(Comments sparked by Economist Article of Oct. 6, 2012, p.84 discussing a study by Barclay's capital)
Many would probably assume that periods when we have a Republican President would be good for the Stock Market. But, interestingly, since 1929 the average price change on stocks, adjusted for inflation, during the 40 years we have had Republican President's is....slightly less than zero per year. The 44 years where we have had Democratic Presidents, on the other hand, average about 7% increase.
Even if you look only at the years where a Repubilican President's party controlled both houses of Congress, the real average return on stocks is negative.
Predictably, given that bonds do well when investor's retreat from equities when the economy is weak, bond prices when we had Republican President's averaged a gain in bond values of 1.9% while Democrats saw a loss of just under 1%.
The inflation rate has been slightly higher under Democratic Presidents than Republican Presidents (3.5% to 3%), but far from enough to explain away the Republicans poor record.
The advantage to Democratic Presidents goes beyond prices to income. The article cites calculations * that the top 20% of earners, between 1952 and 2004, did better under Democratic President's than Republican Presidents (1.37% to 0.92%). So did the poor (bottom 20%) who gained 1.56% a year under Democrats, and lost 0.32% under Republicans.
A big part of the Republicans problem is that somehow they just seem to be running the show when calamitous collapses in stock prices occur. In 1929 Herbert Hoover was President, in 1973-74 it was Richard Nixon, in 1987 Ronald Reagan and in 2001 and again in 2008 it was George Bush. Democratic Presidents seldom see stock market crashes, Roosevelt in 1935-36 is the only one even beginning to rise to the level of the classic Republican collapses. But that still hardly explains the underlying huge gap over the years.
So why are the facts so hard on Republicans? The simple answer suggested by the facts is that Republicans are incompetent at managing the economy. Business Republicans love money, so they try too hard to cultivate it. Perhaps Republicans are like one of those people we all know who love plants but kill everything they try to grow because they over water and overfeed.
* "Unequal Democracy: The Political Economy of the New Gilded Age" (Larry Bartel's)
Tuesday, October 16, 2012
Wednesday, October 10, 2012
Income Inequality - Good or Bad?
Is income inequality good or bad?
The answer seems to depend on what goal you are seeking to achieve.
If your goal is to maximize the economic strength and vitality of the United States, history shows pretty clearly it is bad. In the last 100 years the two periods where income inequality rose rapidly ended in the two most crippling economic collapses, the great depression and the great recession. The long period from the late -1930's to early 1980's where income inequality was falling or stable at lower levels was marked by a very long period of pretty stable and strong growth.
The average American should be against income inequality. A survey from about a year ago found the average American, if they had an income of $70,000 a year, felt comfortable and secure and was willing to commit more time to enjoying life. Because for average Americans wealth is not about competition or power, its about creating a life for themselves and their family. So their goal should be a strong and vital economy for the United States.
On the other hand, if your pre-eminent goals are personal maybe income inequality is good (if you are on the up side of inequality). Psychological studies found some years ago that most rich people care more about relative wealth than absolute wealth. What motivates them is to be much wealthier than everyone else, rather than to achieve any particular amount of wealth or security. There is no magic number at which they are ready to enjoy life and family, because what motivates them is the competition to garner personal wealth and the power to goes with wealth. They don't really care what is good for the country, if it gets in the way of their personal ambitions.
It is sort of like they just want to be a big fish, and if the pond has to shrink for them to be a big fish, so be it. So, unfortunately for the rest of us, our pond has been shrinking because the folks who like income inequality have dominated the public discourse the last few years.
Sunday, October 7, 2012
Businessmen as Presidents
History suggests businessmen don't make very good Presidents. In the last 100 years we have had, by my reckoning, 5 Presidents whose primary qualification according to the way they characterized themselves was their success as business people.
The first three were Republicans.
First wealthy newspaperman Warren G. Harding from 1921 to 1923. He died in office in 1923 as his administration was engulfed by the Teapot Dome corruption scandal. He was replaced by Calvin Coolidge. Silent Cal was a career Republican politician and seems to have been a pretty smart guy. He managed to defuse and deflect the scandal from the Harding administration and, since the economy was doing reasonably well get re-elected in 1925. His term in office was marked by a hands off, business knows best attitude, during which stock market and housing bubbles began to really inflate. Coolidge choose not to run in 1929.
With Coolidge bowing out Republican Herbert Hoover, a successful mining engineer who had moved into politics and served in both the Harding and Coolidge administrations rode the still bubbling euphoria of the roaring twenties into office. Within a year the bubbles began collapsing and the nation began sinking into what came to be the Great Depression. Hoover tried to use business friendly free market economic policies to stop the slide, they only made it worse. He reduced income tax rates, and, believing in limited government, vetoed a series of efforts attempting to develop a coordinated national response to the deepening crisis. By the 1932 election thousands of banks had failed, the unemployment rate was nearing 25%, businesses were failing across the country and the nations deficit was skyrocketing. Coolidge lost to Roosevelt and we did not have another Republican President until Ike 20 years later.
The next businessman President was a Democrat, Jimmy Carter, the Peanut Farmer. Although Carter wasn't truly a big business candidate, and didn't necessarily ascribe to the notion the free market is self correcting and government is bad, his administration began in a period of economic stagnation and he managed to do little to turn the tide.
The next business man President was George Bush Jr. (Although his Dad had considerable business experience, he did not market himself as a businessman). Mr. Bush, as we all know, took over a country with a balanced budget and a strong economy and walked out the door eight years later with the housing market in a shambles, Lehman Brothers having just collapsed, over 4 million people having lost their jobs in the months before he left and the deficit skyrocketing.
The first three were Republicans.
First wealthy newspaperman Warren G. Harding from 1921 to 1923. He died in office in 1923 as his administration was engulfed by the Teapot Dome corruption scandal. He was replaced by Calvin Coolidge. Silent Cal was a career Republican politician and seems to have been a pretty smart guy. He managed to defuse and deflect the scandal from the Harding administration and, since the economy was doing reasonably well get re-elected in 1925. His term in office was marked by a hands off, business knows best attitude, during which stock market and housing bubbles began to really inflate. Coolidge choose not to run in 1929.
With Coolidge bowing out Republican Herbert Hoover, a successful mining engineer who had moved into politics and served in both the Harding and Coolidge administrations rode the still bubbling euphoria of the roaring twenties into office. Within a year the bubbles began collapsing and the nation began sinking into what came to be the Great Depression. Hoover tried to use business friendly free market economic policies to stop the slide, they only made it worse. He reduced income tax rates, and, believing in limited government, vetoed a series of efforts attempting to develop a coordinated national response to the deepening crisis. By the 1932 election thousands of banks had failed, the unemployment rate was nearing 25%, businesses were failing across the country and the nations deficit was skyrocketing. Coolidge lost to Roosevelt and we did not have another Republican President until Ike 20 years later.
The next businessman President was a Democrat, Jimmy Carter, the Peanut Farmer. Although Carter wasn't truly a big business candidate, and didn't necessarily ascribe to the notion the free market is self correcting and government is bad, his administration began in a period of economic stagnation and he managed to do little to turn the tide.
The next business man President was George Bush Jr. (Although his Dad had considerable business experience, he did not market himself as a businessman). Mr. Bush, as we all know, took over a country with a balanced budget and a strong economy and walked out the door eight years later with the housing market in a shambles, Lehman Brothers having just collapsed, over 4 million people having lost their jobs in the months before he left and the deficit skyrocketing.
Friday, October 5, 2012
Romneys Health Care Fairy Tale
The Republican party has staked out such a fantasy based position on Health Care that it has allowed Obama to occupy the middle of the road where one can make decisions based on facts and data rather than having to cater to ideology.
This is a bit of a problem for Romney, who is a pragmatic guy, as far as I can see. He really wants Obama's job but has to be very careful about what he says to avoid irritating either his base who believe a fairy tale view of how good healthcare works, or the middle of the road voters who pay at least some attention to facts and data.
So the formula he has hit on is to avoid direct discussion of the realities of Health Care in favor calling Obama the "government" health care guy, and himself the "private sector" health care guy, and then piling up platitudes about how wonderful the private sector is at health care, and how bad government is at health care.
If this turns out to be politically the best thing Romney can do, it will be because voters are to busy to realize how wrong this approach is, and it will limit Romney's ability to actually move the countries creaking health care system to a better place. The historical evidence shows pretty clearly the private sector is pretty bad at doing Health Care. At the end of WW II, when many Western industrialized countries were moving toward Government health care, Congress pushed the US into a system based on employers providing private insurance for their employee's. Ever since we have maintained one of the most privatized health care systems in the industrialized world.
60 years down the road our health care system is a mess. For decades, the cost of healthcare has inflated far more rapidly that inflation in general, to the point we now pay twice as much for healthcare per person as do citizens of any other country in the world ($15,000 a year in the US as against about $7,000 per year in the next most expensive countries). Yet there are 30 or 40 countries where people live longer, another 30 or 40 where they have lower infant mortality rates. And employers, the backbone around which our system was designed, are scrambling to get out from under the constantly inflating health insurance premiums.
The flaw in Romney's theory of healthcare is simple to spot. A fundemental requirement to make a free market work efficiently is buyers who are not acting under compulsion. When we go out to buy a car, if it is too expensive we just walk away, or go buy a used car, or a bike, or take a bus. When enough of us just walk away the industry has to find a way to lower costs to survive.
We don't have those options with healthcare. If we have a child with cancer, we can't just walk away until the price comes down. In the purchase of medical services (by $ amount - healthy people don't use much health care - sick people use almost all of it) most of the buyers are acting under compulsion - the threat of serious debilitation or death. So a key market force that controls costs is missing in a private medical marketplace.
Contradicting Romneys "Government is bad" position, we have an example of a government run health care system here in the United States that is far more efficient than the private sector medical providers, both in terms of cost per patient, and overall health outcomes. The Veterans Adminstration Hospital system has no private component.
Many of those countries who spend less than half of what we spend per person per year have government run systems that their voters are very happy with, (England, Canada and Sweden come to mind immediately) and their citizens live longer than we do and have lower infant mortality rates.
The Fairy Tale Romney is selling will have serious consequences if he is elected. Even if he is just saying what he needs to say to get elected, he is boxing himself in. The fundemental rule for Doctors is to "first, do no harm." Romney will have a hard time even meeting this standard if he becomes President.
This is a bit of a problem for Romney, who is a pragmatic guy, as far as I can see. He really wants Obama's job but has to be very careful about what he says to avoid irritating either his base who believe a fairy tale view of how good healthcare works, or the middle of the road voters who pay at least some attention to facts and data.
So the formula he has hit on is to avoid direct discussion of the realities of Health Care in favor calling Obama the "government" health care guy, and himself the "private sector" health care guy, and then piling up platitudes about how wonderful the private sector is at health care, and how bad government is at health care.
If this turns out to be politically the best thing Romney can do, it will be because voters are to busy to realize how wrong this approach is, and it will limit Romney's ability to actually move the countries creaking health care system to a better place. The historical evidence shows pretty clearly the private sector is pretty bad at doing Health Care. At the end of WW II, when many Western industrialized countries were moving toward Government health care, Congress pushed the US into a system based on employers providing private insurance for their employee's. Ever since we have maintained one of the most privatized health care systems in the industrialized world.
60 years down the road our health care system is a mess. For decades, the cost of healthcare has inflated far more rapidly that inflation in general, to the point we now pay twice as much for healthcare per person as do citizens of any other country in the world ($15,000 a year in the US as against about $7,000 per year in the next most expensive countries). Yet there are 30 or 40 countries where people live longer, another 30 or 40 where they have lower infant mortality rates. And employers, the backbone around which our system was designed, are scrambling to get out from under the constantly inflating health insurance premiums.
The flaw in Romney's theory of healthcare is simple to spot. A fundemental requirement to make a free market work efficiently is buyers who are not acting under compulsion. When we go out to buy a car, if it is too expensive we just walk away, or go buy a used car, or a bike, or take a bus. When enough of us just walk away the industry has to find a way to lower costs to survive.
We don't have those options with healthcare. If we have a child with cancer, we can't just walk away until the price comes down. In the purchase of medical services (by $ amount - healthy people don't use much health care - sick people use almost all of it) most of the buyers are acting under compulsion - the threat of serious debilitation or death. So a key market force that controls costs is missing in a private medical marketplace.
Contradicting Romneys "Government is bad" position, we have an example of a government run health care system here in the United States that is far more efficient than the private sector medical providers, both in terms of cost per patient, and overall health outcomes. The Veterans Adminstration Hospital system has no private component.
Many of those countries who spend less than half of what we spend per person per year have government run systems that their voters are very happy with, (England, Canada and Sweden come to mind immediately) and their citizens live longer than we do and have lower infant mortality rates.
The Fairy Tale Romney is selling will have serious consequences if he is elected. Even if he is just saying what he needs to say to get elected, he is boxing himself in. The fundemental rule for Doctors is to "first, do no harm." Romney will have a hard time even meeting this standard if he becomes President.
Tuesday, October 2, 2012
What history says about Romney Ryan economics
The Republican party claims cutting taxes, regulations and the size of government will bring back prosperity. Here are some easily documented historical facts useful in evaluating the Romney/Ryan plan:
The formula of cutting taxes, cutting regulations and cutting the size of government as an economic growth tool has has been widely advocated by Conservatives in most democratic countries for the last 100 years, and from time to time a Conservative government gains sufficient control to implement the policies. The results have not been good.
In the United States it is the formula the Republican party in the United States rode into power in 1919. Republicans controlled both houses of Congress from 1919 to 1933 and we had Republican Presidents from 1921 to 1933. Their business friendly, low tax policies produced bubbles in stocks and housing, followed by a financial crash in 1929 and the Great Depression. By the time Republicans were ushered out of power in 1933 unemployment was around 25%, millions of Americans had lost their life savings as thousands of banks collapsed, millions more had lost their homes to foreclosure and the Government had gone from a balanced budget with no debt to large federal deficits.
Democrats controlled Congess for most of the next next 62 years. Then in 1995 Republicans again advocating cutting taxes, regulations and the size of Government took control of both houses of Congess. They held control until 2007. We also had a Republican President from 2001 through 2007. The period of Republican domination started with a growing economy and a shrinking National Debt. By the time voters brought Democratic majorities back in 2007 the national debt was skyrocketing, and the economy was caught up in the downward spiral that culminated in the Financial collapse of 2008 and the Great Recession, and once again lots of people lost big chunks of their savings, lost homes to foreclosure, and lost their job.
Comparing these two Republican orchastrated financial collapses is instructive. Unlike 2007, when the Republicans were being shown the door by the voters just as the collapse began, the Republicans continued to control both houses of Congress and the Presidency between 1929 and January of 1933. President Herbert Hoover was convinced that the private sector would pull us out of the downturn, so continued with the Republican polices that reduced the influence of government, lowered taxes and eliminated regulations. It didn't work. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression rather than a bad recession was because of the Republican policies. It appears voters made the connection - for the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years out of 47 years.
Beyond the historical evidence from US history, the Romney/Ryan plan ignores economic studies that have looked at the effect of cutting government. The International Monetary Fund commissioned a study that looked at 173 times in the last couple decades where developed countries cut government spending. They found that in a situation like we are currently in, with very low interest rates, cutting government spending causes a drop in GDP and a rise in unemployment.
Britain, the country whose economic system is most like ours, bought into something very like the Romney-Ryan plan when they elected a Conservative government in May of 2010. The Conservative governing philosophy, like Herbert Hoovers in the 1930's, has been to rely on the private sector to drive economic recovery through lowering taxes, and cutting government and regulations. Instead of recovery, GDP growth has turned negative and Britain has been in recession for the last three quarters (the last quarter was surprisingly bad according to the BBC).
Supporters of the Romney/Ryan campaign cite the "Reagan" recession in the early 1980's as evidence their plan will work. It is a false comparison. Unlike our current economy, the slowdown in the early 1980's was not a product of a private sector financial collapses, it was caused by high interest rates. The Federal funds rate, which is currently effectively 0%, was 20% in June of 1981. The recession was a product of the fact neither business nor consumers could afford to borrow money at rates above 20%. When inflation cooled off, the Fed lowered interest rates and suddenly business and consumers could afford to borrow and expand and the economy took off.
In short the recovery in the early 1980's was in an environment of interest rates falling from historically high levels coupled with low consumer debt. That recipe is not available to us right how. We have historically high consumer debt and interest rates have hovered at near zero for a couple years. The current conditions could not be more different.
If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, history is pretty clear there is a high likelyhood we will be back in recession within a year, and at risk of a serious depression.
The formula of cutting taxes, cutting regulations and cutting the size of government as an economic growth tool has has been widely advocated by Conservatives in most democratic countries for the last 100 years, and from time to time a Conservative government gains sufficient control to implement the policies. The results have not been good.
In the United States it is the formula the Republican party in the United States rode into power in 1919. Republicans controlled both houses of Congress from 1919 to 1933 and we had Republican Presidents from 1921 to 1933. Their business friendly, low tax policies produced bubbles in stocks and housing, followed by a financial crash in 1929 and the Great Depression. By the time Republicans were ushered out of power in 1933 unemployment was around 25%, millions of Americans had lost their life savings as thousands of banks collapsed, millions more had lost their homes to foreclosure and the Government had gone from a balanced budget with no debt to large federal deficits.
Democrats controlled Congess for most of the next next 62 years. Then in 1995 Republicans again advocating cutting taxes, regulations and the size of Government took control of both houses of Congess. They held control until 2007. We also had a Republican President from 2001 through 2007. The period of Republican domination started with a growing economy and a shrinking National Debt. By the time voters brought Democratic majorities back in 2007 the national debt was skyrocketing, and the economy was caught up in the downward spiral that culminated in the Financial collapse of 2008 and the Great Recession, and once again lots of people lost big chunks of their savings, lost homes to foreclosure, and lost their job.
Comparing these two Republican orchastrated financial collapses is instructive. Unlike 2007, when the Republicans were being shown the door by the voters just as the collapse began, the Republicans continued to control both houses of Congress and the Presidency between 1929 and January of 1933. President Herbert Hoover was convinced that the private sector would pull us out of the downturn, so continued with the Republican polices that reduced the influence of government, lowered taxes and eliminated regulations. It didn't work. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression rather than a bad recession was because of the Republican policies. It appears voters made the connection - for the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years out of 47 years.
Beyond the historical evidence from US history, the Romney/Ryan plan ignores economic studies that have looked at the effect of cutting government. The International Monetary Fund commissioned a study that looked at 173 times in the last couple decades where developed countries cut government spending. They found that in a situation like we are currently in, with very low interest rates, cutting government spending causes a drop in GDP and a rise in unemployment.
Britain, the country whose economic system is most like ours, bought into something very like the Romney-Ryan plan when they elected a Conservative government in May of 2010. The Conservative governing philosophy, like Herbert Hoovers in the 1930's, has been to rely on the private sector to drive economic recovery through lowering taxes, and cutting government and regulations. Instead of recovery, GDP growth has turned negative and Britain has been in recession for the last three quarters (the last quarter was surprisingly bad according to the BBC).
Supporters of the Romney/Ryan campaign cite the "Reagan" recession in the early 1980's as evidence their plan will work. It is a false comparison. Unlike our current economy, the slowdown in the early 1980's was not a product of a private sector financial collapses, it was caused by high interest rates. The Federal funds rate, which is currently effectively 0%, was 20% in June of 1981. The recession was a product of the fact neither business nor consumers could afford to borrow money at rates above 20%. When inflation cooled off, the Fed lowered interest rates and suddenly business and consumers could afford to borrow and expand and the economy took off.
In short the recovery in the early 1980's was in an environment of interest rates falling from historically high levels coupled with low consumer debt. That recipe is not available to us right how. We have historically high consumer debt and interest rates have hovered at near zero for a couple years. The current conditions could not be more different.
If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, history is pretty clear there is a high likelyhood we will be back in recession within a year, and at risk of a serious depression.
Friday, September 28, 2012
The Fundamental Fiscal Weakness in Democracy - the fiction of Public Service
California is in a fiscal mess. The roots of the problem are a problem fundamental to all governments. How to fairly compensate public employee's. Private sector compensation is controlled by consumer's voting with their dollars. If your product is inferior, or too expensive, people stop buying it, so you have no income stream to overpay yourself and your associates. No business can claim a right to force people to buy what they are selling.
But Government can force people to buy what they are selling. In any government where voters have no real power Government employees can go on for decades living a good life at the expense of everyone else, as happened in the Soviet Union. But even in a true democratic government, government has an inherent power that is hard for voters to control. In addition to California's current problems with employee compensation, the whole problem in the Euro zone rests on public employee compensation levels that exceed taxpayer willingness to fund.
The problem is built into the ways voters interact. California is a good example. In the late 1970's Republicans in the state started trying to restrain the growth of Government spending by limiting governments ability to tax. The problem with this approach is it aimed at the wrong target. Instead of aiming at limiting employee compensation, it just cut revenue to the state. In essence it treated a symptom, not the underlying disease. What that accomplished was to cut lots of lower end employee's and public services without touching the way public employee compensation was determined. In fact it set up a situation where programs began competing for public money, so the whole process became less about what served the public, and more about who could generate political clout.
At a point years ago California's legislature started creating "compensation" committee's to determine fair compensation for government officials. The committee's have three problems. 1. They are composed mostly of politically connected people who generally anticipate spending part of their working life as government employee's, so it is hard to be completely objective.
2. They tried to compete with the private sector on salary. What they end up doing is competing with the most successful private sector enterprises who pay the most money for any particular skill, even though that enterprise may pay much lower for other skills not as important. In short the public sectors salaries tend to reflect cherry picking the highest salaries paid for a particular skill across all industries.
3. But most crucially, 80 years ago or so public employers bought into the notion they should set an example for the private sector with a guarantee to all employees of a comfortable retirement. The system has evolved to a point where public sector retirement is vastly more expensive than taxpayers are willing to fund.
The result in California is a state where the obligations greatly exceed it's income, and taxpayers are unwilling to approve higher taxes. Why should they? When the average California probably makes $45,000 to $50,000 a year, what are they to think when 50 employees of the State Department of Corrections make 10 times as much, and will continue to make as much when the retire? When literally millions of State employees will draw more in retirement than the average taxpayer makes? When tuition at the State's Universities is so expensive the average Californian can no longer afford to attend.
Republican's on the National level have taken the same tack - seeking to limit government by limiting income, while not doing much to limit government salary and benefits. They have managed to cover up the fundamental weakness of their strategy for 30 years by pumping up the US economy for 30 years with deficit spending on defense, at the expense of programs that actually impact peoples daily lives. Defense spending does produce a boost to the economy, as it puts people to work, but in the end it doesn't produce wealth, it produces a big military that is probably going to cost us a lot more money as we try to put all that military might to some useful purpose (although it unequivocally makes a lot of defense contractors very rich) and then as we care for physically and emotionally crippled veterans for the rest of their lives.
Our Democracy needs provisions built into the Constitution to create a direct link between the level of public sector compensation and the average private sector compensation.
But Government can force people to buy what they are selling. In any government where voters have no real power Government employees can go on for decades living a good life at the expense of everyone else, as happened in the Soviet Union. But even in a true democratic government, government has an inherent power that is hard for voters to control. In addition to California's current problems with employee compensation, the whole problem in the Euro zone rests on public employee compensation levels that exceed taxpayer willingness to fund.
The problem is built into the ways voters interact. California is a good example. In the late 1970's Republicans in the state started trying to restrain the growth of Government spending by limiting governments ability to tax. The problem with this approach is it aimed at the wrong target. Instead of aiming at limiting employee compensation, it just cut revenue to the state. In essence it treated a symptom, not the underlying disease. What that accomplished was to cut lots of lower end employee's and public services without touching the way public employee compensation was determined. In fact it set up a situation where programs began competing for public money, so the whole process became less about what served the public, and more about who could generate political clout.
At a point years ago California's legislature started creating "compensation" committee's to determine fair compensation for government officials. The committee's have three problems. 1. They are composed mostly of politically connected people who generally anticipate spending part of their working life as government employee's, so it is hard to be completely objective.
2. They tried to compete with the private sector on salary. What they end up doing is competing with the most successful private sector enterprises who pay the most money for any particular skill, even though that enterprise may pay much lower for other skills not as important. In short the public sectors salaries tend to reflect cherry picking the highest salaries paid for a particular skill across all industries.
3. But most crucially, 80 years ago or so public employers bought into the notion they should set an example for the private sector with a guarantee to all employees of a comfortable retirement. The system has evolved to a point where public sector retirement is vastly more expensive than taxpayers are willing to fund.
The result in California is a state where the obligations greatly exceed it's income, and taxpayers are unwilling to approve higher taxes. Why should they? When the average California probably makes $45,000 to $50,000 a year, what are they to think when 50 employees of the State Department of Corrections make 10 times as much, and will continue to make as much when the retire? When literally millions of State employees will draw more in retirement than the average taxpayer makes? When tuition at the State's Universities is so expensive the average Californian can no longer afford to attend.
Republican's on the National level have taken the same tack - seeking to limit government by limiting income, while not doing much to limit government salary and benefits. They have managed to cover up the fundamental weakness of their strategy for 30 years by pumping up the US economy for 30 years with deficit spending on defense, at the expense of programs that actually impact peoples daily lives. Defense spending does produce a boost to the economy, as it puts people to work, but in the end it doesn't produce wealth, it produces a big military that is probably going to cost us a lot more money as we try to put all that military might to some useful purpose (although it unequivocally makes a lot of defense contractors very rich) and then as we care for physically and emotionally crippled veterans for the rest of their lives.
Our Democracy needs provisions built into the Constitution to create a direct link between the level of public sector compensation and the average private sector compensation.
Tuesday, September 25, 2012
Nattering Nabob of Negativism
This delightful phrase was coined by Spiro Agnew, Nixon's first vice President. I am old enough to remember Spiro. My impression of him at the time was he was one of those big jovial guys who build their career around networking and platitudes while avoiding actual hard work. As Vice President he seemed to spend all his time playing golf and conjuring up clever phrases. Of course history remembers Agnew as the only vice President in history forced to resign for taking bribes.
Agnew coined the phrase "Nattering Nabobs of Negativism" to refer to the media who dared to criticize the administrations policies, particularly in regard to the Viet-nam war. In one of those odd reversals that happen in history, now the person most deserving of being called a Nattering Nabob of Negativism is - Mitt Romney, the Republican nominee for President.
Romney has not had much positive to say about anything, probably because he tends to insert foot in mouth when he does. His economic plan has never consisted of anything more than vague generalities designed to sound good without actually risking offending anyone with facts. To show off his wise approach to foreign policy he took a trip a month or two ago in which he managed to insult the Brits by (wrongly) informing them they were disorganized and their Olympic's were going to have major problems, he said our number one enemy was Russia (evidently forgetting about folks like Al-Queda, North Korea and Iran) and irritated most of the middle east by placing the blame for the Palestinians plight entirely on the shoulders of the Palestinians. (He seems to particularly like to pick on the Palestinians)
So his campaign has come to consist entirely of sitting back, waiting for Obama to do something, or say something, then criticizing him vociferously. I am beginning to think if a video of Obama tying his shoelace made its way onto U-Tube within hours sound bites from Romney would be on all the networks passionately explaining why the way Obama ties his shoelace is wrong and puts the United States at risk.
Agnew coined the phrase "Nattering Nabobs of Negativism" to refer to the media who dared to criticize the administrations policies, particularly in regard to the Viet-nam war. In one of those odd reversals that happen in history, now the person most deserving of being called a Nattering Nabob of Negativism is - Mitt Romney, the Republican nominee for President.
Romney has not had much positive to say about anything, probably because he tends to insert foot in mouth when he does. His economic plan has never consisted of anything more than vague generalities designed to sound good without actually risking offending anyone with facts. To show off his wise approach to foreign policy he took a trip a month or two ago in which he managed to insult the Brits by (wrongly) informing them they were disorganized and their Olympic's were going to have major problems, he said our number one enemy was Russia (evidently forgetting about folks like Al-Queda, North Korea and Iran) and irritated most of the middle east by placing the blame for the Palestinians plight entirely on the shoulders of the Palestinians. (He seems to particularly like to pick on the Palestinians)
So his campaign has come to consist entirely of sitting back, waiting for Obama to do something, or say something, then criticizing him vociferously. I am beginning to think if a video of Obama tying his shoelace made its way onto U-Tube within hours sound bites from Romney would be on all the networks passionately explaining why the way Obama ties his shoelace is wrong and puts the United States at risk.
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