Republican Debate – My Answers

Two nights ago was the New Hampshire Republican debate on CNN. While I am a big supporter of Ron Paul, I don’t think his message was simple enough for the mainstream voters to consume. He jumped over his simple talking points about the Federal Reserve, Austrian Economics, Sound Money and Blowback among others and went right into rants that were valid, but made him sound more like a fringe candidate than a serious one.

I’m not saying that the two “winners,” Mitt Romney or Michelle Bachmann said anything of substance, but their message was well packaged. If Congressman Paul could just stick to clear, concise points while still spreading his message of liberty and Constitutionalism, he would come out as a clear frontrunner.

I only watched the first part of the debate last night, but if I had to give a response to some of the questions that were asked, here are a few:

1. What is your plan to create manufacturing  jobs in the US?

Currently in the United States, we have a service based economy. We do not have a manufacturing/production based one like we had in the past. Most of the manufacturing of products we import is in China or other Asian countries. The only way we are going to start manufacturing here is that we need the capital and labor to compete with China. In “capital,” I mean machines and resources. We need to invest in these machines so we can be competitive. Even if labor and materials are cheaper in China, we still have to ship all those products across the Pacific Ocean. It’s not really as efficient as we think. There is opportunity for us to start producing products again.

First, we need to cut the corporate tax to zero. There is no need to tax corporate profits and then tax them again when they get distributed to employees as pay. Second, we need to encourage investment in American capital. The easiest way to do this is to get the Federal Government out of economic planning. Stop subsidizing certain industries. Let the market decide what industries and products we should develop. We could be throwing money down the drain because an industry we are supporting might not be able to exist without the subsidies. That makes no economic sense and would never exist in a market based economy.

Bottom line is that we need to make things again, and in order to do that we need to let the market work and the capital invested here at home to do that.

2. What are your feelings on “Right to Work”?

Personally, I believe that the Federal Government should not be involved in the hiring process of a private company. However, we have installed labor laws that call for a closed shop if half of the workers decide to unionize. So, “Right to Work” is a counter to these regulations, but it really doesn’t work. It would be easier to defund the National Labor Relations Board and repeal labor laws that interfere with hiring process of a private firm, union or not.

Let the company, workers, and the market decide what they want to do. If Company A wants to run a closed shop with union employees, let them. If Company B wants to use non-union labor, there’s nothing wrong with that either. The point is that the Federal Government should just stay out of it altogether.

3. How would you build consensus within the Republican Party, not just Tea Partiers?

I feel the message of freedom and liberty are what the Founding Fathers of our nation wanted. This should resonate with every American, not just Republicans or Democrats. To me, it should be easy to build consensus to get the government out of our lives, out of the private sector and out of foreign wars and entanglements.

Then you would be free to live your life the way you want. Businesses will be able to hire people and deliver new and innovative products to the market. We would stop spending hundreds of billions of dollars overseas and would be able to pass that savings along to the taxpayers.

We need to remember the reasons for the Constitution that the Framers had in mind at the time. We broke away from a too powerful and distant foreign central government. This country was founded on the principle of limited central government and if we remember that, building a consensus should not be too difficult.

As I watch more of the debate tonight, I’ll post more answers. Your comments are always welcome. Thanks for reading.

Making Work for ATT

At work, we had a phone line through ATT that we didn’t use anymore. We also had a DSL line that we use for our phone system tied to that account. We wanted to cancel the phone line, but keep the DSL line. Sounds pretty simple, right?

Let’s just say it ended up being a lesson in the power of the International Communications Workers Union. When we canceled the phone line, they told us we would have a new account number. Nobody thought anything of it.

Then, the next morning, our phones were dead. I checked the DSL modem, to see if it was that or the phone system itself. The lights on the modem were all dead. Definitely a DSL problem. After calling ATT, we figured out that our new account number meant we had a completely new account. They couldn’t just cancel the phone line and keep the DSL line active. Perhaps this was a quirk in ATT’s system.

They told us that they would be able to turn it on for us in a few hours.   Then we got a call back from another rep saying that since we were in California, they couldn’t just turn it back on.  They had to send someone out to install the line.

We told them that we already had the modem, everything was hooked up, and we just needed the line switched. The answer was no. We had to have someone come out. So we scheduled it between 8 am and noon in a few days.

This was during a time when our office was closed for the Holidays, but I had some work to do so I came in with our IT guy. That morning at 9:30, we got an automated call from ATT saying that our line was now ready to use and we needed to register our account.   So now I came in to wait for an install that wasn’t even going to happen? They also were kind enough to tell us if we were having trouble, they could send someone out for $150.

I was mad, so I got on chat support with ATT. We got the modem activated and were up and running. I asked them why they told us someone had to come out. They said that on their records, no one was ever scheduled. I was dumbfounded.

After all this, an ATT truck pulls up in front of our office. The guy sits there for a minute, then comes in and asks “So you’re all up and running?”

We said that we set it up ourselves. We suspected that there had to be some sort of subcontractor or union agreement behind his visit, so we asked him if he was part of a union. That’s when he told us he was part of the ICW. We asked what he was going to do, and he said “say hi and leave.”

This was one of my first direct experiences with a union “make work” program. There was no need for him to come to our office at all, but the State of California requires him to do so. The union lobbied for these regulations not to ensure that our connection was up and running, but to make sure this person had a job.

Makes you realize why we’re so uncompetitive here in CA and in the US in general…

Three Early Failures of Obamacare

We have barely seen the Obamacare Healthcare Plan go into effect and so far, there have already been three big failures.  I’m sure we’ll see many more as the plan is more widely implemented.

1.  Since they can’t raise rates for pre-existing conditions, the companies will just raise the rates for everyone.

One of the main points in Obamacare is that insurers cannot deny you coverage because of a pre-existing condition.  However, nothing in the legislation prevents the companies from raising rates on everyone in order to cover the people with pre-existing conditions.

2.  Insurance companies have decided to stop selling children only plans.

Rather than take on sick kids with pre-existing conditions when parents sign them up for child only plans, the insurers will just stop selling the coverage.  Talk about your backfires.

3.   McDonald’s will drop their partial policy for over 30,000 workers.

So, rather than allow McDonald’s to provide partial coverage to their part-time workers that covers doctor visits and basic medical care, Obamacare mandates that the company provides full coverage.  Instead of making this commitment, McDonald’s will just stop providing any coverage at all.  You could argue that McDonald’s is “evil” for choosing to keep their money, but you could also argue that government intervention is ruining a situation that is working.

I’m sure these cases are just the tip of the iceberg.  The healthcare companies and drug companies spent millions lobbying for the healthcare overhaul.  I’m sure there will be more problems like this that arise, and we won’t have any recourse unless we repeal all or portions of the law.

Hayek and Bailouts

I’m in the middle of reading The Road to Serfdom, by FA Hayek.  I’m on a part right now that talks about the role of government and the free market.

People now think that free market supporters want no regulation and financial anarchy.  This is especially true with the criticism of the Tea Party.

However, Hayek claims that laws are necessary and that there are two main points:

1.  The rules have to be predictable and known in advance.

2.  The rules have to be set with no regard of who they will benefit.  A law created to benefit a particular group will create imbalances.

Unfortunately, we actually have not violated rule #1 in our economic system today.  The rules are very predictable, that our government will bail out big corporations at the expense of the individual family.  This is predictable in all the wrong ways.

We have violated rule #2 and you would be hard pressed to find any legislation that does not seek to help one particular group.  The healthcare laws are supposed to help the uninsured.  The financial overhaul is supposed to benefit the consumer.  While the laws are well meaning, we know that they will not work because business will exploit the laws that they lobbied for in their favor.

As I read more of The Road to Serfdom, I’ll keep posting my thoughts.  It is not a very easy read (Hayek’s sentences last forever!) but the ideas that he was expressing in the 1940’s are as true today as they have ever been.

TARP Success?

Today, the Treasury Department declared that the government will only lose $29 billion from the TARP program.  This is being hailed as a huge success and that we saved the financial system and the economy, preventing a second Great Depression and barely losing any money.

I have some big problems with these statements.  First of all, most of the big banks that were infused with cash paid back that money within a year of the program starting.  How can a bank go from about to collapse to financially stable so quickly?

Think about Goldman, it received $10 billion from the government.  If they just took that money and invested it for a year in 3% government bonds, that’s $300 million!  Citi and Bank of America got $20 billion each.  That could turn to $600 million of pure profit.

Did the big financial institutions create a sense of panic, in order to get the government to step in and “save” them by taking over all their bad debts?  Did they know that this panic would lead the government create a web of regulations that stifles future competition?  Anytime banks and government come together, I have a feeling the banks are going to win.

Also, where did this money come from anyway?  We created $700 billion out of thin air, gave it to banks to earn interest on, took on their bad loans, and then they gave it back to the Treasury.   Will the government now put that money to rest?  Or will it eventually make it back into the economy.

And finally, $33 billion is still a lot of money.  We have just become desensitized to the number because we saw the $750 billion stimulus package and the $700 billion bailout.  $33 billion just seems like a drop in the bucket.

While the government claims the success of TARP, I find it hard to believe that it saved our economy and that the true cost was really that low.  We’re still mired in a stalled economy and the bad debt is still out there and has not been liquidated.  And with all the success of this bailout, business now knows that future bailouts will be sure to follow, allowing them to take more foolish risks and setting us up for even bigger failure.

My View of a Green America

With all the talk of “cap and trade” and the new green industries, I thought it was time to really look at a vision of a truly “green” America, not one manufactured by political parties and big business.

First, just think about how we get electricity.  It is produced by a coal power plant, transmitted hundreds of miles, and then to our homes.  It has been this way for a century.  Most of the power we generate is wasted though, because we have no efficient way to store the excess electricity.  Is this a product of a lack of science?  No.  It is because of a lack of innovation because utilities are politically insulated companies, granted monopoly rights by our governments.

You would think, by now, every home would be fitted with solar panels that could generate more than enough electricity for the house.  You would also believe that each house would be equipped with some sort of device, be it a flywheel or another invention, that could store power generated during the day to be used at night.

Then, we could all drive plug-in hybrid cars, cutting our gas consumption to a small fraction, and using the power generated by our homes to charge the cars.

Why haven’t we gotten to this point yet?  Because as consumers, we have no choice.  We have to buy our power from our local utility.  If you even mention power deregulation, everyone always brings up the California fiasco.  However, the reason it failed is because they deregulated everything except the end user.  We were still stuck buying power from the monopolies, no matter how much they manipulated the price.  And who can blame them?  If you had a captive audience, wouldn’t you charge as much as you could?

Imagine if there was competition for supplying power.  You could buy from a solar provider, hydroelectric, nuclear, or if you wanted to save a few bucks, coal.  If we had the choice, I think a lot of people would sacrifice a few dollars a month to buy from a cleaner source.  Rather than having the government subsidize the coal plants, we would put them out of business because we want a cleaner solution.  This would cause for innovation from the coal companies to find a better way to burn the fuel.

Government restrictions and a horrible cap and trade policy cannot and will not help the environment one bit.  It will just generate revenues for the government and their partner utility companies, while charging the consumer more, and allowing the utilities to keep polluting.

In India, companies claim that they can capture carbon in huge underground tunnels.  They can then print out carbon certificates at will, and sell them on the cap and trade market.  Utility companies can buy these certificates and not have to change their ways at all, while this bogus company makes millions.

We need to be able to hold companies accountable, and if it is proven that a utility’s pollution is harming people, they need to be held accountable.  We can have the Supreme Court giving them a free pass to pollute all they want.  That’s not helping anyone.

It’s not about global warming or climate change either.  It is about creating the most efficient and cost effective source of power we can make, while polluting and wasting less.  We need innovation in the way we produce power and the only way that will happen is ending government/utility partnerships, allowing consumer choice, and letting the markets work.  Cap and Trade or any other government sponsored method will only hurt the environment and the consumers, while making the utility companies and the government itself handsome profits.

Obama Will Now Protect Us in Cyberspace, Too

President Obama can do it all.  He can fix the nation’s economy, bailout banks, prearrange bankruptcies for the automakers, and now he can protect us all from “cyberattacks” and the “epidemic of cybercrime.”  He is going to create a “cyberspace czar” to make sure we are all safe.  I say this is more needless government intervention that will not help anything at all, and will lead to a huge waste in taxpayer dollars.

All you have to do is look at the FDA and SEC.  These are two government agencies that are supposed to protect us who fail miserably.

The FDA is supposed to “keep our food safe” but they are always reacting too late.  With the last peanut salmonella scare, they forced the company in Georgia to issue a recall.  If they were supposed to be monitoring our food, shouldn’t they have caught that?  Only after people got sick did they react, and then it took a long time for them to track it back to the plant in Georgia.  What did they do to protect us?

The same goes for the SEC, who are supposed to protect investors from fraud and unethical business practices.  They had information on Bernie Madoff, that basically outlined the entire ponzi scheme, but they chose to ignore it.  They also were way behind on the Enron case, and definitely were absent when dot com companies were defrauding investors left and right.  What protecting did they do?  They talk tough about regulation and oversight, but then they miss a $64 billion ponzi scheme right under their nose.

Now the “cybersecurity czar” is supposed to protect us?  What a joke.  The last president didn’t even use email but now the White House is up to being able to monitor cybercrime?

First of all, most “cybercrime” is fraud that just happens to use the internet.  Check cashing scams and the “long lost relative in Nigeria” scams could happen anywhere.  Also, phishing schemes rely on user error, not hackers.  Unless the White House monitors every email and every click we make, they will not be able to protect the victims of these crimes.

Also, wouldn’t it make sense to leave this task up to the professionals?  There are multimillion dollar companies like Symantec, McAfee and Norton that already patrol cyberspace.  They keep our computers safe and secure.  They have the best people and are on the leading edge of the field.  What good is the government going to do competing against or marginalizing these companies?

When the government recruits their staff, they will lure workers away from these companies with high salaries, paid for by taxpayers.  This will lead to an artificial rise in the cost of labor because government is distorting the price.  This will only hurt the private companies who need to make money to survive.  Since the government can just keep printing money, they can be allowed to misallocate resources in this manner.

Instead of a czar, we need education so people know to update their computers and their virus software.  If they did not go to the phishing sites or be duped into a scheme, we’d be better off.  By creating the czar, we are saying the problems are too big to be solved and that they are just a fact of life, so we need to regulate them.  This is band-aid government at it’s best and it will just lead to a bigger waste of taxpayer money, and no benefit to society as a whole.

Bondholders Are Not Villians

I’m tired of hearing about the evil bondholders that are preventing GM from avoiding bankruptcy.  Why not call them what they really are?  They are the creditors to GM.  They lent GM money, and now are being villified for wanting to collect as much of that money as possible.

The Obama administration’s “offer” is for the bondholders to trade their $27 billion in debt for 10% of the failing company.  If they go to bankruptcy, the bondholders might get wiped out completely, but in a real bankruptcy, the bondholders usually get paid back first.  The problem is that this is not an ordinary bankruptcy.  It is rigged to give the government and the unions all the power.  The creditors and stockholders are the ones getting screwed.

Also, the “offer” gives the US and Canadian governments a 69% stake in the company.  So the primary debt holders get 10%, but the government gets 69%?  Who in their right mind would accept this rotten deal?

We all know the problem with GM is that their labor costs are too high.  Rather than actually trying to fix the problem, the government is handing the keys to the car over to the unions.  Since they are in a partnership with Uncle Sam, we now will be bailing them out forever.  The current model is unsustainable, but rather than actually fixing the problem we are setting up for permanent transfer of wealth from our pockets to the unions.

So, instead of just saying “it’s the evil bondholders’ fault,” we need to look at the actual offer and realize the only winners are Obama and the UAW, and the losers are every tax paying citizen of the country.

Are We Really Safer?

President Obama and his team have been going back and forth with former VP Dick Cheney on whether or not we are safer as a nation now that Guantanamo Bay has closed and we say, at least, that we will no longer torture.

My answer to this whole debate:  Who cares!

Our safety as a country won’t change at all because we close one prison that holds 240 inmates.  And, our enemies have known for a long time that we torture, so this is nothing new.

The bigger debate should be if we are safer now than we were before we put all of these measures in place after 9/11.  Really, it’s been almost 8 years, and we haven’t gotten too far.  That’s the problem with fighting a war with an ideal.  How do you suppose we actually win a war on “terror?”  It’s the same thing with the new war on greed we have going after all the bailouts.  There is absolutely no way you can win a war on idealology.

I would agree with Ron Paul and others that our actions in the Middle East are actually making the situation worse and making us less safe.  Our intentions there were good, but the blowback is creating more and more people who hate us.  If we drop some bombs on civilians, which we have done numerous times, we are giving hundreds or thousands more people a reason to rise up against us.

There is an easy solution to the problem in the Middle East – Bring our troops home, close our military bases, and stop all foreign aid to Arab nations and Israel.  Let the people of the Middle East rule themselves.

If we are gone, they will have no reason to hate us.  Don’t believe the idea either that they hate “freedom and liberty” and the “American way of life.”  If they hated freedom, why wouldn’t they attack the Netherlands or New Zealand?  What they hate is our foreign policy, our bases in some of the holiest parts of the Muslim world, and our unwavering support for Israel.

Instead of actually getting into a real discussion about foreign policy, though, our media focuses on Guantanamo and that’s it.  It is like the extent of our entire foreign policy is one little prison.

It’s time to wake up and start asking bigger questions.  The sooner we do, the safer we all will be.

Obama’s Misguided Fuel Efficiency Policy

Today, President Obama announced his goal to increase fuel efficiency standards in our cars to an average of 35.5 gallons by 2016.  What he didn’t say is that he is going to keep using the horrible and unfair CAFE fuel efficiency standards and how this is going to absolutely kill the American automakers.  His policies are straight out of a “Politics 101” textbook.  They are so naive and idealistic and he does not realize that there are unintended consequences of his policies.

I’m not an expert on fuel efficiency and the auto industry, but a quick search on wikipedia for “CAFE Fuel Standards” was all I needed.  A little research showed me how the rules and regulations are broken.  Instead of addressing the root of the problem with our auto industry and efficiency standards, our President just reaches for pie in the sky goals with no regard for the blowback of his actions.

As I wrote before, the problem with the Corporate Average Fuel Efficiency (CAFE) standards is that they measure the harmonic mean of all the cars sold domestically by automakers.  Since the domestic automakers sell mostly trucks, they then have to sell – not just produce – an equal amount of crappy, fuel efficient cars that no one wants to buy in order to meet the standard.  They end up having to sell these at huge discounts or even at a loss to rental car agencies.  The Big Three lose money on every compact car they make because of labor and union costs, but make money on every truck and SUV they sell.  The importers from Asia and Europe sell mostly compact cars, so they are at an advantage.  They build these cars using the same US labor, but they are not burdened with the labor costs the US automakers are strapped with.   They can meet the fuel standards and be profitable at the same time.

On a side note, we know that US labor costs are not going to go down either.   The United Auto Workers are now majority owners in Chrysler, and will probably come out the same with GM.  With a partnership of labor and the government running the company, how can we expect labor costs to decrease?  Instead, they will continue to increase, and the taxpayers will keep giving them more money to prop them up.

But back to fuel efficiency.  I believe that we need more efficient cars, and we are already on our way there.  Hybrids are all the rage, and the automakers can’t keep up with the demand.  But are hybrids really green?  Massive amounts of energy go into producing the electric batteries they use.  I won’t get into that debate here, but the consumer demand for more efficient cars is very, very strong.

Why not just let the consumer and the market dictate fuel efficiency?  Why do we need laws created by bureaucrats to overregulate the industry?  Look at how competitive and innovative trucks have become in the last year or so.  As gas prices skyrocketed, consumers wanted fuel efficiency.  Toyota came out marketing their Tundra aggressively, and Ford, Chevy and Dodge responded.  All of the commercials touting features and miles per gallon were a testament that the market works and if consumers demand something, the automakers will listen.  It was capitalism and the free markets at their finest!

But why punish our auto industry for making the best trucks?  Even if they get a truck that can average 30 MPG by 2016, they will have sell an equal amount of compact cars that average 40 MPG to meet the tougher standard.  Or, if they can only get 25 MPG out of the truck, they will have to sell even more 40 MPG compacts.  The smaller cars are money losers for the US auto makers, so we are forcing them to make an unprofitable product.  What kind of business can succeed with that kind of regulation placed on them?

If we were to measure anything, we should measure how much progress is being made by a manufacturer for that particular make and model.  If the auto makers make a truck 250% more efficient than last year’s model, they should be rewarded.  If they can’t make money producing small compact cars, don’t force them to make them.  Let the imports fill that market and let the US automakers focus on making their breadwinners, the trucks and SUVs better.

The bottom line is that consumers are already demanding more efficient vehicles.  Let that demand drive what is produced and sold in the US.  Don’t regulate for the sake of regulating and sign the death sentence for the US auto industry.  We need real changes in the policies of our country, not more well intentioned but horribly executed Politics 101, pipe-dream nonsense from our leaders in Washington.