Category Archives: Big Thoughts

“Nothing Is Free”

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I never thought I would say this: Cubans understand economics better than Americans.

In 1932 Lionel Robbins defined Economics as “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.”

I think that is not true any more. At least, not here.

Economists should study and report on who produces, distributes, and consumes goods and services, how they do it, and where it happens. The “soft science” of economics allegedly uses empirical data but in reality is now a political exercise. In today’s scientific environment, we know more about Global Warming than we know about the economy and there is certainly more politics than science in the climatology data.

In Cuba, nothing is free, reports the Miami Herald. The Cuban people pay for it [all] with their work.

“A Cuban gets a salary of 500 pesos a month (about $20) and is told that education and healthcare are free,” Uva de Aragon of FIU Research Institute told the Herald last week. “Nothing is free. The Cuban people pay for it with their work.”

What a concept. Health care. Food. Housing. Consumer goods. All related to the sweat of one’s brow.

Despite the media furor, have you noticed that you don’t directly pay for your health care? Most of us don’t. Most of us have “insurance” (or Medicare or Medicaid). When was the last time anyone reading this brought a home-grown chicken to the doc’s office to pay for the visit? Or traded an hour of computer service for it? Since there is a disconnect between the delivery of the service and the payment for same, we don’t care that the cost has spiraled out of sight. The incoming Administration and the Congress want to take over Health Care to save you money. Right.

The Cuban earns 500 pesos a month from the state. The rest of his or her production stays in the hands of the state to pay for that “free” care.

Education has long been publicly funded by land taxes. Since states like Vermont and Florida take those real estate taxes straight to the Capitol and dole out payments to the local schools, there is a disconnect between the delivery of the service and the payment for same; the cost has spiraled out of sight. Now that real estate values (and the taxes collected) have dropped, the Miami-Dade schools will sue the State of Florida for the “lost” revenue. Right.

The Cuban earns 500 pesos a month from the state. The rest of his or her production stays in the hands of the state to pay for their “free” schooling.

Food (so far) hits most Americans in the pocketbook. OK, except for those on Food Stamps. Oh, yeah, and except for the taxpayer-funded farm subsidies that keep prices artificially low. Still, most of us spend part of our paychecks at the supermarket every week.

The Cuban earns 500 pesos a month from the state. No free lunch there, either, since he has to pay for his meals out of the 500 pesos (about $20). It costs most American families more than twenty bucks to hit the Mickey D Supper Club once.

Congress and the Fed believe we can spend our way out of any problem–health care, food, housing, bad loans. That’s probably true if there is enough earned income to tax to do so.

Uh oh.

Congress and the Fed (and apparently the Miami-Dade school superintendent) believe we can spend our way out of any problem by printing more money.

And nobody in Congress has broken an honest sweat in years.

Here’s the reality check. If I take a fine art photograph, print and frame that photograph, and sell that photograph to Joe next door, I will receive cash money which I can then spend in the grocery store or at the gas pump. If I don’t take that fine art photograph, or print and frame that photograph, or eventually sell that photograph to Joe, I will have no money for food or gas or my tax bill.

Any Congress Critter who doesn’t understand that dooms you and you and you and me.

Throw Good Money After Bad

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Congress critters have the right to free speech. They also have the right to remain silent. There is a message there to those who would listen.

Senator Christopher Dodd (D-CT), is a lawyer and Chairman of the Senate Banking Committee. Representative Barney Frank (D-MA), is a lawyer and Chairman of the House Financial Services Committee.

“With regard to the automobile industry, certainly we should not throw good money after bad,” Senator Dodd said, “nor should we subsidize ineffective performance and inefficient production.”

Thank you, Senator, for that insightful, positive, and critical decree.

I need to analyze the players a bit before I get to the main point of this piece.

Senator Dodd and Representative Frank make the perfect pair. Combined, they are the Barney Rubble of the United States Congress.

I looked at the $700 billion Barney Rubble campaign finance bill and it is indeed an interesting pattern. See, Barney Rubble specifically enabled the formerly illegal activities that lead us into the “mortgage crisis,” then rejected all attempts to get Fannie Mae and Freddie Mac under control. Barney Rubble has blocked expanding domestic oil production because it is bad for us. (As an aside, Saudi oil minister Ali Al-Naimi told 60 Minutes last night that he is bullish on oil’s future and that expanding domestic oil production here is bad for us.) Barney Rubble did plenty more but you can Google it yourself.

I have been noodling about how this perfect storm of a financial crisis hit. Few scientists, fewer engineers, and no forensic guy believes in coincidence. It is almost impossible to believe that sheer happenstance conspired to put crooks in the banks, burst the housing bubble, jack oil prices, and more all in the same few months.

Somebody did it on purpose.

I nominate Barney Rubble.

Has our hero ever held a real job? Made anything with his (collective) hands? Yes, I used collective on purpose. Barney Rubble gave away $700 billion in handouts with scarcely a whimper but when three actual manufacturers who are the end source of more than a third of this country’s jobs asked for just five percent of that in loans, Messrs. Rubble know, absolutely know, that Congress needs to micro-manage the supplicants.

Boy, do I feel better about my tax dollars now. Congress gonna protect me from those evil auto makers.

Why?

My friend “Bob” posited the question, “Anyone know how to find which politician got money from which source?

“My guess is,” he said, “you will find that the car companies haven’t been making their proper political contributions like the lads on Wall Street.”

Christopher Dodd has received $21,202,690 in contributions. His top contributors include security brokers and investment companies, lawyers, the insurance “industry,” banks, investment banks and hedge funds, and, of course, lobbyists.

Barney Frank has received only $4,231,044 in contributions. [Piker.] His top contributors include lawyers, UBS Americas, Brown Brothers Harriman & Co, JPMorgan Chase, Ernst & Young, the Credit Union National Association, and Independent Community Bankers Of America.

“Bob” was right. Not a single car company on the list.

Money doesn’t buy influence, right? Our Congress Critters would never sell their votes, right? Right?

To paraphrase “Bob,” if you pay off Barney Rubble, he treats you right. If you diss him, he burns you. Just like the Mafia. Our Congress.

Main Point: Starting today, certainly we should not throw good money after bad, nor should we subsidize ineffective performance.

Not one single Representative or Senator has offered to work for $1 per year. The car company CEOs are.

Not one single Representative or Senator has offered to give up their aircraft. The car company CEOs are.

BROKEN NEWS

We are doomed. Sell your automobile stock right now. Representatives Nancy Pelosi and Barney Frank held a news conference today.“Come March 31,” Speaker Pelosi said, “it is our hope that there will be a viable automotive industry in our country with transparency and accountability to the taxpayer.”

Under the plan, automakers will be given $15 Billion in loans.

That’s a win–win for Congress. Barney Rubble can say “We did all we could but they screwed the pooch.” Sure enough. Since $15 billion is less than half what the companies need to weather the crisis, they might as well fold their tents now.

“How could you possibly accept the same management to run restructured companies that have driven us into the ditch we are in?” Senator Dodd asked.

Was he talking about the automakers or the Congress?

Paraphrasing Senator Richard Shelby (R-AL), The model of this Congress is failure. This Congress has already failed and should we rescue them? I say no.

Senator Dodd almost said it. Starting today, with regard to the United States government, certainly we should not throw good money after bad, nor should we subsidize ineffective performance.

Thanks to Senator Dodd, we don’t have to.

Say, hey, IRS. It’s been real but I’m afraid you won’t be getting any more checks this year. Senator Dodd says NO to throwing good money after bad.

And about Barney Rubble? I’ve said it before. It’s time to throw da bums out and start over.

All One

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We who write editorials and particularly we who rant on blogs know in our hearts that we stand alone in the wilderness, baying at the moon. On the other hand one of my correspondents noted, “Six days and you have not opined via blog. You are a disgrace to the whole of blogdom.”

Alrighty, then. It is indeed Monday. Here it is.

Radio guy Josh Mothner ranted about one of my pet peeves this morning: our gummint in its infinite wisdom has decided to solve the credit crisis by … wait for it … borrowing money.

Sheesh.

I am not an economist. I do not even play one on television. It seems obvious to me, though, that our economists are a wee bit warped. The world economy is tanking because the American economy tanked. The American economy tanked because we lost faith in it. We lost faith in it because a bunch of bankers decided to rip us off. That bunch of bankers decided they could rip us off because we live on tomorrow. We live on tomorrow because we want that bright and shiny object right now. We want that bright and shiny object now because we’ve learned we don’t have to pay for it. We got into this mess by our own avarice.

When you borrow money against your house to pay off your credit card, sooner or later you have to sell your house.

$700 billion and climbing.

Not even Bill Gates and Warren Buffett together has that in their combined piggy bank. And we can’t just print it.

Oh. Wait. I know! We’ll issue more Treasury notes. We’ll borrow it!

Let’s see. The banks don’t have enough money to lend to their customers so their customers can buy more stuff from companies that depend on the banks to borrow money from.

So tell me again exactly where the $700 billion and climbing will come from?

Oh. Wait. I know! We’ll borrow it!

It is interesting that, in the middle of the borrowing fever, the number one radio advertiser on that morning radio show is … Rolex. Bright and shiny object anyone? Unfortunately nobody listens to Mr. Mothner, either.

I wish, Dick wrote plaintively, that someone other than the Man in the Moon took these brilliant analyses to heart. There is a chance for a curmudgeon like me, though. I found out today that I’m going to be Andy Rooney when I grow up. See, I’m already growing his eyebrows.

Didya Vote?

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The polls have closed in the East so I figure it’s safe to tell you how I voted as opposed to telling you over and over how you ought to vote. We have to whisper, though.

I voted for the old white guy instead of the young black guy or the other old white guys or all the other guys.

I know, I know, I said I was going to vote for Paris Hilton. And I did engender a brief flurry of interest in the Pick Dick campaign. I thought about Jimmy Buffett but his running mate never made the news. I would have voted for his uncle but he was never really a candidate.

Down here by the southernmost point in these semi-United States our ballots had 14 bona fide offices contested plus six judges up for retention. We also decided on six amendments to the state constitution, numbered 1 through 8. It’s Florida. Go figure.

I didn’t count how many candidates there were in total but 13 people wanted my vote for President. We have now elected a Congress critter, a state attorney, a state representative, a Sheriff, a property appraiser, the superintendent of schools I wrote about earlier, the supervisor of elections, three county commissioners, and two members of the mosquito control board.

The Mosquito Control Board is a big deal here simply because mosquitoes are. Here, that is. The Board controls about a gazillion dollar budget but no longer flies the old fleet of DC3s at treetop level to scare the mosquitoes to death. Now they drive around spraying from little pickup trucks and fly helicopters lower than Homeland Security. I did not vote for the candidate who was in jail at the time of the election. Joan Lord-Papy was one of three votes I cast for an incumbent.

Mostly I took my own advice to “Throw Da Bums Out.” The other two office holders I voted for were Congresswoman Ileana Ros-Lehtinen (R-Florida) and Property Appraiser Ervin Higgs, a Democrat. Ms. Ros-Lehtinen ran a reasonably clean campaign (a serious rarity in South Florida politics where the Diaz-Balart brothers, Raul Martinez, and Joe Garcia alone refilled Lake Okeechobee and the Everglades with mud). She may also be the only Republican who retains a seat in Congress this year if my vote has anything to say about it.

Unfortunately, every Democrat running will be returned to office, too.

The negatives were huge on both sides of the State’s Attorney contest so I held my nose and voted for the challenger.

State Rep. Ron Saunders will continue as the Keys representative. It’s nice that he seems like another of the good guys because Republican challenger Ernie Hernandez withdrew from the race in September. Hernandez was a mystery. He did not talk to reporters, attend candidate forums, or gladhand anywhere. His name remained on the ballots printed before he withdrew. The Elections Office will not count votes for Hernandez.

The Sheriff’s Office was an open seat but one candidate has served in that department for 27 years, is currently a Captain there, and got the retiring Sheriff’s endorsement. That’s as close to incumbency as it gets. I voted for the DEA guy.

Two of the three County Commission seats were open so I voted for one Republican, one Democrat, and one NPA. I figure party politics has no business on a Town. City, or County board. The Democrat I chose, Heather Carruthers, runs a “we are not gay” guest house for women only. She got hammered unfairly for that in the campaign. She has also taken the lead in reining in Citizens Insurance, the insurer of last resort who carries my hurricane insurance here at great cost to me. She seems like one of the good guys.

I’ve had trouble finding anything about the judges on the ballot. The Florida bar said their lawyers “overwhelmingly recommend” retaining all those on the ballot. Here’s how they define “overwhelmingly”: A secret ballot was mailed in August to 62,779 lawyers residing and practicing in Florida (the Bar has more than 84,000 members–I don’t know what happened to the other 21,000-odd lawyers). 4,132 lawyers participated in the poll. Yeppers, I’m overwhelmed alright.

The anti-abortion crowd asked, How does Justice Wells vote on pro-life issues? The anti-abortion crowd is, as usual, off base. He’s not a U.S. Supreme Court Justice so his position prolly doesn’t matter. More important in all the retention choices is how closely to the law did the judges hew and how well did they manage their courtrooms.

The spouse of circuit judge candidate Tegan Slaton is Public Defender Rosemary Enright; that requires him to recuse himself from cases defended by the P.D.’s office. I hated to vote against Mr. Slaton because he was the better candidate on paper, but his inability to hear the majority of criminal and juvenile delinquency cases took him out of the running.

In addition to wanting term limits for elected officials, I disapprove of changing a constitution every time the wind blows. Two amendments are life-changing.

Fortunately, Constitutional amendments need 60% support to pass.

Number 1 asks to delete the provisions that allow the Legislature to prohibit ownership of real property by aliens who cannot become citizens. In 1926, that meant Chinese immigrants. 80 years later, alien means anyone who remains a citizen of some other country.

You already know what I think of Defense of Marriage amendments. I expect Number 2 to fail here in Monroe County but this is red state Florida and it has a lot of advertising oomph around the state. The amendment failed to get enough signatures to make it to the 2006 ballot but the supporters pushed it on this year. It’s a bad amendment because it segregates citizens and because it will cost a fortune to defend.

That’s the only citizen-sponsored amendment on the ballot–the others are housekeeping, put there by the Legislature and a tax commission to “clean up” language that governs how properties are assessed: a couple of current use tax exemptions, 15 cents on the property tax to pay for the air ambulance, and the penn(ies) on the sales tax for community colleges. I apologize, but I did vote for allowing assessments based on current use. I voted against all the others.

Back to the old white guy.

<sotto voce> Denny Crane </sotto voce>, of course.

Unfortunately, the election is over. We all lost.