it comes to voting, the politicians know they can garner more votes per square mile promoting solar energy at the expense of our economy and our long energy interests.

VDOE Standards of Learning for Economics and Personal Finance

The Virginia Department of Education (VDOE) has requested comments on its proposed economics and personal finance standards of learning. The following comments were provided by me on October 9, 2009. If you are a Virginia resident, I suggest that you review the proposed standards and comment.

Open Letter to Virginia Department of Education Concerning Proposed Standards of Learning for a Public School Curriculum to Teach Economics and Personal Finance

I agree with the VDOE’s goal that an understanding of economics and personal finance is important to young people, as they learn to manage successfully their own time, money, and resources, and become informed citizens in a increasingly globally integrated, interdependent society. However, establishing standards of learning is only the first step in this process. The SOLs, as you have stated them, provide a broad roadmap for what needs to be taught. They do not address the expected outcomes, how it will be taught, or the actual content of instruction. My comments: (1) request clarification on objectives, which appear to be loosely defined, (2) request that VDOE specify the textbooks that will be used, and (3) request that VDOE identify the qualifications of and preparatory instruction that will be provided to teachers who will conduct this very important course.

After a review of the curriculum’s stated objectives, my particular concerns are with specific objectives that explore the interrelationship between a free market economic system and the role of government in that system. Specifically, I am interested in understanding what will be taught in these areas. I am concerned that, like so much of current public education, it can be co-opted by persons who do not share my traditional, historical perspective on the formation and objective success of American free-market economics. Specific comments on the SOLs are:


EFP.7 b) describing government’s role in stabilizing the economy; c) describing sources of government revenue; and d) explaining balanced-budget, deficit, and national debt.

What exactly is to be taught as part of this objective? If the bias is to promote the virtues and success of Keynesian economics as practiced by Roosevelt or the current administration, I would oppose such instruction. However, a balanced discussion that compares and contrasts the practices of the Hoover, Kennedy, Reagan, and G.W. Bush administration to that of Roosevelt, Johnson, Carter, and Obama administrations would be fair. Text references: Folsom, B., New Deal, Raw Deal and Simon, W., A Time for Truth.

EFP.8 in its entirety, which requires the student to demonstrate knowledge of the role of government in a market economy by d.) explaining that governments redistribute wealth.

Again, what is to be taught as part of this objective? While it is a fact the government does redistribute wealth the real question that must be answered is to what purpose and to what extent is this necessary? A good text that addresses the role of government in a free market is Thomas Sowell’s text Basic Economics.

ALL terminal objectives (which is what I assume you have listed in your document) should be broken down into enabling objectives that include a measure of acceptable accomplishment. For example, “Upon completion of this objective, the student will be able to state the three root causes of the Great Depression: (1) ‘Cause 1,’ (2) ‘Cause 2,’ (3) ‘Cause 3’). This would go a long way to “flesh out” what is required and make it clear to the teacher, student, and public if that objective has been accomplished.

Noticeably absent from the learning objectives is a requirement that the students complete an actual income tax return. In this context, it would be good to teach each student that 50% of American taxpayers pay 97% of all federal income tax. Twenty percent pay 3%. Thirty percent either pay nothing or receive transfer of payments (Earned Income Tax Credit) from the top fifty-three percent. This might prove to be an interesting discussion if compared and contrasted to the redistribution of wealth discussion alluded to in EFP 8.

With respect to a text, I recommend that VDOE disclose, at this point in time, the textbooks that will support the curriculum. While I fully anticipate that such a request will be declined because the curriculum will not be taught for several years and it will be argued that it is impossible to select a text at this time, I suggest that you refer to existing texts that you find acceptable today to give the public a feel for content and set an expectation against which the public can judge your final selection. In the absence of any response from VDOE, I recommend that you consider Thomas Sowell’s Basic Economics. The book is unique in that it does not present economics from a mathematical perspective, but utilizes real world examples to illustrate economic principles. It can be understood by anyone using simple logic.

Last, I propose that you disclose required teacher qualifications and the approach, schedule, and training program content that you plan to use in preparing teachers to present this material. This is as important as the instruction itself.

I have posted this letter on my blog and the HR Teaparty blog. I am encouraging other Virginia citizens to review and comment on the proposed SOLs. I have also forwarded a copy of these comments to my state representatives and Del. Bob Tata. I will be following the progress of curriculum implementation closely. Over the past thirty years, traditional values-based Americans have not paid sufficient attention to the actions of government and as a result have ceded the moral high ground to post-modern relativists, who have undermined the nuclear family, the church, education, the media, and government institutions. Control of our economy and the principles that underlie economic freedom are one of their last objectives. Rest assured that I will continue to work diligently to make sure any economics curriculum is taught from a factual and balanced perspective.

DNR: Health Care Reform

Open Letter to the Congress of the United States

As we debate whether health care reform lives or dies, I want to reiterate my opposition: Do Not Resuscitate (DNR) the bills in their current form. I believe the current bills should be scrapped, and congress should tackle health care with the following principles in mind.

1. No public option
2. No coverage for illegal aliens.
3. Allow individuals to OWN their own policies with health savings accounts and make them transportable between jobs.
4. No reduction in Medicare, Social Security. If you think $500B over the next 10 years can be saved through reduction in graft and corruption, then go after that. You should be doing that anyway ... that is your job. Funnel ACTUAL savings from your graft and corruption initiatives DIRECTLY to the states so that they can provide catastrophic health services to those without coverage via Medicaid, an EXISTING program. No more government programs that are incapable of paying for themselves... use what you have and use the existing government workforce more efficiently and effectively.
5. Remove barriers to insurance companies so that they can provide coverage across state boundaries.
6. Eliminate pre-existing conditions from insurance policies.
7. Require insurance providers to disclose costs, coverage, and other performance statistics on the internet. Allow insured persons to post their experience with the insurer on the internet.
8. Require posting of drug prices, at the point of provision, on the internet.
9. Create incentives for drug companies, insurance companies, government, and non-profit organizations to invest in student scholarships and health care infrastructure to allow ALL qualified students to go to medical school.
10. Take on the AMA if they proscribe through licensure the MAXIMUM number of doctors entering the profession. Their job should be define and measure competence, not regulate supply in order to artificially raise salaries.
11. Tackle medical malpractice tort reform.
12. Tackle medical regulation reform: I believe the government in general OVER REGULATES industries.

In short, create a FREE Market, where supply and demand can seek a balance. As Ronald Reagan said, "Government is the problem, not the solution."

National Security

Open Letter to the Congress of the United States

My understanding is that the President has held one national security briefing in the last month. The number of Presidential appearances on television and at town halls has been greater than the number of days he has been in office. His administration has spent more time seeking partnerships between government and large business (GE), between government and corrupt private non-profit organizations (ACORN), and between government and federally funded organizations that indoctrinate and promote administration programs (the National Endowment of the Arts), than he has with his cabinet.

Having managed large businesses, I am familiar with the concept of span of control and the need to focus on key issues in order to achieve a business’s core objectives. This president does not appear to appreciate this concept, abrogating his responsibility to DIRECTLY involve himself in the two most important issues facing this country: security and economic recovery. This raises serious questions about who is in charge, in my view. Instead, he wants to “remake” the country by asserting government control over large segments of our economy, bypassing the checks and balances of the constitution through the appointment of “czars” of questionable fealty to historical American principles, and making the world more unsafe by not supporting democratic movements in Georgia, Poland, Czechoslovakia, and Iran.

I suggest that you counsel the president on his responsibilities and faithfully uphold your responsibility to ensure that ALL legislation be passed by congress rather than abrogate this responsibility to the administration’s ever expanding federal regulation. In the absence of perceived progress toward these goals, I will ensure that I exercise the small influence I have on my family, friends, communities, and the organizations that I support to oppose the unconstitutional practices, policies, and profligate spending of this administration. The results of my actions will be measured at the ballot box.