Telling It Like It Is

THE ENTERPRISE--A LOT TO WATCH FOR

THE ENTERPRISE--A LOT TO WATCH FOR

ECONOMISTS DON'T GET IT
Economists love to study numbers and reach conclusions.  Some are right, and many are horribly wrong, because the assumptions behind the numbers are wrong, wrong, wrong.  This is the case in  recent economists' pronouncements of the cost of regulatory burdens on small business.  They opine that it isn't all that great. (Check WSJ Article "Small Business Regulatory 'Burden' Is Tough to Quantify." Jan. 29-30 edition p. A2)  As usual, they miss a few critically important points. 

GOVERNMENT BUREAUCRATS DON'T GET IT EITHER.
How do you quantify the hours wasted trying to figure out what regulations your small business must comply with?  How to you quantify and assign a cost to the intimidation factor--that paralyzes many small businesses.  How do you quantify the constantly changing regulatory landscape and the fact that many of the so-called exemptions and tax relief take longer can cost more to understand than they are worth.  Economists, politicians and government bureaucrats have never had to make payroll, comply with hundreds of obscure regulations and still make enough money to stay in business.  They simply ride, like parasites, on the backs of businesses struggling to stay alive.

PEGGY NOONAN HIT IT ON THE HEAD--AGAIN
Readers know I like Peggy Noonan, and she is especially on target when she critiques presidential speeches, an area where she spent a lot of her life--writing them for President Ronald Reagan. The best of her quotes are here, but you can find her whole speech no the WSJ site and probably on her site:
---"The State of the Union speech was not centrist, as it should have been, it was merely mushy, and barely relevant."
---"Rhetorically the speech lay there like a lox, as if the document itself knew it was dishonest, felt embarrassed, and wanted to curl up quietly in a corner of the podium and hide.  But the president insisted on reading it."
---"The administration continues to struggle with the concept of priorities,  They cannot see where the immediate urgency is."
Noonan identified the central elements of the missed opportunity:
--"An inability to focus on what is important now."
--"Unresponsiveness to the political moment."
--"An attitude that was small bore and off point."
--"Unbelievability."
Noonan hits the central issue of Obama-speak in a couple of statements:
--"...there is often about the president and air of delivering a sincere lecture in which he informs us of things that seem new to him but are old to everyone else.  He has a tendency to present banalities as if they were discoveries."
Finally, she sums it up in two sentences that could be about Detroit and its tragic deterioration
 (Look at this:  http://www.huffingtonpost.com/2011/01/26/detroit-decline_n_813696.html#218521  )
--"But out deterioration isn't new information, it's a shared predicate of at least 20 years' standing, it's what we all know.  When you talk this way [Mr. President], as if the audience is uninformed, they think you are uninformed."


FOR EVERYONE WHO EVEN THINkS ABOUT VOTING FOR OBAMA IN 2012 (OR VOTED FOR HIM IN 2008)
Please go read the post on my FORBES blog (copy this into your browser):
http://blogs.forbes.com/prospernow/2011/01/27/america-is-broke-who-will-fix-it/
(I pasted the text, minus the graphics, of the blog at the end, if you'd rather read it that way.)

Then look at these outcomes that further confirm the failures.

HERE IS WHAT HE'S DONE FOR YOU OTHER THAN MAKING NICE SPEECHES ON TV VERY OFTEN

Report Card on Obama's First Two Years

By K.E. Campbell

Two years ago today, Barack Obama was inaugurated as president of the United States.  Are you better off today than you were two years ago?  Numbers don't lie, and here are the data on the impact he and his policies have had on the lives of Americans:

	January 2009	Current	% chg	Source
Avg. retail price/gallon gas in U.S. (regular conventional)	$1.83	$3.104	69.6%	1
Selected commodities:
Crude oil, European Brent (barrel)	$43.48	$99.02	127.7%	2
Crude oil, West TX Inter. (barrel)	$38.74	$91.38	135.9%	2
Natural gas, Henry Hub, $ per MMbtu	$4.85	$4.48	-7.6%	2
Gold: London (per troy oz.)	$853.25	$1,369.50	60.5%	2
Corn, No.2 yellow, Central IL	$3.56	$6.33	78.1%	2
Soybeans, No. 1 yellow, IL	$9.66	$13.75	42.3%	2
Sugar, cane, raw, world, lb. fob	$13.37	$35.39	164.7%	2
Consumer Price Index (for all urban consumers)	211.1	219.2	3.8%	3
Producer Price Index:  finished goods	170.3	183.0	7.5%	3
Producer Price Index:  all commodities	171.0	189.9	11.1%	3
Unemployment rate, non-farm, overall	7.6%	9.4%	23.7%	3
Unemployment rate, blacks	12.6%	15.8%	25.4%	3
Number of unemployed	11,616,000	14,485,000	24.7%	3
Number of fed. employees, ex. uniformed military (curr = 12/10 prelim)	2,779,000	2,840,000	2.2%	3
Real median household income (2008 vs 2009)	$50,112	$49,777	-0.7%	4
Number of food stamp recipients (curr = 10/10)	31,983,716	43,200,878	35.1%	5
Number of unemployment benefit recipients (curr = 12/10)	7,526,598	9,193,838	22.2%	6
Number of long-term unemployed, in millions	2.6	6.4	146.2%	3
Poverty rate, individuals (2008 vs 2009)	13.2%	14.3%	8.3%	4
People in poverty in U.S., in millions (2008 vs 2009)	39.8	43.6	9.5%	4
House price index (current = Q3 2010)	198.7	192.7	-3.0%	7
S&P/Case-Shiller Home Price Index: 20 city composite (curr = 10/10)	146.4	145.3	-0.8%	8
Number of properties subject of foreclosure filings, in millions	2.82	2.87	1.7%	9
DJIA (12,403 on 6/3/08, date BHO clinched Dem. nomination)	7,949	11,825	48.8%	2
NASDAQ (2,480 on 6/3/08)	1,441	2,725	89.1%	2
S&P 500 (1,378 on 6/3/08)	805	1,282	59.2%	2
Global Dow	1,356	2,153	58.8%	2
U.S. rank in Economic Freedom World Rankings	5	9	n/a	10
Consumer Confidence Index (curr = 12/10)	37.7	52.5	39.3%	11
Present Situation Index (curr = 12/10)	29.9	23.5	-21.4%	11
Failed banks (curr = 2010 + 2011 to date)	140	164	17.1%	12
U.S. dollar versus Japanese yen exchange rate	89.76	82.03	-8.6%	2
U.S. money supply, M1, in billions (curr = 12/10 preliminary)	1,575.1	1,865.7	18.4%	13
U.S. money supply, M2, in billions (curr = 12/10 preliminary)	8,310.9	8,852.3	6.5%	13
National debt, in trillions ($000,000,000,000)	$10.627	$14.052	32.2%	14
Sources:
1 - U.S. Energy Information Admin.
2 - Wall Street Journal
3 - Bureau of Labor Statistics
4 - Census Bureau
5 - USDA
6 - U.S. Dept. of Labor
7 - FHFA
8 - Standard & Poor's/Case-Shiller
9 - RealtyTrac
10 - Heritage Foundation and WSJ
11 - The Conference Board
12 - FDIC
13 - Federal Reserve
14 - U.S. Treasury

 

I KNOW--MY GRAMMAR DOESN'T SOUND RIGHT BUT IT IS

READ IT AND WEEP--THEN SEND IT TO YOUR CONGRESSIONAL REPRESENTATIVES

BEST, JOHN

 

AMERICA IS BROKE!  WHO WILL FIX IT?

©John L. Mariotti 2011

 

In an Orwellian[1] twist of Obama rhetoric, the president tells Americans that we must keep spending because “Spending is investment.”  Or at least that’s my take from the State of the Union speech.  Spending is NOT investment when there is no return, and no prospect of payback, ever.  More important, spending MUST be stopped, when the bank account is dry. What part of that statement does our Harvard-educated president not understand?

 

Every responsible person knows (or should know), when you run out of money, you must stop spending.  But our government leaders apparently don’t get it.  They just have more dollars printed (each new one worth less than the others), or borrow more from China (who we already owe nearly a Trillion dollars.)  The CBO[2] just estimated this year’s US deficit at $1.5 Trillion!

 

Not only is our Federal government so deeply in debt that there is no foreseeable way to get out of the mess, but so also are most of our states.  A few states have been fiscally responsible, but most, and some of the largest states are in the worst shape:  California, Illinois, Michigan, New York ….  

American Pulse[3] Survey:  Americans Most Worried in Illinois, California and Michigan…

01.26.2011– COLUMBUS, OH – Three in five (61.3%) Americans believe the state they live in may be in financial trouble and unable to meet service requirements to its residents (versus 29.2% who do not), according to the latest American Pulse™ Survey of 5,206 respondents. It appears that residents of Illinois are the most concerned followed by California and Michigan. New York and New Jersey round out the top five.

The states that are in terrible financial condition are even worse off than their “books” show.  States have not accounted for pension liabilities as private companies must.  States show current contributions as expense, not billion dollar liabilities (money owed), and worst yet, most states use ludicrous actuarial assumptions to estimate the returns on pension funds.

 

States are hoping for a Federal bailout, but where will the Federal government get the money?  There is none left!  Here’s the situation.  America has been living beyond its means, spending more money than it takes in for a long, long time.  This problem has been growing for decades, but Barack Obama aided and abetted by two years of Democratic Congressional control has dramatically worsened the problem. 

 

So now Obama will “make nice” and talk about “freezing spending” on accounts that represent a small fraction of the budget.  But lets go back to some root causes of our problems.

 

1. We just spend too much on everything, and it’s getting worse, not better.  Unless the House Budget Committee, led by Rep. Paul Ryan, can clamp down hard—and with a Democrat controlled Senate and Obama as “spender in chief,” that’s not likely to be enough.  Interest on the debt is dependent on the amount of debt and prevailing interest rates—a huge cost and growing.  If interest rates go up to historical levels, the interest on the national debt will skyrocket—draining the nation’s coffers faster, and making the deficit even worse.

 

1. States have spent too much too, and the downturn in the economy reduced tax revenues at both state and federal levels, making the problem worse—because nobody reined in spending. 

 

The leading causes of Federal excess spending are huge “entitlement” accounts: Social Security and Medicare/Medicaid.  The aging population of America is depending on these to cover them in their old age.  The bad news is, that both of these must be cut in one way or another. 

 

1. Social Security: Pushing out retirement to age 70, and doing it now, (not in 10-20 years_, will help.  Changing COLA adjustments to cost based instead of wage based, and adding a means test to reduce benefits to high earners, will help too.  Nobody will like these steps, but such changes are mandatory.

 

Medicare & Medicaid present two different dilemmas. 

 

1. Medicare is full of waste and corruption, most of it hidden in “privacy protected” accounts.  These need to be opened up and cleaned up—now!  Means testing already exists, but it will need further changes.  Medicare abuses—charging fees for services not performed, or choosing expensive treatments, when less costly ones are suitable—must be stopped.

 

1. Medicaid is tougher since it is intended to help the poor.  But how poor? Medicaid recipients have been defined so that people who are not really “poor” at all can use Medicaid.  States must redefine these limits and the Federal government must go along, because living costs vary all over the USA, and any national limits are sure to be wrong—too high in some places and too low in others.

 

Most members of Congress are afraid to tackle Social Security and Medicare because they will be voted out of office before they can make meaningful changes.  But if they don’t do it, who will?  Certainly not President Obama.  Somebody has to do this.  A courageous president would demand it—but not our “Spender in Chief.”

 

1. Defense spending is the next big budget item.  It simply needs to be cut—by at least 15-20% across the board—and those in charge told to “make do.”  Defense spending is loaded with redundant, duplicatd military forces, administration, intelligence services (who don’t share information) and costly weapons systems, and many contract cost over-runs.

 

1. Six “welfare-like” budget accounts didn’t even exist in the late 1960’s:  food stamps, housing subsidies, low-income tax credit, supplemental security income, nutrition programs and disaster relief,  They add up to $200 Billion in spending we cannot now afford.  (And I’d bet they are also full of waste and corruption.)  And these don’t even include the $107 Billion Federal Unemployment budget.

 

1. Finally, the government is too big, too expensive, too complex and pays too many people too much money. GOVERNMENT WAS CREATED TO WORK FOR THE PEOPLE, NOT VICE VERSA.  Government has grown into a behemoth that meddles in every walk of life, telling Americans what they can and cannot do.  It must be simplified and drastically cost-reduced. E.g., The number of Cabinet level positions & departments must be cut in half--from 16 to 8—and the departments “combined, consolidated and downsized.”  Done right, this would save hundreds of billions.  This is exactly what happens in the private sector during competitive threats, or as a result of hard-nosed mergers. Start with the pay and benefit levels of public sector employees versus competitive private sector people.  These have been driven up by public employee unions, and must be cut—and hard.  Look what has happened!

 

 

The table posted at the end of this article appeared in a USA Today story last year.  It compares the compensation of federal and private employees. I am posting the whole table, and hope you will scroll down through it.  You will be amazed—and possibly disbelieving, but the link to the article is at the end.  That is one of the leading reasons why our State and Federal governments are “broke.”

 

We are down to the bottom line! Our President talks a lot but does little (“symbolic things”) or nothing at all. Their GOP predecessors were also guilty of overspending, but this group has topped everything and made the problems dramatically worse in a short two years.  Just study the deficit chart below.  Obama has made the problem much worse, and so has Congress.

 

 

What are “they” going to do to fix it?  When? How? And how soon? Every day that passes, the problem gets worse.  How hard will it be to fix Obama and the Democrats spending debacle?

 

Here’s a simple example that is frightening: 

1) Assume we don’t extend the “Bush tax cuts for the wealthy”

2) Assume we cut defense spending by 20%

3) Assume we implement a two-year federal employee wage freeze

4) Assume we cut domestic (non-defense) discretionary spending by 20%

Assume we do these all at one time. 

 

The amount saved would hardly budge the deficit.  Why? Because it would we offset by the interest cost on the debt—when interest rates go back to traditional/normal levels—which they inevitably must do before much longer. 

 

Can you imagine that?  All these big cuts would have an minimal effect on the deficit—which is now projected to average $1 Trillion per year for the next ten years.  This shows just how widespread and dramatic the cuts must be. 

 

Of course the best cure for a deficit is growth in the economy, which generates more tax revenue.  But President Obama’s anti-business policies (which won’t be cured by naming GE’s CEO as an adviser), job-killing programs  (like Obamacare) and stifling regulations (like the EPA’s) are stopping economic growth in its tracks.   GDP in 2011 is projected to grow—maybe 3% (and 1/3 of that is due to the tax holiday of 2% on employee Social Security withholding).  This is not real growth! 

 

AMERICA IS “BROKE” DUE TO OVERSPENDING—AND “BROKEN” DUE TO BUREAUCRACY, INEFFICIENCY AND WASTE—AND OUR PRESIDENT DOES NOTHING BUT MOUTH PLATITUDES LIKE “SPENDING IS INVESTMENT.” 

 

Hopefully the new House will push the Draconian actions needed.  Then we’ll see if the Senate and the President care about America’s future.  If someone doesn’t do something fast, America will become another Greece—or worse.  AMERICA IS BROKE!  WHO’S GOING TO FIX IT?

 

 

Comparison of Compensation—Private vs. Federal—Job by Job.

Job

Federal

Private

Difference

 

Airline pilot, copilot, flight engineer	$93,690	$120,012	-$26,322
Broadcast technician	$90,310	$49,265	$41,045
Budget analyst	$73,140	$65,532	$7,608
Chemist	$98,060	$72,120	$25,940
Civil engineer	$85,970	$76,184	$9,786
Clergy	$70,460	$39,247	$31,213
Computer, information systems manager	$122,020	$115,705	$6,315
Computer support specialist	$45,830	$54,875	-$9,045
Cook	$38,400	$23,279	$15,121
Crane, tower operator	$54,900	$44,044	$10,856
Dental assistant	$36,170	$32,069	$4,101
Economist	$101,020	$91,065	$9,955
Editors	$42,210	$54,803	-$12,593
Electrical engineer	$86,400	$84,653	$1,747
Financial analysts	$87,400	$81,232	$6,168
Graphic designer	$70,820	$46,565	$24,255
Highway maintenance worker	$42,720	$31,376	$11,344
Janitor	$30,110	$24,188	$5,922
Landscape architects	$80,830	$58,380	$22,450
Laundry, dry-cleaning worker	$33,100	$19,945	$13,155
Lawyer	$123,660	$126,763	-$3,103
Librarian	$76,110	$63,284	$12,826
Locomotive engineer	$48,440	$63,125	-$14,685
Machinist	$51,530	$44,315	$7,215
Mechanical engineer	$88,690	$77,554	$11,136
Office clerk	$34,260	$29,863	$4,397
Optometrist	$61,530	$106,665	-$45,135
Paralegals	$60,340	$48,890	$11,450
Pest control worker	$48,670	$33,675	$14,995
Physicians, surgeons	$176,050	$177,102	-$1,052
Physician assistant	$77,770	$87,783	-$10,013
Procurement clerk	$40,640	$34,082	$6,558
Public relations manager	$132,410	$88,241	$44,169
Recreation worker	$43,630	$21,671	$21,959
Registered nurse	$74,460	$63,780	$10,680
Respiratory therapist	$46,740	$50,443	-$3,703
Secretary	$44,500	$33,829	$10,671
Sheet metal worker	$49,700	$43,725	$5,975
Statistician	$88,520	$78,065	$10,455
Surveyor	$78,710	$67,336	$11,374

Source: Bureau of Labor Statistics, USA Today analysis http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm

You can see in the next graph how this differential has built up over time. It used to be that a federal government job paid less but was more secure. Now it is still more secure, but pays about 44% more on average (35% higher wages and 69% higher benefits). (Source: Reason magazine)

 

 

---

[1] George Orwell, author of the famous book “1984”

[2] Congressional Budget Office

[3] American Pulse Survey conducted 1/18-1/19/2011. Margin of error is +/- 1.4%. www.bigresearch.com

 

 

 

 

THE ENTERPRISE—OBSERVATIONS OF THE SCENE

 

THE ENTERPRISE—OBSERVATIONS OF THE SCENE

 

Note:  I am not emailing this directly to regular subscribers due to a technical issue with the Comcast email here in FL.  I have Webmail email access, but my regular Apple Mail system (where the Address Lists reside) cannot be used to send from here.

BREAKING NEWS: KEITH OLBERMANN IS OUT AT MSNBC

How sad [NOT], to lose the leading light of this misguided network.  Or, as we used to say, "don't let the door hit you in the A--!"  Good riddance to another unqualified big mouth. 

 

DOES A LEOPARD CHANGE ITS SPOTS?  IS OBAMA NOW A BUSINESS FRIENDLY CENTRIST?

We used to speak of people who either “walk the talk” or not.  Charles Krauthammer coined a great phrase tonight to describe Obama’s recent centrist and seemingly pro-business shifts.  When asked if this was a good “start” for Obama’s move to the center, Charles said, “It’s less of a start than a ‘pose’.”

 

WHEN YOU ARE IN DANGER OF BEING RUN OUT OF TOWN, GET OUT IN FRONT AND PRETEND YOU ARE LEADING A PARADE

This simple phrase describes a wise move and a succinct way to explain Obama’s recent choices for staff (Daley) and counsel (Immelt) from the business community.  Nobody in his administration has ever run a business, and few (including Obama himself) understand business more than theoretically or superficially.

 

AMERICAN   MANUFACTURING SHOWS SIGNS OF LIFE

Sooner or later, the strong American companies come back to life and reinvest in factories to make products in the USA.  Caterpillar, Ford, Whirlpool and Intel are leading this round of US manufacturing expansion.  There are many others without the marquee names too who will be expanding US production and employment. 

 

CAN AMERICAN MANUFACTURERS COMPETE WITH ASIANS?

Not so well.  Some problems will not go away.  Labor rate differences in a range of 10:1 up to 30:1 are hard to overcome, but the real killers are the US’ taxes, socially regulated costs, regulations and unions—all penalties—compared Asian subsidies which provide economic advantages.  Together, these factors contribute to creating a US Overhead structure that is nearly impossible to overcome vs. the negligible ones in Asian countries.  

 

LESS DEVELOPED COUNTRIES WILL DEVELOP--EVENTUALLY

As those countries keep developing, their “overheads” for benefits, environment, safety, etc. will grow, but it will take decades.  Meanwhile, clever design and replacing labor with capital (automation and mechanization) and advanced methods such as lean production, and self-directed, empowered teams of employees seem to be the best way to “compete” in manufacturing

 

SOCIAL MEDIA—THE NEXT “MINE-FIELD” FOR COMPANIES

If you “friend” someone of the opposite sex at work a bit too aggressively, have you committed sexual harassment?  Maybe!  If you post stories or photos or videos of you misbehaving on personal time, have you damaged your career opportunities or possibly even the reputation of your company?  Maybe, probably!  Might there be liabilities you could suffer from this kind of action.  Sure! 

 

REPUTATION DAMAGE IS IRREVERSIBLE

Could an active life on Facebook or a hyperactive, but ill-advised stream of Tweets on Twitter expose you to reputation damages?  Absolutely.  Is it “fixable?”  NO!  And how does your social media presence expose you to identity theft?  A lot of ways, since personal content on Facebook might also contain hints to security questions/answers in your private banking life.  Conclusion:  once you do this—expose your personal life on Facebook—there is no undo, erase or “rewind.”  What’s out there stays out there, visible to many, at any time.

 

UNIONS ARE KILLING AMERICA’S UNION (OF STATES)

Public sector unions have an incestuous relationship with their “bosses.”  The “Bosses” are essentially politicians, who must run for reelection every 2, 4 or occasionally 6 years.  Union dues, collected from workers are used to fund political campaigns, thus making the politician who gets elected “beholden” to the Unions who supported him/her.  Thus negotiations over wage and benefits are not balanced or even in the best interest of the citizens of the state or local government these people are elected to represent.  They are slanted to benefit the unions and thus pay and benefits for public union employees have grown and grown and grown, crippling many municipalities—large states and smaller towns or counties.  This is a dangerous, unhealthy situation, which must be addressed—and fast.  It will be emotional and tough, but it is a ticking time bomb.

 

JOBS ARE FLOWING TO STATES WITH LOW TAXES AND LOW UNION POWER

Northern industrial strongholds like OH and MI are losing jobs constantly to southern states like AL, MS, and TX where taxes are low, wages are lower and unions are much less prevalent and/or weaker due to Right to Work laws in those places.  Nature is at work.  Work will flow to the most competitive places, both within the USA and outside the US.   Worst of all for American workers, those who have skills and are willing to move to where the jobs are cannot, since they are trapped in homes with “underwater” mortgages or facing a loss of equity on a sale. Thus jobs go unfilled in some places and people remain unemployed in others.

 

LOTS MORE TO CONSIDER ABOUT WHAT’S GOING ON IN WASHINGTON AND IN OUR ECONOMY—BUT THAT IS FOR NEXT WEEK’S EDITION.

 

BEST, JOHN

 

 

 

THE ENTERPRISE--LET'S STOP AND THINK ABOUT THINGS

THE ENTERPRISE--LET'S STOP AND THINK ABOUT THINGS

FINALLY A PRESIDENTIAL SPEECH I CAN AGREE WITH AND ADMIRE
I'll add my voice to the many who thought Obama (admittedly a talented speaker) "nailed it" at the Tucson memorial service--in spite of an immature and raucous audience.  This is the one speech he's given where I can find nothing to disagree with and was proud he was the President making the speech.  He is still pretty stoic, but whether he wrote a lot of it or not (it matters), it was a fitting tribute and an inspiring speech.  If only, in addition to "Gaby" opening her eyes, he would "open his eyes," and see the potential he has if he would just quite being a left wing, big government, wealth redistributing elitist.  But he won't.  He still gets credit for a great speech.  I knew it was great when the lefty talking heads on CNN were critical and the panel on Fox loved it.

My favorite line..."...what matters most is not wealth, or status, or power, or fame, but how well we have loved..." [those close to us]

A LARGE BUT UNINSPIRING CAST OF 2012 CANDIDATES
I started my own list a long time ago, seeking someone who I would like and who could beat Obama in 2012.  The list is long, and so are the odds of any of them emerging to challenge this talented speaker/campaigner, who promises hope and moderation and then does the opposite. (The curse of so many politicians).

My list as of now is:  Right now, I am underwhelmed by all but a couple of them (see ***)
Sarah Palin. She’ll draw the largest crowds but will also draw attacks from both within the party and outside it. Expect her to be one of the last to officially announce her candidacy, hoping to limit opportunities for criticism. Not for me.
Mitt Romney. With a sharper message on overreaching bureaucrats and the economy, he’ll do better than in 2008. He’s aggressively seeking support of local lawmakers in early primary states as well as social conservative groups. I liked him 4 years ago, not so sure now.  Still like his competency; wonder about voter appeal.

Mike Huckabee. With Palin in the mix, he’ll find it harder this time than last to rally conservatives around him. Plus money woes will dog him again. No thanks, would have been a good VP candidate in 2008.  Don't give up day job on FOX!

Ron Paul.  Again?  Please, not again.  Makes sense a lot but it too old, too libertarian, etc.

Newt Gingrich. Best of the "policy wonks, " but the former House speaker will struggle with fund-raising, and though his often strident rhetoric will stoke the far right, it’ll alienate others. Plenty smart, but too much old baggage.

***Haley Barbour. The Miss. governor is a fund-raising pro, likely to gather to him the GOP’s ace campaign operatives. But he’s barely known outside Dixie, tone deaf on racism at times. Maybe too Southern?  But a smooth savvy guy!

***Rick Perry, Governor of Texas. With a following and acceptable to Tea Partiers! Being Gov. of a big state is useful experience.  Smooth, accomplished, good looking, and from a big GOP state. Says he's not running; we'll see.

Tim Pawlenty. Retiring as Minn.’s governor this year, he’s Palin’s opposite, attractive to moderates and independents but not likely to inspire conservatives. Forget about him.  Dull.  No sizzle.

Mitch Daniels. The Ind. governor and former Bush budget director will position himself as a practical manager, pushing government reform and cutting the federal deficit…hardly an exciting sales pitch for the primaries. He’s the real deal but will the vote for a "not so flashy leader, so-so orator?"  I doubt it--but a possible VP?

Mike Pence.  Prominent GOP Congressman from Indiana. Not a household name.  Looks the part, but does he have the right stuff?

John Thune. ND Senator with little name recognition, uncertain popularity power.

Chris Christie. N.J.’s governor may run, but only to raise his profile with voters across the country for a more purposeful attempt down the road. A temporary fad—good ideas. But fat guys don’t do well in Pres. runs and he has plenty to do in NJ.

***Marco Rubio—the shining new face, but too new to rate—an impressive speaker…Best of the New Bunch?

Paul Ryan—the only one in the GOP with a real plan, but is he an aspiring candidate? The real thing on budgets.

Eric Cantor—a smart, competent Congressman, prominent in the GOP House, but a bit sharp-tongued.

John Kasich—OH Gov. spot was a big win—and he tried and failed once before, in 2000—lacks real sizzle—but very tough and bright.  Will gain in prominence if his OH plans work

Rob Portman—A bright new/old face who won easily in OH—Could be good VP choice in 2012 or 2016.

John Bolton—controversial UN ambassador—Forget  about it.  Few know him and many didn't like him all that much as UN guy.

Jon Huntsman—Former Utah governor, probably too moderate for current GOP, As Obama's Ambassador to China (now) he has more downside than upside in that role.

FINALLY--THE LAST TWO

***Jeb Bush--The best of the Bushes, but much more likely to run for Senate in 2010 (FL and win); could contend in 2016--especially if Obama is reelected, and there is no VP successor in the wings.  Perhaps the "third time is the charm!"

Herman Cain—African American, former CEO of Godfather's Pizza, talk show host, Baptist minister, motivational speaker and Tea Party favorite.  After Obama's rise from obscurity in 2008, and vote uprising in 2010, stranger things could happen.


LET'S SEE, IT'S WINTER AND THE WEATHER IS AWFUL--WHAT SHOULD I DO TODAY?
Whenever you wonder what to should do today....and nothing comes to mind, go to this list.  Try not to get arrested or committed.

To Maintain A Healthy Level Of Insanity
1. At Lunch Time, Sit In Your Parked Car With Sunglasses on and point a Hair Dryer At Passing Cars. See If They Slow Down.
2. Page Yourself Over the Intercom where you work. Don't Disguise Your Voice!
3..Every Time Someone Asks You To Do Something, ask "Do You Want Fries with That?"
4. Put Decaf In The Coffee Maker For 3 Weeks. Once Everyone has Gotten Over Their Caffeine Addictions, Switch to Espresso.
5. In the Memo Field Of All Your Checks, Write "For Marijuana."
6. Skip down the hall Rather Than Walk and see how many strange looks you get.
7. Order a Diet Water whenever you go out to eat; do it with a serious face.
8. Specify That Your Drive-through Order Is 'To Go'.
9. Sing Along At The Opera.
10. Five Days In Advance, Tell Your Friends You Can't Attend Their Party Because You're going to have a headache.
11. When The Money Comes Out The ATM, Scream 'I Won! I Won!'
12. When Leaving the Zoo, Start Running towards the Parking lot, Yelling 'Run For Your Lives! They're Loose!'
13. Tell Your Children Over Dinner, 'Due To The Economy, We Are Going To Have To Let One Of You Go.'
And The Final Way To Keep A Healthy Level Of Insanity
14. Pick up a box of condoms at the pharmacy, go to the counter and ask where the fitting room is.

THIS BRINGS BACK MY DAYS ON THE RAILROAD OR AT A COMPANY WITH SEVEN UNIONS
What's wrong with America these days?  Check out California!




THIS ONE WILL MAKE YOU GRIN--OR GRIMACE--AS NEWSPAPERS CHANGE IN NATURE AND INFLUENCE
Strange Demographics of U.S. Newspapers

1. The Wall Street Journal is read by the people who run the country.

2. The Washington Post is read by people who think they run the country.

3. The New York Times is read by people who think they should run the country and who are very good at crossword puzzles.

4. USA Today is read by people who think they ought to run the country but don't really understand The New York Times. They do, however, like their statistics shown in pie charts.

5. The Los Angeles Times is read by people who wouldn't mind running the country -- if they could find the time -- and if they didn't have to leave Southern California to do it.

6. The Boston Globe is read by people whose parents used to run the country and did a poor job of it, thank you very much.

7. The New York Daily News is read by people who aren't too sure who's running the country and don't really care as long as they can get a seat on the train.

8. The New York Post is read by people who don't care who is running the country as long as they do something really scandalous, preferably while intoxicated.

9. The Miami Herald is read by people who are running another country but need the baseball scores.

10. The San Francisco Chronicle is read by people who aren't sure if there is a country or that anyone is running it; but if so, they oppose all that they stand for. There are occasional exceptions if the leaders are handicapped minority feminist atheist dwarfs who also happen to be illegal aliens from any other country, or galaxy, provided of course, that they are not Republicans.

11. The National Enquirer is read by people trapped in line at the grocery store.

12. The Minneapolis Star Tribune is read by people who have recently caught a fish and need something in which to wrap it.
So, in which category do you belong.  There are probably others--like "four day old editions of any of the above, are read by people in laundromats waiting for their clothes to dry, or people who use certain public restrooms.

A POPULAR PASTIME IS SENDING AROUND STERN EMAILS ABOUT HOW THINGS ARE OR HOW THEY SHOULD CHANGE
The problem is that they are drafted by upset people who don't stop and think through the consequences of what they are proposing--or how they'd like it if it was done to them.  It's OK to be upset with Congress.  The way to deal with that is to communicate with them--directly and frequently--and then elect someone else if they don't listen and perform. 

I have added "my take" below each of these--think about what your reaction might be?
Proposed: Congressional Reform Act of 2010

1. Term Limits.
I heartily agree -- but it is so unlikely that they'll vote to limit their own terms, I don't hold much hope for it. This will only work if limits on staffers are also imposed.  They carry over from one politician to the other and are the "shadow bureaucracy/democracy."

   12 years only, one of the possible options below..

   A. Two Six-year Senate terms
   B. Six Two-year House terms
   C. One Six-year Senate term and three Two-Year House terms

2.  No Tenure / No Pension.
I don't agree with this.  They deserve  pension, since they leave their jobs, home, etc. to serve.  It should vest based on service, like everywhere else and be fully vested at 67% of their pay, after 24 years unless term limits pass and then it could vest at 50% pay after 12 years.

A Congressman collects a salary while in office and receives no pay when they are out of office. 
That's how it works now.  Isn't it?

3.  Congress (past, present & future) participates in Social Security.
Fine and just like some corporate systems, there is a compensation/offset vs. other pension plans so they don't exceed some level.

All funds in the Congressional retirement fund move to the Social Security system immediately.  All future funds flow into the Social Security system, and Congress participates with the American people.
Not practical in full.  Social Security doesn't pay enough especially if politicians do  only stay in office for 12-18 years.  They deserve a pension.  The good ones give up a lot to serve their country.  (The lousy ones we need to vote out.)

4. Congress can purchase their own retirement plan, just as all Americans do.
Most Americans have traditionally gotten this from employers.  Now that 401(k) plans are in vogue, then Congress could contribute and have it matched up to 5% of their pay.

5. Congress will no longer vote themselves a pay raise.  Congressional pay will rise by the lower of CPI or 3%.
Why "lower of?"  CPI is good enough.  "lower of" is just being nasty.

6. Congress loses their current health care system and participates in the same health care system as the American people.
Which is what?  There is none--not yet anyway.  If their employer gives them health care, what system does it use?  VA? Medicare plus supplements?  What?  Nice attempt at in your face, but not well thought out.

7. Congress must equally abide by all laws they impose on the American people.
Absolutely, but remember, "Power corrupts, and absolute power corrupts absolutely."  They are still human and will do some bad things.  They should be punished (not just :"censured!"

8. All contracts with past and present Congressmen are void effective 1/1/11.
I don't even know what this means.
 

The American people did not make this contract with Congressmen.  Congressmen made all these contracts for themselves.
Of course.  The government is vested with the power to make laws.


Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.
I agree, and some do, but too many don't.  The reelection rate of incumbents is over 90%.  That's why term limits are a good solution.


A SOBERING THOUGHT TO CLOSE WITH--IT'S EASY TO THROW ROCKS AT THEM, BUT THEY DO "SERVE" FOR US
How about someone actually thinking about how they'd feel if they gave up everything for more than a year of their life as a candidate, endured mud slinging campaigns and then spent their nights sleeping in their offices in Washington, because as much as  a Congressman's salary sounds like, it is not enough to support a family and home back in the district AND rent an apartment or buy a condo in one of the most expensive cities in the country.  That fact is what tempts them to listen to and take goodies from lobbyists.

THAT'S ENOUGH RANDOM STUFF FOR ONE WEEK. 
Below I have posted a thought provoking "comic" piece about the sports choices of different levels of organizations.  Someone sent it to me and I grinned, than started thinking.

Best, JOHN

 
 
:


INTERESTING OBSERVATION



1. The sport of choice for the
urban poor is BASKETBALL.



2 The sport of choice for maintenance level employees is BOWLING



3 The sport of choice for front-line workers is FOOTBALL.



4 The sport of choice for supervisors
is BASEBALL.



5 The sport of choice for middle management is TENNIS.

and....


6 The sport of choice for corporate executives and officers is GOLF.


THE AMAZING CONCLUSION:


The higher you go in the corporate structure, the smaller your balls become.

 



__________________________________


BUY IT NOW—READ IT DURING THE WINTER MONTHS

THE  CHINESE CONSPIRACY

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John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959  http://www.mariotti.net   http://mariotti.blogs.com/my_weblog/

THE ENTERPRISE--AROUND THE WORLD & AT HOME

THE ENTERPRISE--AROUND THE WORLD & AT HOME

NOT REALLY 'MADE IN CHINA'
Quick, where it the iPhone made?  It says "Made in China" on it, but in fact, only 3.6% of the content is actually "done in China"--mostly the final assembly--below the 6% of USA content..  34% comes from Japan, 17% from Germany, 13% from South Korea and 27% from an assortment of other places that vary.  So what's the problem?  It is that the misconception about "country of origin" drives irrational and emotional decisions about trade policy.  Modern supply chains are far from linear chains.  They are complex networks in which material and knowledge converge in various places to create value and then move on.  I called them VALUE NETWORKS  as far back as 13 years ago!  The only way to know what comes from where it to disassemble the value in products and track back to where it was created.  You will invariably be surprised.  A long time ago, when David Glass was CEO of Walmart, he told me about how he proudly promoted Washington State Apple Juice, only to discover it was reconstituted there from concentrate made in ITALY!

IRAN AND NORTH KOREA, AND A BUNCH OF NEXT-TIER ROGUES
Does anyone else think it's time to quit "negotiating" with these lunatics and draw the line somewhere.  If it were the USA, we would not take kindly to being told we can't develop whatever kind of weapons we want.  So why are we surprised that it upsets Iran.  Forget for a brief moment the consequences of ignoring them and letting them become the Nuclear weapons broker for the Middle East.  And we need to quit "bribing " North Korea to make promises it invariably breaks.  One of these days, someone from the USA has to let these rogues know where the line is drawn and then invite so called "allies" to join us in that position.  Once that is done, then we can do whatever necessary if they try to step over the line.  I don't know who launched the Stuxnet worm virus into Iran's nuclear facilities, but I applaud them.  (Best guesses: Israel or the USA)

LET'S UNSURGE IN AFGHANISTAN
The question still remains:  What are we doing in Afghanistan and is there even a definition of what "win" means?  Or should we be devoting our efforts to "get the hell out--gracefully?"  The Afghan government is corrupt and untrustworthy.  The Taliban--who is the enemy--are residents there.  They're not going anywhere. They can just attack and fall back and hide and then do it again.  The Pakistanis are helping the Taliban, allowing free border movement and protection.  What are we doing besides pumping money and lives to save a country that isn't sure it wants to be saved, and that will then be run by whom?  A corrupt government?  Or the group we "defeated," but really never did, and probably never will defeat.  It is looking more and more like this is Obama's Vietnam, and we should stop trying to fix that country, who could care less, and spend the money and effort on fixing our own--where the people want it fixed.  Let everyone know that as we withdraw, if we discover new al Qaeda or other terrorist training camps and safe havens moving back in, we will bomb them to oblivion (and innocent citizens might be wise to stay away from such places.)

"IN THEORY THERE IS VERY LITTLE DIFFERENCE BETWEEN THEORY AND PRACTICE; IN PRACTICE THERE'S A HELL OF A LOT OF DIFFERENCE."
I wrote this line about 15 years ago after spending a year at a major university on the staff of its business school dean.  I discovered that in just a few short months, I was becoming absorbed in the miasma that clouds the thinking of otherwise intelligent and decent people.  Just like our current president, theoretical situation are fine for learning in the abstract, but then the real world encroaches on things and the
idealized solutions are woefully inadequate without the context of relevant, real world experience.
======================
'Experts' often are short on real-world wisdom

Thursday, January 6, 2011  02:50 AM  By Victor Davis Hanson
[Excerpts from a longer  article] 
In classical Athens, public life became dominated by clever and smart-sounding sophists. These mellifluous 'really wise guys' made money and gained influence by their rhetorical boasts to 'prove' the most amazing 'thinkery' that belied common sense.  We are living in a new age of sophism - but without a modern equivalent of Socrates to remind the public just how silly our highly credentialed and privileged new rhetoricians can often sound. ...
...In 2009, brilliant economists in the Obama administration - Peter Orszag, Larry Summers and Christina Romer - assured us that record trillion-plus budget deficits were critical to prevent stalled growth and 10 percent unemployment. For nearly two years we have experienced both, but now with an additional $3 trillion in national debt. All three have quietly either returned to academia or Wall Street.

There is also a new generation of young, sophistic bloggers who offer their wisdom from the New York-Washington corridor. They usually are graduates of America's elite colleges and navigate an upscale urban landscape. One, the Washington Post's 26-year-old Ezra Klein, recently scoffed to his readers that a bothersome U.S. Constitution was "100 years old" and had "no binding power on anything."

One constant here is equating wisdom with a certificate of graduation from a prestigious school. If, in the fashion of the sophist Protagoras, one writes that record cold proves record heat, or that record borrowing and printing money will create jobs and sustained economic growth, or that a 223-year-old Constitution is 100 years old and largely irrelevant, then credibility can be claimed only in the title or the credentials - but not the logic - of the writer.

America is huge and diverse, but the world of our credentialed experts is quite small, warped and monotonous - circumscribed largely by the prestigious university and an office in the incestuous Washington-New York corridor. There are plenty of prizes, honors and degrees among our policy setters and experts, but very little experience in running a business in Oklahoma, raising a large family in Kansas or working on an assembly line in Michigan, a military base in Texas, a boat in Alaska or a ranch in Idaho.

In classical sophistic fashion, rhetoric is never far from personal profit. Multimillionaire Al Gore convinced the governments of the Western world that they were facing a global-warming Armageddon, then hired out his services to address the hysteria that he helped create. ...

... The public might have better believed the deficit nostrums of former budget director Peter Orzag had he not retired after less than two years on the job to position himself for a multimillion-dollar billet at Citigroup - itself a recent recipient of some $25 billion in government bailout funds.  Are we to wonder why an angry, grassroots tea party spread - or why it was instantly derided by our experts and technocrats as ill-informed or worse?

Victor Davis Hanson is a senior fellow at the Hoover Institution on War, Revolution and Peace at Stanford University.

======================

SMALL STARTUPS DECLINE--2ND WORST IN 18 YEARS
The number of mall startup companies with at least one employee declined 2% in the year ending March 31, 2010 according to the Labor Department.  The decline was not as bad as the previous year, which dropped 3.4%, but both are the worst in 18 years.  Could it be that these small startups are scared of what an Obama administration will do to regulate and tax them?  Probably!  Oh, yes, demand was weak too, thanks to the recession, but that has seldom stopped these innovative, ingenious small businesses from starting up.  Only the "Big Brother" government can do that.

SHOPPERS SPENT MORE THAN THEY INTENDED, BUT USED CREDIT CARDS LESS AND CASH MORE
Shoppers responded to surveys that they were concerned and planned to spend less this past Christmas.  They spent more--but they bargain shopped more intensely and paid with debit cards or cash more of the time.  That bodes well for 1Q 2011 not having as much "credit card shock" as previous years.  Also it reminds us not to believe everything consumers tell us about their plans.  Sometimes they change them at the last minute!

SOMEBODY TELL ME AGAIN--WHAT ARE WE FIGHTING TO "WIN" IN AFGHANISTAN?
The Taliban are the enemy, but they live there.  The government is our ally, but it is corrupt and dislikes us.  The Afghan people largely don't understand why we are there, have little knowledge and less memory of 9/11 and don't know how they figure into it in the first place.  So tell me again:  What does "Win" mean?  And with Pakistan in a state of near chaos, what is the best outcome we might hope for over the next year or two??

CONSUMER CONFIDENCE IS RISING, EMPLOYMENT IS INCHING UP, AND THE STOCK MARKET IS UP--PEOPLE FEEL WEALTHIER, AND MAYBE GOVERNMENT SPENDING AND INTERFERENCE WILL GO DOWN--MAYBE!
This is all the stuff we have been hoping for.  Now let's watch carefully who's actually pushing for the right actions, and who is politicizing the continued reach of government--into our lives and our pocketbooks.  This is going to be a telling 1Q of 2011.  I hope the right directions continue.

Best, JOHN

 
__________________________________


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John L. Mariotti, President & CEO, The Enterprise Group, Phone 614-840-0959  http://www.mariotti.net   http://mariotti.blogs.com/my_weblog/

THE ENTERPRISE--STARTING A NEW YEAR WITH FACTS

FIRST:  HAPPY NEW YEAR TO ALL.  I hope 2011 is a great year for everyone.  We've been waiting and hoping it will be. 
Now, on to the year's first edition of THE ENTERPRISE, going into its 10th year!

THE HEADLINES: (Taken from just a few recent issues of the Wall Street Journal and other news media) AND SOME OF THE FACTS BEHIND THEM

PENSIONS PUSH TAXES HIGHER
Taxes are not down, of that you can be sure.  If you ever tallied up ALL the taxes you pay, you'd faint.  Not just Federal or State or Local income tax or sales tax, but excise taxes, luxury taxes, (check your phone and cable bills), and other taxes that are called fees....like your car license tags.  Check the top of your liquor bottles for a tax stamp there too.  If you still smoke, you know there is big tax there too.  Now the latest thing driving taxes up is the immense burden of governments to pay for excessive benefits and pensions.  Public sector employees make around 40% more than private sector employees in similar jobs, and they have much richer benefits and pensions and pay for less of them.  Where does the government get money to pay these high wages and benefits--from you, that's where--from your tax dollar.  But these people earned the comp and benefits, some would say.  Not exactly, others would counter.  They were the result of public unions negotiating the higher packages--with elected officials that those same unions contributions helped get elected.  A sweet deal?   Not really.  It needs to be taken apart and changed.

IN A BIND (DUE TO BINDING ARBITRATION)
Ohio, where I live passed a "binding arbitration" law.  If any of those state employees represented by unions (which includes most of them:   teachers, firefighters, trash collectors, policemen, and a raft of governmental administrative people) don't like the way contract negotiations come out (not rich enough), they can demand a "binding arbitration" that will force the arbitrators settlement on the governmental unit--like it or not.  That needs to change and hopefully our new governor, House and Senate will pass a different law, not one that dumps the costs of any disputed contract negotiations onto taxpayers with no recourse.  It's time to rein in the unilateral power of public unions.  At this point, one of my liberal friends will say, "but who is going to negotiate for those employees?"  How about the competitive markets.  Offer a job with a competitive pay scale based on public and private comp and benefit levels and if the employee wants it, fine; if not, let the look elsewhere.  Or better yet, put the government jobs out for competitive bidding and let the contracts that way.  After all, as President Obama loves to say, "it's only fair."

UNEMPLOYMENT CLAIMS DROP--BUT HIRING IS STILL A QUESTION MARK
There was a glimmer of hope. As one person put it, "the firings have slowed!"  Isn't that a line?  But have the hirings started?  Next time we get stats on job creation, I don't expect a big uptick, but maybe some improvement.  Why aren't companies hiring?  They don't need to!  Using temps, overtime and improved productivity has supported the modest demand increases.  Some of the increases in sales over the past half year are because prices are up and not quantities.  People make quantities, and thus the demand for people (jobs) lags the actual sales gain.  The big question is how retail inventory positions will look at the end of Dec.  If they are lowered, restocking will lift the economy and maybe some jobs.  If not, it could be a long, cold winter before spring warms things up.  But then everyone in America who is working got an extra 2% pay increase coming Jan. 1 thanks to the government spending largesse.

JOB OFFERS RISING AS ECONOMY WARMS UP--ANOTHER HOPEFUL SIGN?
There are reports of notable increases in job posting--Internet postings almost double the year earlier level--which is (hopefully) a sign of a recovery and imminent hiring plans. This is just one data point, but one of the most positive ones in a long time. This is a good sign, as is the increased advertising plans that have been announced.  Companies are getting ready to track a recovery--IF one comes.

 

GIFT SHOPPERS FLOCK TO THE WEB




LOSER PAYS, EVERYONE WINS
Texas has a wonderful new idea (pending law) to curb runaway legal costs.  Take a page from Britain's book and make lawsuits "loser pays."  This will dramatically reduce frivolous lawsuits and who will like should suffer are the contingent fee lawyers who bring and cause most of them.  I hope this gains momentum.  It is an idea whose time has come.

TAXES AND THE TOP PERCENTILE MYTH--MUCH ADO ABOUT VERY LITTLE CHANGE
It doesn't matter what the taxes are, the top percentile will get its share, one way of another.  In a study from 1999 to 2008, as tax rates meandered up and down, the top ten percent's income varied only slightly. 
--Salary ranged from $440,000 (2003) to $552,000 (2000)--in 1999 it was $515,000 and in 2008 it was $504,000. 
--Capital Gains varied more, as tax rates varied, but it ranged from $145,000 (2002) to as high as $428,000 (2007), and yet, in 1999 it was $320,000 and in $2008 it was $232,000.
--Dividend Income ranged from 31,000 (2002) to $83,000 (2007) because low dividend tax rates made it more beneficial in recent years.
--Business Income varied from a low of $200,000 (2002) to a high of $284,000 (2006), and in 1999 it was $217,000 and in 2008 it was $256,000.
What do all these numbers mean?  They mean that when the economy is down a lot (2002) so is income; and when it's up a lot (2006-7) so it income.  And above all this noise, the tax rates only matter very little to this "top Ten-Percent of Richest Americans."  This group is savvy enough and flexible enough to shift around and take advantage of whatever the tax laws allow.

OUR DICKENSIAN ECONOMY
The big problem referred to by this headline is the widening gap between the highest earners/wealthiest Americans and the lowest ones.  The chasm was big and if getting bigger.  And it is not going to be solved by being "Robin Hood," and taking from the rich to give to the poor (who, if history is any guide, will just squander it all over again.)  The kind of jobs that are valued in the USA have changed dramatically from the "industrial revolution factory worker, with only minimal education" to a "global knowledge economy worker" who is educated or trained in modern technology well enough to work in the kind of jobs that stay in the USA in the 21st century.  That is a training and education issue, and a job misfit issue, and only if it is addressed from that standpoint will any progress be made.  Subsidizing the lowest level of workers with extended unemployment and propping them up with high minimum wage levels just assures that they will not adapt and develop the capability to compete and hold a job in the future.  The government's human desire to help them is actually hurting them.  if tax policy is going to be a tool for closing the chasm, then provide incentives for the top earners/wealthiest to "do something" to help the bottom dwellers help themselves.  Don't just grab money and hand it out.  That accomplishes little and irritates many.

THE MYTH OF LOW INFLATION
One of the largest illusions being perpetrated on the people of the USA is that inflation is really low--under 2%.  Government statisticians may (mis)calculate it that way, but anyone with a few ounces of common sense can tell the truth.  IF we measured the CPI (Consumer Price Index) now like we used to a couple of decades ago, inflation would be around 8%--that's right--about 4 times as high.  Check the facts:  Oil is at $90/bbl, gas is at $3.00 and other energy costs are up proportionally--but wait--the government eliminated those from the CPI a few years back.  I guess Energy costs don't impact inflation or our cost of living.  Ditto food prices.  Just go to the grocery store and look past the traffic-drawing specials at what regular prices look like.  American consumers are not just reeling from joblessness or underemployment; they are suffering from a dollar that doesn't go nearly as far as it used to.

AS PART OF MY NEW YEAR'S RESOLUTION I HOPED TO HELP SOLVE SOME PROBLEMS WE FACE
There are three steps to solving any problem:
Understand the problem
Define the problem
Solve the problem

The essence of following this three step process is to find the "root causes" -- those things that are at the bottom of the problems, and solving them.  This does not mean solving symptoms.  Here is a classic example of why some states lose industry, jobs and population--and it shows in the coming redistricting/re-apportionment as places like Texas gain (4) seats in the House and places like Ohio lose (2) of them!  It is a not so subtle hint to the tax & spend liberals who have controlled those states, that their policies are not what the people want.

==================

STATES TAXING THEMSELVES TO DEATH
           
By DICK MORRIS & EILEEN MCGANN  Published in the New York Post on December 23, 2010

High taxes kill states. There can be no better evidence than the 2010 Census. The states that lost House seats -- because they're shrinking, relative to the nation -- had taxes 27 percent higher than the ones that gained seats.  Of the seven states that don't have a personal income tax, four (Texas, Florida, Nevada and Washington) account for eight of the 12 seats apportioned to the fastest-growing states.

New York and Ohio lost two more seats. Other losers -- down one each -- are Massachusetts, Missouri, Michigan, New Jersey, Pennsylvania, Illinois, Louisiana and Iowa. What do they all have in common? High taxes.  Texas, with the second lowest taxes in the nation, gained four seats, Florida picked up two and Arizona, Georgia, Nevada, South Carolina, Utah, and Washington state each gained one. All have low taxes.

The states that lost seats ranked an average of 24th in taxes and had an average tax burden of $2,267 per capita (weighted more toward the states that lost more than one seat).

The states that gained seats ranked an average of 39th in taxes and had an average tax burden (weighted) of $1,788 -- 27 percent lower than the losing states.  People vote with their feet and flee to low-tax states. It's not the climate; it's the taxes.

In New York, the city grew from 7.3 million in 1990 to 8 million in 2000 to 8.4 million in 2010 -- but population upstate shrank dramatically. Some 1.7 million people left New York state in the last decade, the largest exodus any state experienced. Upstate New York is dying, killed by high taxes.  The New York City metro area can grow despite high taxes. It's the historical center for immigration from overseas, a glittering attraction for migration from within the country and the foremost global city. But upstate has no such offsetting attractions.  
Consider Buffalo. From half a million people in 1960, it has fallen to a quarter of a million. It's lost half its population in 50 years.

The trend is unmistakable: The "losing" states drove out their high-income citizens (and middle-income jobs) with heavier tax burdens. As New York and other high-tax states confront their budget difficulties, they need to be mindful of this trend -- lest they wind up taxing their states into oblivion.

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IS THAT TOO MUCH TO START OFF THE NEW YEAR WITH?
Maybe.  And I didn't even get into our "domestic politics" outlook and a bunch of "global issues" facing a new House Majority coming in early Jan. to tussle with the Democratically controlled Senate and President Obama.  It will be an interesting year, to say the least.

Best, JOHN

LAST, BUT CERTAINLY NOT LEAST
I found this little "parable" as part of a Newsletter from an investments guy that was forwarded to me.  It seemed so appropriate I wanted to share it with you.

I fell asleep at my computer keyboard (in the wee hours of the morning, not in broad daylight, wise guys!), when I was awoken by The Ghost of Hanukah Yet to Come. “To say your country has been spending like drunken sailors is an insult to drunken sailors.”  He went on to say that it was one thing when you were running deficits of one or two percent of GDP; if your policies were competent, you could grow your way out of this financial imprudence.  “But 10% and 13%?  It is  not as if you are fighting a war.”  
 
The Ghost scoffed at the notion that the nation’s top Money Man would go around crediting the demand deposit accounts of various entities, but mostly the government, to the tune of trillions of dollars.  He said, “Was all this purchasing power borrowed?  No!  It was conjured out of thin air!  And then the Money Man has the gall to say he is not monetizing the government’s debt?”  He then related how the smart money caught on to the scam.  When central banks become big buyers of their Treasuries’ paper, that’s never a good sign that the debt is going to maintain its value in the future.  
 
The gurus at Goldman Sachs were among the first to wise up, and the gnomes of Switzerland soon followed, and they all began shorting the debt heavily.  Yields soared. The Ghost pointed out that when you run a national debt of $15 trillion, every percentage point increase in the average cost of debt raises the deficit by $150 billion.  Ten points is $1.5 trillion!  The Ghost chuckled, “When rates were real low, the Treasury should have been selling the hell out of the long-dated securities, not bills.”  So like a dog chasing his tail, higher rates simply meant more central bank purchases of securities, which drove rates even higher.  
 
Meanwhile, with the regulator of the money supply wildly handing out blank checks, the people came around to the view that the paper money was getting worth less and less.  So prices went higher and higher and HIGHER.  It all happened so fast.  The ghost explained that any asset that had a fixed monetary value became worthless: “You know that saving account you had?  It’s now worthless.  You know that life insurance policy you had?  It’s now worthless.  You know those bond funds you had?  It’s now worthless.  You know that pension you had?  It’s now worthless.”
 
I asked the Ghost, “But what about the people that invested in hard assets?  Didn’t they at least make out OK?”  “You would think,” said the Ghost, “But you know how the Govmint always likes to gets its nose into things, for the ‘good of the people.’  Ha!  The Ghost described how the Govmint determined that it would be unfair and unjust for a few individuals to benefit enormously while the masses suffer.  So under the banner of “shared misery” the Govmint imposed a 95% special capital gains tax on hard asset gains.  “Theft by government!,” remarked the Ghost.
 
The financial calamity imposed severe hardship on the public.  It sent many fleeing, by whatever means possible—sometimes illegal—to freer and more stable economies, like Brazil and China.
 
“But Ghost,” I said, “How could we have prevented this?”  The Ghost belly laughed, “Do you think I have all night?  This is the territory of the Ghost of Hanukah Past, who by the way looks a lot like Thomas Jefferson, but  let me boil it down to this: Capitalism rewards success but it punishes failure.  And failure is necessary.  To require the winners to bail out the losers destroys the incentives of both groups to do better.  And there is no substitute for personal responsibility.  You set up some bad precedents in the 1930s and really went off the tracks in the 1960s.  As they say, the rest is history.”
 
“Can’t we do anything to avoid this horrible fate?” I said.  He replied, “Sorry, that’s not my department.  Speak to The Ghost of Hanukah Present.”   And then I woke up and got back to finishing the Monthly.




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