I Hope You're Happy

You get some funny things in email. this one came via the mother in law. I haven’t gone to verify if this comment was actually in the St. Petersburg Times, as claimed. I don’t have to. I can simply take it as a piece of Republican propaganda, as that’s all she ever sends out.

Now, let me point something out very quickly. The bigger the font size, the bigger the bullshit. This is Johnny’s Axiom #1 of the day.

This is from an article in the St. Petersburg Times Newspaper on Sunday. The Business Section asked readers for ideas on “How Would You Fix the Economy?”

I think this guy nailed it!

She would, too.

Dear Mr. President:

Please find below my suggestion for fixing America ’s economy.

Because you should listen to me, a forum troll, over all of the experts in the world. But I get ahead of myself.

Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan.

You can call it the Patriotic Retirement Plan:

Axiom #2: Giving it your own smug name doesn’t give you any points in calling it a good plan.

There are about 40 million people over 50 in the work force.

Pay them $1 million apiece severance for early retirement with the following stipulations:

Axiom #3: Using a paragraph for every statement means you haven’t taken the time to think it all the way through.

And who is going to pay this? the cash strapped companies? No. The Federal Government? There might be people who would balk at handing $40,000,000,000,000 out. It would be a hell of a lot of national debt. And how long do you think that’s going to last? if you needed $50,000 a year, a million would last 20 years. And since you’re putting a lot of people out of work after 50, who’s going to pay for them after they turn 70? Social security? Welfare? Is that money going to be taxed? Because it would last half as long. But let’s move on to the stipulations.

1) They MUST retire.  Forty million job openings – Unemployment fixed.

Not so fast. You just took away 40 million people with a lot of experience. What happens when that experience is gone? Companies will crumble under the learning curve.

2) They MUST buy a new American CAR.  Forty million cars ordered – Auto Industry fixed.

Hmmm….about that. The biggest problem with the auto industry is the pensions and health plans. These are the programs that give them an unfair competitive disadvantage with other industries in countries with nationalized health care. Where do you think your bailout dollars are going? R&D? No. Sorry. We have to pay for people before we catch up on technology. Oh, and how would you define “American Car?” My last American car was made in Mexico. My Toyota was made in the states. Didn’t think that one all the way through, now did you? Oh, but you just ate through another year of that person’s retirement.

3) They MUST either buy a house or pay off their mortgage – Housing Crisis fixed.

Except that a run of 40 million people will surely drive real estate prices into a bubble state. Then to allow the rest of us to get houses, we’d have to invent something like subprime loans. And then there’d be some derivative product of that and well, we all know how this one turns out.

Oh, and you’ve just cost people another significant cost of that million dollars. A Mil ain’t what it used to be.

So, what do you think? ya think I nailed it? Thanks for throwing shit at the wall to see if it sticks. You may want to pick that up.

Since today is tax day, the nation is in the throes of Teabagging parties. Far from being some strange new niche style of pornography, these are homages to the Boston Tea Party. It is important to note that the reasons for the historic tea party and the current ones are quite different.

Let’s start with the historic events. The cry of “No taxation without representation” comes from these events. The colonists used a law in England which stated that citizens may not be taxed by legislative bodies that didn’t represent them, and thus, since they had no representatives in Parliament, England could not tax them. An interesting thing to note is that they had little problems with paying taxes in some form, but they wanted those laws to come from colonial assemblies. Parliament insisted they could continue taxing any person they wanted in any way they wanted, and attempted to do so, with the net result being the Revolutionary war. Interestingly, this means the only people who could legitimately have a Boston Tea Party today is people living in D.C. if those same laws applied now.

But let’s not hold anyone to those details. Today people are protesting the fact that we have to pay taxes, that the income tax amendment may not have been properly ratified, that we’re bailing out major banks and companies, or that we’re spending so much money in general and running up a big national deficit.

Some of these points have merit. Our national deficit is well beyond reasonable. Numbers I heard earlier had us at 80% of GDP, when the European Union wouldn’t even allow a nation in if their deficit was over 60%. I can agree with this, but protesting taxes to protest our big spending hardly makes sense. Overspending is something we should write letters to our representatives about first, and protest second, and should be watched every day, not just one day a year. So, sorry to spoil the party on that one.

Let’s look at some of these claims. First, bailout dollars. Whereas in the past (under Republican administrations I might add) bailouts have been handouts, the current bailouts were loans. We stand to make profit as taxpayers by doing them, and it looks like some of them might be coming back already. This is a big bonus for us, and does a lot to disprove the Republican propaganda on this topic. It turns out those bailouts were strategically crafted, non-nationalizing, profit generating vehicles to lead the economy into recovery.

Next, let’s talk about overtaxing the rich. I heard a comment on the radio, a person protesting taxing the rich, using the argument that while he is in the middle class, he hopes to be rich one day. It’s logic like this that tells me he probably won’t be. Take the tax break and run buddy, don’t complain about a tax rate you aren’t going to pay. Moron.

But some of these points are merely hypocritical. Let’s face it. Republicans are moaning about spending. The same Republicans who overspent by record amounts, who think we shouldn’t spend our way out of a recession, who think that the rich need a tax break and who believe that Barack Obama was born in Kenya.

A little over eight years ago, we had a budget surplus, a national debt of a few trillion dollars, and a presidential election on. I was on the Conservative message boards, let’s say discussing. Actually, I met arguments head on and with just a little bit of snark. I gained a reputation quickly. In fact, one of my favorite quotes read something like “All you other Libtards are dumb, but Johnny is dangerous.” It wasn’t even because I was holding a knife to his throat.

But one of my favorite arguments was when one commenter on the board complained about why the government was taking too much money. I think the quote was “Why should I pay more taxes than the government needs?” This argument was, even then, very short sighted. Eight years less debt and interest on that debt would have put us in a much better space right now, don’t you think? But we see the Republicans out there everyday complaining that we can’t spend our way out of a recession that could last years (cue the fearmongering), is the next depression, God save us from the New New Deal, now let’s make those Bush Tax cuts for the rich permanent or we’ll all surely be going to hell.

Of course, we’re sitting at six months since the beginning of the worst financial meltdown in a lifetime, and the indications are that we might actually be bottoming out already. Our infrastructure projects are finishing up early, and under budget. There is an uptick in industrial orders starting.

If you’re wondering, I’m looking at this through eyes that perceive reality. Taxes make this nation happen. We appear to be on the right path. I’m not throwing my tea into the harbor. Seems just a little silly given the way news is going.

As we look at the question of whether we should bail out the auto manufacturers, I think one thing has been proven: on the whole, they are as incompetent at business as the U.S. Government. First off, I have to say I believe a bailout will happen, and it is for the good of the greater beast, the U.S. economy.

Let’s look at some of the history of the auto industry and its own worst symbiotic enemy, the labor union. The two are like grade school brothers, forced to live under the same roof, but never able to get along, and always blaming the other for breaking the lamp on the end table. The union workers in the auto industry can make a good living. Some of the senior factory workers for the big three could make over $70,000 a year, and starting salary is over $30k. Particularly at the senior end of the scale, this is significantly higher than non-union workers, and those working in similar industries, or other auto manufacturers.  There are also pensions and continuing health care for retirees.

Let’s look at a previous collapse to see how damaging these labor contracts could be. Does anyone remember AMC? The brand who brought the Jeep off the WWII battlefield and into consumer use was based in Kenosha, WI, making a line of cars known for their ugliness and stripped down generic nature. My grandfather had one when I was little, a Concorde station wagon in metallic yellow brown from one of the last few production years, if I remember right.

The AMC union contract called for far higher wages than the other big three manufacturers. Burdened by these contracts, AMC found it could not sustain its workforce and it folded. Chrysler bought them out for the Jeep name, but production stopped and Kenosha, a town full of prosperous workers, suddenly found itself a welfare state. I wish the Republicans who cry about people living for generations on welfare could take an objective look at places like Kenosha, Flint and Detroit to find a lesson instead of complaining about Michael Moore’s bias and how the government is full of socialists, but don’t get me going on that one.

AMC’s union got greedy, its management caved easily in contract negotiations, and what looked like the best deal ever for the workers turned into no deal at all. Their greed made their wages exorbitantly over the scale for the work nationally, and the company fell. Remember, at this time, Toyota was selling compact Corollas and Nissan had only just left Datsun behind.

In more modern times, we had to start looking at the global labor market. Auto makers were smart to recognize the value of labor in Mexico, but not smart enough to realize that they were going destroy their own most loyal market by laying off workers. I think there was some overconfidence that imports would ever overtake the market. The labor unions were short sighted in not realizing that they were far more expensive than labor just over the border, and they never thought their workers were expendable.

Their contracts were top heavy, and they kept demanding more. Like a virus, they paid no attention to the health of the host organism, but just kept feeding. In order to pay these salaries, the big three neglected such pesky issues as R&D, and the quality and tech of their product suffered. I know from experience, my uncle worked for GMAC, and we had every  box of fail GM made throughout the 80’s and 90’s. This left a big door for imports to come in and open up the market, aided by an open import policy supported by Washington. The countries of origin for these cars didn’t have as friendly a policy, and so as a nation, we found our exports to be unable to compete, putting us at another disadvantage.

And this is where we stand.

Take a breath and think about this.

What we’re talking about is a market correction. In areas where the union is not strong like in the south, auto worker wages are competitive and the workforce is strong and until recently, flourishing. Transplant manufacturers like Toyota have similar pay scales, and similar success. The UAW continues to lose members to layoffs because they are overcompensated, and a burden on the big 3 manufacturers.

The UAW will have to back off the gains it made in order to survive, and in order not to kill off its host, the Big 3. The losses of jobs since the eighties are the direct result of plants closing due to high wages, and moving to Mexico. The result is that ironically, if you want to buy American, you can look towards Toyota and other transplants before you look to the Big 3.

This is the correction that needs to happen: the big 3 need to respond to the market and put out more hybrid and alternative energy vehicles. In order to do this, they need capital to invest in R&D, and the new tech needs to be manufactured in America at competitive but fair wages. The Government needs to bail out the companies, in a manner that will turn a profit for the government over time. The whole blank check era of government is over. The losses of jobs would turn this recession into a depression otherwise. The UAW is going to have to become realistic about its wages, its negotiations will have to be about market value rather than better than the last contract. The auto makers will also have to get better at these negotiations.

In this way we can make forward progress economically without long term cost to the taxpayers.