The New Economy

In the early 1990’s, IBM laid off 135,000 workers (this is a number that I remember but I can only find support online for 115,000, still a HUGE number to be laid off in less than two years).  Few to none of them were low-skill workers.  And the number was SO huge that it was 10 times the total number employed at the time by Microsoft, the company that more than any other was making IBM’s life miserable.

From the early 1980’s through the early 2000’s, General Electric under the leadership of “Neutron Jack” Welch laid off between 120,000 and 160,000 workers (internet research supplies varying numbers).

From the distant past, I dredge up these two cases to make the point that “The New Economy” (the economy that is less and less dependent upon human labor, or high-skilled American labor) is not merely the consequence of computer / internet-based productivity gains or globalization / out-sourcing manufacturing jobs.  These two and other early massive layoff events were often a consequence of “Mergers and Acquisitions.”  M&A was part of a new strategy to boost corporate Bottom Lines – by terminating workers who did not contribute directly or adequately to that goal.

A. Lincoln on Capitalism

These words are the words of Abraham Lincoln, a Libertarian before his time.

You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help little men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot help the poor by destroying the rich.
You cannot establish sound security on borrowed money.
You cannot further the brotherhood of man by inciting class hatred.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by destroying men's initiative and independence.
You cannot help men permanently by doing for them what they can and should do for themselves.

A Workers' Paradise

Who first spoke the expression “a workers’ paradise” is not certain.  It may have been Karl Marx glorifying a stage on the path to a Socialist Utopia, or it may have been coined (or re-coined) by a very Left Wing American in the 1930’s as a reference to Stalin’s Soviet Union.  Few people today believe that Marxist Socialism would be a paradise, and everyone (even those 1930’s Communists) today knows that Uncle Joe’s USSR was more a workers’ Hell than a workers’ paradise.

But there is a real workers’ paradise, and it is here – in the good old USA.

Republicans and Democrats

The core difference between the two major political parties is over the role of government in our lives.  Republicans believe that government interferes with our lives and should be kept to a minimum.  “The government that governs least governs best” (falsely attributed to Thomas Jefferson, as it does reflect his thinking, but more likely spoken by Henry David Thoreau).  Democrats believe that government should help us out when we need its help.  “I am my brother’s keeper” (Genesis' Cain did NOT say that).

Republicans believe in competition; Democrats believe in cooperation.  Mostly.

American Exceptionalism

Watch this video because I will not be repeating what the news anchor says to his audience.  If you don’t watch it, you will miss most of the context for what I have written.  Go ahead; it is an entertaining and dramatic five minutes (they killed the extended eight minute version).

We’re Broke

You’ve heard this before.  “We’re broke.”  You’ve heard it many, many times.  You’ve heard it so many times that you probably believe it, because in many ways it seems true.

But it is not true.

First, some context.  When a politician says “we’re broke,” he is always arguing to cut government spending and/or arguing against tax increases or for tax cuts, usually for the wealthy.  If “we’re broke,” we surely cannot get blood from the stone of people’s incomes.

Redistribution of Wealth

Every penny, every cent, every sou, every shilling, every yen that was ever taken by taxation at any time in history and anywhere in the world is a “redistribution of wealth.”  Never is a single penny taken in tax not a redistribution of wealth.  Whether it is taken in the form of a sales tax, an income tax, a property tax, a FICA (Social Security) tax, an excise tax or a luxury tax, every cent that gets taken by government will be “redistributed.”  To government workers who handle the collection and distribution of tax monies, to other government workers, to construction teams, to doctors and hospitals, to teachers, to police and fire-fighters, to sanitation workers, to mass transit workers, to retired and “elderly” citizens as a subsistence income and, yes, to thieves.  It is sheer demagoguery for any politician to call a tax hike on the wealthy a re-distribution of wealth when you consider that the most massive re-distribution of wealth in American history was the legal theft of wealth (by way of indecently huge tax cuts for the wealthy) from the pockets of the poor and the middle class into the bank and investment accounts of the super-wealthy over the past thirty-five years in America, ever since the top marginal income tax rate was cut from 70 - 91% (you read that right!) down to 28 - 39%.  These monies, that were never collected, if they could be recaptured by the U.S. Treasury, would erase the National Debt.  These tax cuts caused the National Debt.  Many Republicans use this phrase when they want to steal your money and redistribute it to their wealthy friends, the sources of their campaign war-chests.

Obamacare: The Good, the Bad and the Ugly

I do not like Obamacare AKA the Patient Protection and Affordable Care Act (ACA).

But before getting to the particular points of this blog post, let me say that if you think that Obamacare is 100% perfect, or if you think it is 100% evil, in both these cases you are displaying an impatience with thoughtfulness and detail.

So, let me now beg your patience for a while.

First, Obamacare is not so awful that, if it were totally repealed, it would not have to be replaced by something better, because it IS better than what we have had for the past 35 years.  And here is why:

Mankiw on Economic Inequality: Part II

Now for Professor Mankiw.

Argument 1 – The title “Yes, the Wealthy Can Be Deserving” is disarmingly inoffensive.

Reply 1 – Is there a person alive who does not agree that “the wealthy can be deserving,” the logical equivalent of which is “some of the wealthy are deserving”?  The title is deceptive as no one wants to debate it, and surely no argument is necessary to defend it.  Surely Professor Mankiw means to argue more than his title suggests; and that is what I will answer.

Mankiw on Economic Inequality: Part I

N. Gregory Mankiw, professor of Economics at Harvard, and author of THE Economics 101 college textbook, wrote a piece for The New York Times published on February 15th, 2014, called “Yes, the Wealthy Can Be Deserving.”  What follows is my open reply to his article, which you should read (click on the title link) before reading my reply.

But what became clear writing this reply is that there is such fundamental confusion regarding the issue of economic inequality that I must deal with the confusion – first.

The National Debt

This is the first of many blogs on this subject.  And the reason I know I will post on the subject again is the widespread misunderstanding of what should be easy stuff.

The National Debt is the sum of all annual Deficits minus the sum of all annual Surpluses plus Interest on the Balance.   Debt = Deficits – Surpluses + Interest.

What the Interest part should tell us – now that the Debt is at $31.2 Trillion – is that we should work to CUT the Debt, as Interest payments are beyond starting to get serious.  Even at only 1% interest, the annual cost of Interest on the Debt is $312 Billion.  When interest rates begin to creep up – as they surely must – the Interest hit will become $600 Billion or $900 Billion or $1.2 Trillion, every year.  The current low figure – $312 Billion – costs every man, woman and child $945 / year in taxes, or a family of four $3782.  Not chump change, for the nation's credit card Interest.  And each citizens owns $93,705 of that Debt!