Bain Capital

The Democrats are making Bain Capital a focus in their efforts to undermine Mitt Romney's credibility on his economic policy, and the Republican's are pushing back hard to distance Bain Capital from the discussion.  Here is a link to an excellent summary of what private equity companies do by Robert Reich.   http://robertreich.org/post/20930554256

Here is why I think Bain Capital is extremely pertinent.  Mitt Romneys economic plan is rooted in his claim he will create jobs by protecting the wealthy from new taxes and cutting the size of the Federal deficit by cutting government jobs.

It is a variation on the strategy that Romney employed very successfully at Bain Capital to make lots of money.  But success in the private sector is measured differently than success in government.  Businesses can lay off lots of people to improve their profitability, and the people they lay off are not their problem.  If the economy is good many of them will find a job with some business that is hiring, if the economy is not good - well - its not Bain Capitals problem if they made some peoples lifes incredibily hard.  For the broader economy allowing business to act callously in general works because the private sector is composed of lots of businesses, so even as some are laying people off, normally others are hiring.

But there is only one government.  Economic studies that looked at 70 + governments that have downsized in the last 40 years or so found they always experienced both a decline in GDP and a rise in unemployment (except in high interest rate environments when Government was sucking up all the capital - definitely not our current situation).  Is that really what we want to accomplish as we try to climb out of the economic collapse of a couple years ago.  We can't go on expanding government forever, but the time to trim is in a good economy (like during the Republican administrations early in the last decade that became famous for running up the deficit with earmarks and handouts to rich people).

But beyond the pragmatic economics, government shouldn't be about profitability for the select few rich and powerful - that is exactly the historical problem democracy's were created to address.  That was Ghadaffi's Libya, or now, Putin's Russian.  Governments primary justification is to protect people from one another by mediating to ensure everyone has a fair shot in life.  When government downsizes, particularly in an economic downturn, it is consigning a big group of it's citizens to a difficult period of life, and undermining social stability, to protect the well off from a little inconvenience.

Bain Capital is extremely instructive as the apparent reason an intelligent guy like Romney seems to truly believe cutting government will improve the economy in the face of history that says otherwise.  After all, downsizing companies by firing people worked very well for Bain.

Our obsession with 1/2 of Free market theory

The last decade or so the media is constantly talking about entrepreneurs, and how the free market rewards people who do things better or more efficiently.  The economists buzz word is competitive advantage.

But there are many other ways to succeed in a free market.  The South's competitive advantage in their cotton based economy in the first 80 years of our countries existence was slavery.  They had very low labor costs because they used slaves.

In manufacturing a companies competitive advantage could be skimping on public safety by dumping hazardous chemicals.  Or worker safety.  Or they may lie about the quality or nature of their products in their advertising.

Yet in our political dialogue anyone who addresses the negative ways to obtain competitive advantage is always accused of being anti-business.  It would be helpful if politicians talked more about the negative characteristics of free markets rather than celebrating the positives and painting the negatives as unrelated to free markets.

Questions to people who support banning abortion

I am soliciting responses, but I ask that you read all the questions and think about them a bit before you respond.

1.  Is your goal to reduce abortions?

If so, how do you explain the fact abortions have fallen consistently in the United States ever since Roe v. Wade made abortions legal in 1973?

How do you explain the fact the United Nations study from a couple years ago that looked at abortion in scores of different countries found a consistent correlation between tolerant abortion laws and low abortion levels, and tough abortion laws and high levels of abortion?

2.  Why would a women want to abort her fetus that will grow into a child?  Could it be because her fear outweighs love?

Could it be economic fear - that she won't be able to support the child?

Could it be relationshipship fear - that she doesn't have people in her life she can rely on to help her raise the child?

Could it be lifestyle fear - fear that a child will force her to change their lifestyle?

How does passing laws forcing her to have the child address any of these fears?

Could it be that a society that is tolerant and loving alleviates fear better than a society that is strict and demanding?

3.  Does cutting the budget for social programs that help people in need alleviate or aggravate fear of pregnancy?

4.  If you are Christian and build your life around the teachings of Jesus, what do his teachings tell you about whether you should chose loving guidance or strict laws enforced by authorities?

IDP - Questions for those who think Creative design is an alternative theory

1.  Who wrote Genesis?
     Did they know the earth was one of a number of planets revolving around the sun?
     Did they know the sun was just one small star among a galaxy of stars?
     Did they know what DNA is?
     Did they know the Western Hemisphere, or Europe or Asia existed?

2.  Are we intelligently designed?
    Why to we have cavities in our teeth, or clogged arteries?
    Why are children born with birth defects?  Design defect?

3. How were we designed and built?
   Where is God's workshop where he built the earth?
   What tools did he use?
   How do you know evolution isn't the tool God used?  God gave us a brain, don't you think he wants us to use it?

GDP doesn't reflect reality?

People are always throwing GDP around as a measurement of growth.  But as near as I can tell in computing GDP economists don't take into account borrowing.  So if government (or some private business) borrows a lot of money to produce things GDP jumps.  But that seems to me to artificial growth.  GDP should not take into account the amount of production (or consumption) that was in fact funded by borrrowing from future income.

Anybody out there know if GDP Computation takes into account borrowing?

Politicians and Madison Avenue

Business Republicans generally approach government the same way they approach business, assuming the two can be managed the same way.  One of the unfortunate side effects of this approach is they lose sight of the differences between images and reality.

In business focusing on image can produce good results for long periods of time (although it almost always leads to a loss of competitiveness eventually).  American car manufacturers have a long history of focusing on marketing and neglecting quality, because their marketing skills enabled them to sell lots of cars by manipulating consumer perceptions.  Eventually management groupthink gets so confident of their ability to manipulate consumers they ignore new challenges on the horizon.

But eventually some change in circumstances will turn the tables and consumers will no longer be as amendable to being controlled by an image that doesn't reflect reality and the company will probably end up in bankruptcy or disappear because they can't provide what consumers want.

Politicians have also leaned more and more on image and marketing rather than hard headed decisions about good policies.  The Republican party in particular has been pretty successful marketing themselves the last 30 years and as a result they have become seriously infected by ideology built on the images they seek to project rather than the insights of data or history.  Unfortunately when politicians focus to on image rather than reality, and sink into group think, we all suffer.

We as consumers and voters need to constantly strive to inoculate ourselves from image based reality by constant reference to history and valid data.

Can the private sector do everything better than government?

The assumption that the private sector can do everything better than government is basic to Republicans.  They don't even think about whether the assumption is correct.   Democrats, on the other hand sometimes seem to think that Government can do everything.

Someday I think that science will have precisely identified the mix of personality traits that make some people inclined toward the private sector and others inclined toward government.  Government and the private sector should be a team.

The strengths of the private sector are energy, imagination, creative problem solving and willingness to take risks. But the nature of the private sector can allow ambitious, self centered people that are greedy, monopolistic and exploitative to be enormously successful.

The strengths of the government are consistency, focus on public good.  But measuring productivity and cost effectiveness in government work is very difficult which can allow self centered people with good people skills who care little about their mission to build little fiefdoms at taxpayer expense.

I wouldn't want to buy a car made by the government, but I would be happy to put my money in a government bank or get a mortgage from a government entity (without private investors) dedicated to making home loans.

I certainly wouldn't want to buy a cell phone made by the Government, but I wish the government would do more to insure a few companies don't control the market.  Why do I have to go with Verizon if I want to realistically get cell phone reception in Montana?

I wouldn't give my money to government to invest, but I am very happy that government has trained regulators to keep an eye on the companies that are offering investment services, and I wish the government could be even better at it.

I want a house built by the private sector, but I think it is important for government to regulate construction to insure that the house I live in is safe.  I am not so keen on government regulating how my house looks.

I definitely would rather go to a Doctor, Dentist or other health care professional who is paid a salary that is independent of how many tests or procedures he/she performs.  I want them thinking about what I need, not what they need to pay the bills, or buy a new car.

I don't want to buy my tomatoes from a government run farm.  But I want the government to keep an eye on the safety of the products grown by the farmers I buy from, because I have no way to do it.

Every time we as voters have bought into the notion of private sector perfection we end up paying for it, most glaringly with the Great Depression and the Great Recession.  We bought into the notion about the wonders of private sector health care after WW II and 60 years later we pay twice as much for health care (per person) as any other country in the world (even before Obama care) yet many other countries are statistically much healthier than we are.

We as voters need to view the private sector and government as tools we can use to build a strong nation.  We need to understand the strengths and weaknesses of both of these tools, and realize it is a mistake to try to do everything with either one.