American Policy on Ukraine Crisis is Wrongheaded

March 17, 2014

A recent Post/ABC poll found that 56 percent of Americans would be in favor of the United States and its allies imposing sanctions on Russia for its role so far in the crisis in Ukraine.  This is not surprising given the fact that most Americans get their news one sound bite at a time delivered by a media that generally is complicit in spouting whatever the Washington, D.C. line is on a story.  And it doesn’t help that President Obama ignores the sins of his own government while lying that Russia’s decision to send troops into Crimea is a “violation of Ukrainian sovereignty and territorial integrity…and breach of international law.

Then, there is the obligatory bluster of America’s biggest warmonger – John McCain.  Not only does he favor sanctions against Russia, but he also wants Congress to send American tax dollars to Kiev and U.S. missiles to the Czech Republic to show those evil Ruskies that we mean business.  And just a few days ago he ranted that the Obama Administration is derelict in its duty because it won’t supply the new regime in Kiev with arms, ammunition, and intelligence support for Ukraine’s military.

What makes the view of 56 percent of Americans, John McCain and President Obama ridiculous is that the crisis in Ukraine has American fingerprints all over it.  A leaked phone call between Assistant Secretary of State Victoria Nuland and U.S. Ambassador to the Ukraine, Geoffrey Pyatt indicates American government involvement with protests and the eventual coup in Kiev.

And both Nuland and Pyatt were photographed in Kiev in December handing out baked goods and mingling with anti-government protestors.  For those that say this proves nothing, since when is it appropriate for a sitting ambassador to directly encourage protests against the government he is supposedly engaged in diplomatic relations with?  Can we now understand why ambassadors like Chris Stevens get killed?

The point is, whether the U.S. government supported the coup which overthrew the popularly elected president in Ukraine directly or indirectly is immaterial.  Washington’s support for the coup is primarily responsible for the current tensions between Russia and the U.S.  We rightly wouldn’t like it if Russia facilitated the overthrow of the government in Mexico and supported a new regime hostile to America in that country.  Why do Americans have a hard time feeling empathy towards others?

But, the American response to Ukraine is also wrongheaded because the new Washington supported regime in Kiev is filled with ultra-rightist Svoboda party members and other neo-Nazis.  These are hardly the kinds of folks that share our values of human rights and liberty.  But, in the view of Washington, damn the Ukrainian people as long as their leaders are supportive of the West, not Russia.  Thus, once again, our government is playing politics with the wellbeing of people in another country.  This can only lead to disaster, not a good outcome.

Perhaps the biggest idiocy of the American position on the crisis in Ukraine is the belief that we could enact sanctions against Russia for her part in the crisis with no consequences for ourselves and our trading partners.

First of all, Russia is a major trading partner with all of Europe.  Sanctions against her would also harm her trading partners.

China would support Russia and the two of them could stop using U.S. dollars for international purchases.  Both could also completely stop buying U.S. debt.  The consequences for our economy would be devastating and quite possibly be the final nail in the coffin for the dollar as the world’s reserve currency.  Washington would be faced with two choices:  continue to spend at current levels and face hyperinflation at home or live within its means by drastically cutting federal spending and face social unrest from Americans who have become accustomed to federal largess.

The above scenario is inevitable in any event, but Washington would expedite the event by imposing sanctions on Russia now.

At the end of the day, the U.S. should leave Ukraine alone.  She has already caused enormous harm to the Ukrainian people.  And pushing the envelope by imposing sanctions on Russia could wreak economic devastation on her economy.  That is why the American policy toward Ukraine is wrongheaded.


Obamacare and False Claims

March 7, 2014

Kevin Short over at the Huffington Post produced a wrongheaded post this week titled, “Obamacare Just Made Americans Richer Without Anyone Noticing”.  Citing a report issued by the Commerce Department’s Bureau of Economic Analysis and calculations made by the Wall Street Journal, Short claims Obama’s so-called Affordable Care Act (ACA), better known as Obamacare, was responsible for three-quarters of the rise in Americans’ spending and income growth in January.  Thus, according to Short, the ACA in its first month of operation has already made Americans richer.

The problem with Short’s analysis and the reason why Americans didn’t notice they were richer is because they aren’t.  Short’s claim is nothing more than typical Keynesian bunk.

So, how did the ACA make Americans’ richer in January according to Short?  Well, the expansion of Medicaid funding to the tune of about $19 billion and $15 billion in subsidies received by Obamacare enrollees did the trick.  The logic goes, because some Americans received a combined $34 billion in federal largess, that money will be spent in the economy providing new jobs for countless Americans.

Of course, what Short fails to mention is where the money for those welfare benefits (Medicaid and subsidies) came from.  Did they come from an increase in worker productivity?  Did they come from an expansion of business and employment?  No.  In fact, according to the Institute for Supply Management  its employment gauge in February declined for the first time in 25 months and currently stands at its lowest reading since March 2010.

Obviously, the money came from taxpayers, either through direct tax payments or debt monetization by the Federal Reserve.  Neither approach represents an expansion of the economy or wealth production.  What has happened is akin to taking money from one pocket and transferring it to the other.  Only in Short’s world and the world of Keynesians everywhere is this considered prosperity.

But, what is even more troublesome is how that $34 billion was spent in January.  Again, according to the Bureau of Economic Analysis, Obamacare handouts may have been responsible for a $29 billion increase in health care services.  Besides utilities, all other spending categories experienced a decline.

What this means is if Obamacare further increases government spending on health care, then the cost of health care will rise even higher.  All of that new money entering the health care industry will bid up prices to heights never seen before.  This is precisely the reason health care costs have been on the rise for the last 50 years.

Over the last few years, there have been many false claims made about Obamacare.  From “you can keep your coverage and doctor” to health care costs will decrease to more Americans will have health care coverage, there has been no shortage of mistruths.  And now we have the outrageous claim that the ACA is making Americans richer.  Not only does taking from one citizen and giving to another not make us richer, increased government spending on health care will surely make us poorer.


President is Pushing Another Failed Policy

February 28, 2014

A couple of weeks ago, I received an email update from President Obama which discussed his signing of the Executive Order raising the minimum wage to $10.10 an hour for federal contract workers.  Within his remarks the President stated his belief that, “It’s the right thing to do”, raising the minimum wage for federal contract workers.

Naturally the President used the news of the Executive Order as a segue to lobby Congress to raise the federal minimum wage from $7.25 to $10.10 an hour for all American workers.  He claims raising the minimum wage “would move millions of Americans out of poverty”.  In fact, Obama indicated that, “Raising the minimum wage would grow the economy for everyone”.  The latter remark is based on his undying Keynesian dogma that more spending is the key to growing the economy.

There’s only one big problem with the President’s position on raising the minimum wage.  It’s called the Law of Demand.  According to this law of economics, with all other factors being equal, when the price of a good or service increases, demand for that good or service decreases and vice versa.

In the case of minimum wage laws, the service in question is the labor offered by workers.  Since minimum wage laws make the price of labor artificially higher the demand for labor decreases per the law of demand.  Consequently, some workers will receive pink slips and others will not be hired.  Higher unemployment will result.

In fact, a Congressional Budget Office report last week confirmed just that.  It indicated that Obama’s proposal to raise the minimum wage from $7.25/hour to $10.25/hour would result in the loss of possibly 1 million jobs.

And there are other reports issued by economists who know the laws of their science, which have found that minimum wage measures cause higher unemployment.  It’s also important to understand that that higher unemployment will result in greater income inequality between rich and poor.

At the end of the day, the President’s belief that raising the minimum wage will grow the economy is ridiculous.  In the first place, the law of demand tells us that less people will be working.  In the second place, the president is assuming that the money businesses earn which does not go to higher wages for their employees, somehow gets sucked down a black hole.  Does he not understand that that money could be channeled into productive enterprises like plant expansions, training for employees, and research and development?  All are enterprises which ultimately lead to job creation and higher pay for workers.  Even my 8th grade economics students understand this.  They also understanding that raising the minimum wage is not the right thing to do.


Don’t Prepare Your Kids to be Slaves of the State

February 1, 2014

As we all know, the jails are full of victimless criminals in America.  Whether they are street walkers, gamblers, or drug users, many are serving time not for hurting anyone, but as protection against themselves or because they committed an act considered immoral by society’s moral elite.

However, adults are not the only ones punished for not hurting anyone.  Young children are usually placed in time out, spanked, or have their toys confiscated by their parents for committing the victimless crime of not sharing.

Picture this, little Jonny has a friend over to play, but refuses to give him a turn with his slinky.  After much quibbling between the two young lads, Jonny’s dad intervenes by taking the slinky away from Jonny and giving it to Jonny’s friend while Jonny is placed in time out on the couch to think about what he did.

But, what did little Jonny do?  He did not hurt his friend or violate his friend’s rights.  After all, he didn’t steal from or hit him.  What he did was obnoxious and inhospitable by societal norms, but no crime worth punishing was committed.  Little Jonny’s toys are his property and it is his decision whether or not to let others play with them.

If you disagree, then consider why adults are held to a different standard?  If my neighbor wishes to borrow my hedge trimmer, but I don’t loan my tools out to anyone, does some authority figure come along and take it from me and give it to my neighbor while I am placed in time out in a ten by ten cell?  Most people would say that is a preposterous example that would never happen.  Agreed, then why are kids punished for not sharing their toys?

Like adults, kids have a choice to make.  If they don’t share their things, when they are at a friend’s house, that friend may not share his things with them.  Worse yet, a child who doesn’t share may not have any friends even if he wanted them.  The bottom line is that the natural world has a way of working these issues out.  There are plenty of incentives for little Jonny to share.

But, let’s return for a moment to the example about the neighbor who wanted to borrow my hedge trimmer – the example is not so far-fetched upon closer consideration.  In America, it has become all too commonplace for our neighbors to ask for authority figures (government) to make us share our income with others or face time in prison.  Whether it is big bank bailouts, the military industrial complex, public employee unions, corporate and individual welfare, or foreign aid, Americans are constantly required to share their money with others or face jail time.

And that is really the lesson to be learned about punishing kids for not sharing their things with others.  It teaches them at a young age that property rights equates to selfishness and prepares them to be subservient slaves to the state which takes their property through taxation or price inflation and gives it to others.

At the end of the day, sharing should come from the heart not because you will be placed in time out or put in a cage.  Parents should teach their children empathy for others while respecting their property rights.  In an age of massive public assistance spending and “too big to fail” bailouts, property rights have taken a back seat to political expediency.  It is time property rights were once again respected. Parents can begin that process with their young children.


It’s Time to Try Something New for a Change

January 16, 2014

Last week, on the 50th anniversary of Lyndon Johnson’s so-called War on Poverty, President Barack Obama unveiled his latest initiative to combat economic deprivation in America.  The President’s latest scheme involves public and private funding to create jobs, enhance public safety, improve schools, and provide better housing in 20 communities across the country.  You know, it is the same old story.  If only the federal government would spend enough money we could eradicate poverty in our lifetime.  Unfortunately, for Obama, his latest initiative to fight poverty will have the same end result as LBJ’s War on Poverty – utter failure.

You see, in the 50 years since LBJ signed into law the most sweeping social welfare programs in the history of the U.S., Uncle Sam has spent about $16 trillion on public assistance schemes.  Yet, Americans living in poverty has only gone from 19 percent of the population in 1964 to about 15 percent today.  Put another way, it cost our economy $4 trillion for every percentage point decrease in the rate of poverty.  Given our already enormous national debt and the future calamity it will bring, isn’t there a more cost effective way to help the poor escape poverty?  We cannot afford to spend more money and that is clearly not the answer anyway.

At the end of the day, the best way to fight poverty is with a job.  Thus, to help the poor all minimum wage laws should be repealed immediately.  The late, great, Murray Rothbard had it right when he labeled minimum wage laws “compulsory unemployment”.  Whenever government fixes prices either shortages or surpluses result.  Fixing wage rates above the market rate will only lessen demand for workers’ labor.  Thus, a surplus of workers’ labor (unemployment) will result.  This is Economics 101.

Low wages may not provide a decent standard of living, but for the 49 percent of African-American youth who are currently unemployed, the jobs they would have by virtue of repealing minimum wage laws would give them the opportunity to work hard, get work place experience, and build a resume.  All three could lead to higher paying jobs in the future.

But repeal of minimum wage laws alone isn’t enough.  Uncle Sam needs to repeal costly regulations on business which prevents the creation of new jobs.  In 2013, the federal government adopted $112 billion worth of new regulatory costs on job producers.  This amounted to 80,224 pages being added to the Federal Register.  Since Barack Obama became president in 2009 close to $500 billion in new regulations have been imposed.  And then there is the job killing scheme known as Obamacare.  At a time when the labor force participation rate is at the lowest level since 1978, should the federal government really be concerned about expensive energy efficiency standards for microwave ovens?

To be sure, more could be done to alleviate the scourge of poverty.  A gold backed dollar like existed in the late 1800s and which kept price inflation flat for more than 60 years should be reintroduced in America.  Abolition of the Federal Reserve System which is primarily responsible for the continuous boom and bust cycle in our economy and the destruction of the middle class should be enacted.

In the final analysis, for 50 years, Washington has thrown good money at the so-called War on Poverty.  The result has been failure to achieve the objective.  And this is why it’s time to try something new for a change.


Young Voters Betrayed by Obama Policies

December 21, 2013

Barack Obama, in large part, owes his presidency to young voters.  In two presidential elections he has garnered 66 percent and 67 percent of their vote respectively.  Many of those votes proved pivotal for him in winning key states like Florida, Virginia, Pennsylvania, and Ohio.  And yet the President apparently feels no loyalty toward this group of voters that has given him so much.  In fact, it has become second nature for him to run roughshod over their interests.

To begin with, the economy Obama has produced for young people in close to five years of his leadership is horrendous.  His policies of regulate and spend have not permitted the economy to recover from the Great Recession that began in 2008.  Unemployment for 15 to 24 year olds is more than double the national average.  Many college graduates, unable to find a job, have returned to their parents’ nests to wait for better days and brighter employment prospects.  African-American teenagers face a jobless rate of more than 40 percent!

And while the President was attempting to “stimulate” the economy back to good health with profligate spending, what he did instead was run up a tab that young folks will have to pay back for many years into the future.  What’s more, when interest rates rise to their historic average and interest payments on the national debt more than double, paying back that debt will have to include much higher taxes or enormous cuts in government services.

Lastly, there is Obamacare.  The President is relying on young folks to make his health care scheme work.  He is counting on millions of them to purchase high cost plans to offset costs for the sick and elderly.  Of course, many will not accommodate the President’s wishes, thereby causing health care premiums to skyrocket for all consumers.  By the time the current crop of 18-30 year olds is interested in purchasing health care coverage the costs will be astronomical.  Thus he has put them in an unenviable position.  They are damned if they do, damned if they don’t.

Young people made a serious mistake giving Barack Obama their overwhelming support in the last two presidential elections.  But, what choice did they have?  John McCain and Mitt Romney weren’t much better alternatives.  What young people need are free market policies – sound money, a balanced federal budget, and deregulation.  It doesn’t appear this is going to happen anytime soon.


Obama is Disingenuous about the Economy as Well

November 21, 2013

Lies, damn lies, and statistics.  The current administration has become adept at using all three to mislead the American people.  There is the current kerfuffle over the President’s lie that Americans could keep their health care plans and doctors under Obamacare if they liked them.  Of course, that was a damn lie, especially if you have lost your plan and are now looking at much higher premiums.  And then there are smaller mistruths, perhaps not as egregious, when it comes to describing the current state of the economy.

For instance, I got an email from the White House last week with the headline:  “Here’s What Economic Growth Looks Like, in 3 Charts”.  Included in the message was a chart showing private sector job growth over the last 44 months.  7.8 million private sector jobs have been produced in that time period.  At first glance, this number is amazing.  But, it is only a statistic.  And statistics can be deceiving if you only take them at face value.

Although, nearly 8 million jobs produced in the last 44 months is quite an accomplishment, the figure becomes a lot less remarkable when it is viewed alongside other related statistics.  Those 7.8 million jobs in the last 44 months calculates to an average of about 177,000 per month.  Unfortunately, over the same time period the working age population has grown by an average of 213,000 workers per month.  Thus, private sector job growth is not keeping up with the number of new workers entering the job market.  7.8 million new jobs is simply nowhere near the number of jobs that are needed.

Further, the statistic put out there by the Obama Administration does not indicate what kind of private sector jobs are being produced.  According to the Household Survey of the Bureau of Labor Statistics, from February to August of this year, 963,000 more people reported they were employed, and 936,000 of them reported they were in part-time positions.  Additionally, Labor Department statistics show that people employed in part-time positions are growing four and a half times faster than those employed in full time positions.  So, while claiming 7.8 million jobs is “What Economic Growth Looks Like”, the Administration is being less than honest given that most of the jobs are low-paying, light hour positions.

To put things in the proper perspective, in 2009, 133.5 million Americans were employed.  32 million Americans were on food stamps.  Today, 143.5 million Americans are employed, while 47 million are on food stamps.  Thus, while 10 million more Americans are working today, 15 million more are on food stamps.  This is not indicative of economic growth.  It is characteristic of a collapsing economy.

But, the point is that the President needs to come clean with regards to the condition of the economy.  He is a smart guy.  He has access to the same statistics referenced in this article.  The charade that the economy is growing and has been in recovery since 2009 must end.  Lastly, there needs to be an acknowledgement from Obama that spending trillions of dollars and pumping trillions more into the economy through Federal Reserve monetary schemes has been an abysmal failure in reviving our collapsing economy.  Let’s end the lies, damn lies, and dishonest statistics so we can have an adult conversation about a new direction for America.


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