Posts Tagged ‘economy’

Letter from Granddad

Tuesday, December 23rd, 2008

Guess you heard that 68% of “the youth vote” went to Obama.  My granddaughter called this morning to tell me she was one of them.  I replied with this e-mail:

Sweetheart, The election of Obama comes down to this.  Your grandmother and I, your mother and other productive wage earning tax payers will have their taxes increased and that means less income.  Less income means we will have to cut back on basic purchases, gifts and handouts.  That includes firing the Hispanic lady who cleans our house twice a month.

She just lost her job.  We can’t afford her anymore.

What is the economic effect of Obama’s election on you personally?

Over the years, your grandmother and I have given you thousands of dollars in food, housing, cash, clothing, gifts, etc., etc.  By your vote, you have chosen another family over ours for help.  So in the future, if you need assistance with your rent, money for gas, tires for your car, someone to bring you lunch, etc.  ..  call 202-456-1111.  That’s the telephone number for the Office of the President of the United States.  I’m sure Mr. Obama will be happy to send a check from his personal or business accounts or leave cash in an envelope taped to his front door.

It’s like this.  Those who vote for the president should consider what the impact of an election will be on the nation as a whole and not just be concerned with what they can get for themselves (welfare, etc.).  What Obama voters don’t seem to realize is that the government’s money comes from taxes collected from taxpaying families.  Raising taxes on productive people means they will have less money to spend on their families.

Congratulations on your choice.  For future reference, you might attempt to add up all you’ve received from us, your mom, Mike’s parents and others and compare it to what you expect to get over the next four years from Mr.  Obama.
To congratulate Mr.  Obama and to make sure you’re on the list for handouts, write to:

The White House

1600 Pennsylvania Avenue NW

Washington DC 20500

P.S.  Love you, but call the number listed above when you need help.

Granddad

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Say something nice about Obama

Saturday, December 13th, 2008

“Say something nice about Obama.”
 
This challenge came at a party from a good-natured self-described “rabid Obama supporter.” Normally, when off the clock, I avoid this kind of stuff. How different is it to, say, approach a physician in a social setting and say: “Doc, my knee hurts in the morning. What do you think it is?” But the guy seemed nice enough.

“OK,” I said. “Obama is likable. He means well. He appears to be a good father and a faithful and loving husband.”
 
“That’s it?”
 
“You asked me to say something good. I just did.”
 
“Aren’t you leaving something out?”
 
“I’ll bite,” I said. “What?”
 
“Well, you left out something that’s pretty obvious. The man is extremely intelligent, don’t you think?”
 
“I make a distinction,” I said, “between intelligence and wisdom, intelligence and judgment, and intelligence and common sense. Obama attended elite schools and did well enough at Harvard to become president of the law review and graduate magna cum laude. But…”
 
“But?”
 
“But my 93-year-old Republican father, who only finished the eighth grade until going back to get his GED in his late 30s, has more judgment, wisdom and common sense. My father never spent one minute in the auto industry and does not think he could run it. Obama thinks government can. My father thinks if you lend or borrow money irresponsibly, you shouldn’t be ‘saved’ by taxpayers. Obama — and a whole bunch of Republicans — think they should.”
 
“It’s about helping people,” my “rabid” friend said.
 
“My friend, economist Thomas Sowell, told me that whenever government wants to ‘do something,’ ask yourself three questions. 1) Who pays for it? 2) How much will it cost? 3) Will it work? With this brief analysis, Sowell said, one almost always finds ‘something’ is not worth it, is wrongheaded, or makes things worse.
 
“Who pays?” I continued. “Taxpayers do — either through higher taxes, borrowed money to be repaid with higher taxes, or printing money that creates inflation and higher interest rates.”
 
“The cost?” he asked.
 
“Well, last Sunday morning, Obama appeared on Meet the Press,” I said. “He offered a massive ‘infrastructure’ program, a New Deal II. The cost? Obama said his economic team is working on that. So far, the amount of government money spent or expects to spend — on FDIC insurance and to rescue banks, borrowers, insurance companies and investment firms, as well as the auto industry — exceeds $7 trillion or $8 trillion.
 
“Treasury Secretary Henry Paulson initially proposed $700 billion under TARP, the Troubled Assets Relief Program,” I continued. “But wait, Paulson then said no, it’s not a good idea to spend the money on troubled assets — better to spend the money on buying stock in financial institutions. So within weeks, the central premise of the bailout — the need to purchase ‘toxic’ assets held by financial institutions — was thrown out the window.”
 
My friend and I were now drawing a crowd.
 
“Paulson told us,” I said, “that lenders needed money in order to unlock the ‘credit freeze.’ But banks instead used the money to clean up their own balance sheets or to purchase other banks — completely contrary to the stated purpose of providing them cash infusions. And now Obama wants to ‘put people to work’ on government infrastructure projects. He wants to ‘modernize’ school and federal buildings. He wants to invest in technologies to create ‘green’ jobs.”
 
“How do you know it won’t work?” he asked.
 
“Well, years into the Great Depression, FDR’s secretary of the treasury, Henry Morgenthau, declared (quoted here verbatim): ‘We have tried spending money. We are spending more than we have ever spent before and it does not work….We have never made good on our promises….I say after eight years of this Administration we have just as much unemployment as when we started…and an enormous debt to boot!’
 
“So this has been tried, and many economists believe that the spending, along with other dumb government actions, prolonged and possibly deepened the problems and certainly did not solve them.”
 
“So what’s the answer?” he asked.
 
“Well, back to my dad. Mind you, he does not read The Wall Street Journal or Investor’s Business Daily or Forbes magazine. I recently asked him the same question.
 
“‘It seems to me the government’s just too d— big,’ said my Depression-era/World War II-veteran father. ‘I’d let people keep their own money. They’ll figure it out. They always do.'”
 
“But,” I repeated, “Obama certainly is likable.”

Larry Elder – Syndicated Columnist – 12/11/2008 10:15:00 AM

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American Success Story – Letter to Obama

Sunday, November 23rd, 2008
This comes from a real guy who lives in East Texas near my aunt and uncle … Move over Joe the Plumber!

~~~~~~~~~~~~~~

This letter was written by a man in East Texas as an open letter to Senator Obama. He really does exist and says anyone can email his letter around, just don’t change it. If you know someone who holds to the theory that the rich have life easy and need to be taxed more send it to them. This man tells it like it is!

*************

Mr. Obama,

Given the uproar about the simple question asked you by Joe the plumber, and the persecution that has been heaped on him because he dared to question you, I find myself motivated to say a few things to you myself. While Joe aspires to start a business someday, I already have started not one, but 4 businesses.But first, let me introduce myself. You can call me “Cory the well driller”. I am a 54 year old high school graduate. I didn’t go to college like you, I was too ready to go “conquer the world” when I finished high school.25 years ago at age 29, I started my own water well drilling business at a time when the economy here in East Texas was in a tailspin from the crash of the early 80’s oil boom. I didn’t get any help from the government, nor did I look for any. I borrowed what I could from my sister, my uncle, and even the pawn shop and managed to scrape together a homemade drill rig and a few tools to do my first job. My businesses did not start as a result of privilege. They are the result of my personal drive, personal ambition, self discipline, self reliance, and a determination to treat my customers fairly.

From the very start my business provided one other (than myself) East Texan a full time job. I couldn’t afford a backhoe the first few years (something every well drilling business had), so I and my helper had to dig the mud pits that are necessary for each and every job with hand shovels. I had to use my 10 year old, 1/2 ton pickup truck for my water tank truck (normally a job for at least a 2 ton truck).

A year and a half after I started the business, I scraped together a 20% down payment to get a modest bank loan and bought a (28 year) old, worn out, slightly bigger drilling rig to allow me to drill the deeper water wells in my area. I spent the next few years drilling wells with the rig while simultaneously rebuilding it between jobs.

Through these years I never knew from one month to the next if I would have any work or be able to pay the bills. I got behind on my income taxes one year, and spent the next two years paying that back (with penalty and interest) while keeping up with ongoing taxes. I got behind on my water well supply bill 2 different years (way behind the second time… $80,000.00), and spent over a year paying it back (each time) while continuing to pay for ongoing supplies C.O.D.. Of course, the personal stress endured through these experiences and years is hard to measure. I do have a stent in my heart now to memorialize it all.

I spent the next 10 years developing the reputation for being the most competent and most honest water well driller in East Texas. Two years along the way, I hired another full time employee for the drilling business so that we could provide full time water well pump service as well as the well drilling. Also, 3 years along the path, I bought a water well screen service machine from a friend, starting business # 2. Five years later I made a business loan for 100,000.00 to build a new, higher production, computer controlled screen service machine. I had designed the machine myself, and it didn’t work out for 3 years so I had to make the loan payments without the benefit of any added income from the new machine. No government program was there to help me with the payments, or to help me sleep at night as I lay awake wondering how I would solve my machine problems or pay my bills.Finally, after 3 years, I got the screen machine working properly, and that provided another full time job for an East Texan in the screen service business.Two years after that, I made another business loan, this time for $250,000.00, to buy another used drilling rig and all the support equipment needed to run another, larger, drill rig. This provided another 2 full time jobs for East Texans. Again, I spent a couple of years not knowing if I had made a smart move, or a move that  would bankrupt me.For the third time in 13 years, I had placed everything I owned on the line, risking everything, in order to build a business.

A couple of years into this, I came up with a bright idea for a new kind of mud pump, a fundamentally necessary pump used on water well drill rigs. I spent my entire life savings to date (just $30,000.00), building a prototype of the pump and took it to the national water well convention to show it off. Customers immediately started coming out of the woodwork to buy the pumps, but there was a problem.I had depleted my assets making the prototype, and nobody would make me a business loan to start production of the new pumps. With several deposits for pump orders in hand, and nowhere to go, I finally started applying for as many credit card as I could find and took cash withdrawals on these cards to the tune of over $150,000.00 (including modest loans from my dear sister and brother), to get this 3rd business going.Yes, once again, I had everything hanging over the line in an effort to start another business. I had never manufactured anything, and I had to design and bring into production a complex hydraulic machine from an untested prototype to a reliable production model (in six months). How many nights I lay awake wondering if I had just made the paramount mistake of my life I cannot tell you, but there were plenty.I managed to get the pumps into production, which immediately created another 2 full time jobs in East Texas. Some of the models in the first year suffered from quality issues due to the poor workmanship of one of my key suppliers, so I and an employee (another East Texan employed) had to drive across the country to repair customers’ pumps, practically from coast to coast. I stood behind the product, and made payments to all the credit cards that had financed me (and my brother and sister).I spent the next 5 years improving and refining the product, building a reputation for the pump and the company, working to get the pump into drill rig manufacturers’ product lines, and paying back credit cards.During all this time I continued to manage a growing water well business that was now operating 3 drill rig crews, and 2 well service crews. Also, the screen service business continued to grow. No government programs were there to help me, Mr. Obama, but that’s OK, I didn’t expect any, nor did I want any. I was too busy fighting to make success happen to sit around waiting for the government to help me.

Now, we have been manufacturing the mud pumps for 7 years, my combined businesses employ 32 full time employees, and distribute $5,000,000.00 annually through the local economy. Now, just 4 months ago I borrowed $1,254,000.00, purchasing computer controlled machining equipment to start my 4th business, a production machine shop.The machine shop will serve the mud pump company so that we can better manufacture our pumps that are being shipped worldwide. Of course, the machine shop will also do work for outside companies as well. This has already produced 2 more full time jobs, and 2 more should develop out of it in the next few months.This should work out, but if it doesn’t it will be because you, and the other professional politicians like yourself, will have destroyed our

country’s (and the world) economy with your meddling with mortgage loan programs through your liberal manipulation and intimidation of loaning institutions to make sure that unqualified borrowers could get mortgages.You see, at the very time when I couldn’t get a business loan to get my mud pumps into production, you were working with Acorn and the Community Reinvestment Act programs to make sure that unqualified borrowers could buy homes with no down payment, and even no credit or worse yet, bad credit. Even the infamous, liberal, Ninja loans (No Income, No Job or Assets).While these unqualified borrowers were enjoying unrealistically low interest rates, I was paying 22% to 24% interest on the credit cards that I had used to provide me the funds for the mud pump business that has created jobs for more East Texans.It’s funny, because after 25 years of turning almost every dime of extra money back into my businesses to grow them, it has been only in the last two years that I have finally made enough money to be able to put a little away for retirement, and now the value of that has dropped 40% because of the policies you and your ilk have perpetrated on our country.

You see, Mr. Obama, I’m the guy you intend to raise taxes on. I’m the guy who has spent 25 years toiling and sweating, fretting and fighting, stressing and risking, to build a business and get ahead.

I’m the guy who has been on the very edge of bankruptcy more than a dozen times over the last 25 years, and all the while creating more and more jobs for East Texans who didn’t want to take a risk, and would not demand from themselves what I have demanded from myself.

I’m the guy you characterize as “the Americans who can afford it the most” that you believe should be taxed more to provide income redistribution “to spread the wealth” to those who have never toiled, sweated, fretted, fought, stressed, or risked anything. You want to characterize me as someone who has enjoyed a life of privilege and who needs to pay a higher percentage of my income than those who have bought into your entitlement culture.I resent you, Mr. Obama, as I resent all who want to use class warfare as a tool to advance their political career. What’s worse, each year more Americans buy into your liberal entitlement culture, and turn to the government for their hope of a better life instead of themselves.Liberals are succeeding through more than 40 years of collaborative effort between the predominant liberal media, and liberal indoctrination programs in the public school systems across our land.

What is so terribly sad about this is that America was made great by people who embraced the one-time American culture of self reliance, self motivation, self determination, self discipline, personal betterment, hard work, risk taking. A culture built around the concept that success was in reach of every able bodied American who would strive for it.Each year that fewer Americans embrace that culture, we all descend together. We descend down the socialist path that has brought country after country ultimately to bitter and unremarkable states. If you and your liberal comrades in the media and school systems would spend half as much effort cultivating a culture of can-do across America as you do cultivating your entitlement culture, we could see Americans at large embracing the conviction that they can elevate themselves through personal betterment, personal achievement, and self reliance. You see, when people embrace such ideals, they act on them. When people act on such ideals, they succeed.All of America could find herself elevating instead of deteriorating. But that would eliminate the need for liberal politicians, wouldn’t it, Mr. Obama? The country would not need you if the country was convinced that problem solving was best left with individuals instead of the government. You and all your liberal comrades have a vested interested in creating a dependent class in our country.

It is the very business of liberals to create an ever expanding dependence on government. What’s remarkable is that you, who have never produced a job in your life, are going to tax me to take more of my money and give it to people who wouldn’t need my money if they would get off their entitlement mentality asses and apply themselves at work, demand more from themselves, and quit looking to liberal politicians to raise their station in life.

You see, I know because I’ve had them work for me before. Hundreds of them over these 25 years. People who simply will not show up to work on time. People who just will not work 5 days in a week, much less, 6 days. People always looking for a way to put less effort out. People who actually tell me that they would do more if I just would first pay them more. People who take off work to sit in government offices to apply to get free government handouts (gee, I wonder how things would have turned out for them if they had spent that time earning money and pleasing their employer?). You see, all of this comes from your entitlement mentality culture.

Oh, I know you will say I am uncompassionate. Sorry, Mr. Obama, wrong again. You see, I’ve seen what the average percentage of your income has been given to charities over the years of 2000 to 2004 (ignoring the years you started running for office – can you pronounce “politically motivated”), you averaged less than 1% annually. And your running mate, Joe Biden, averaged less than 1/4% of his annual income in charitable contributions over the last 10 years.

Like so many liberals, the two of you want to give to the needy, just as long as it is someone else’s money you are giving to them. I won’t say what I have given to charities over the last 25 years, but the percentage is several times more than you and Joe Biden, combined (don’t you just hate google?). Tell me again how you feel my pain.

In short, Mr. Obama, your political philosophies represent everything that is wrong with our country. You represent the culture of government dependence instead of self reliance; Entitlement mentality instead of personal achievement; Penalization of the successful to reward the unmotivated; Political correctness instead of open mindedness and open debate. If you are successful, you may preside over the final transformation of America from being the greatest and most self-reliant culture on earth, to just another country of whiners and wimps, who sit around looking to the government to solve their problems. Like all of western Europe. All countries on the decline. All countries that, because of liberal socialistic mentalities, have a little less to offer mankind every year.

God help us…

Cory Miller

P.S. Yes, Mr. Obama, I am a real American…

 http:// www.cmillerdrilling.com 

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FDR’s Policies Prolonged Depression by 7 Years

Thursday, November 13th, 2008

Written 4 years ago, this is very timely …

FDR’s policies prolonged Depression by 7 years, UCLA economists calculate

By Meg Sullivan

| 8/10/2004 12:23:12 PM

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

“President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services,” said Cole, also a UCLA professor of economics. “So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.”

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

Roosevelt’s role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century’s second-most influential figure.

“This is exciting and valuable research,” said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. “The prevention and cure of depressions is a central mission of macroeconomics, and if we can’t understand what happened in the 1930s, how can we be sure it won’t happen again?”

NIRA’s role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

“Historians have assumed that the policies didn’t have an impact because they were too short-lived, but the proof is in the pudding,” Ohanian said. “We show that they really did artificially inflate wages and prices.”

Even after being deemed unconstitutional, Roosevelt’s anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA’s labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor’s bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

-UCLA-                                                      

LSMS368                                                        

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