Deep Thoughts…with Euroranger

An outlet for my Tourette's-like thoughts (aka: you've been warned)

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Posts Tagged ‘election’

No Cure For Stupid

Posted by Euroranger on November 12, 2012

As I mentioned last week, I wanted to take a few days to digest the recent election activity and then comment on it.  I’ll spare you all from a rant and tirade about how the election turned out, who did underhanded what to whom and so on and so forth.  You can find those a dime a dozen on the intarwebz and I strive to deliver a somewhat fresh (or at least different perspective) on not so much what happened but what it will mean to our country.  To that end, after a week of somewhat erratic contemplation, I have come to two conclusive opinions:

Franklin et al

These guys actively modeled our country on the Roman Republic. They even knew that one day, we’d screw it up just like Rome managed to.

1./ The decline of the American Republic is at hand – Well, THAT sounds all doom and gloomy, doesn’t it?  Exactly the kind of bombast you’d expect from some dyed in the wool, hard core conservative, right?  Well, my assertion is based on history and not partisan politics.  I don’t really care who won the election…what I care about is who was elected, what those people have demonstrated over the past several years and what it means to America’s future.  What I’m talking about, of course, is our national debt.  Currently, the national debt stands at (get this) $16,260,696,626,397.55.  I kid you not.  I got that figure from here.  Said in plain English that’s “sixteen trillion, two hundred sixty billion, six hundred ninety six million, six hundred twenty six thousand, three hundred ninety seven dollars and fifty five cents”.  However, by the time you read that number out loud it was already obsolete by nine million additional dollars or so.  Yep, we here in the United States pile up debt by the assload like nobody else.  Anyway, everyone knows (or thinks they do) that the debt is one big ass number, right?  Well, it is and most people think it’s always been this big.  But the word “big” in this context has dramatically changed over the past 5 years.  This year, we’ll add another $1.5T or so in new debt.  Prior to President Obama taking over though, our deficits were more in the neighborhood of 200 to 400 billion per year.  Truly bad numbers back then to be sure…but those numbers are less than 1/3 of what we’re doing these days.  Go back even further to the last time Congress claimed to get serious about controlling the debt and budget deficits and you see deficits of less than $200B per year.  Just so we’re clear: days where we ran deficits around $200B = shit’s serious enough to enact legislation to try and control Congress spending like a drunk sailor on shore leave.  Days where our deficits are more than 6 times that much = meh, who cares (aka: “today”).

Since you’ve read this far, you’re probably wondering: how does this equal the decline of the American Republic?  It’s not complicated but it does require understanding how the process for funding our debt works and accepting that history has a tendency to repeat itself.  Our debt is funded by our treasury issuing something called “T-bills” or treasury bills.  The government makes such bills available for purchase and buyers of those bills receive a guaranteed modest amount of interest on their investment.  That means that for every dollar the government borrows, it ends up paying like $1.10 or so which is the original debt plus the t-bill’s interest.  Governments, private firms, banks and individual investors buy t-bills because their return is guaranteed.  However, “guaranteed” is the sticky point here.  Every country issues debt bonds (t-bills) to fund their debts, public works projects, etc.  Every entity that issues such a debt bond receives a debt rating from several international ratings agencies.  This is basically nothing more than an assessment of the risk of that issuing country making good on their guarantee to repay.  For countries that’s called their “credit rating”.  On August 5 of 2011, for the first time in the history of our country, our credit rating was reduced by first one then all the major rating agencies from AAA (outstanding) to AA+ (excellent).  The reason this happened was explained as two main reasons: our debt to revenue ratio and our political gridlock (Dems and Repubs not playing nice together).  In short, what the international ratings agencies said to investors worldwide was “while we still like America as an investment, they’re not as solid as they used to be and they don’t appear to have a plan to improve the situation”.

What does this have to do with the American Republic?  Just this: we just re-elected both a president and a Congress who, collectively, have added somewhere north of SIX TRILLION DOLLARS IN NEW DEBT IN THE PAST FOUR YEARS.  Re-elected.  That means, that despite the fact that we all supposedly knew how bad the debt was, we still returned the same buffoons who have proved they can’t and won’t control their spending.  Alright, you might say, but still…what does that have to do with the health of the Republic?  Just this: the only real parallel we have to historically compare ourselves with is the Roman Republic that disappeared in 27 B.C. when the Roman Senate granted exceptional ruling powers to one man (Octavian) who proclaimed himself Augustus and became, in essence, a Roman emperor.  To understand why this happened and why it’s a parallel to our situation you only need to know the the Roman Republic was experiencing many of the same types of pressures we are today:

– rapid expansion from a small entity to a large, world spanning nation (the United States only really became the world spanning nation in 1945 after the end of WW2)

– both nations maintained large, well funded armies (Rome because they were conquering the world, ours because we can no longer allow Europe the luxury of fighting amongst themselves every other generation now that we have atomic weapons) that placed a drain on the nation’s finances

– both nations polarized into conservative and popular (liberal) factions where the former derived power from the elite class while the latter looked to the lower classes for support, dividing the people and classes into what seemed like warring factions

– both experienced eras of huge social upheaval.  For Rome it was the importation of millions of slaves who took over the menial work of nearly everyone while in the United States we preside over the continual destruction of the traditional family while redefining both societal and gender roles for men, women, adults and children

With society changing at such a rapid pace, the demands of the nations required more and more revenue.  Rome acquired theirs via conquest and higher taxes.  Already in the United States, the call has begun for higher taxes to support lavish social entitlement spending.  In Rome’s case, taxes then were sold as “patriotic” and many people paid them gladly.  However, they eventually discerned that their taxes were being misspent and wasted and many stopped paying their taxes.  In other words, Rome couldn’t fund their debts.  That coupled with the rapid remaking of society, gridlocked politics and no real reasonable solution in sight was when people started thinking that their only salvation was to turn everything over to a single person who would have absolute power.  In the United States, we already have the fiscal hole we’ve dug ourselves and the societal upheaval.  We lack only the rapid shutoff of financial solutions for our spending.  Should our debt and deficit problems remain unaddressed, the rating agencies will have no choice but to downgrade our credit rating yet again.  Do that enough times and suddenly you have a scenario where the United States can no longer find buyers for our t-bills.  If you think this is impossible, you have only to look at Greece, Spain, Italy, Portugal, Ireland and a host of others around the world to see the lie.  There is nothing special about the United States that magically insulates us from economical reality.  If we keep on this path we will eventually be truly broke…and then rather than a dictatorship, we’ll have another revolution.  Either way, it’s the end of the American Republic…and our re-affirming election last week means we’re at least another 2 years away from even starting to address the problem responsibly.

White Obama

Don’t tell me this isn’t every Democrat strategist’s wet dream

2/ The Democratic Party may not nominate another white male for president again – There.  I’ve gone ahead and said it.  Democrat white dudes winning the nomination may never happen again.  While to some that may sound racist, I submit that a suspension of social outrage is in order while we examine the election’s demographic breakdown.  That link goes to demographic results that are, well, fairly stark in terms of demographic politics.  To put it bluntly: if you were white you voted for the Republican to the tune of nearly 60%.  White voters in this country made up 72% of all those casting votes and Obama got just 39% of you.  And yet, he won the general election by 3%.  How is that?

He won because he carried blacks by 93%, hispanics by 71% and asians by 73%.  That being the case, what does that mean?  Well, let’s look at the last times Democrats ran white men as their candidate: Kerry in 2004 and Gore in 2000.  Both men ran against Bush who, by all reasonable accounts, was vulnerable in both elections, yet he managed to win.  The numbers though, tell the tale:

In 2000 the non white vote was 19% of the total.  In 2004 it was 23% and in 2008 it was 27%.  In none of the elections (2000, 2004, 2008, 2012) did the Democrat candidate carry the white vote despite it making no less than 72% of all votes cast.  The Democrats lost the elections in 2000 and 2004 by close margins.  In fact, in each year except 2008, the white vote decreased for the Democrats each election.  While Al Gore carried 42% of the white vote in 2000, Obama got just 39% of the vote in 2012.

What it means is this: the Democrats know (or should know) that they cannot win the presidency by counting on the white voter.  That voter has become ever more hostile to their message over the years (albeit gradually as Clinton carried only 44% then 39%)…but the white voter is losing influence in this country to the hispanic voter bloc.  While I was aware of these numbers somewhat (I didn’t know their exact breakdowns), last week I asked myself a fairly straightforward question and didn’t like the honest answer: if Obama had been a white male running on the record of his deficits, poor employment numbers and such, would he have been re-elected?  The answer to that, I believe, is “not a chance in hell”.  I have to say, given that the minority vote in this country (especially black and hispanic) is so skewed by the race of the candidate, that the Democrats will eventually come to realize that they won’t win the presidency unless their candidate is a minority or is female (although no polling back in 2008 showed Hillary doing well should she have won the nomination).  That, to me, is a rather sobering thought.  White voters have split between Democrats and Republicans fairly reliably regardless of the ethnicity of the Democrat candidate.  Not so for blacks and hispanics.  This suggests a low level racial component when campaigning for minority votes would not only be advisable but beneficial.  It also suggests that, for a block representing more than 1/4 of American voters, issues and platforms matter less than the race of the candidate does.  In fact, if these numbers were somehow reversed and showed a race bias on the part of white voters, I shudder to contemplate the volume of the racial protests that would follow.  However, in this current era of media-sponsored political correctness, not only will there not be a protest, the very existence of these numbers won’t even be mentioned and if they are mentioned, they’ll be summarily dismissed.

Except, I expect, by the king makers in the Democratic party who are just as good with such numbers as I or any of you would be…and they look for any edge they can get in the biggest political game on the planet.  Oh, and by the way, for the time it took me to write this post, the United States added an additional $227 million dollars in debt.  Nice, huh?

My name is Euroranger and I approved this message.


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I have an idea: #1

Posted by Euroranger on January 25, 2012

Bullshit detector

This thing has been going crazy lately...

So, it’s yet another political season and yet another occasion for all of us Americans to look around and marvel at how absolutely gullible and tolerant we are.  Gullible in that some of us actually believe what a politician says when he/she opens their mouth (Hope and Change anyone?) and tolerant in that we haven’t all collectively grabbed torches and pitchforks and marched on Washington with the intent of stringing the useless bastards up by their toes for their sheer collective ineptitude.  Well, maybe instead of “tolerant” we could use “lethargic” because I think that kind of defines most folks these days when it comes to politics in this country.  We just don’t believe things can be handled anymore by the system we have in place.  It’s a nice system, had worked well for quite some time but it’s now been hobbled by the notion that compromise is evil and wrong and that anyone that doesn’t hold fast to every single belief they claim to hold is wishy-washy and should be expelled in favor of another politician whose character is more ideologically “pure”.  It’s utter bullshit and it’s why we have a Congress that got nearly nothing done this past session and why we have a president who’s better at making insipid fucking slogans instead of actually being an effective chief executive.  And…it’s all our own faults for electing them and then tolerating their collective idiocy while the country slowly sinks into the cesspool of history.

But hey, good news: I have some ideas!

Yes, I have suggestions to solve several problems that plague our once great country and none of them involve mass executions of anyone in government (yet).  No, I’ve been sitting quietly by watching with barely detectable interest the GOP nomination contest for the next presidential election and wondering how it was we came to this place.  And yet, rather than wonder why we’re interested in Romney’s tax returns or whether Newt wanted to bang someone other than his repellent second wife (she really does seem to be a real shrew though) when we should be interested in identifying the problems in the country and formulating and applying solutions to them, I’ll just go ahead and toss out a few ideas and hope that someday, someone in a position of power and who gives a care about the country to the extent they may actually, oh I don’t know, decide they want to arrest our current downward slide into obscurity notices them and says “hey, not a bad idea”.  So, without further ado, let’s get on with it.  Life has taught me that in order to get things done you need to identify what things need to get done.  That seems simple but really it’s kind of necessary to cut through all the circus crap around politics.  We don’t deal with issues anymore.  Our politicians use issues as the reason they can hold a press conference and pontificate about how their political opponents are really just Satan in disguise and want nothing more than to ruin this country.  They don’t actually solve issues though.

Unemployed dog

At least he was out looking for work instead of sitting around and moaning and licking his balls...unlike the OWS crowd.

So, to my mind, issue #1 today is: the economy.  That seems kind of obvious, right?  But, have you heard anyone put forward an idea other than “we need more jobs”?  Anything concrete?  Yeah, me neither and that’s because the way to fix the economy is rather radical and won’t make anyone happy…but fixed is what it needs to be rather than watch it get worse and worse.  So, let’s define what’s wrong with the economy.  I believe what’s wrong with the economy is wealth disparity, the tax rate and lack of jobs.  Oh sure, there are others but I believe if you solve these three then the others kind of solve themselves.  Luckily, I know exactly how to solve all three with but one simple new law.  Seriously.  I can solve all those in one fell swoop.  That one law would be: mandatory profit sharing.

Now, before most of you go “what the hell…profit sharing?…what an idiot” let me explain why this fixes things.  Let’s start with the issue of wealth disparity.  The real gulf in wealth accumulation between the rich and the not-rich started, not coincidentally around the early to mid 1980s.  There’s always been a difference but it was around then that the wealthy really started to rake in huge piles of money and the rest of us were pretty much cruising along at the same rate we always had.  I know why this happened.  Remember something called “supply side economics”?  No?  “Trickle down economics”?  How about “Reaganomics”?  Well, whether you understand it or not, our economy has operated more or less under the tenets of this economic model since around 1982-83 or so (it took time to implement).  The idea itself seems pretty straightforward and obvious.  Supply side economics featured 4 major components:

  1. Reduce government control of the economy and let business do what business does (basically, reduce/remove regulations)
  2. Reduce taxes, namely the capital gains and income taxes (let the people keep more of their money and they’ll invest it in business)
  3. Use the federal reserve to control inflation (this is done by controlling the money supply via the setting of lending rates to banks)
  4. Reduce the increase in government spending (spending increases but not as much as it had been doing)

The idea was to take the leash off business and in return the economy would grow, jobs would be created, profits and the GDP would increase, federal revenues would increase right along with them and workers would benefit via better jobs and higher wages.  All those happened…except that last one.  And despite the cases of apoplexy it’ll cause on the left when I say this: supply side/trickle down/Reaganomics just plain works.  This truly isn’t up for debate.  However, it can be made to work better (and as intended by it’s namesake).

A look at any data since the mid 1980s bears out the fantastic success of supply side economics.  Controls were loosened, tax rates were lowered, inflation was strangled and, for a time, federal budgets were at least under some control.  As a result business boomed, millions of new jobs were created, money poured into the stock market and federal revenues actually went up despite rates being reduced.  Everyone was winning…except the average American worker.  You see, while the businesses everyone was working for were making enormous record profits, those profits weren’t being passed down to the people who helped make them.  For the most part, those profits were being routed back into the stock market via corporate investment and dividend payouts but not into higher overall wages.  As a result, those who had money in the stock market (the wealthy) made even more money in the stock market and American wages fairly stagnated.  Sure, there were 401(k) retirement investment accounts and real estate boomed…and that’s where most of the wealth of all the non-wealthy folk was being realized.  Your house became, not just a place to live but a vehicle to contain your wealth.  Nobody recalls it now but that concept was rather new in the 1980s and 90s.  Anyway, the whole issue is that while the government opened the floodgates at the top of the pipe, nothing more ended up trickling down at the bottom of the pipe than had been before the plan was put into motion.  Well, fabulous wealth was generated (that much is obvious) but it didn’t get shared with those at the middle and bottom of the ladder.  Mandatory profit sharing fixes that.

Reagan on TIME

Reagan had a great idea but it got implemented with the typical efficiency we've all come to expect from our government.

I propose a law wherein if a company (any size) realizes an operating profit (after all expenses including wages/benefits) then a portion of that profit gets distributed to the employees in the form of a profit sharing payment.  The portion wouldn’t need to be cripplingly large either.  By way of example, let’s look at two companies: ExxonMobil and Walmart.  In 2010, ExxonMobil made $19.28B in profits and had 83,600 employees.  If you took just 1% of that profit (meaning 99% stayed with the company) and equally distributed it to every one of their employees in the form of profit sharing, it comes out to $2306 per employee.  Just one frickin’ percent equates to an additional $2306 per employee.  Naturally, 2% is twice that and so on.  And for ExxonMobil, 2010 was a down year compared to just two years earlier.  Yeah, 2010 saw a 57% decrease in profits from 2008.  But how about Walmart?  In 2010 they had around 2 million employees and enjoyed a profit of $14.33B.  Take the same numbers we did for ExxonMobil and Walmart pays out a 1% profit sharing check of just $72.  However, of those 2 million employees, the vast majority are part time and some adjustments need to be made to the formula.  However, when the Bush tax refunds went out at $300 per taxpayer, it helped to stabilize the economy and inject cash flow into a sluggish market.  Using that as a measuring stick, Walmart would need to pay out just 5% of their profits back to their employees or roughly $360 per person…and they still keep 95%.

This idea has a number of attractive features.  For one, we’re not using the federal government via the IRS to tax those corporations so that the government can redistribute it via social services.  No, in this case, work (having a job) pays off.  It’s a direct transaction between the employer and employee.  If, for tax purposes, the employer wishes to put that money into better benefits or wages ahead of time, such would reduce their profits somewhat (because benefits and wages are expenses that reduce profits) then this is also good.  Further, what will those employees do with their one time checks do you think?  What would you do if you got a one time, extra check from your employer for $350?  You’d do what most Americans do with it: you’d spend it.  That spending generates commerce which makes more jobs, higher profits for companies, sales tax revenues for local governments, increased income tax for the federal government, some of it gets invested into the stock market, etc.  Notice what it does though: it places more money (wealth) into the hands of the non-wealthy classes, it stimulates the economy which means more jobs, and it doesn’t complicate the tax code any.  It addresses two parts of the three I identified as needing to be fixed to make the economy move again…and it does it all without increasing taxes one bit.  In fact, the federal government could probably drop the tax rates across the board by a half or one percent and still maintain and probably increase revenues.  Let’s find out.

Say we have a worker making $60K and who has an effective tax rate (what they end up paying on their 1040 each year) of 18%.  The government revenue for that person is $10,800.  But suppose that worker gets a $1500 profit sharing check and the government has reduced taxes to sell this notion such that the new effective tax rate is 17.5%.  Well, the new taxes come out to $10,763 which is a $37 or 3/10 of 1% drop for that one guy.  However, that employee has $1537 more in his pocket than he did…and he’ll spend that money.  Spending that money creates local taxes and the goods he buys means the company making those goods needs more employees to keep up with demand…which means more jobs…which means more taxpayers.  This all worked for Reaganomics/supply side/trickle down economics and it’ll work here.  More taxpayers means the government very quickly makes up that lost $37 plus a whole lot more.  And the poor employer who had to pay out that 1% profit sharing?  Yeah, the demand for their goods goes up along with everyone elses which means they sell more…which means they make more profit.

Essentially, my idea binds the fortunes of the employer and employee closer together and ensures that the employee enjoys some of the benefits of the ever increasing economy and corporate profits.  This all seems like a win-win situation right?  Surely though, there must be a downside or two…and there is.  One downside is that with that much more money in the economy you get inflation.  However, the federal reserve now has a reliable formula for combating inflation and that’s the interest they charge banks to borrow from them.  Right now, that rate is exactly 0%.  That means the reserve lends money to banks for free.  However, the economy was on virtual fire throughout the 1980s and 90s and the rate wasn’t astronomical to control inflation.  In short, inflation will happen but it can be controlled.  Who else suffers though?  Maybe Wall Street some.  With corporations not having that extra percent or two to put into investments there will be a dip in the amount of money that flows into the stock market.  However, that money didn’t just disappear and those employees who have it will want to invest in their own retirements and the stock market is an ideal place to do just that.  So, while there might be an initial dip, it should right itself when some of those employees realize they have that extra check each year they can do something responsible with.


It may not be fashionable but if we don't there'll be less cake than in Portal

Anyway, that’s idea #1.  As an aside, I’m usually a fiscal conservative when it comes to politics and yet this is an idea I’m putting forward.  I believe that increasing the cash flowing through the economy is the only viable way to get everything moving again.  I don’t involve the government in the form of confiscatory taxes (indeed, I suggest those taxes may even be able to be reduced a little) and I retain all the existing features of our economic model.  All I am doing is putting the mechanism in place to ensure that the unfulfilled promise of trickle down economics gets realized: that some of the largess from the scheme actually, you know, trickles down.  It was a great idea but missed that one important and crucial element.  Fix it and the model will kick the economy into gear like it did 30 years ago when it was first enacted.

This is just one idea I have.  I have others as well but hey, let’s start with this one.  The right should embrace it because it keeps the government out of things (they don’t act as middlemen), it validates the conceptual promise of supply side or Reaganomics and it does something concrete to spur business growth.  The left should embrace it because, while my very simple example was that profits were shared equally for every employee, the plan can be tweaked to be indexed against salary.  The lowest earners get a higher percentage cut while the higher earners’ cut is lower.  Everyone still gets a piece of the pie but it provides room to ensure that those who have less get more and those who have more get less (but still get some).  It also directly helps the American worker which is something the left has claimed to champion for some time.  Well, this lets them do that.  Business should support it because it will mean that the measure falls across them and their competitors equally (so nobody gets disadvantaged competitively by it) and the resulting better economy means more business for them all.  The average American should support it because, duh, more money in their pocket.

Oh hell…that was all just compromise, wasn’t it?  Well, maybe if we don’t tell them, they’ll still go for it.  One can always hope.

My name is Euroranger and I approved this message.

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