Why Japanese People Don't "Want" Things Anymore

His explainations make a lot of sense, as do his conclusions. And we don't have to choose between the extreams of Diogenes and Alexander. There is plenty room in between to make authentic choices.

The Oregon counties the "recovery" forgot

Poverty in Oregon: Interactive maps show food stamps, welfare, Medicaid reliance by county

Nearly five years after the Great Recession officially ended, more than one in five Oregonians continues to rely on food stamps, and nearly 17 percent live in poverty.

Rural Oregon counties continue to fare the worst, with food stamps and Medicaid rates exceeding 30 percent in Jefferson and Josephine counties. In some timber-reliant counties, the poverty rate exceeds 20 percent.

The Oregonian mapped state and county unemployment, poverty, food stamps, welfare and Medicaid rates using January 2014 numbers from the Oregon Department of Human Services. The figures show slight improvements from last summer, when The Oregonian last mapped poverty by county. But it's clear that the state continues to struggle and that rural Oregon continues to be left behind in the recovery. [...]

The article has a link to an Interactive Oregon Poverty map that is quite revealing.
     

The End of Work?

Uh... what exactly does that mean? Depends who you talk to:

Should We Fear "the End of Work"?

[...]  Cornell University's School of Industrial and Labor Relations recently brought together 40 leading economists, policy makers, engineers, bankers, corporate executives, social scientists, philanthropists, journalists and statisticians for a day-long exploration of how technology is shaping -- or misshaping -- the American workplace.

Coming up with answers was not the goal: Cornell's belief was that searching for consensus in a one-day meeting would be futile. Initially, I wondered about the utility of that, given the gravity of the economic challenge facing the country. But it was a good decision. The range of views on what's happening was so wide -- and surprising -- that reaching realistic solutions would have been, well, unrealistic. Precisely because this kind of a meeting has been so rare, the meeting imposed the Chatham House Rule on attendees: we could talk afterwards about what was said, but not about who said it. (I later asked some of those who attended if I could quote them directly; almost all said yes.) If I had to sum up a fascinating day -- well, let's save that for the end, after you've seen the amazing diversity of views on the future of work.

Here's perhaps the fundamental question about what's going on in the American economy as it struggles to recover from the Great Recession: "How is this recovery different from other recoveries?" Or is it?

To put it in economese, is the persistently high level of unemployment a result of cyclical factors (the traditional ups and downs of economic growth) or structural factors (new game-changing technologies, dramatic shifts in the global economy)? The NewsHour has covered this debate several times, including economists duking it out in one recent instance.

From one decades-long leading student of the American economy came a succinct one-liner in favor of cyclicality: "This isn't a jobless economic recovery as everyone insists on calling it; it's simply just not yet a recovery."

In other words, as painful as the waiting certainly is, the economy will heal -- and once again, create jobs -- in time.

"Brace yourselves," countered Eric Brynjolfsson, from MIT's Sloan School, co-author of "Race Against the Machine," a much-talked-about recent book which argues that the introduction of new transformative technologies has only just begun, and that we're dangerously unable to perceive what's actually going to happen. (Brynjolffson was featured in a Making Sen$e broadcast story in 2011.) He added:

"Many of our intuitions about what's coming next are going to fail us. All the disruptions we've been talking about today about the past 10 years, the past 20 years -- as important as they've been and as hard-hitting as they've been for so many people -- are just a small glimmer of the much bigger disruptions that we think are in store for us in the next 10 and 20 years, at least the ones that are related to technology."

Princeton University economist Alan Blinder, who served in the 1990s as vice chairman of the Federal Reserve, took a more measured view. He believes that both cyclical problems and disruptive technological change are at play, along with the changing face of the global economy:

"In terms of the number of jobs, it looks like an awful lot of the problem is cyclical. That's the first problem.

"The second problem is the lagging average wage. Until a few decades ago, India, China, and the former Soviet Union were isolated and not really participating in the world economy. But now they have roughly doubled the world's labor force, in a couple of decades.

"What did they bring to the table? Capital? No. They had almost none. But they had a lot of labor. So, if you double the amount of world labor and you don't change the amount of world capital much, then loosely speaking, the returns to labor are going to go down while the returns to capital go up. And this is about to end. And it's not mainly about technology.

"But then there is the third problem: what's behind the trend toward greater wage inequality? The non-economist in me wants to think about institutions and social norms. Some of the increase in inequality has to stem from changing attitudes in our society. I just don't believe that it's only technology."

The Promise and Perils of a Machine that Can Make Anything

The role of automation in the decline of manufacturing jobs has been front-and-center since the end of the recession. (Well, since the Luddites in the 19th century, but let's move on.) Cornell University's Hod Lipson is one of the country's most prominent experts on the interplay of robotics, IT and manufacturing. Lipson's next book is titled, ominously, "The Promise and Perils of a Machine that Can Make Anything." I found his presentation both powerful and unsettling:

"Machines are better at learning than humans in many different areas. So now the question is, what will they learn and what's the end game?
"Are we talking about the future of jobs in the next five years, 10 years, 50 years or 100 years?

"If you're talking 100 years, there's no doubt in my mind that all jobs will be gone, including creative ones. And 100 years is not far in the future -- some of our children will be alive in 100 years."

Trained years ago as an engineer myself, I get the enthusiasm for technological solutions to manufacturing problems. But given the persistent levels of unemployment, I asked Lipson if the engineering profession didn't have to take a broader view. His answer was blunt -- but also open to the possibility of change:

"In a way, we cannot help ourselves. We try to automate every difficult task that we see. It is rooted in the fact that the mantra of engineering has always been to try to alleviate drudgery and increase productivity -- that was the good thing to do. That's what we still train our students to do.

"But what I'm hearing here is that maybe we should redirect our efforts, and try to solve a new kind of problem. I'm not sure what that problem is. But I'm sure that if you can define what the problem is that we need to solve, then we can start thinking about how to solve it, using the same engineering tools."

Thomas Kochan, the co-director of MIT's Institute for Work and Employment Research, jumped in on that point. Decades ago, MIT was one of the first engineering schools in the country to focus on the public policy implications of engineering innovations. (Full disclosure: I'm an MIT grad). Here's what he had to say:

"Instead of focusing on how do we drive labor out and how do we eliminate variability by standardizing everything, we need the engineering profession to think about the world's big problems, and then to understand that it's the interaction between skills, the way in which we organize our work, and the technology that really drives productivity.

"The engineering profession needs to catch up with the understanding of how technology can be enhancing to society, without just thinking about how it drives out labor, through innovations. I think if we focus more on enhancing human skills, we'd get a lot more societal benefit out of the next generation of technology."

Lipson and the other tech experts took some pointed, albeit well-mannered, heat from people worried that more efficient production is nearly always equated with eliminating human workers. As one participant put it: "optimistically inventing stuff" with too little thought for the social consequences. [...]

There is a lot more, but I can't excerpt the whole article. I can't say what is going to happen, but there is plenty food for thought here.
     

Austerity, Spending, and Economic Growth

Alex Castellanos says Europe hasn't really embraced austerity yet:

Could austerity be the right cure for Europe's hangover?

(CNN) -- I never imagined we would find a no-win question to displace the genre's champ, "Have you stopped beating your wife?" Now, there is contender: "Does austerity work?"

Fareed Zakaria tells us it doesn't, faulting it for Europe's constriction. The problem is not a borderless European financial system, unable to quarantine nations sick with public and private debt. Oh, no, Zakaria writes, "The larger failure, shared across Europe, has been too much austerity."

In the Washington Post, Ezra Klein notes unemployment is "skyrocketing" across Europe and he contends the fault lies in shrinking budget deficits brought by spending cuts and tax increases. Klein tells us this is what austerity looks like "and it can be expected to reduce economic growth."

As the UK slides into a double-dip recession, economist Paul Krugman blames David Cameron's austerity. Borrowing from John Maynard Keynes, he tells us, "The boom, not the slump, is the right time for austerity."

Never mind that spending in Britain is virtually unchanged and other nations in Europe are spending more. Neal Reynolds writes that "austerity," as practiced in Euro27 countries, has actually increased government spending from 46% to 51% of Europe's GDP from 2006 to 2010.

Greece, where rioters protest "austeros," increased its public sector expenditures from 45.2 % of GDP to 50.1% tin he same period. As the Richmond Times-Dispatch noted, in 2011, 23 of the EU's 27 nations jacked up their spending levels. This year 24 will. Apparently, it is not austerity itself that constricts economies. The mere thought of austerity is enough to choke the eurozone to death.

Austerity seems to be working just fine for the masters of the practice, the Germans: We are counting on them to bail out the entire eurozone.

[...]

On June 17, the world will come to an end, as it often does. Ripples from Europe's unraveling will begin traveling to America. Greece will have an election. Greeks will vote to make Germans work until they are 67 so they can retire at 50. They will vote to make someone else pay their bills, fund their holidays and support their benefits.

They will be lectured about this by an American president who asks his own nation to make China pay its bills, fund its holidays and support its benefits. We can only hope he does it from the Hellenic state of California, which has also attempted to outsmart austerity. Remarkably, it hasn't grown jobs, just debt. [...]

Those who complain the most about austerity, are the ones who won't practice it. And they are the ones who are in shit-street financially, wanting someone else to bail them out. The rest of the article explains perfectly why they won't get gain, can't get gain, without some austerity pain first, because they spent (and continue to spend) money they didn't (and still don't) have. Castellanos says that asking whether austerity works is like asking a drinker if sobriety works. Those who are on a binge, (be it spending or drinking) aren't likely to agree.


Austerity alone isn't the answer though, to get things moving again. Jeffery Miron, a senior fellow at the Cato Institute, offers this:

How to get economy growing fast

Cambridge, Massachusetts (CNN) -- In a recent discussion of what his administration might accomplish, Mitt Romney claimed that "by virtue of the policies that we put in place, we'd get the unemployment rate down to 6%, and perhaps a little lower," over a period of four years.

Is this goal attainable?

It is. Indeed, it is not that tough a task. If the United States avoids new growth-retarding policies, such as the tax hikes scheduled for January 1, the economy's natural adjustments will lower unemployment substantially. These include downward adjustments in wages, reallocation of job-seekers from slower to faster growing sectors and regions, reduced in-migration plus increased out-migration, and withdrawals from the labor force.

These adjustments do not always work quickly or for everyone (not every former construction worker can become a computer technician). But history suggests the adjustments do occur, as they have since the recession began. Over the next four years, they will continue to lower the unemployment rate, if not to 6%, at least near that territory.

The more important task for either presidential candidate is restoring the economy to its prerecession growth path. Real GDP has historically grown about 3% per year, and major downturns have been followed by strong recoveries. Within two to three years, therefore, output is typically "back where it would have been."

In this recession, the rapid recovery phase has so far been absent; real GDP is still well below where one would have predicted pre-2008, and with average growth under 3% since the recession ended, the gap grows larger every quarter.

So can Romney, or anyone, get us back to a higher growth rate? Yes. Here is a program that will restore U.S. economic performance: [...]

Miron goes on to list eight reforms that are needed, that make good sense. I suspect some Republicans may have a problem with #4, but the world is changing, including American demographics, and we're going to have to adapt to what IS.
     

Economic forcast: Gloomy?

But isn't the economy improving? Yes, some economic indicators are, but other indicators are showing something else:



A new recession seems inevitable

[...] ECRI is one of the more widely respected firms on economic recessions, as it has never been wrong when forecasting that a recession would start, or failed to predict a recession well before it was widely accepted.

Achuthan predicts the recession will happen even without a new shock to the economy, such as a spike in oil and gas prices or a Greek sovereign debt default sparking a financial meltdown. If those things occur, he says they will simply make an inevitable recession more painful.

In fact, Achuthan said data gathered since his September forecast only confirms his view that economic growth has slowed to such a degree that a downturn is now unavoidable, likely by late summer.

"Now that we have several months of definitive hard data, this is not a forecast," he said, pointing to key measures that don't receive as much attention from the public or many economists.

Specifically, he identifies annual growth in industrial production, real personal income and spending, as well as the year-over-year change in gross domestic product, a broad measure of the nation's economic activity. That GDP reading has been stuck between 1.5% and 1.6% growth for the last three quarters, far less encouraging that the rising quarterly GDP, which is more widely reported.

"Basically, growth has flatlined," he said.

Some might think that a new downturn would be a so-called double-dip recession, in that it comes before the economy has fully recovered from the jobs lost during the Great Recession. But Achuthan said if the economy falls into recession at this point, it would be a new recession, not a double dip, given the time that has passed since the formal end of the recession in 2009 and the economic growth since then.

He said improved consumer confidence and economists' stronger outlook are due to gains in jobs and stocks over the last six months.

The unemployment rate has fallen for five straight months, dropping to 8.3% in January compared to 9.1% in August. Filings for new jobless benefits have fallen to a nearly four-year low. And the Standard & Poor's 500 (SPX) index has gained 27% since an October low to reach the highest level since June 2008.

Even ECRI's own leading indicators have been showing steady improvement since October. But Achuthan said those readings are still recessionary.

He said the time it takes employers to increase staff means that job growth is a so-called lagging indicator, which reflects economic conditions in the past rather than pointing to future growth.

"Job growth always follows consumer spending growth, not the other way around," Achuthan said.

That doesn't necessarily mean the economy will start losing jobs again by this summer, when he expects the recession to start. He said hiring can continue in the early months of a downturn, but there will definitely be job losses ahead. [...]

Read the whole thing to see why. The worst part is, the obvious signs of a new recession may not start to manifest until after the November elections.
     

Jesus saves... the economy?

Yep. It's the DEMOGRAHICS that count. Here's an article that spells it out:

How will babies named Jesus save the economy?

[...] The currency of the future is babies, because babies grow up to be taxpaying workers. Let's do Demography 101, which is basically the study of baby-making. Demographers have a fancy term called "total fertility rate," which measures the average number of babies a woman has over her childbearing years.

The magic number you need to remember is 2.1. This is the average number of babies a country needs to remain at equilibrium. It makes sense, too. When a mother and father die, they need to be replaced by two babies, or else the population declines. A rich powerful country needs lots of babies to project geopolitical power and increase its productivity. If you won't multiply, who will fight your wars? Who will pay Social Security to support grandpa? Who do you think will start the next Facebook, Amazon or Google?

The U.S. total fertility rate is at 2.09, and at that level we just replace our population. That's not good. But wait a minute, why do we keep growing? Simple: immigration.

Our favorable immigration policy and liberal treatment of the millions of people working without legal documents means our population will grow from 312 million today to 439 million in 2050. Hispanic babies, 83 million of them, will account for 65% of that growth. This is where the total fertility rate comes into play again, 2.84 for Hispanics, but only 1.84 and trending much lower for non-Hispanic whites who will only add 4 million babies to the melting pot. Keep in mind that those Hispanic babies born here to Mitt Romney's "self-deportation" candidates are all red-blooded American citizens -- our future Navy SEALs, entrepreneurs, middle-class working Americans and maybe even a president.

Demography will shape the geopolitics of the two largest economies of the 21st century: the United States and the European Union. They will maintain their status as world powers principally through immigration. [...]

And the demographics don't only apply to economics, but to politics and elections as well. The demographics of the electorate is changing. Any political party that wants to remain relevant needs to recognize that.
     

Is it growth, or inflation?

Is job growth slow, because the economy isn't growing as much as they say it is?

Another view on why there is no robust job growth

[...] there's something else that almost nobody is considering: perhaps the economic recovery just isn't as strong as Washington thinks (which, incidentally, isn't very strong to begin with.)

Nobody, of course, wants to hear this. But let me make the case.

[...]

The December estimates put into the GDP are about as solid as a Jello mold.

Worse, according to economist John Williams, 3.44 percentage points of the annualized growth in the fourth quarter -- more than the total 3.2 percent reported -- came from a sudden, inexplicable decline in imports.

Without the reduction in imports GDP would have been down in the fourth quarter and we'd be hearing talk right now -- again -- about a possible double-dip recession!

The Commerce Dept. also attributed a lot of the gain in fourth quarter GDP to retail spending.

But we already know -- from a column I did during the holiday shopping season -- that much of the sales increase in December wasn't coming from a sudden burst in consumerism, but instead from rising prices on things like energy.

That isn't growth; it is inflation. And inflation is bad.

Despite all the inflation that you and I see in the real world, the Commerce Dept. barely noticed that prices were rising in its GDP calculations.

It used 0.3 percent as the annualized deflator in the GDP report when the consumer price index (the CPI, which itself understates inflation) is up 2.6 percent from a year earlier.

Let me explain it a different way.

Each point that inflation rises decreases the GDP by a point.

So, for instance, if the GDP deflator had simply stayed at the 2.0 percent reported in the third quarter the annualized GDP growth in the final three months of the year would have been an extremely modest 1.2 percent annualized, not 3.2 percent.

Countries get them selves into trouble when they publicize false economic data, whether the deceit is intentional or not. [...]

     

Renewal of Tax Cuts: What's at stake

How Congress' tax-cut decision may affect economy

On this, economists agree: Extending tax cuts passed under President George W. Bush for low- and middle-income people would strengthen the weak economy.

The question is what to do about the highest-paid 3 percent of taxpayers. Should Congress let their tax cuts expire at year's end as scheduled? Extend them for only a while? Or make them permanent?

It isn't just a debate over how much money high-income Americans should get to keep. It's about how much their tax cuts might aid the economy. And how much they'll affect the budget deficit years from now.

But first, consider what would happen next year if Congress let the tax cuts for everyone expire as scheduled. According to Moody's Analytics, the deficit would drop to $732 billion. That's well below the $1.3 trillion deficit for the budget year that ended Sept. 30.

At the same time, the economy would suffer, Moody's says: Growth would tail off to just 0.9 percent next year. That's scarcely more than a recessionary pace. And unemployment would average 10.7 percent next year.

That's because higher taxes would leave people with less money to spend. Businesses would be less inclined to hire. Economic growth would slide. Yet if Democrats and Republicans can't reach a deal during the post-election lame-duck session that began this month, taxes will rise across the board in January.

Republicans triumphant in the midterm elections insist that everyone, regardless of income, should continue to enjoy the tax cuts approved during George W. Bush's presidency. [...]

It goes on to give three options that could play out, and their probable consequences. It's a short but informative article, well worth the read.

Then there's this:

Thus Does the Economy Grow

[...] Here, then, are ten practical tips for elected Republican officials, who are torn between trying to govern as a majority party and trying to oppose President Obama’s agenda as a minority party.

[...]

Six. Don’t delink income-tax rates. The strategy we developed in 2001 and 2003 worked. Forced by reconciliation rules to sunset the tax cuts, we set them all to expire on the same day. President Bush reframed the top income-tax rates as small-business tax rates. This argument won the day in 2003 and 2010 and will win again as long as the expiration dates remain synchronized. Don’t fall for the trap of temporarily extending the top rates and permanently extending the others. This would guarantee future increases in the top rates.

Seven. Offer to help the president expand free trade and open investment. Rebuild the center-right free-trade coalition. The president will need to deliver a few Democrats to offset the protectionist Republicans (darn them). You can fight economic isolationism, raise American standards of living, help American allies in Latin America and Asia, cooperate with the president, and split congressional Democrats. That’s a five-part win.

[...]

Read all ten, they're good.
     

"shipping jobs overseas" argument is flawed

See the logic. Do the math:

Shipping out jobs
A myth pols find convenient

With campaign season comes predictable charges that Candidate X favors "tax breaks for corporations that ship US jobs overseas." It's a bogus claim.

With unemployment still stubbornly high, Americans are rightly worried about the economy. And politicians of both parties -- from President Obama on down -- have seized on US multinational companies as a convenient scapegoat.

The charge sounds logical: Under the US corporate tax code, US-based companies aren't taxed on profits that their affiliates abroad earn until those profits are returned here. Supposedly, this "tax break" gives firms an incentive to create jobs overseas rather than at home, so any candidate who doesn't want to impose higher taxes on those foreign operations is guilty of "shipping jobs overseas."

In fact, American companies have quite valid reasons beyond any tax advantage to establish overseas affiliates: That's how they reach foreign customers with US-branded goods and services.

Those affiliates allow US companies to sell services that can only be delivered where the customer lives (such as fast food and retail) or to customize their products, such as automobiles, to better reflect the taste of customers in foreign markets.

In 2008, US companies sold more than $6 trillion worth of goods and services through overseas affiliates -- three times what US companies exported from America. And, no, those affiliates aren't mainly "export platforms," set up to ship goods back to the United States: Almost 90 percent of what they produce abroad is sold abroad.

It's not about access to "cheap labor," either: More than three-quarters of outward US manufacturing investment goes to other rich, developed economies like Canada and the European Union. That's where they find the wealthy customers, skilled workers, open markets, efficient infrastructure and political stability to operate profitably.

Indeed, US manufacturing companies invest a modest $2 billion a year in China, compared to $30 billion a year in Europe.

Nor do jobs created by those investments come at the expense of American workers. In fact, the more workers US multinationals hire abroad, the more they tend to hire at their parent operations in America. Ramped up production at affiliates stimulates demand at home for managers, accountants, engineers and sales reps. It also stokes demand for the export of higher-end components and services from the US-based parent.

But the charge is worse yet -- because if Congress were to repeal the tax exemption for income earned abroad, it would kill American jobs. [...]

Read the rest and see how. The truth matters.
     

Which party is better at job growth?

How job growth looked before and after the Democrats took control of Congress

This is why we have 10% unemployment. The Democrats keep blaming George Bush and the Republicans for it, but it's congress that controls economic policy. And since it's the Democrats who've controlled congress since 2007, the unemployment we are seeing today is largely due to their policies and decision-making. The more power they got, the more employment dropped.
     

The "Jobless" Recovery. A Second "Dip"?

Recession May Be Over, but Joblessness Remains

The United States economy has lost more jobs than it has added since the recovery began over a year ago.

Yes, you read that correctly.

The downturn officially ended, and the recovery officially began, in June 2009, according to an announcement Monday by the official arbiter of economic turning points. Since that point, total output — the amount of goods and services produced by the United States — has increased, as have many other measures of economic activity.

[...]

The declaration of the recession’s end confirms what many suspected: The 2007-9 recession was not only the longest post-World War II recession, but also the deepest, in terms of both job losses and at least one measure of output declines.

The announcement also implies that any contraction that might lie ahead would be a separate and distinct recession, and one that the Obama administration could not claim to have inherited. While economists generally say such a double-dip recession seems unlikely, new monthly estimates of gross domestic product, released by two committee members, show that output shrank in May and June, the most recent months for which data are available. Output and other factors would have to shrink for a longer period of time before another contraction might be declared.

Even without a full-blown double dip in the economy, the recovery thus far has been so anemic that the job picture seems likely to stagnate, and perhaps even get worse, in the near future.

Many forecasters estimate that output needs to grow over the long run by about 2.5 percent to keep the unemployment rate, now at 9.6 percent, constant. The economy grew at an annual rate of just 1.6 percent in the second quarter of this year, and private forecasts indicate growth will not be much better in the third quarter. (The Business Cycle Dating Committee itself does not engage in forecasting.)

“The amount of unemployment we’ve already got and the slowness of recovery lead to predictions that we could have 9-plus percent unemployment even through the next presidential election,” said Robert J. Gordon, an economics professor at Northwestern University and a committee member.

“What’s really unique about this recession is the amount of unemployment in combination with the slowness of the recovery,” he said. “That’s just not happened before. We had a sharp recession followed by a sharp recovery in the 1980s. And in ’91 and ’01 we had slow recoveries, but those recessions were shallow recessions, so the slowness didn’t matter much.” [...]

The rest of the article compares this recession and recovery with ones that have occurred previously, and looks for explanations to account for the differences. Some of their findings are interesting, but the real question they should be asking is: "Why aren't employers hiring?" There ARE reasons. See the links below:

Why the "Recovery" is stalling

What happens when Tax Cuts Expire in 2011?

Obama's Anti-Business Policies Are Our Economic Katrina
     

We know how to recover the economy

We just have to get the government, which is sitting on our necks and strangling us, off of us and out of our way:

Restore Economic Liberty

[...] Reagan had succeeded in turning America’s ailing economy into a healthy and thriving one, and the leaders wanted to know how he did it. Reagan’s policies were defeating inflation and unemployment at a time when the rest of the world was still in recession. His key themes in answering them was to talk about how over taxation and burdensome government stifle the economy and individuals, and how economic freedom and limited government unleash the creativity and passion of the individual, allowing them to pursue their dreams and thrive. Reagan preached, and practiced, the old-time gospel of economic freedom.

Today, Americans are stifled by big government, smothered by over-regulation, and taxed to death. Our Founding Fathers who risked everything they had – their fortunes, their families, their lives – to secure freedom for us would not recognize our current economic reality as anything even close to the economic liberty they worked so hard to secure. Yes, we are endowed by our Creator with the right to "life, liberty and the pursuit of happiness". But the government formed to protect those rights now makes it awfully hard for Americans to see economic liberty anywhere and nearly impossible to pursue financial security and the happiness that comes with it.

It’s time to reclaim a bit of that old time religion. It’s time to secure economic liberty by cutting taxes, reducing regulations and shrinking the size of government. We’ve got to free individuals to use our God-given talents and imaginations to build a better life for ourselves and our children or we will eventually lose our liberty altogether. [...]

It goes on to say how we should do that, and ends with a great quote by Thomas Jefferson.

The economic truths Ronald Reagan spoke about are timeless. At this critical time when we desperately need to apply them, our current government is doing exactly the opposite. And the results will be exactly the opposite of prosperity. It's also why the recovery is stalling.

If this can still be turned around, we need to start this November by voting OUT the politicians who are promulgating this madness.
     

Why the "Recovery" is stalling

We need real job creation, but it isn't happening. Guess why:

Barack Obama: The great jobs killer

[...] It's time to call Obama what he is: The Great Jobs Killer. With his massive spending and tax hikes -- rewarding big government and big unions, while punishing taxpayers and business owners -- Obama has killed jobs, he has killed motivation to create new jobs, he has killed the motivation to invest in new businesses, or expand old ones. With all this killing, Obama should be given the top spot on the FBI's Most Wanted List.

Meanwhile, he has kept the union workers of GM and Chrysler employed (with taxpayer money). He has made sure that most government employee union members got their annual raises for sleeping on the job (with taxpayer money). He made sure that his voters got handouts mislabeled as "tax cuts" even though they never paid taxes (with taxpayer money). And he made sure that major campaign contributors collected billions off government stimulus (with taxpayer money).

As far as the taxpayers -- the people who actually take risks with our own money to create small businesses and jobs and pay most of the taxes -- we require protection under the Endangered Species Act.

[...]

I've polled all my friends who own small businesses -- many of them in the Internet and high-tech fields. They all agree that in this new Obama world of high business taxes, income taxes, payroll taxes, capital gains taxes, and workers compensation taxes, the key to success is to avoid employees. The only way to survive as a business owner today is by keeping the payroll very low and by hiring only independent contractors or part-time employees provided by temp agencies.

The days of jobs in the private sector with big salaries, full benefits, and pensions are over. We've all seen where those kinds of jobs get you as a business owner -- in Bankruptcy Court or surviving on government welfare like GM and Chrysler. Or in the case of government itself -- completely insolvent, but surviving by ripping off taxpayers and fraudulently running printing presses at the Fed all day and night to print money by the trillions.

Unfortunately, small businesses don't have the power to impose taxes or print money. So unlike government, we'll just have to cut employees and run lean and mean.

[...]

The days of believing the Obama propaganda about a jobs recovery are over. The trillion-dollar corporate handouts (neatly named "stimulus") may have kept big business in the money for the past 18 months, and artificially propped up the stock market, but small business is the real canary in the coal mine.

My small business-owning friends aren't creating one job. Not one. They are shedding jobs. They are learning to do more with fewer employees. They are creating high-tech businesses that don't need employees. And many business owners are making plans to leave the country. In a high-tech world where businesses can be run from anywhere, Obama has a problem. His one-trick pony -- raise taxes, raise taxes, raising taxes -- is chasing away the business owners he desperately needs to pay his bills.

So who is going to pay Obama's taxes? Not his voters. They want government to pay them. Who is going to create Obama's jobs? Not his voters -- they've never created a job in their lives. [...]

But what can you expect from an Administration that is openly hostile to the private sector? Who's leader has referred to it in his books as "the enemy"? What can you expect from an administration whose members keep insisting that "Capitalism has failed". They are doing their best to make sure that it does, so they can replace it with something else.

And it's having repercussions globally:

With the US trapped in depression, this really is starting to feel like 1932

[...] Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes. [...]

And yet, government seems to be doing exactly opposite of what they need to be doing. How much time is there left to turn it around?
     

What happens when Tax Cuts Expire in 2011?

Tax rates will rise sharply. Businesses are already planning for it now, and it will affect the state of the economy and the recovery. But how much so? Here are two perspectives:

Tax Hikes and the 2011 Economic Collapse
Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market.

[...] On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession. [...]

The article goes on to compare what is happening now, with what Ronald Reagan did in 1981, to pull us out of a recession. The current Administration is doing exactly the opposite, and the results will be exactly the opposite too. Many in this Administration have been claiming that "capitalism is dead"; and now it seems they are doing their best to make sure it happens.


Tax cuts actually increase tax revenue, because as businesses prosper, there are more businesses and employees paying taxes. The Democrat leadership knows this too, but it doesn't fit with their agenda of attacking the private sector and expanding government power and control. Many of them would even like to overburden and collapse our current system of government and economics, so they can then replace it with something else. And unfortunately, the Democrat's understanding of economics in general, tends to be very poor. We are seeing the proof of that now.

Even so, I don't want to be strictly partisan about this, I want to be realistic. Is the prediction of "economic collapse" in 2011 too grim? Or at least, too soon? Perhaps.

Will Higher Tax Rates in 2011 Cause an Economic Collapse?

[...] I am reluctant to endorse Art’s prediction that the “economy will collapse,” since even good economists are lousy forecasters. But we certainly will see a large degree of tax planning, which will lead to less revenue than expected next year. And the higher tax rates will inhibit growth, though it is impossible to predict whether this means 2.1 percent growth instead of 2.3 percent growth, for instance, or 0.5 percent growth instead of 0.6 percent growth. [...]

You don't need to be a rocket scientist to understand that if taxes rise sharply, businesses will make decisions based on that, and the cost of higher taxes will be passed on to the consumer in the form of higher prices.

In our own business, we are buying new equipment and making repairs and improvements this year, because we are anticipating the costs of these things to rise next year. Therefore, we won't be spending much next year. I would have to assume that other business people who are paying attention to what is happening are going to do the same.

Even if we elect a better congress in November, it will take time to reverse the many bad trends that have already been put into motion. I don't see a quick fix for any of this. We are going to have muddle through. If that is the best we can do, then we must do it. The situation is what it is, but it can be improved, even if it has to get worse for a time, before it can get better.


Also see:

Has US Currency already "collapsed"?

What would a U.S. currency collapse look like?

     

Congressman Paul Ryan has Answers

Tax Collecting for Obama’s Welfare State

[...] In theory, it’s possible that Democrats could have passed a health bill that actually made durable reforms in the health entitlement programs that would have improved the medium and long-term budget outlook. But that’s not what they passed. No, new law makes the health entitlement much worse by adding tens of millions of people to Medicaid and a new insurance-subsidy program offered to persons getting insurance in the so-called “exchanges.” CBO expects the cost of these entitlement expansions to reach $216 billion in 2019. Further, the cost would escalate every year thereafter at a very rapid rate, just as Medicare and Medicaid have for more than four decades.

The Democrats respond by saying they also slowed the cost growth in Medicare. But, for starters, their cuts in Medicare do not cover the full cost of their entitlement expansions. That’s why they also raised taxes — by more than a half trillion dollars over ten years. Under the legislation President Obama just signed, federal health entitlement spending goes up, not down. Moreover, the cuts they do impose in Medicare do not in any way constitute “reform” of the program. For the most part, the big savings comes from paying less to hospitals, clinics, nursing homes, and others for the services they provide. In other words, it’s a price-control system.

These kinds of cuts have been passed by Congress many times before. They have never worked to permanently slow the pace of rising costs because they don’t do anything to make the delivery of health services any more efficient than it is today. Over time, arbitrary price controls imposed by the government always drive out willing suppliers of services and lead to access problems. That’s not entitlement reform. It’s government-enforced rationing of care.

To slow the pace of rising costs without harming the quality of American medicine will require restructuring the tax code and entitlement programs to promote a vibrant marketplace in the health sector, with strong price competition and consumer choice. That’s the vision Congressman Paul Ryan has laid out. And it’s both genuine health reform and entitlement reform too. [...]

Indeed! Here is a link to Ryan's website, where you can learn all the details:

A Roadmap for America's Future

Congressman Ryan is one of the best things the GOP has to offer right now:

Paul Ryan - a man to watch #12

He has answers and ideas that can actually work.