Thursday, February 26, 2009

The Lord of Business

People are scared, really scared. The US economy is enduring a recession at a time of multiple crises, the Administration which took office less than a month ago has shown no grasp of even the fundamental facts and forces at work, and the Congress has added a massive spending bill which has no direct effect at all on any of the root causes. Europe is also in trouble, with rising unemployment and its own financial crisis. Japan has lost more than twelve percent of its GDP in the last year, and China has laid off more than twenty million workers because of the global crisis. There is fear in the finance sector, in housing, in retail, manufacturing, and in government. Unemployment is rising in every industrialized nation and concerns about the future heighten almost daily. Some folks are even saying that the debt is so great, that all the money in the world cannot pay it.

And it is at that point of worry and doubt, that the pressure in my mind is abruptly relieved, and I realize we are trying to control too much. Money, after all, is an artificial construct, a human device used to describe and direct an intangible force. For all our formulae, theories, and even our experience, it must be understood that money is not something we can completely control; at best we can influence it, and we are not at our best just now.

That’s not to say that the effects of mistakes are not real. Indeed they are, but when seeking to address large-scale problems, even multiple crises as we see here, we must understand our limits, and more to the point remember that there is one who controls the Reality beyond our comprehension. Yes, I am talking about God.

God and Finance are not often paired together, and most of the time that they are, it is by a speaker who holds commerce in rather strong contempt. But we should know better. Abraham was beloved of God, and God made Abraham a wealthy man. God made Job wealthy, and David, Solomon, and countless other righteous men. It’s a sin to love money, but not to succeed in business. It’s wrong to ignore the needs of others, but no sin to provide for your family and community. Further, if biblical accounts are to be believed, the Lord has often shown favor to individuals, in business as well as other endeavors. The book of Genesis notes the rise of Joseph on the strength of business acumen, the same for Abraham, Job, and so on. Details are not given, so I am not about to try to sell the notion that the Bible has a blueprint that anyone can use to get rich, but I am saying that there seem to be forces at work that we can only partly comprehend, let alone control. The Bible contained the instruction for the year of jubilee, in which all debts were forgiven. It may seem simplistic to us, but such a model allows for people to look forward to a point in time when they can put mistakes and bad fortune behind them. Without such a model, it becomes difficult for a person to recover from even a single bad event, if it should be large or long enough in severity or duration. The careful reader may even note aspects of the modern bankruptcy code in the ‘jubilee’ concept.

So what concrete advice would I give to our leaders, as we wrestle with this present situation? Millions of families are in danger of poverty, or losing their homes, and of seeing their life savings disappear, and these are real, undeniable problems which demand effective, immediate answers. Is it as simple as praying to the Lord and trusting Him? Essentially, yes.

I do not mean pray and wait for the Lord to make it happen while we sit around and do nothing. Sorry folks, but we are here to work, and work we must, but I will surely say it’s a far sight better to know we have a patron who cares for our welfare, who wants us to do well, and who hears our prayers – and answers. We may not understand the answer, we may well not like the answer, but we shall be answered, and we shall find our way according to His grace. Those who refuse to ask His help will do as they choose, but I would not invest my money with anyone who thinks he can out-think God.

It also helps, I think, to consider whether what we are doing is pleasing to the Lord. I don’t think many of us would be foolish enough to imagine that the Lord considers alcohol and immoral entertainment to be as worthy a place for our investment as construction and manufacturing, much less spending money to help protect children from disease and support farms. Don’t spend money that is not yours, make sure you are honest and complete in reporting to investors what you do with their money. Old-fashioned values, those, but that’s what made us a strong country in the first place.

Pray to God, and get to work. And don’t worry about the politicians, in the end they will either get right with God or they just won’t matter.

Can You Read This?

Google has blocked me from seeing my own blog. I can post, but I cannot read my own blog.

Just out of curiosity, can you read this? Just curious about what's going on.


Wednesday, February 25, 2009

Junk Economics

An online magazine called “The Week” posted an article by an eonomist about why he thinks the Stimulus Package passed by Congress last week will actually help the economy. For all my suspicions regarding President Obama and the frat boys at the Hill, Omnis Porcinus Modo, I would like to believe that there is actually some genuine interest in addressing the economic crisis, rather than just stuffing their own pockets and feeding their special interests with money desperately needed for better purposes. The writer was Brad Delong, and your first warning sign is that the professor hails from U.C. Berkeley. Things do not get better from there, but it’s still useful to look at his article, since it reflects the self-deluding mindset of the Left, how they can lie to themselves and push this fraud on the people.

The first lie by Delong comes early; he describes the bill as “$500 billion in extra government spending, and $300 billion in tax cuts”. Unfortunately, examination of the bill shows no real tax “cuts” to speak of. A genuine tax cut is a reduction in the tax rate. Everything related to taxes in the bill, however, comes down to either a credit applied to taxes, or special-interest exemptions for government contractors and one-time payments to state and local governments in exchange for permanent federal conditions on state and local government operations (which smells a lot like a violation of the Tenth Amendment of the U.S. Constitution). No reduction of tax rates or payment of any money exists for tax payers, in relation to the taxes paid or their identity as citizens. None whatsoever, so there are zero actual tax cuts in the bill. None whatsoever.

Delong has to know this, given his academic credentials and on the assumption that only a complete moron or a democrat would support so large and expensive a bill without at least reading it first. Delong compares government to “some group or another” who creates an era “in which production and employment are high and unemployment is low”. One wonders how Delong can imagine it, but he repeats his assertion that the federal government is “just like any other group of starry-eyed optimists whose eagerness to spend pulls the economy into a high-employment, high-pressure boom.”

Delong compares the present Porkfest to the housing boom (before 2005) and the Internet boom (before 1998). He contends, without bothering to lay out why he sees the comparison as valid, that simply spending tax money will create this boom – Delong crows that “the government’s money, after all, is as good as anybody else’s”.

But is it, leaving aside for a moment the fact that it's not the government's money, but the people's money we are discussing here? Delong claims that this bill should be compared to Reagan’s defense spending in the 1980s, or any number of private-company investments. But that’s cherry-picking at best; Delong makes no mention of the massive spending during the Vietnam War on defense, or the huge amounts of money spent on Welfare, Medicare, and the War on Drugs. Financially, all of those could be most charitably described as failures, characterized by inept or dishonest management and a lack of effective oversight. Delong knows this, yet chooses not to mention the evidence which not only weakens his claim, but which warns that government spending is, in the main, a bad idea when taken to extremes. Delong forgets that most economists now recognize that FDR’s policies of the 1930s not only did not help end the Great Depression, they extended the suffering for several years. The bill passed by Congress last week lays almost eight hundred billion dollars of debt on an already weary taxpayer, not to mention the interest on the thing, and for that there is not one penny spent to actually save a home facing foreclosure, create any private-sector jobs, or restore value to the stock market. Read the bill for yourself, and see how much it ignores the crisis that Obama himself said we could not afford to put off facing.

Perhaps some of that spending is worthy, even important. But none of it, not one penny, goes to address the most serious problems facing our nation today. And President Obama himself observed that one of the greatest threats we must face now is the massive deficit, yet in one stroke he has more than doubled it, for no need at all.

Government is inherently wasteful and inefficient. Remember the press reports about thousand-dollar hammers and ten-thousand dollar toilets? Remember hearing how the government could not even account for much of the money spent on Welfare? How many times have we heard about money designated for schools or police but spent on something it was never meant for? The problem is not the intent of the people crafting the program, it’s that large-scale programs run by people with no relevant experience or proven ability will always, always, waste resources, especially money.

If you want to understand why government is wasteful by its nature, consider any large company. There are different departments in that company, some which produce revenue and others which do not produce revenue. The manufacturing group, for example, creates value by turning raw resources into the product to sell, increasing the value by that work. On the other hand, the accounting department does not produce revenue. It is a necessary function, since the company needs to report on its actions and results, but accountants do not bring in money. The same for management; they can be valuable to the company, even vital, but they do not bring money in by their function. So, the company has to make enough money in its revenue-producing departments to cover the ones which don’t make money. Also, any successful company needs to trim fat and get rid of unnecessary costs. The motive to do that is the fact that waste eats profits and makes a company weaker.

Government is like a non-revenue-producing department of the company, in this case the company is the U.S. Economy. At its best, government provides vital functions for defense, safety, and law enforcement. At its worst, government eats tax money for no benefit to the country. There are three problems which make government more wasteful than private business, however. First, private business has top management in place to pursue one set of goals and objectives, while in government there are at two major political parties at work, with very different goals and objectives, as well as a horde of little empire-builders who cannot easily be fired and who consider themselves unanswerable to anyone. Second, all public corporations must submit annual reports with audited financial data complying with specific statutes carrying clear penalties for violations. Government has never submitted annual reports worthy of the name, since the United States government has never even pretended to follow Generally Accepted Accounting Principles (GAAP). And third, all businesses which operate to make a profit are compelled by necessity to provide some product or service or both that the public will agree to purchase with money. If the public is not convinced to buy what the company sells, it’s over right there. Government, on the other hand, can and does compel its will upon the public, sometimes egregiously so. It’s no surprise at all to see a politician pay attention to the voters when he wants re-election, but not one politician asked for genuine public feedback on this swinefest of a bill before the vote.

Government eats money and lies. Always has, always will. This bill that Congress passed last week (a product of the democratic party, greed, and nothing else) is a deceitful crime against America. Anyone who would support it is criminal, incompetent, or both. But at least this article by Dr. Delong shows us the spin we can expect from the Left.

Tuesday, February 24, 2009

Barack Obama - The O stands for Zero Honesty

The times are too serious, the stakes are too high for this same partisan playbook” – August 28, 2008

95% of working families will get a tax cut” – September 26, 2008

I will put an end to lobbyists and special interests in Washington” – October 7, 2008

What I’ve done throughout this campaign is to propose a net spending cut” - October 15, 2008

I have been a strong proponent of pay-as- you-go. Every dollar that I've proposed, I've proposed an additional cut so that it matches.” – October 15, 2008

to those Americans whose support I have yet to earn, I may not have won your vote tonight, but I hear your voices. I need your help. And I will be your president, too.” - November 4, 2008

“[The stimulus plan] contains an unprecedented level of transparency and accountability so that every American will be able to go online and see where and how we're spending every dime. What it does not contain, however, is a single pet project, not a single earmark, and it has been stripped of the projects members of both parties found most objectionable.” – February 9, 2009

So my bottom line when it comes to the recovery package is: Send me a bill that creates or saves 4 million jobs. Because everybody has to be possessed with a sense of urgency about putting people back to work, making sure that folks are staying in their homes, that they can send their kids to college.” – February 9, 2009

Obama’s own words, nothing but lies.