Holiday gifts for the American consumer

Have you read about the recent boost in U.S. consumer spending?  Of course you have and you know it is attributed -- at least in part -- to a steep drop in energy prices, particularly a drop in gasoline prices.   

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This development is described by some in the financial press as a tax cut because the benefit accrues to the consumer in much the same way a tax cut does.  That is, by paying less at the pump, we automatically keep more of what we earn.  I wonder how Keynesians who routinely advocate for enormous government spending to stimulate demand are reacting.  Putting money directly in the hands of taxpayers can also spur consumption.  

Summer notes on New York

I've taken business trips to New York City since the Eighties and for me much remains unchanged -- both good and not-so-good. 

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Taxi cabs now co-exist with new competitors like Uber and Lyft giving riders new options, but the ride through decrepit parts of Queens enroute to LaGuardia airport, is still dreary.  

The Times Square area remains a crowded kaleidoscope of sounds, sights and smells that probably began to lose its charm in the Seventies.  Thousands of pedestrians mill around a neon backdrop of seedy shops and streets that cry for updates, or at least a protracted power wash. 

On the other hand, I'm still captivated by the view looking southward down Park Avenue that terminates at the Met Life Building and Grand Central Terminal, or looking northward down Park Avenue from the other side of these buildings. 

Central Park remains a rolling, twisting, verdant place of tranquility.  In Lower Manhattan ("Downtown") adjacent to the monolithic New York Stock Exchange, a timeless and magnificent statue of George Washington still looks on above the steps of Federal Hall where General Washington took his oath to become President.

I could go on about the gems of old New York, but have a look at the gleaming new Freedom Tower!  It is one of the most breathtaking buildings I've seen.  This structure with its inspired shape, beautiful blue color and sheer enormity -- soars over the somber space where the World Trade Center Towers stood. 

Freedom Tower
John Maddente photo

How slander goes unpunished

As a teen, I once scraped together enough money to buy a hamburger at a diner, then sat down at a table and waited and waited.  I watched waitresses serving customers around me and after a long period, I caught the attention of one waitress.  I asked her if someone could take my order.  She replied that another waitress had seen me steal a tip and that's why nobody would wait on me.  The charge was bogus.  I had taken nothing.  I protested the charge and left the diner with emotions that affected me decades later and even as I write these words.  I never learned the identity of my accuser.

The point of the story is that if one is going to charge another of being a thief, one must be able to back up the accusation, or there ought to be consequences for the accuser.  

Slanderous or libelous commentary is allowed in America's political environment because it's accepted as free speech and there are no rules for fair play

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when public policy fights occur.  

Unfortunately, class warfare is one avenue that works well for the accuser to smear someone.  Frequently, the one doing the smearing advocates for a populist cause.  Too often, without evidence, one can accuse another of holding depraved motives like "voter suppression" or "racism" and get away with it.  Want examples?   

Do you recall when Sen. Harry Reid likened the GOP to slavery sympathizers because he couldn't handle Obamacare criticisms?  (See my Examiner column published here).  His disgraceful comparison is largely forgotten today.  

Consider Vice President Joe Biden's spoken gem on the campaign trail, telling an African American audience that Republicans are "...going to put y'all back in chains."  Many pundits dismissed the remark as just one more bone-headed comment by Biden.  Now contrast that sorry episode with how Mitt Romney got crucified for citing an accurate statistic about the extent of government transfer payments. 

Romney's utterance wasn't populist, so the opposition could vilify him as a contemptible elitist, yet Biden's reprehensible remarks about the GOP left him unscathed.  

Political slander often occurs after Conservatives disclose ideas to reform the welfare state, curtail federal spending, or simplify the tax system.  Some ideas are better than others, but there's always a number of character assassins that will cry "Racism!"  And advocates trying to reduce voter fraud often attract a full-scale tar job, replete with charges of "voter suppression".    

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Most Conservatives encounter this sort of thing sooner or later.  What if it happens to you?  My advice is to expose your character assassins fully, fairly and early.  Fight with facts, but fight no less.  

If you have a better remedy; please let me know.

Fast food and class warfare

CAUTION: The fast food wage debate is heating up.  Consider recent actions undertaken by labor unions and community organizers against McDonald's and then...

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read Al Lewis' WSJ column, ("Let Them Eat Burgers" September 1, 2013).  Mr. Lewis concludes that a super-sized minimum wage increase is justified on the basis of a single data point (average age of minimum wage workers has increased) and comparison to an Australian business model.  

Mr. Lewis' account of a recent protest demonstration reminds me of the danger I've been talking about since 2008.  Here's the story...

A vocal group is demanding a doubling of the minimum wage to $15 an hour in front of a Denver-area McDonald's which had to shut down because of the ruckus.  Lewis interviews a twenty-six year old man working at McDonald's who's protesting and had this to say about his employer, 

"They'd rather line their own pockets, than take care of us." 

A little perspective is in order.  According to the Bureau of Labor Statistics (BLS), there are over four million workers employed at fast food establishments in the U.S. and half of them work part time. Turnover is high and this job pool is expected to narrow as new technologies become cost efficient alternatives to tasks currently performed by humans.

The education level required to perform most of these jobs is less than a high-school education.  Such jobs were not conceived as self-sustaining careers.  They are typically temporary positions for which the market pays a correspondingly low wage.  Nothing wrong with the work of course.  Many of us have performed such jobs -- I have -- and I take Lewis' point that if the average age of minimum wage workers is increasing, it says something troubling about our employment picture.  I never said that no wage increase is warranted or that all is sunny.  

However, should McDonald’s have a primary responsibility to "take care of us" or instead should they strive to satisfy customers, franchisees and shareholders?  What are the implications to our system if a corporation like McDonald's is pressured to act less like a business and more like a social safety net that also sells fast food?

Why is the implication that employees are "owed" more by McDonald's Corporation?  Most McDonald's restaurants are not even owned by McDonald's Corporation -- they are franchised to individuals or small businesses that pay royalties and franchise fees to McDonald's. This fact might not matter to one protester that Lewis interviewed who added,

"The corporation makes billions of dollars every year -- they can afford to pay us $15".

Piling on, Mr. Lewis writes, "Companies have paid the lowest wages they could, for as many years as they could".  Of course.  We call that a market economy.  Either way, can't we dial back the shame-mongering and instead focus upon additional training and education of the workforce? 

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IRS actions compared to Watergate

Lois Lerner takes the Fifth Amendment right to silence, during the hearing before the US House of Representatives Committee on Oversight & Government Reform, "The IRS: Targeting Americans for Their Political Beliefs (Image: Public Domain)

 

These days, some want to dismiss charges of government abuse as conservative cynicism, but 40 years ago, Dems and some Republicans made similar charges stick because there was criminal behavior called Watergate.  Although we don't yet know where the IRS activity in question began and who knew about it before the election, a comparison to Watergate was inevitable.

In the early 1970s, the abuse targeted high level political enemies of President Nixon.  This time, it's hundreds of ordinary citizens who were targeted by the IRS.  Those individuals flagged by the service; just happened to disagree with the direction of our country.

Some Pols are trying to tamp down the significance of what could become one of the saddest chapters in American politics.  Notably, George Will called them out in the Washington Post (May 13, "In IRS Scandal, Echoes of Watergate"),

"Jay Carney, ... calls the IRS’s behavior “inappropriate.” No, using the salad fork for the entree is inappropriate. Using the Internal Revenue Service for political purposes is a criminal offense."

We also witnessed the former IRS Commissioner, Steven Miller, characterize the agency actions by using the word "mistakes."  Borrowing Mr. Will's style, I'd say, no, a mistake is purchasing too much mulch for your flower beds.  Using the power of the IRS to suppress political dissent is a criminal offense.  People go to prison for less.

Ms. Lois Lerner, IRS director of tax-exempt organizations, took the Fifth before testifying but not before she claimed that she had done nothing wrong.  Even some Democrats like Senator Claire McCaskill (D-Missouri) are upset.  Ms. McCaskill said,

 

"We should not only fire the head of the IRS, which has occurred, but we’ve got to go down the line and find every single person who had anything to do with this and make sure that they are removed from the IRS and the word goes out that this is unacceptable." 

 

We also need to learn who at the highest level of government knew about this effort and when they knew it -- just as Howard Baker demanded to know in 1974 at the Watergate hearings.

Election loss and an unpopular explanation

This post by a Rabbi in Teaneck, NJ is a stark reminder why America is in trouble and how polarized we've become as a nation.  Rabbi Pruzansky obviously feels the frustration many of us feel about this election outcome.  I've added blue italics for emphasis of key passages. By Rabbi Steven Pruzansky   "The most charitable way of explaining the election results of 2012 is that Americans voted for the status quo - for the incumbent President and for a divided Congress. They must enjoy gridlock, partisanship, incompetence, economic stagnation and avoidance of responsibility.  And fewer people voted.     But as we awake from the nightmare, it is important to eschew the facile explanations for the Romney defeat that will prevail among the chattering classes. Romney did not lose because of the effects of Hurricane Sandy that devastated this area, nor did he lose because he ran a poor campaign, nor did he lose because the Republicans could have chosen better candidates, nor did he lose because Obama benefited from a slight uptick in the economy due to the business cycle. Romney lost because he didn't get enough votes to win.  That might seem obvious, but not for the obvious reasons. Romney lost because the conservative virtues - the traditional American virtues – of  liberty, hard work, free enterprise, private initiative and aspirations to moral greatness - no longer inspire or animate a majority of the electorate.  The simplest reason why Romney lost was because it is impossible to compete against free stuff. Every businessman knows this; that is why the "loss leader" or the giveaway is such a powerful marketing tool. Obama's America is one in which free stuff is given away: the adults among the 47,000,000 on food stamps clearly recognized for whom they should vote, and so they did, by the tens of millions; those who - courtesy of Obama - receive two full years of unemployment benefits (which, of course, both disincentivizes looking for work and also motivates people to work off the books while collecting their windfall) surely know for whom to vote.  The lure of free stuff is irresistible. The defining moment of the whole campaign was the revelation of the secretly-recorded video in which Romney acknowledged the difficulty of winning an election in which "47% of the people" start off against him because they pay no taxes and just receive money - "free stuff" - from the government. Almost half of the population has no skin in the game - they don't care about high taxes, promoting business, or creating jobs, nor do they care that the money for their free stuff is being borrowed from their children and from the Chinese. They just want the free stuff that comes their way at someone else's expense. In the end, that 47% leaves very little margin for error for any Republican, and does not bode well for the future. It is impossible to imagine a conservative candidate winning against such overwhelming odds. People do vote their pocketbooks. In essence, the people vote for a Congress who will not raise their taxes, and for a President who will give them free stuff, never mind who has to pay for it.     That engenders the second reason why Romney lost: the inescapable conclusion that the electorate is ignorant and uninformed. Indeed, it does not pay to be an informed voter, because most other voters - the clear majority – are unintelligent and easily swayed by emotion and raw populism. That is the indelicate way of saying that too many people vote with their hearts and not their heads. That is why Obama did not have to produce a second term agenda, or even defend his first-term record. He needed only to portray Mitt Romney as a rapacious capitalist who throws elderly women over a cliff, when he is not just snatching away their cancer medication, while starving the poor and cutting taxes for the rich.     Obama could get away with saying that "Romney wants the rich to play by a different set of rules" - without ever defining what those different rules were; with saying that the "rich should pay their fair share" - without ever defining what a "fair share" is; with saying that Romney wants the poor, elderly and sick to "fend for themselves" - without even acknowledging that all these government programs are going bankrupt, their current insolvency only papered over by deficit spending. Similarly, Obama (or his surrogates) could hint to blacks that a Romney victory would lead them back into chains and proclaim to women that their abortions and birth control would be taken away. He could appeal to Hispanics that Romney would have them all arrested and shipped to Mexico and unabashedly state that he will not enforce the current immigration laws. He could espouse the furtherance of the incestuous relationship between governments and unions - in which politicians ply the unions with public money, in exchange for which the unions provide the politicians with votes, in exchange for which the politicians provide more money and the unions provide more votes, etc., even though the money is gone.     Obama also knows that the electorate has changed - that whites will soon be a minority in America (they're already a minority in California) and that the new immigrants to the US are primarily from the Third World and do not share the traditional American values that attracted immigrants in the 19th and 20th centuries. It is a different world, and a different America. Obama is part of that different America, knows it, and knows how to tap into it. That is why he won. Obama also proved again that negative advertising works, invective sells, and harsh personal attacks succeed. That Romney never engaged in such diatribes points to his essential goodness as a person; his "negative ads" were simple facts, never personal abuse - facts about high unemployment, lower take-home pay, a loss of American power and prestige abroad, a lack of leadership, etc. As a politician, though, Romney failed because he did not embrace the devil's bargain of making unsustainable promises. It turned out that it was not possible for Romney and Ryan - people of substance, depth and ideas - to compete with the shallow populism and platitudes of their opponents.  Obama mastered the politics of envy – of class warfare - never reaching out to Americans as such but to individual groups, and cobbling together a winning majority from these minority groups. If an Obama could not be defeated - with his record and his vision of America, in which free stuff seduces voters - it is hard to envision any change in the future. The road to Hillary Clinton in 2016 and to a European-socialist economy - those very economies that are collapsing today in Europe - is paved.       Society is permeated with sloth, greed, envy and materialistic excess. It has lost its moorings and its moral foundations.. The takers outnumber the givers, and that will only increase in years to come.  The "Occupy" riots across this country in the last two years were mere dress rehearsals for what lies ahead - years of unrest sparked by the increasing discontent of the unsuccessful who want to seize the fruits and the bounty of the successful, and do not appreciate the slow pace of redistribution.     If this election proves one thing, it is that the Old America is gone. And, sad for the world, it is not coming back." (Image above from Microsoft Clip Art)

The yoke of two Americas

It became clearer after President Obama’s re-election that we're two Americas.  Has our country been this divided since the Vietnam War, or perhaps the Civil War?  Mr. Obama captured just fifty-one percent of the popular vote.  

Last November, I anticipated more reaction from voters in the Center, due in part to the now infamous, “You didn’t build that” quip.  I believed it validated deep concerns held by many Americans that President Obama remains anti-business and anti-free market.  I also believed there was no way to take such a gaffe out of context (as claimed by the President and his defenders) and that the ripple effect would devastate the President's campaign.  I was obviously wrong about the fallout as far fewer swing voters in the Center cared about the issue than I'd imagined.  Setting aside the unpredictable American Center, the two Americas of Blue and Red remain far apart in their belief systems.

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Much of Blue America believes that since car tires rolled on public pavement while building businesses, or since career success came after attending public universities --- government funding enabled positive economic outcomes.   

Red America concedes that of course, some large scale public works projects and excellent public universities influenced America's growth and as our population grew, a corresponding increase in the size of federal government was necessary.  

However, Red America doesn't believe our nation flourished exclusively, or even principally, for these reasons.  Red America believes, it was limited government, free markets and personal freedom that enabled growth and prosperity in the first place coupled with initiative, smart risk-taking and hard work. Red America points to history that suggests the inevitable outcome of unchecked deficit-spending and taxation courts disaster and that we're already witnessing our decline.

Red America remains convinced that one of the most perilous problems faced by our nation today is federal spending and that added taxation, by any other name or game, is more of an enabler to the fiscal problem, than a cure.  For this view, Red America is often labeled by Blue as extremists.

Leaders of Blue America welcome new tax increases like the 2% payroll hike on all taxable wages up to $113,700 (which Blue dismisses as end of a tax "holiday") and the new Medicare adder of 0.9%.  

Class warfare and the politics of envy are often used to justify tax increases.  This historically has been Blue America's mantra to increase taxes.  Paying one's "fair share" is whatever they want it to mean.

And on the spending side, a reduction in the rate of increase to any budget item, is still decried as a spending cut by Blue America.  By contrast, Red America welcomes the prospect of a nominal $85 billion spending reduction from a government that spent over $3.5 trillion last year. 

Sadly, the yoke of two Americas remains firmly in place.

White House Fiscal Adviser?
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