Legislative tyranny after the American Revolution

When the various American states became independent, the legislatures were freed of the tyranny of the Crown appointed governors.  Despite the high-sounding "civic virtue" that Thomas Jefferson and many of his colleagues thought would come about, special interests often dominated state legislatures, often unicameral legislatures.  If those interests were represented by the majority, those interests would take precedence over the rights of others.  Jefferson wrote, "An elective despotism was not the government we fought for."

Source: "The American Revolution", Gordon S. Woods

"Those who don't know history are destined to repeat it."
- Edmund Burke

Job creation in the strangest places

A pickpocket is a job creator?  A pickpocket takes someone's wallet and spends the money at a liquor store, at a barber, at a grocery store, and at a gas station, each transaction helping to at least sustain jobs.  What was the wallet owner going to do with his money?  Buy a necklace for his girlfriend?  And was the wallet owner a pickpocket in different way?  "Sign here, it's a standard form."

Entitlement is not a dirty word

Many are calling for a cutback in "entitlements" as a means of "cutting spending"; spending being another "dirty word".  The subtext of the use of "entitlement" is that the recipients are not deserving of the payments from Social Security, Medicare, or pensions for government employees.

My wife and I each get a small monthly pension payment from a company that we both had worked for long ago.  This pension was paid for by the company.  It was one of the terms of our employment.  Is this an entitlement that we don't deserve?  Should the company take the funds in the pension trust to spend elsewhere to balance its budget?

A fired CEO is granted a life-time pension far greater than many people even dream of for a regular income.  Isn't this an entitlement?  Maybe it's a bribe not to sue the company for wrongful termination.  We don't hear many who complain about Social Security being an entitlement complaining about how shareholder value is being decreased by these give-aways.

Many shareholders expect regular dividends from companies whose shares they own.  Isn't this an entitlement?  Shouldn't companies paying large dividends cut this spending so they can invest and create more jobs?

Social Security is a contract between the worker and the Federal government.  The worker (and employer) make payments to the Social Security Trust Fund based on the worker's wages.  The worker has been promised benefits in relation to the amount of payments made.  The employer is relieved of having a pension fund or can at least have a bit smaller pension fund.  Isn't Social Security an entitlement just like company pensions, CEO pensions, and dividends?  Why is one entitlement bad and why are the others good?

I think there are two reasons.

First, Social Security is bad because it is a government program; government programs are bad because government can't do anything right (except give subsidies to favored companies).  My wife just said, "Bail out bankers who plundered customer resources".  Aren't the super-big bonuses an entitlement?

Second, Social Security funds are placed in interest-bearing government securities.    These securities are part of the government debt and debt is bad.  Somehow, it is not bad for large corporations to hold these securities and be paid interest.

One can make all kinds of arguments about how much or how little is paid from Social Security and under what conditions.  But as long as people expect Social Security checks on retirement AND pay the payroll tax, we should consider Social Security not an entitlement, but a contract.

Quote of the day – politics or statecraft

"As 19th century author, preacher, and abolitionist James Freeman Clarke said, 'A politician thinks about the next election. The statesman thinks about the next generation.'" - Wayne Baker, "Are there any true 'statesmen' left in America", annarbor.com, 2011-06-07, quoted in "30% Consider Third-Party Option", Americans Elect, 2011-06-15.

Who caused the deficit? Let the facts speak

See "Obama's and Bush's effects on the deficit in one graph", Ezra Klein, Washington Post, 2011-07-25.

Facebog?

As I was cleaning up my email inbox, I came across a message from my ISP asking me to enter a drawing.  The message also asked me to become a fan on Facebook.

OMG, how many companies can I be a fan of?  Between a couple dozen relatives and the Coffee Party, I am already overwhelmed by the amount of reading I have each day.  I should add my ISP, my favorite newspapers and magazines, my colleges, my car dealer, my…; I would spend my whole day reading through my news feed.  Facebook would become Facebog!

An amusing list of gestures for Apple's OS X Lion

For all you Apple aficionados who have moved to Lion or are considering doing so take a peek at "Introducing OS X Lion's New Gestures".  Or if you're using that other system, you can have a smug chuckle.

Governance quote of the day

"People need quality services from government.  And the way to provide them is industrial development.  Industrial development is built around education and investment, not tax cuts.  Desirable industries need a fine work force of well-educate, healthy people who are attracted to a place because of its culture and amenities, not its cheapness."

- Former Minnesota Gov. Elmer L. Anderson, Republican, quoted in a letter from John Bray to the Duluth News Tribune, 2011-07-24

Tax quote of the day

"And as a former resident of Florida (which has no income tax either) who moved back to Minnesota a few weeks ago, I've learned that one gets what one pays for."

- Letter to the Duluth News Tribune, 2011-07-24, Ralph R. Doty, man of many hats including Budgeteer columnist

Military quote of the day

"The British never clearly understood what they were against–a revolutionary struggle involving widespread support in the population.  Hence they continually underestimated the staying power of the rebels and overestimated the strength of the loyalists.  And in the end, independence came to mean more to the Americans than reconquest did to the English."

- The American Revolution, Gordon S. Wood, p. 78.

New and improved can be worse

Microsoft touted its new and improved Office 2011 for the Mac.  It showed videos of programmers showing off all the cool new features.  Apple touted its new and improved OS X Lion.  It showed over 250 cool new features.

For me, the only cool thing about Office 2011 was that Microsoft put back in Excel the macro capability it took out in Office 2008.  It was not so cool that some very simple macros wouldn't work, macros that had worked in Office 2004.

For me, the only cool thing about OS X Lion is that one now drags up to scroll up.  It is taking a bit of getting used to, but if you think about it that is how you move paper.  It was not cool because a couple of things stopped working.

I don't know what the relation between Office and Lion is, but after I installed Lion, all my tasks in Outlook disappeared.  They are not gone because some will in Office Reminders.  I was able to find a topic in Microsoft Support that brought this up, but the only answer didn't work.  I added a reply, but I can't check if anybody added anything because…

I downloaded Lion at home with my nominal 7Mbps connection.  Now I'm at our cabin with our 24kbps connection, and I can't get online.  OS X Lion considers an Apple USB modem unsupported.  What?  It was supported in many previous versions.  Am I supposed to drive 50+ miles from the cabin to buy a different modem?

OK, I gave Apple's 800 number a try, and had a pleasant but unfruitful talk with Jennifer in Apple Care.  Lion is a 64-bit operating system and the USB modem has 32-bit firmware.  Nobody seemed to think it was worth it making it work; after all, the only way you can get Lion currently is with a high-speed connection.  In her enthusiasm to be helpful, Jennifer thought I should get online to look for a compatible modem.  Oops, I can't get online.  She also suggested having my ISP come to give me a hand.  I pointed out that they are over 200 miles away and I am in the woods.  She did do her best to make lemonade out of the lemon the developers gave her and me.

I'm glad that I didn't come to the cabin to do some big bucks work.  That really would have ruined my weekend.

When we design complex systems, be they nuclear plants, computer operating systems, or legislation, we will never think of everything.  A simple decision to put something in or take something out can have far greater consequences than we expect.  Murphy's Law will always hold.

When I got back to Duluth and my DSL connection, I found that Apple had sent me email asking me to take a survey about my Apple Care Support Center Call.  I normally don't take surveys, but I thought I could at least vent about product compatibility decisions.  Jennifer did a great job with the tools given her; Apple did a lousy job of providing "seamless" migration to a new system.

My feedback was:

It's not what the Advisor could have done or not done.  It's Apple's decision to unilaterally discontinue support in Lion of the Apple USB modem.  I would not have purchased Lion at this time had I been able to easily find out that I would not be able to access the web from the dial-up at our cabin.

If I'd known that Lion would have cost me, not $29.99, but $79.99 or $129.99 or more (the difference being the cost of a new modem), I would have waited until 10.7.1 or whatever version Apple decided to be backwards compatible for many of its users.

One thing the Apple Care support person was not able to tell me was what USB modems are compatible with Lion.

Freedom, democracy, and unelected legislatures

In my readings, the American Legislative Exchange Council (ALEC) has been appearing more and more.  A recent article was "Koch, Exxon Mobil Among Corporations Helping Write State Laws Across U.S." Alison Fitzgerald, Bloomberg, 2011-07-20,

ALEC arranges meetings with legislators and corporate representatives to write model legislation.  This legislation is often introduced verbatim into legislative agendas.  Raegan Weber, an ALEC spokeswoman, says the group simply facilitates the sharing of information and “good conservative policy.” ALEC’s mission is to promote free markets, limited government, federalism and individual freedom, according to its website. “All of our policies are in line with those principles,” said Weber.

To me these nice-sounding words mean unrestricted operation for big corporations, government that stays out of the way of big corporations, government at the state level that is easier to control, and individual freedom for executives.  George Orwell's Newspeak is alive and well.

Missing in all these fine words are democracy and small-r republicanism.  The people and things public (res public) are left out of the picture.

A hidden cost of health insurance "efficiency"

As regular readers know, I take a dim view of those who tout efficiency because they use it as a code for lower obvious costs.  They ignore that lowering costs may reduce effectiveness or may increase costs elsewhere.

A recent case was that someone thought that Medicare Advantage participants getting health club memberships was a cost that could be eliminated.  I'm sorry that I didn't note where I read it.

However, a health club membership can cut costs elsewhere.  Granted that not everyone who has such membership gets any real gain.  Some show up for the sauna or the hot tub and get no real exercise.  Probably sufficient numbers show up and do exercises that increase bone mass, muscle tone, and cardio-vascular function so that they will be less likely to be hospitalized than those who don't show up.  In other words, the cost of the health club membership can offset the costs of major medical intervention.

Of course I should get more from Social Security than I put in

Many who dislike the idea of Social Security are complaining that recipients are receiving more than they put in. Of course I should get more from Social Security than I put in.

Of course, it is debatable how much more I should get.

OK, why should I get more? Isn't that a bit greedy?

No more greedy than anybody who buys government bonds. They expect payment of interest as well as principal. Since by law Social Security funds are supposed to go into government bonds, then there should be more money available in Social Security than was originally put in.

Social Security is an insurance program, but the reverse of health, house, or auto insurance. In the latter case, the fortunate never get any of their money back. In the case of Social Security or any other pension plan, the fortunate get more than their share back. The less fortunate died before collecting all that they put in.

The real argument should be what should have been paid all along. Some of the past increases bore no reality to the cost of living of many retirees. This is a discussion that would take hundreds of paragraphs more.

P.S. My father's father died before he collected his first Social Security check.  My mother died at 65, and, as far as I know, never collected Social Security.

Businesses live within their means? Really?

Over and over again, letter writers and some politicians complain that governments should live within their means just like families and businesses.  But do families and businesses really live within their means?

Consider that the current crisis was not caused by government overspending, but family and business overspending.  Many people went in way over their heads with credit card and mortgage debt.  Financial gurus created debt instruments of debt repackages over and over in a great Ponzi scheme, all in the name of free markets.  The whole mess collapsed of its own weight and took down the guilty and the innocent alike.  Unfortunately, the captains didn't go down with their ships, but were first in the lifeboats carrying their safes.

I got to thinking about what kind of corporate debt does exist.  Well, I am a small beneficiary of corporate debt; we own shares of some market-traded bond funds that give us a few hundred dollars of income every month.

Now is the time that semi-annual shareholder reports come out, and I checked one fund's holdings.  Below is a sample of some of the businesses whose bonds are held by DWS Global High Income Fund (LBF) with the rate and due date.

HCA Holdings, Inc. offers health care services in the United States. The company owns, manages, or operates hospitals, freestanding surgery centers, diagnostic and imaging centers, radiation and oncology therapy centers, rehabilitation and physical therapy centers, and various other facilities.
- From Yahoo! Finance, http://finance.yahoo.com/q/pr?s=HCA+Profile

No wonder health care costs are so high.  Many health care conglomerates can't live within their means.

Of course, these rates are low compared to credit card rates.  By comparison, home mortgage rates are around 4.50 percent for thirty years.  Treasury bonds are currently about 1.50 percent for five years and 4.25 percent for thirty years.  Either certainly beats current bank savings account rates of less than one percent.

I would say that families that have only fixed-rate mortgage debt and the federal government are living within their means far better than some large corporations.

When do subsidies outlive their usefulness?

Sen. Amy Klobuchar (D-MN) wrote an op-ed piece "A mature industry can sacrifice: That was the case with ethanol, and it's especially the case with oil" in today's Star Tribune.

She and others worked "to end the major tax credit for ethanol".  Ethanol production "is now a competitive, established industry in the energy market…"

She asks why the oil industry isn't treated the same.

I think the answer is two-fold - lots of conservatives don't like the ethanol industry but they are paid big bucks by the oil industry.

Were all the oil subsidies a good idea some time in the past?  Possibly.  Consider that lots of oil was discovered and extracted by wildcatters.  These were small groups that took the risks, financial and physical, to find the oil and drill the original wells.  Many were the dry holes that they drilled.

Congress in its great wisdom saw the huge benefit of an oil-based economy and gave the hundreds or thousands of wildcatters a boost through various tax credits.

Now the oil industry is a mature industry of only five companies.  Their probability of dry wells is practically nil compared to the wildcatters.  Even with their safety shortcuts, their financial risks are small.

It's way past time to cut the oil subsidies.

Free enterprise is the wrong metaphor for large corporations

We have been hoodwinked into considering large corporations as examples of free enterprise, just like many of the small businesses that keep popping up.  A better way to consider large corporations is as monarchies.

Monarchies were rarely monolithic, top-down structures, but a complex arrangement of carrots and sticks.  Carrots could include favors of money or position.  Sticks could be actual assassination or character assassination.  If all else failed, monarchies would divert people with a war elsewhere and demand patriotism from all

Corporations give carrots of campaign contributions and hire politicians into lucrative jobs later.  Corporations have murdered strikers and sympathizers, but they have always financed and promulgated false information about those who disagree with their agenda.  Do you really think the "birther movement" was "grass-roots"?  And corporations are really "patriotic" when they support a war with all its profits from selling military equipment.

And to think that we make a big holiday of throwing off the yoke of a monarchy.

You are being manipulated, lied to, and bamboozled! Here's how

So you think the U.S. has the best health care system in the world, that free enterprise made this country great and any government intervention stifles free enterprise, and you think that we don't have global warming but maybe climate change, then you are being manipulated, lied to, and bamboozled by the spin doctors of large corporations.  They are putting out big bucks in advertising to get us to see things their way and big bucks in campaign contributions and lobbying to have governments do things their way.  Forget, "We the People".

The writers of the U. S. Constitution used "people" in the sense of communities.  When they meant individuals they used "persons" or "citizens".  Large corporations don't want communities, whether they are unions, co-operatives, or any other group where people come together for their common economic interest.  They want isolated individuals to whom they can target their messages.

I've long suspected that corporate interests aren't my interests, or even many others interests, but I've become strongly aware of this after reading three books on corporate manipulation of us and our elected officials.

The first was "Deadly Spin" by Wendell Potter on how the health insurance companies work to minimize their payouts and maximize their profits, even if it gives bad health outcomes to their customers.  I have already written about this book; see "Benefits - Getting mad at the wrong people?"

The second is "23 Things They Don't Tell You about Capitalism" by Ha-Joon Chang.  Chang's first Thing is "There is no such thing as a free market", that is individuals acting in their own best interest.  This free market idea simplifies individuals into economic entities without complex personalities.

The third is "Life, Inc., How the World Became a Corporation and How to Take it Back" by Douglas Rushkoff.  His starting point is how limited liability corporations started and what they enabled.  Like any good idea, this has morphed into a monster that "The People" can't control.

If you can stomach reading about the manipulations, you might find these books very informative and fascinating.  If you're reading this blog, you probably see the world as a more complex place than the spin doctors would have us believe.  These books might give you more information to counter the spin doctors.  If you think the world is relatively simple, then please read these books before you vote again.

Corporate bureaucracies eat into other corporations' profits

I've often said that government has no corner on bureaucracy.  Almost any large organization, for-profit, non-profit, government, has a large bureaucracy.  They have to in order to look into many, many details that are needed to run the organization efficiently.  You read that right, an organization needs a bureaucracy to be efficient.

Who is going to do the details of hiring and firing?  Who is going to process the payroll for thousands of employees.  Who is going to pay and collect the bills.  Certainly not the executives.  Certainly not the employees involved in developing new products. Certainly not the employees providing goods or services to customers.

The purpose of a bureaucracy is to take care of details that free other employees to do the primary work of the organization.

One corporate bureaucracy is customer support.  These are the folks that process customer questions and complaints and attempt to find solutions.  When run well, customer support provides satisfaction to the customers and feedback to the rest of the organization.  When customer support is not given organization support, it devolves into an unresponsive bureaucracy.  The result is less customer satisfaction, which in turn can lead to the demise of the organization.

A case study is the corporation many love to hate but many depend on for the functioning of their own organizations - Microsoft.

I mentioned my calendar problems in "Quote of the day - Ease of use" and "Misdirected ire".

Since then, I've been subscribing to a thread "Meetings disappearing" on Microsoft's Apple Support Discussions.  Hoo Boy!  Talk about non-responsiveness!  This thread has been going on since February and there appears to be no resolution.

Well, maybe there was some resolution.  Many report that if they set up a regular weekly appointment for a year and then change one, all subsequent appointments disappeared!  How often are regular meetings changed in your organization?  Sometimes changed meetings become the norm.  What was the solution that one writer said Microsoft proposed?  Set up 52 individual appointments for the year!!  Wow!  That certainly is a shining example of productivity improvement.  Guess what?  When the user changed one of the 52 individual appointments, the subsequent appointments disappeared.

What a way to run a railroad or any business!  I've had better responsiveness from city, state, and federal bureaucracies.

The Republicans as "The Lone Ranger"

Not only do the Republicans think that they are on the just side, but they think they can shoot faster and straighter than their opposition and that they have silver bullets that will cure all problems.

Instead of compromise, they keep shooting more silver bullets, the latest being a balanced budget amendment.  Do they think that each and every administration and each and every Congress will hold to it without coming up with some gimmicks to get around a balanced budget amendment?  All one has to do is to treat an operating expense as a capital expense and borrow for it.

A "homonym homily"

He growled as he bowled that he lost his soul when he stepped over the foul line.

For more of this word silliness, see Homonym Homilies.

Bad economy? Good economy?

I called my dentist's office last Friday for an appointment for semi-annual checkup.  I wrote down the appointment as being next Monday.  Imagine my surprise to get home yesterday to a message that they were waiting for me.  Whoever heard of getting a routine appointment for the next business day?

Is this a sign that the economy is bad?  Not enough people are willing to spend money for dentists?  Or is it that the practice is relatively new and hasn't built a large patient base yet?

Whatever, I called this morning, apologized, and scheduled an appointment for next Monday.

Articles have appeared recently about people starting small breweries or brewpubs.  The popularity of locally brewed, small-batch beer has been growing for a few years, and it seems that new breweries are popping up all the time, despite the "bad economy".  Are these brewers guys with stars in their eyes or do they know something large corporations don't know?  After all, many claim large businesses aren't expanding because of the uncertain economic climate.  Seeing articles frequently about local start-ups of many different genres, I'd say the economy is good.  At least it is better than the large corporations want the government to believe.

Trick question - who favored modern capitalism?

a. Adam Smith
b. Sweden
c. Karl Marx

I bet you chose Adam Smith.

Actually, he didn't like limited liability corporations.  He thought an owner should work in his own shop or factory with a few employees.  If he worked in it himself, he would be very interested in its success.  If others owned the shop or factory, they would be less interested in how it was run.

Sweden in 1844 was the first country to make limited liability generally available.  Few had the resources to start a steel mill or a railway.  People outside the company had to furnish the capital without incurring losses greater than they put into the company.

Karl Marx in 1865 thought that joint-stock companies would bring huge material progress.

Source: "23 Things They Don't Tell You about Capitalism", Ha-Joon Chang, Bloomsbury Press, 2010

From "Thing 2: Companies should not be run in the interest of their owners".  The result has been loss of vitality in many a large corporation.  Thing 1 is "There is no such thing as a free market".

Quote of the day - the crooks on Wall St.

"For the people on Wall Street, it's a case of heads they win, tails they get to flip again."  - Brett Arends, "The Next Financial Crisis Will Be Even Worse", SmartMoney, 2011-07-06.

Do we really need people who think like this?

“Why do we have state parks, city parks, county parks and regional parks?  Of course we value our parks and open spaces. It’s one of our great gems. But do we really need four different bureaucracies dealing with that?”
– Annette Meeks, CEO of the conservative Freedom Foundation of Minnesota and the Republican candidate for lieutenant governor in 2010, quoted in "Minnesota budget standoff a battle over big-spending legacy", Duluth News Tribune, 2011-07-08.

I don't think Ms. Meeks understands that different levels of government serve different needs.  Do we want the county or state running Enger Park, the Rose Garden, or Chester Bowl?  We in Duluth would like to control our own parks.  Would the people of Hennepin County like the state to run its extensive park system?  I think they would want to determine how they are run.  Conversely, should Lake County control Gooseberry Falls when it is a treasure for people all over Minnesota.

Does she think that we shouldn't have four bureaucracies dealing with city streets, county roads, state highways, and the Interstate?  Each serves a different constituency.  Would she want a county deciding that an Interstate in the county should be a two-lane road?  Would she want the federal government deciding to put an eight-lane highway where her house is?

I think she is mixing "efficiency" (spending the least possible money) with "effectiveness" (meeting the needs of customers or citizens).

People power takes on corporate power

"Iceland, a country that wants to punish the bankers responsible for the crisis" is the title of an article published by Pressenza, a press agency based in Chile.

The Icelanders have thrown out one government and led a second government to plan a referendum on whether the Icelandic people should be responsible for the debt incurred by others.

On top of that, it will be individuals elected specifically to rewrite the constitution, not experts and politicians.

I'll let you read the last two paragraphs, which are humdingers on how countries should be governed.

Stock market – humans need not apply

Yesterday afternoon I sold shares in a stock through my online broker.  As soon as I clicked Submit, up popped a message that the order was filled!!!

In the past, this process has taken minutes or even hours, especially for odd lots like mine.  It's all done by computers owned by the really big guys who are taking advantage of the small ups and downs of the market.  The cents part of my price was .1902.  The stock closed about five cents higher.

And to think that many financial articles talk about investors doing this or that to the market.  Buying a stock and then selling it a few minutes later is not investing.  Recently I read that the majority of stock trades are done by computers, not people.

High pay to attract CEOs, low pay for judges?

How is it that companies need to pay multi-million dollar salaries to attract CEOs, but we expect to get excellent judges when their pay is frozen?  See "With Salary Freeze, More New York Judges Are Leaving the Bench", William Glaberson, New York Times, 2011-07-04.

Many judges are earning one-tenth what they could earn in private practice.  Although I don't have much sympathy for the hard times of one earning a six-figure salary, I wonder about the wisdom of keeping pay "low" for judges.  There comes a point where the prestige of being a judge is less attractive than a much higher salary in private practice.

I think it is part of the growing myth that all government employees are worthless do-nothings.  If that myth goes too far, we really will have a government of worthless do-nothings.  You get what you pay for.

Quote of the day - hyperpartisanship

"… hyperpartisanship is the opposite of patriotism."

See "Has the Third Party's Moment Arrived?", John Avlon, The Daily Beast, 2011-07-01

The idea of a third party got a big boost

Thomas Friedman has spoken out for the need of a third party.  At the Aspen Ideas Festival, he said, "We need a third party.  I am for a third party.  We are trapped in a corrupt duopoly".  See "Has the Third Party's Moment Arrived?", John Avlon, The Daily Beast, 2011-07-01.

He also said, "One thing about the Internet and the hyperconnected world—it has flattened every hierarchy in the world from The New York Times to the banking industry. It’s flattened every hierarchy in the world except the two-party system, and that will not remain. That is a prediction that I will make."

This reminds me of the aphorism, "Are you part of the problem or part of the solution?"  And of course, I have to preach, probably to the choir, be sure to vote in each and every election.  If you have no choices that you like, write somebody in.