Politics and Economics In America

This is a follow up to my latest nonfiction post.  And it is putting my fiction writing behind, but such is the curse of presidential political campaigns, it is such a distraction.  I almost wish I was a gamer.  But that not with standing let us proceed.  We have two candidates that are promising a lot of stuff.  Clinton is promising free shit to the free shit army, pure and simple.  Free college except you still have to take out student loans but don’t worry, paying them back will be easy.  Everyone gets a free college degree no matter how worthless it happens to be.  What’s that, how can my college degree be worthless?  Simple, the colleges and universities have to dumb down the curriculum so that even the mentally handicapped can have one.  If you haven’t been paying attention, businesses are still complaining that college grads can’t do math on a level greater that algebra II, and that is the high school level.  They can’t write or read beyond a tenth grade level of high school.  They have no critical analyzation skills.  The list goes on and on.  And the fact is, if you take any liberal arts or social science degree you will never encounter any need for any serious math or science skills.  Look, the fact is simple, if you score less than 117 on your Stanford-Binet IQ test, you are not qualified material for the old college courses of the fifties and early sixties.  You literally can’t hack the work.  But the NEA and the Teachers Federation has convinced so many parents that their little Johnie or Betty just mush go to college.  A college degree is the short cut to a high wage job, until it isn’t.  Let me clue you in.  Back in the depression the average college was no more assured a job that the average blue collar worker or the unskilled laborer.  We are in a depression and your cheapened college degree is no more useful now that it was almost one hundred years ago.  Simply because you have some degree does not mean that there is a job waiting for you to apply and obtain it as a right of attending a four year institution where the administrators out number the teaching professors by a two to one margin.  Think about that for a minute.

Second, any idiot politician that promises you a free education is exceptionally stupid.  Who is going to pay for it?  Oh right, we are going to tax the 1 percent or the ten percent and get lots of tax dollars to pay for it all.  Yeah, sure, it could happen if the rich were stupid.  How many politicians have off shored their wealth to the Cayman Islands to be held in trust out of reach of the IRS?  One whole hell of a lot of them.  do you really think that with all the tax strategies Warren Buffet will allow our governments to take a great deal of his wealth?  I mean, it is so damn obvious that if one owns shares in a corporation that is an investment vehicle and defers taxes by reinvesting the profits that the only way to tax Warren Buffet is to raise the tax on his dividends?  Gosh, his house is paid for, he may only have one or two vehicles that are paid for, his income needs are minimal.  You people are stupid if you think he is going to pay for your college education.  Well, what about Mark Zuckerberg?  He’s a rich man, right?  He owns a lot of stock in Facebook, true enough, but until he sells that stock he doesn’t pay any tax on it.

Well, what about all the infrastructure that needs to be rebuild?  It’s all union work, people.  If you ain’t in the union you ain’t got a chance for a job.  And with the excessively high union wages, who is going to pay for these projects that benefit union members and construction companies?  You and me, pal.  Oh, that’s right, we can use deficit spending, or government debt, to fund it all.  well, that is until no one wants to lend the government money.  We are reaching a saturation point with government debt.  We have been going through a type of very high rate of inflation but it is one that has affected classes of assets.  Real Estate has been rising on a long and high rate of inflation.  True, if suffered a partial collapse about 2007/08, but it has been back on a tear once again.  What has fueled all this inflation of asset classes?  The major expansion of credit in all segments of the economy.  Now economists love to tell us that credit is not money and technically they world be right.  But that credit card in your pocket, can you buy almost anything with it?  Then it is a form of money.  The difference between the currency/money you have in your pocket is that when you use that green stuff, you are left with the object that your bought or service you used.  With credit, you get the stuff or experiences and debt to be repaid with the green stuff.  Credit is a money substitute that spends like money and debt is that substitute for owing someone your green stuff, money.

But we are going to bring back factory jobs, right?  Uh, no, they are gone and will not return.  What all those trade agreements forgot to tell you is that outsourcing of manufacturing is wealth redistribution to the non developed nations.  The idiocy of outsourcing is that using cheaper labor, cheaper regulations and government red tape, being able to avoid the costs of pollutions and other restriction, corporations can make goods far cheaper for consumers.  But what they forgot is that consumers without jobs or higher paying jobs can’t afford to buy much of these cheaper goods.  Is there a problem with this logic?  I don’t care how cheap your product is, if I don’t have a job I can’t buy your product.  End of story.  So to wrap up, Hillary wants to spend a whole lot of money we don’t have but maybe we can borrow, assuming she can get a republican congress to allocate that spending, which is not likely, and tax the rich, which ain’t going to happen because their money is hidden from the IRS, and she is going to defeat ISIS and do all sorts of stuff at which she has already failed.  Donald is going to make America great again but he will fail to bring back manufacturing because of local and state regulations which he as president can’t do anything about and can’t control union wages, and so it ain’t going to happen.  Yes, he can try to get congress to pass tariffs so that we will at least assemble goods here but the cost of those goods will become exceptionally high.  If the average cost of a new car is $30,000, expect that average cost to rise to $60,000.

Of course America, both the private citizen and the public entity called government has been living far beyond its ability to repay in terms of deficit spending.  Our government debt is already close to 100% of our GDP.  think about that for a minute.  Our government spends far more than it takes in.  It would have to tax at a 100% rate of GDP just to balance the books.  and should interest rate rise the government will stand an increasing probability of default.  what does that mean,  Exceptionally high taxes upon the populace, both rich and poor.

Now two days ago I wrote a post about Race and Black Lives Matter.  How does this tie in?  Simple, well meaning people developed the welfare system and failed to see that it would be gamed.  Or if they did anticipate that event, they knew that the recipients of welfare, both white and black, would become members of the government plantation.  Pretty strong words.  But think of it, if you can get an income, any income without having to work, would you?  Maybe you and me would prefer the dignity of work even at a low wage job, but a good many others who have lacked a decent family background and support don’t think it worth their time to get off their asses and go to work.  Besides, ain’t no jobs in the hood anyway.  Is that a problem?  Yes and no.  It is a problem in that a low or no income neighborhood has very little employment opportunities.  The dwellers in such areas must travel outside their neighborhood to work and often they may not have personal transportation nor public transportation.  But it isn’t a problem if the dwellers of such neighborhoods are dependent on welfare programs and find it easier to take the welfare money than find a job.  This is the welfare paradox.  We literally create welfare “slaves” and for the most part these “slaves tend to be black.  Yes, that sounds racist but that is the reality, government statistics on welfare give us a very disappointing picture. Understand this is not just an urban phenomenon for one can find the same problem in some rural areas in states like West Virginia.  We may point the finger at the democrats for having created this problem by creating the welfare state and in so doing breaking up the family structure.  One has only to read the rules for obtaining Aid For Dependent Children to understand that effect.  The attempt to aid families when the legislation was passed in 1964 was a noble one whose consequences went unforeseen.  Now we have talk by progressive liberals about a minimum income for all Americans.  I can tell you, that will not end well.

Well, what about small business, is it the economic growth machine every politician and economist says it is?  That is another yes and no answer.  Most people don’t really know what small businesses are.  Those who sell services such as hair cuts and beauty salon treatments are service businesses.  The same for accounting services and tax preparation.  The plumber who cleans your stopped up drain and does home repair, the electrician who does home repair, and so forth, these are services that are sold.  Many such services require a professional license.  Yard work or landscaping doesn’t although the government unit that oversees these nonprofessional licensed business will require a business license and many other forms that will need to be filled out on a monthly, quarterly, semiannual, and annual basis.  If a vehicle is involved then that vehicle will need commercial plates and insurance to match.  All these costs add up.  Gone are the times when a teenager could put the gas mower in the back of his old pickup truck and mow lawns without giving the government its slice of the business.  True, there is an underground economy that does just that and it is often filled by those who are here illegally.  On the other hand we have small businesses that make things.  Do you want awnings for your windows?  they will make them, custom made to your measurements.  Perhaps they make some type of sporting good like a friend of mine.  He make surfboards.  The amount of EPA forms he has to fill out because of the plastic resins he uses is absurd for the very small amount he uses.  And if he actually hires someone, look out, the forms become worse.  So he contracts out any extra labor services he needs.  Other manufactures make have several employees who fabricate metal or wood.  If one looks at the number of small parts that are used in aircraft, automobiles, appliances, and etc. they are extensive.  A small business may make the plastic mouldings for your refrigerator using injection molding machines and less than a hundred workers.  But guess what?  A great many of these jobs have departed to other under developed countries and will not be coming back anytime soon.  Government regulations of all types along with labor unions have killed them dead.  People can’t understand that labor unions, for all the good that they may do, kill the very employment through constantly increased wages and excessive work rules.  They add to the cost of doing business forcing the end products or services to become more expensive relative to non union manufacture or services.  And they are often abetted by local and state governments.  In many states it is illegal for you to replace a light switch or fixture or wall socket unless you are a licensed electrician.  It may be illegal for you to replace a faucet for your sink or replace a broken pipe in your wall.  It may be illegal for you to repair more that four square feet of sheetrock on your wall.  These regulations abound like weeds and no president can kill them.  Congress can’t pass any laws that would regulate state and local regulations because it doesn’t have the power under the constitution.  Unfortunately, most Americans are very ignorant as to their respective governments and the laws and regulations thereof.

What about healthcare?  What about it?  There was a time when healthcare was a pay as you went business.  there was little or no insurance available.  That changed when World War Two came.  A great many manufactures and services providers could not raise wages and in order to attract new employees offered healthcare insurance.  Kaiser Shipyards was the first to do this.  Blue Cross had been established back in the early thirties but was not widely used.  After the war came the need to add benefits such as health insurance, the kind that paid when you needed to see a doctor or go into a hospital.  Now we have managed healthcare plans that keep you tied to the healthcare system.  The entire healthcare industry, and it is an industry, has become rapacious in its greed and power to drain the average American’s pocket book.  It has this power through monopoly.  Now back when the telephone company had a monopoly because everyone used a land line, it was regulated and the cost per line and its usage was low.  My land line only costs me $20 a month.  What does your cell phone service cost you?  That Epipen that has been in the news used to cost about $20 for a package of two ten years ago.  What does it cost now?  And why?  No competition, it is a monopoly.  Our healthcare system is a monopoly that uses unfair practices and deceptive pricing and practices to extract a great amount of revenue from us.  Next time you go to your doctor or dentist ask what your visit will cost.  They won’t tell you.  Oh, we have to check with your insurance and then we will bill you.  If you go to the auto mechanic about some problem with your car, he is required by law to give you an estimate for the repair.  Same for buying tires and having them mounted.  But if you need a new heart valve, you will just have to wait until you come our of anesthesia.  Of course with no insurance the cost would kill you so why bother with the pain of that surgery?  We have antitrust laws, anti-monopoly laws, laws against deceptive practices, and the like on the federal and the state levels.  So why aren’t they being charged and prosecuted?  Well, with Hillary you will get more of the same expensive healthcare costs.  With Trump you have got a shot at seeing the laws enforced and to costs declined.  But frankly, you’ve got to stop electing the same congressmen and senators that made this mess.  vote them all out at the local, state, and federal level if you really want change.  Otherwise be prepared to sit and suffer.

Now a word to both the wise and the stupid.  Your world as you know it is about to end.  The harbinger of death is called debt.  I could give you a litany of all the debts and their totals world wide but let me just put it into a relevant context.  Total world GDP is somewhere around 90 trillion dollars.  Total world wide debt, that is personal, corporate, and government debt, is somewhere around 300 trillion dollars.  What is the likelihood that this will end well?  Once interest rates start to rise this house of cards falls hard.  Will interest rates rise?  Yes.  The central banks have mismanaged monetary policy.  Governments have borrowed beyond their capacity to repay.  Don’t believe me?  Fine, only time will tell if I am right and I really am not tied to being right.  Remember, this ain’t fiction, you just can’t make this stuff up.

 

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