Saturday, May 21, 2011

The right to work

I don't know the history of labor law, so I really don't understand how a person can be required to join a union in order to work at certain companies. But that is the essence of the dispute between Big Labor - and its allies in the administration - and Boeing.

We must wake up to the damage that unions are doing to our economy. They drive up costs. They make it harder for businesses to justify hiring more workers. And public unions are the most insidious of all. They spend their members dues on political activities in order to elect legislators that will divert ever more money from the private sector into the union.

New Hampshire's legislature passed a right-to-work bill, but the democratic governor vetoed the bill. Would it be a surprise to learn that unions supported Gov. Lynch in his campaign? You get what you pay for, I guess. Here's hoping the state senate can override that veto, and that right-to-work spreads across the Northeast as other states recognize their competitive disadvantage.

Sunday, May 15, 2011

Distracting us from the real crisis

The noise about the debt ceiling is growing rapidly, and it's probably going to get louder and louder. It's usually a good idea to keep in mind that whenever the pols get excited about something, it is almost always a distraction.

This is no different.

The pols will jump up and down about defaulting on our payments if the debt ceiling isn't raised. And although we will, technically, be in default, what that really means is that we will make our debt payment a few days or weeks late. It is far more important that we get our finances in order, by reducing ongoing entitlement payments, so that we can make those debt payments over the long run.

This is the exact same thing as making your mortgage payment on the 12th of the month because you had to reorganize your budget. Were you late? Yes. But the mortgage company isn't too concerned because you are taking steps to ensure that they will eventually get all of the money due them.

Unfortunately, polls and pols usually react to the noise. And that means that we'll probably get no real reform in exchange for a raise in the debt ceiling. We'll make the current payments on time and jeopardize our ability to finance our activities in the future. Unionized government workers will protest and strike in order to keep their slice of the pie, impoverishing the nation as a whole. It won't happen overnight, but the math dictates that it will.

Saturday, May 14, 2011

Assumptions of Fantasy

On Friday, the Social Security and Medicare trustees reported that Medicare will be insolvent by 2024. Like all projections, the writers must make certain assumptions in order to build their forecast. One thing we know about all forecasts is that they are probably wrong. Even so, our confidence in any forecast comes from examining the assumptions made in building it. The more reasonable the assumptions the more confidence we have in the forecast.

So let's examine their assumptions:

  • The reports must accept the conditions described by the current law. Current law requires that Medicare outlays will be reduced by 30%!! in 2012. Given the historical behavior of both the legislative and executive branches, this is highly unlikely.
  • Here's the real whopper: The report assumes an unemployment rate of 5.5% by 2018. Granted, a lot can happen in 6½ years, but cutting the unemployment rate by more than 40% seems far-fetched ... especially when inflationary pressures and the weakening currency have almost always slowed or even stalled recoveries - both in the US and abroad
It is time for us to accept the reality of a failed experiment, and look at genuine structural alternatives. Defined reimbursement for premium payments is a great step in the right direction. We will quickly see almost every product for seniors match the maximum reimbursement level. Perhaps it would be even better to have a defined transfer payment to seniors, allowing them to keep any excess to do with as they please. Premiums would then reflect competitive pricing, and seniors would have the freedom to pick and choose the level of health insurance that is right for them.

Wednesday, May 11, 2011

Not much has changed

The death of the master terrorist marks an important achievement; as a country we've meted out a measure of justice. And while the administration basks in the glow of this genuine achievement, the rest of us return to daily life, and the realities of gas prices, inflation, persistent un- and under-employment, and a staggering national debt.

Gas prices seemed to have plateaued at around $4.00 per gallon (regular). At least, in my little part of the world, prices haven't changed much in the past 10 days or so. But I believe this is short-lived. The current price of a barrel of oil dropped to below $100 last week, but it's on its way back up:

Surely these prices reflect the news coming from the Trans Alaska Pipeline (link requires subscription) that tells of production issues on the a significant source of our nation's power supply. While all of this goes on, there seems to be no appetite for expanding the supply of oil.

So get ready for even higher gas prices in the coming months.

Source for the oil price graph:
Crude Oil Price By OIL-PRICE.NET

Tuesday, May 3, 2011

I am glad he's dead

The death of Osama Bin Laden is an important milestone. We can reasonably disagree as to whether we should have put more effort into finding him several years ago. Will his death make him into a larger-than-life symbol? Will the firefight in which he died be recounted as some heroic last stand? Or will he - accurately - be seen, at long last, as a coward who hides behind an unarmed woman to avoid getting shot?

Facts will not deter radicals ... they never have. OBL is no longer a wanted man. However, we have not seen the last of radical Islam. Their grievances are contrived and arbitrary. They cannot be negotiated with, nor can they be reasoned with. They can, however, be defeated. And we have taken one, symbolic, and important objective. There are many others, but it is right to celebrate this achievement.

To the men of the JSOC, congratulations and well done!

Sunday, May 1, 2011

Our tax system is depraved

Isn't the purpose of taxes to raise revenues?

If that is the purpose of taxation, then why are their special taxes that penalize certain behaviors and reward others? Here are just a few sickening examples:

  • Why do we deduct health insurance premiums from taxable income when they are paid via a payroll contribution, but not when they are paid out of personal funds?
  • Why is the interest on a primary residence tax-deductible, but not the interest on a car
  • Why do we subsidize inefficient forms of refined petroleum, and put higher levies on the efficient forms?
  • Why are the people who produce the most wealth for our nation penalized with higher tax rates, while those who produce less wealth subsidized with lower tax rates?

Our federal government spends the vast bulk of its energy and resources transferring wealth from our most productive citizens to our least productive citizens. We have completely perverted our sense of fairness and equity.