As President Obama rolls out his poorly-named “Promise Zones” (sounds like something a male adolescent would come up with to name a body part), progressives around the nation are simultaneously pushing for higher minimum wage — places like New York, Detroit, and SeaTac have recently had protests and/or legislation passed over higher minimum wage, just to name a few. And the U.S. Senate has mentioned a “$10-ish” federal minimum wage. By the way, it’s not just progressive liberals pushing for it — in Washington state, a self-described Republican is pushing for $15/hour minimum wage. The article calls him a “conservative”, but we all recognize his progressive ideology.
“Income inequality” is shaping up to be the big 2014 liberal campaign platform. The progressives want to re-frame the debate as a humanitarian rather than an economic one. Democrats hope they can ride this horse to victory, and probably even keep riding it through 2016. Never mind the fact that they are essentially admitting to buying votes.
In any free market system, the cost of labor is an input which impacts the final price of goods sold and services rendered. By artificially inflating minimum wage, Democrats promise us a better life for those at the bottom of the wage scale, but the tradeoff a higher cost to produce goods and services. This increase in cost will work its way into the economy in one of three main ways:
- Higher prices for consumers to obtain a good or service (essentially a hidden tax on consumption)
- Less innovation and production and employment growth, due to more business resources being allocated to existing labor
- Lost jobs due to companies moving production overseas, or in the case of business that can’t move overseas, more automation or just plain lower quality of service
Additionally, when minimum wage goes up, it tends to drive all wages up across the board. This exacerbates the above outcomes across the entire economy.
When fast-food workers in 100+ cities went on strike a few weeks ago, they probably never thought their jobs were replaceable. After all, how do you make food without humans? May I present to you, the robot that makes nearly 400 burgers an hour:
On August 2nd the House released an investigative report on Solyndra, the failed solar energy company, which shows beyond a doubt the Obama administration abused taxpayer dollars for political gain.
Solyndra received a $535 million loan, straight from our pocket, as part of Obama’s “green jobs” strategy. Indeed, Solyndra was considered one of the jewels in Obama’s green recovery crown. When Obama visited the plant in 2010, he highlighted Solyndra as an example of the “right thing to do for the economy,” claiming the plant would employ at least 1,000 high paying jobs.
As is so often the case with lofty oratory, the reality never lived up to the rhetoric.
First, the Obama administration pressured federal reviewers to sign off on Solyndra despite misgivings about the viability of the company and of the government’s loan model. Emails released by the investigators show the Office of Management and Budget responding to White House requests by saying “We would prefer to have sufficient time to do our due diligence reviews.” The loan was ultimately approved, clearly under political duress as an OMB staffer remarked “given the time pressure we are under to sign off on Solyndra, we don’t have time to change the model.”
Solyndra’s CEO at the time hailed the “Bank of Washington” for coming to their aid.
It quickly became clear that Solyndra was in peril as it began to miss payments on the loan. A government analysis warned that the company would run out of money in September of 2011 and recommended that the government simply cut its losses. Instead, the government chose to restructure the loan, ultimately wasting MORE of our tax dollars than if they had simply allowed Solyndra to fail.
The investigators released emails which clearly indicate the decision to restructure the loan – which inexplicably put taxpayers LAST to recoup losses – was made for political reasons. One government analyst remarked that a Solyndra failure “would likely be very embarrassing for DOE and the Administration.” Another commented that she was “vastly confused by DOE’s decision to negotiate away their senior position in this transaction.”
The final insult came when White House Chief of Staff Jack Yew, perhaps sensing that Solyndra was beyond saving, decided to wash his hands of any further involvement in the Solyndra restructuring. Let me say that again to be sure it sinks in:
Despite the administration’s self-proclaimed “quite active interest” in securing the loan for Solyndra, just months before it failed, the White House distanced itself from any further decision making.
No doubt so that when it finally failed, they could blame it on OMB / DOE / Bush (which is exactly what they tried to do).
Still undetermined is exactly what role Obama bundler Robert Kaiser played in securing Solyndra’s loan in the first place. Emails show Kaiser “advised associates” on how to secure federal assistance for Solyndra. As it turns out, Kaiser’s family also had a “substantial” financial stake in Solyndra. Coincidence?
This is an example of Chicago Politics at its finest. We have a choice in 2012. Are you voting for four more years of cronyism and abuse of our wallets? “Bank of Washington” my ass… it’s the Bank of We the People. I say we shut the damn doors. #ABO2012
If you’ve got a business, you didn’t build that. Somebody else made that happen.
So said President Obama in a particularly revealing address on Friday. Obama has been blasted lately for going so negative, and the full speech reads mostly like the “Hope and Change” he ran on in 2008. I have to wonder if this and other remarks were the result of an unfortunate TOTUS malfunction. It always seems Obama is most revealing when he is unscripted.
In any case, there is no doubt that Obama meant this as a shot at those who consider their success to be of their own making. The overall theme of his speech was that nobody is successful without some kind of help, especially help from the government. Unfortunately, Mr. President, somewhere around 24 million small business owners may disagree.
Throughout his speech, Obama reveals an obvious bias against pro-business economic theory, not to mention an unprecedented level of ignorance on the requirements of successful entrepreneurship. Here are some examples:
And on their side, they’ve got a basic theory about how you grow the economy. And the theory is very simple: They think that the economy grows from the top down. So their basic theory is, if wealthy investors are doing well then everybody does well.
Obama is displaying his reliance on demagoguery by willfully distorting the economic theory most conservatives refer to as “Reaganomics.” The so-called “top-down” or “trickle-down” theory has very little to do with wealthy investors, and everything to do with the production of value to the consumer.
Think about it this way: do business owners get rich just because they open a business? On the contrary. Most small businesses require a minimum of tens of thousands of dollars of investment to start — often financed in whole or in part out of the owner’s pocket — and at least one-third of them fail within 2 years. Anybody can open their own business, but that alone does not translate into success or wealth.
Unless you have powerful friends in Congress who can subsidize ineptitude, your success in business can only be achieved by creating a value proposition which entices consumers to purchase your good or service. Even then it requires many years of tireless labor and painful sacrifice to achieve success. 40 hour workweeks? Hah! Try 60+. 2 weeks paid vacation? There’s no such thing when you’re the owner. When you own a small business, you’re chained to it for the first several years. Some people never break those bonds.
So why would anybody ever want to own a business? It is the promise of future wealth which entices people to start (and stick with) a business. In the mean time, though, the owner is busy buying materials, producing products or services that people want to buy, and creating jobs. As economist Thomas Sowell has observed, “Reaganomics” is actually not “trickle-down” in practice. The money goes to the suppliers and employees and the value goes to the consumers BEFORE the owner get wealthy — if they ever get wealthy at all! Only after years of successful enterprise will the typical business owner ever truly enjoy above average wealth.
Obviously, this economic theory has nothing to do with wealthy investors as Obama characterizes. It has everything to do with producing value to the consumer, and the presence of a profit motive on the part of the business owner. Unfortunately for all of us, Obama and his progressive cabal seem woefully incapable of comprehending this relatively simple idea.
Look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.
Apparently, Obama is saying that being hardworking and smart is not sufficient for achieving success, which makes me wonder, what exactly is Obama’s measure for success? Surely there are millions of Americans who are not business owners and not “wealthy” who can nevertheless be considered successful by most standards. What kind of message is the President sending about success?
But returning to the core point, the President is right that there are a whole bunch of hardworking people out there. While hard work can create success for employees, hard work alone is not sufficient to create success for a business owner. Studies have proven what successful business owners already know — the secret to great success goes beyond just dedication, requiring higher levels of sacrifice as well as focused improvement.
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life.
I’m not going to bash teachers. Teaching is tough, often thankless work. But if all that was needed to be successful was having a “great teacher somewhere in your life,” there would be virtually zero unsuccessful people in this country. At some point in their lives, almost EVERYONE has had a great teacher. I remember having undisputed “great teachers” in high school and college, but not everyone got A’s and not everyone who went through their classroom ended up being successful.
Don’t get me wrong. Most accomplished people do have some person or some event to thank for planting the seeds of success. But the cultivation of those seeds into something fruitful is another story entirely. I can say that my own success had very little to do with my education and a whole lot to do with my work ethic and my business savvy. I can thank my parents for planting the seed, but it took hours upon hours of hard work well beyond a 40 hour workweek to bear fruit
Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges.
I always love when liberals give the government extra credit for performing the basic duties with which the government is tasked. But even this argument this is spurious.
Giving the government credit for successful commerce because they build roads would be like Wal Mart giving their building contractor credit for selling me a DVD. Roads weren’t conceptualized by the government. We The People chose the government to be responsible for our road building. If not the government, We The People would find some other way to have roads built because roads are essential to our lives.
The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
False. Actually, the government was one of the main sponsors of a project by MIT called ARPAnet, which is widely (but incorrectly) considered the original Internet. However, an “internet” is a connection of multiple networks, whereas ARPAnet was simply a single network. The MIT research was responsible for some of the underlying technology, but comparing ARPAnet to the Internet is like comparing oil lamps to LED light bulbs.
At the time ARPAnet was being created, other institutions were already researching ways to connect computers together across short and long distances. ARPA got there first, possibly due to a larger influx of capital; at the time, the U.S. government was worried about being technological underdogs after the Soviets launched the Sputnik project. Nevertheless, anyone who says the Internet would never exist were it not for the government is certainly wrong.
Most objective observers agree that it really wasn’t until the government got out of the way, thereby opening the Internet up for private investment, that the World Wide Web was truly born. This is illustrated by the fact that the government’s own standards agency (OSI) actually tried to shut the door on the very same network communications protocol standards (TCP/IP) which are in use by all of us using the Internet today. They believed the technology would never work.
Beyond that, consider the underlying infrastructure supporting the Internet. Data travels across a huge network of fiber optic cables. Cables conceptualized and fabricated by private corporations, installed and maintained largely by private corporations, and funded by well over a trillion dollars of private investments, primarily from Wall Street.
At the very most, we could say the government accidentally helped encourage some of the basic technology of the precursor to the first version of the Internet while throwing money at any project that might have military application to counter the Soviets. After that, it’s at least plausible that the government’s role actually inhibited the development of the Internet we know today.
More to the Story?
By now, Obama’s ideological proclivities should come as no surprise. But reading his remarks, I am suddenly struck by another thought:
Consider his argument; the U.S. has the greatest system in the world, yet even here, people cannot be successful without help from the government. “If you’ve got a business, you didn’t build that. Somebody else made that happen.” What does that say about this country, this world, and humanity in general? Not much faith in mankind there!
Does Obama’s speech reveal something deeper, something on a personal level? What kind of life experiences must a person have to hold such a belief? Is Obama telling us that his own successes are owed to others? Did he accidentally reveal that he was the beneficiary of some government initiative, perhaps affirmative action? Or maybe that someone else, like Bill Ayers, wrote Dreams From My Father?
Thanks to Alert HillBuzz Reader Indy for the heads-up.
(isn’t the big guy in the middle of the back row the same guy who was Gabby Gifford’s staffer? The one who helped save her just after she was shot? If not, he sure looks like him.)
Just a few days ago, Obama signed an Executive Order titled “Establishing a Coordinated Government-Wide Initiative to Promote Diversity and Inclusion in the Federal Workforce.” How wonderful! Another government program…because we really don’t have enough. This Executive Order will “direct federal agencies to draw upon the talents of all parts of society and allow the federal government to tap diverse perspectives to overcome the nation’s greatest challenges.”
Here is an excerpt from this order….
Section 1. Policy. Our Nation derives strength from the diversity of its population and from its commitment to equal opportunity for all. We are at our best when we draw on the talents of all parts of our society, and our greatest accomplishments are achieved when diverse perspectives are brought to bear to overcome our greatest challenges.
A commitment to equal opportunity, diversity, and inclusion is critical for the Federal Government as an employer. By law, the Federal Government’s recruitment policies should “endeavor to achieve a work force from all segments of society.” (5 U.S.C. 2301(b)(1)). As the Nation’s largest employer, the Federal Government has a special obligation to lead by example. Attaining a diverse, qualified workforce is one of the cornerstones of the merit-based civil service.
To realize more fully the goal of using the talents of all segments of society, the Federal Government must continue to challenge itself to enhance its ability to recruit, hire, promote, and retain a more diverse workforce. Further, the Federal Government must create a culture that encourages collaboration, flexibility, and fairness to enable individuals to participate to their full potential.
Instead of spending his time trying to figure out how to get millions of Americans back to work, Obama is just creating new government agencies to further extend government regulations.
Don’t we already have policies that require “inclusion” and “diversity”? We already have another government agency to ensure this….it’s call the Equal Employment Opportunity Commission.
While our Government still has jobs to offer….private sector jobs are very few and far between.
I know how Obama can stimulate the economy and create thousands of new private sector jobs.
Did you watch 60 Minutes this past Sunday? Lesley Stahl did a segment on overseas tax havens. I thought she did a pretty fair job of reporting but I don’t think she intended it to come off the way it did. I’m sure CBS was trying to vilify the big evil American corporations (you know….the ones who own all those corporate jets that Obama complains about). They want us to be outraged that these companies are cheating our government but instead, they illustrated the insanity of our corporate tax law. Who can blame these companies for wanting to escape being pick-pocketed by our government? We all get robbed every April 15th and we’d try to avoid it if we could.
We have the 2nd highest corporate tax rate in the world (just behind Japan). Why would any company want to do business here? Why is it so hard for our government to see that if they lowered the corporate tax rate then these companies would come back to the US…….and bingo…..job creation. Instead, Obama is constantly saying “big corporations need to pay their fair share.” We need to allow these companies to transfer their billions back to the US at a one-time low rate (say 5%) so they could then move the companies back here.
Imagine how Obama’s base would howl if he proposed this? They just don’t get it. They just don’t get that these big companies employ thousands and thousands of people…and right now, these people aren’t American citizens….they are the citizens of countries like Switzerland and Ireland. We need to bring these companies back here so Americans can have these jobs.
I’ve never been a big Dylan Ratigan fan. He’s way too liberal for me and he comes across as a hot-headed attention hound so it should come as no surprise to anyone that he fell into a mouth-foaming-glassy-eyed rant yesterday on MSNBC. He leaves the other panelists completely speechless. I love the looks on their faces during his tirade (very deer-in-the-headlights). He doesn’t spare either party….nor does he spare Obama. I actually found myself agreeing with some of what he said and that’s rare (he’s been a big critic of the Tea Party).
I bet he got into a little trouble for calling out Obama.
What do you think?
As predicted, the stock market is plummeting today….down almost 500 as I write this piece. As also predicted, the Obama administration is blaming everyone but themselves for the disaster (mainly blaming the Tea Party).
Here are just a few Democrat talking points that are appearing today…
1. Howard Dean: “I think they’re totally unreasonable and doctrinaire and not founded in reality. I think they’ve been smoking some of that tea, not just drinking it,”
2. David Axelrod: “The fact of the matter is that this is essentially a Tea Party downgrade. The Tea Party brought us to the brink of a default. … It was the right thing to do to avoid that default. It was the wrong thing to do to push the country to that point.”
3. John Kerry said that the S&P downgrade was “without question the Tea Party downgrade”
One thing they have conveniently ignored? The S&P made it perfectly clear why they downgraded our rating. “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” The S&P requested a $4 trillion dollar debt reduction. They laid it out for Obama and Congress.
Obama…Reid…and Boehner knew what it would take to keep our AAA rating. The only plan that would have saved our rating was the Cut-Cap and Balance plan which passed in the House but not in the Senate. Our brilliant Senate Majority Leader Harry Reid declared the C-C-B bill “over,done,dead” before it even hit the Senate floor. Nice going Harry. If the bill had passed both houses then the pressure would have been on Obama to sign it. It was the only way to save our AAA rating. It was a very good bill.
Who was the biggest proponent of Cut-Cap-Balance?
The Tea Party.
I’ve been trying to learn as much about economics as I can over the past few weeks. I was not an economics major in college…in fact…I never took an economics class because it wasn’t a requirement for my major. I’ve always just sort of fluffed over the subject and knew barely the basics. I decided that now is the time to dig in and learn a few things because if I am going to convince some of my liberal friends that we have got to get Obama out of the White House before he pushes our country over a cliff, I’d better be able to back up what I’m saying.
I started thinking about the difference in economic theories embraced by the 2 parties in Congress. I realize that there are some who fall somewhere in between, unfortunately, someone who is an elected democrat in Congress had better put any conservative ideas they may have out of sight and vote in line with their party. The same goes for the Republicans too.
I recently read an article by William Anderson that summed up the Keynesian theory of economics….which is the theoryour current President likes to embrace. It is the hallmark of famed (I use the term loosely) economist Paul Krugman’s beliefs. Anderson writes that “Krugman has almost a religious belief that borrowing and printing money and policies of spending for the sake of spending will pull the country out of a recession. Borrowing from future generations (or repudiating the debt through inflation) is nothing more than making a claim on futurewealth. Furthermore, Krugman’s recommendations do nothing to address the current set of malinvestments which plague the economy, not to mention the huge added burden of government-imposed costs which make production of wealth more difficult.”
So…Krugman is a firm believer that we need to spend even more to get out of this recession…not cut spending. He thinks that the government should print more and more money and flood the system to encourage spending because the more people spend, the more goods will fly off the shelves in stores and this will create the need for more jobs to replace those goods….and so on and so on. Krugman seems to ignore that fact that printing more money will lead to inflation. Those goods are going to cost a whole lot more and people are going to end up cutting back on buying these goods and this is going to hurt the economy.
In contrast to the Keynesian theory is Paul Ryan’s budget plan titled ” The Path to Prosperity”. His plan follows these basic guidelines.
- ECONOMIC GROWTH AND JOB CREATION: Fosters a better environment for private-sector job creation by lifting debt-fueled uncertainty and advancing pro-growth tax reforms.
- SPENDING CUTS AND CONTROLS: Stops Washington from spending money it does not have on government programs that do not work. Locks in spending cuts with spending controls.
- REAL SECURITY: Fulfills the mission of health and retirement security for all Americans by making the tough decisions necessary to save critical health and retirement programs.
- PATIENT-CENTERED HEALTH CARE: Repeals and defunds the President’s health care law, advancing instead common-sense solutions focused on lowering costs, expanding access and protecting the doctor-patient relationship.
- RESTORING AMERICA’S EXCEPTIONAL PROMISE: Tackles the existential threat posed by rapidly growing government and debt, applying the nation’s timeless principles to this generation’s greatest challenge. Ensures that the next generation inherits a stronger, more prosperous America.
Needless to say, Obama and the Democrats didn’t like Paul Ryan’s plan at all. Cutting spending means cutting government entitlement programs and that would mean making many of the democrat voters furious. They want their Obama money. The really insane thing is that Obama has managed to infuriate his base anyway by not being “Keynesian” enough. Paul Krugman has ended up being one of Obama’s biggest critics because he thinks Obama is lowering himself to compromise with the Republicans. Krugman thinks that we didn’t have enough money in the stimulus package. He wants more, more, more! The bigger the debt…the happier Krugman will be.
So, the Tale of Two Pauls can be summed up like this….
Cut spending or spend more?
Obama needs to listen to Paul Ryan….not Paul Krugman.
I know this is an old video ( as old as this past April I think) but it’s very appropriate to post it today.