How's that working out for you?

I was wondering when we'd here about this in some kind of anniversary "Where is he now?" thing. But it turns out that it has only taken three months for the idealistic Dan Price and his credit card processing company, Gravity Payments, to reap the "benefits" of over-paying staff members. Excerpt:

Gravity Payments financial manager Maisey McMaster didn’t pull any punches in her critique of her former boss:

“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” she said.

Another former employee, Grant Moran, echoed a similar sentiment:

“Now the people who were just clocking in and out were making the same as me,” he said. “It shackles high performers to less motivated team members.”

Dan Price’s own brother Lucas, who owns 30 percent of the company, even filed a lawsuit, seeking millions of dollars in damages.

According to Dan Price, his experiment in wage distribution has made him ill-equipped to handle it:

“We don’t have a margin of error to pay those legal fees,” he said.

The company has also lost customers, who were displeased with the decision. Price finally relented, admitting that, perhaps, raising the minimum wage at his company to $70,000 wasn’t the best idea:

“There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs,” he said.

I skipped the part about his reducing his "salary" from $1 million to $70,000 because that is a silly red herring of a thing to say about a business owner. But these problems shouldn't surprise anyone who understands economics. When I first heard about this on Limbaugh's show my initial thought was "$70,000? Why not $80,000?? What a cheapskate."

If the world was perfect, these kinds of company problems would never happen. But if the world was perfect we wouldn't need credit card processing either, would we.

Tea Party Pope?

I report, you decide. This is an excerpt from a recent Fortune article about Pope Francis.

The pope’s strategy for addressing both spending and pension issues is to gradually shrink the Vatican workforce through attrition and raise more money to maintain the benefits. In February of 2014 he imposed a hiring freeze and also stopped formerly generous overtime payments. The plan is to move existing employees from overstaffed congregations to growth areas, such as financial management, without replacing those who depart.

You have to read through a lot of yadda-yadda to get to this which, to me, is the meat. Workforce reduction is the only way to meaningfully reform a budget. If you think in terms of centuries like the Catholic Church does, attrition is the best way to do it. Cutting overtime is a great idea to since it saves money right away AND can make people quit who need their cushy lifestyle. They should grub for it in the "non-Church" sector.

This is what I wish would happen in our government at all levels. Due to automation, we should need less employees than we used to in places like the IRS and the welfare/unemployment offices. And that's just the tip of the iceberg.

Takeaway quote from the Pope on money:

Pope Francis has a complex but pragmatic view of money. “Money is useful to carry out many things, for works to support humanity,” he has said. “But when your heart is attached to it, it destroys you.”

Classic virtue of detachment, put simply. Not sure what is "complex" about that.

Sad and ironic

Talk about unintended consequences. From a good article about the anti-GMO fear-mongering:

Moms aren’t hearing the whole story and should be aware of the enormous costs associated with these regulations. For example, a dozen states are considering bills to label GM food. That may sound harmless, but labeling mandates will lead to fewer food choices for consumers and will harm the very businesses many of the anti-GMO activists claim to defend: the small farmer and upstart food producer. GMO labeling might be doable for large food manufacturers, but for businesses just starting out, medium-sized food companies, and small-scale farmers, the costs of these new regulations could be crushing. That’s right: Anti-GMO labeling laws will help Big Food by quashing the competition.

Wonderful Precision of the Miraculous ObamaCare Signup Number

And polls continue to show the public still hates the law. So despite their cute and loud cheerleaders, their team bites. I hope they lose big.

One-size-fits-all doesn't lower prices

Here's a sobering article about reality in the wake of Obamacare's utopian promises. 400,000 people get cancellation notices from their health insurers. Here's my favorite excerpt:

As a replacement, Regence BlueShield is offering her a plan for $79 more a month with a deductible twice as large as what she pays now, but which limits her potential out-of-pocket costs to $6,250 a year, including the deductible.

“My impression was...there would be a lot more choice, driving some of the rates down,” said Malean, who does not believe she is eligible for a subsidy.

Regence spokeswoman Rachelle Cunningham said the new plans offer consumers broader benefits, which “in many cases translate into higher costs.”

Why would you think there would be a lot more choice with greater regulations? These companies have to offer more benefits under the regulations of the Obamacare law. A consumer must by a high-end plan. The only reason I can keep my plan for the present is that it is a grandfathered plan, i.e., I've had it since long before 2010. But I am paying much more for it, trust me.

Liberals love one-size-fits-all. It's a corollary to their fetish about equality. "Spread the misery around" should be their motto.

Great Idea: Max Tax

Alternate MAXIMUM Tax? I like it. No, I love it! Here's an excerpt from John H. Cochrane's excellent piece:

I like half, but the principle matters more than the number. Once the country settles on a number, each of us gets to add up everything we pay to government at every level: federal income taxes, yes, but also payroll (Social Security, Medicare, etc.) taxes, state, city and county taxes, estate taxes, property taxes, sales taxes, payroll taxes and unemployment insurance for nannies, household workers, or other employees, excise taxes, real-estate transfer taxes, and so on and on, right down to your vehicle stickers and those annoying extra taxes on your airline tickets.

On April 15, once this total hits the alternative maximum tax, you've done your bit and federal income taxes can take no more. You compute federal income taxes as usual, but then you get to reduce the "tax due" that the total is less than the alternative maximum.

The zombies howl that the top federal tax bracket is still "only" 40%. Surely "the rich" can contribute a bit more? They forget that the economic damage of taxes comes from the total tax bite, not just the federal income tax.

So who's being "Binary"?

I was surfing around looking at anti-Sirico stuff after reading this jab by The Grumpy Mailman Blog when I came across this recent review by Elias Crim over at the American (cough) Conservative (cough, cough). Excerpt:

Culturally speaking, Fr. Sirico gradually became an adherent of the Reagan revolution, a movement that seemed to find its vindication in 1989, only to ossify intellectually in the years following. Even without an Evil Empire, the Reaganites seemed only able to think in a binary fashion: capitalism vs. socialism (or anything else). Even as supply-side economics became a matter of Republican institutional dogma, the historical record showed a growing government and increasing income inequality. Reagan’s vision of widespread employee ownership went unfulfilled, and for most members of the American middle class, the unintended consequence of economically neoliberal policies was a road to serfdom that by 2008 felt more like a superhighway. Wage slavery, with no path to ownership, or welfare: take your pick.

The author asserts that Reaganites are being "binary" when they point out that you either have some sort system based on economic freedom (like capitalism) or some sort of system based on central control (like socialism). But he goes on to state that Reaganism leads to either "Wage slavery, with no path to ownership, or welfare: take your pick." That sounds thoroughly binary to me, although I prefer to use the term false dichotomy to describe this particular fallacious view of reality. Sorry, but I'm not a "wage slave", whatever that is precisely, and I'm not on welfare, thank you very much. I left my job as an IT Professional (not a slave) and started an incorporated consultancy.

Furthermore, I have many friends who are neither slaves nor freeloaders. Sure, I know people who dislike their job. But most of them are able to change employers--and often do--and the ones who can't are most often constrained by external factors, not by whip-cracking capitalist villains in larger offices.

Finally, I'm not sure whether or not Mr. Crim considers those who pay him to write copy as his "slave-masters", but I'm pretty sure he is not a welfare case. The tag at the end of his review states that he "is at work on a new web zine to be called Solidarity Hall." I have to say that makes him sound very much like someone taking advantage of the freedom we have in our country to be an entrepreneur.

So his own existence itself is evidence against his own assertion, ironically. The more these people attempt to promote an imaginary Third Way, the more they just become dogmatists touting their own contrarian ideology.

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What Subsidiarity is all about

MITT ROMNEY RELEASES WEEKLY PODCAST ON PRESIDENT OBAMA'S FAILED ECONOMIC RECORD

FOR IMMEDIATE RELEASE
September 8, 2012

Boston, MA - Mitt Romney today released his weekly podcast on President Obama's failed economic record and broken promises. The podcast is available each week on mittromney.com.

To Listen To Mitt Romney's Weekly Podcast, Click Here: http://mi.tt/OZkKSv

Hello, this is Mitt Romney.

And this week, Democrats met in Charlotte to re-nominate Barack Obama for President. They tried to recapture the spirit of 2008, when then-candidate Obama stood in front of Greek columns and made a lot of promises about how he'd make life better for Americans.

He was elected, but things did not get better. Under President Obama, we've endured the worst economic recovery since the Great Depression.

This week, after another Democrat convention filled with nice words and a lot of promises, Friday's jobs report once again brought this administration back down to earth. The unemployment rate has now been above 8 percent for 43 straight months.

Nearly 47 million Americans are on food stamps - an all-time record high, and 15 million more Americans than when President Obama took office.

Nearly 60 percent of the jobs that have been created after the recession was officially over are low-wage jobs, and they pay less than $14 an hour.

And our national debt recently reached a staggering $16 trillion, an increase of almost $6 trillion under President Obama.

Americans are hurting, they're paying a heavy toll for these years of drift and disappointment, trying hard to hang on for a brighter day. But when we looked to Charlotte this week for signs of hope from the party in power, what did we see?

We saw a party completely out of ideas. We didn't hear one new idea for throwing a lifeline to the struggling middle class. Instead, we heard a stubborn defense of policies that haven't worked.

We saw a president who once promised to unite us, double-down on the politics of fear and division. Four years ago, he said, "If you don't have a record to run on, then you paint your opponent as someone people should run from." That was Candidate Obama describing the strategy that is now at the heart of President Obama's campaign.

A couple days ago, the President was asked to grade his economic performance.

Words like "disappointing" and "dismal" come to mind. But instead, he chose "incomplete" - because that's the best he can do as he asks the American people for a second term.

President Obama is hoping you'll let him advance with an "incomplete." But on November 6th, Americans should hold him accountable. I'm asking you to vote for the ticket that's offering real solutions for the middle class, with a plan to create 12 million jobs over the next four years.

A weak economy and unprecedented debt may be the best President Obama can do - but it is not the best America can do. I commit to you that I will be the president this moment demands. Join our cause, and help us deliver a better future for all Americans this November.

I'm Mitt Romney, and thanks for listening.

 

Whose views better represent Catholicism?

Everyone is bloviating about how Catholic Paul Ryan really is and how much of Ayn Rand's philosophy he buys into. As usual, Bill Donahue has the most clear and succinct analysis. And, it seems to me, the most Catholic.

Catholic League president Bill Donohue comments on the two Catholic vice presidential candidates:

In many respects, the Catholic community today is divided into pro-life and social justice camps. That is unfortunate, and while this division can be overstated, it remains true that most Catholic activists sit in either one camp or the other; cross-over Catholics are a rare breed.

Paul Ryan represents the pro-life wing, and Joe Biden represents the social justice wing. Indeed, both exemplify the differences, and not just on the issue of abortion. For example, Ryan’s idea of freedom of choice commits him to supporting school vouchers; Biden’s notion of choice commits him to abortion rights. Ryan is opposed to reinventing the institution of marriage; Biden wants to expand marriage to include two people of the same sex.

The Catholic Church opposes abortion and gay marriage. On both of these issues, Biden disagrees with the Church. Biden’s defenders, e.g., Catholics who identify with social justice concerns, argue that Ryan’s budgetary prescriptions make him the dissident Catholic; his ideas are said to hurt the poor. This assumes, however, that there is a clear Catholic teaching on what constitutes the best means to conquer poverty. There isn’t. For instance, fidelity to the Church’s preferential option for the poor can be realized by making a serious case to raise taxes, or to lower them. In effect, both Biden and Ryan can plausibly maintain that he is a champion of the poor. But only one, Ryan, can be identified as the champion of the unborn.

Not all policy issues are equal. Abortion is regarded by the Catholic Church as “intrinsically evil.” Moreover, the bishops’ conference has explicitly endorsed a constitutional amendment defining marriage as a union between a man and a woman. This puts Biden at a decisive disadvantage in making the case that he better represents Catholic teachings.

The key sentence: "This assumes, however, that there is a clear Catholic teaching on what constitutes the best means to conquer poverty. There isn’t." This needs to be repeated over and over again until Catholics get it through their heads that fiscal conservatism is completely compatible with a preferential option for the poor. If the economy contracts then rich people sit on their cash. The poor are hurt worst. This is self-evident; look around if you doubt. And while you're at it, compare the charitable giving of Republicans with that of Democrats.

The Government's Small Contribution To Success

There are two tragicomic aspects of Obama's "You Didn't Build That" quip which stand out to me. Firstly, the misrepresentation of the successful and their supposed ignorance of all the others in the past and present who have aided their success. I consider myself one of these successful folks and I feel that I am someone who took initiative, not full credit, with regard to my success. It's a both-and kind of proposition, not an either-or. You have to have clients, vendors and people who believe in you to make it in business. But you also have to make the leap of faith yourself and establish all those relationships on which you rely. No one can do that for you. Certainly no one can do anything in a vacuum, let alone breathe. But society isn't a vacuum, no one believes it is, and the opportunities which exist in the world have to be discovered and acted upon first by the mind of an individual or individuals, not mindless government policy, in order to build anything productive and worthwhile.

This leads me to the second aspect which is apparent to me: the relatively tiny contribution that the government makes toward the endeavor of any enterprise. Maybe Obama should read I, Pencil. Because then he might realize that people who believe in the power of the free market already see that their efforts are small in relation to something. However it is not the government role in their success at which they stare in wonder, but the role of the invisible hand of the free market. In the case of my business, I would be nowhere in my business without Dell, HP, IBM, Apple, Palm, Adobe, Microsoft, Cisco, AT&T and numerous other companies and people who work for them. And this is not to mention countless other people who built everything from the chair on which I'm sitting and the floor boards on which the chair is rolling to the car I drive and the glasses I have to wear so I don't wreck the car.

This whole exchange is troubling because it feeds the envy of the masses of Obama's angry supporters by ridiculing society's producers and those who have taken initiative. Fortunately he's really only knocking down rhetorical straw men since I believe most sensible people see the normal temperament of the very successful differently, from the singer blowing kisses to the audience and the football player kneeling and pointing toward Heaven in the end-zone to the myriad of business owners incessantly thanking customers for their business . In fact, I'd wager that if we have any picture in our mind of the arrogant self-made human it is the smug politician epitomized by Barack Obama giving one of his tedious, overlong speeches. Hopefully those people will come out in droves and vote for Mitt Romney in November.

Competence, not "fairness"

The Economist gets it precisely. Excerpt:

In that case, the election will revolve not around fairness, but competence. Mr Romney is fond of saying that Mr Obama has no idea how the economy works and how jobs are created. The way the Obama campaign talks about Bain Capital suggests that his criticism is correct. Mr Obama, as noted above, likes to insinuate that there is a conflict between pursuing profits and creating jobs. In the long run, however, in a competitive economy, that is nonsense. Only profitable firms can sustain any jobs, and the more profitable they are, the more money they have to invest in new ventures with new workers. Mr Obama is guilty not of rhetorical excess but of economic muddle. That is far more worrying.

The Like Total Unfairness of Darn Rich People

My feeble attempts at humor are nothing, NOTHING, compared to this awesomeness from Frank J. Fleming. Excerpt:

See, the wealthiest 1 percent prevent us from getting ahead because any time we improve our incomes, we spend more on businesses and services, and guess who that helps? The 1 percent. Getting ahead just isn’t worth the knowledge that the rich are getting richer.

There’s no point in working hard to try to become one of the 1 percent ourselves, because what’s the chance of that happening? One in 100? Who would play a lottery with odds that bad?

No, instead of working hard, the 99 percent can only sit and protest on Wall Street until the wealthiest 1 percent are torn down.

Here’s the thing: They’re the 1 percent, but we’re the 99 percent. Their wealth may be much more than ours, but 99 is a much bigger number than one. So we should just gang up and take their money.

When one person takes the property of another, that’s tyranny, but when lots of people get together and do it, that’s democracy. So we should legislate that the 1 percent no longer get to keep that vast wealth and must instead distribute it among the rest of us. (I should get the largest portion because it was my idea.)

Read the whole thing, it's worth it.

Bansai economy?

Timothy Lee shows how Obama's economy has been the worst for growth. Excerpt:

The economy proceeded to grow 1.7% in the third quarter of 2009, and reached 3.8% in the fourth quarter before peaking at 3.9% in the first quarter of 2010. But then, a new decline began. Economic growth slowed to 3.8% in the second quarter of 2010, then declined to 2.5% for the third quarter, and then 2.3% for the final quarter. The first quarter of 2011 saw growth of just 0.4%, and the most recent quarter came in at just 1.0%.

In other words, economic growth, paltry as it was under Obama, reached its 3.9% peak over one year ago and then began a new decline. But Obama and his apologists ask us to believe that he deserves credit for the upswing that began before he entered the White House, yet the ensuing decline that continues to this day is somehow his predecessor’s fault?

Maybe Obama is trying to make the United States economy into a kind of bansai. A little snip here via regulation, a little snip there via NLRB bullying whenever part of the economy threatens to start growing. Liberals hate sprawling growth and love tight control. They are like the weird control freak mom who doesn't want her baby boy to grow up. The hard-working realists in this country deserve better.

These "bumps" vote

Surprise, Surprise

"Stimulus to Cost $43 Billion More than Estimated". Things always cost more than expected when you're spending money which belongs to other people.

Obama and congressional Democrats enacted the law, arguing it would provide a quick jolt to the economy. Republicans opposed the law, saying it would increase deficits and wasn't designed to work quickly.

So who was right? It doesn't matter now, does it. The money is already committed. The people who enacted it don't care that they were wrong; they got what they wanted. Do you really think any of the big spenders look at this and say, "Oh, dear, we shall have to try to do better next time!"?

Ed Lazear's Excellent Piece on Jobs and Unemployment

Every paragraph in this article is great and I find myself mumbling "uh, yeah..." at the end of each. But I'll excerpt my two favorites.

One final fact is worth noting. Healthy labor markets are characterized not only by high levels of hiring, but also by high levels of separations. Although it is true that the importance of quits relative to layoffs rises during good times, even the number of layoffs was greater in the strong labor market of 2006-07 than it is now. No one would suggest that layoffs are good for workers, but what is good is a fluid labor market, where workers and firms constantly seek to produce better products and to find more efficient ways to produce them. High labor market churn is a characteristic of a strong economy. It generally means that workers are moving to better jobs in growing sectors that pay higher wages and away from declining sectors that pay lower wages.

Allowing maximum flexibility encourages fluidity and means that employers are willing to hire workers who lose their jobs elsewhere. Many European countries have restricted mobility by imposing severance pay penalties on employers that lay workers off. More than reducing layoffs, these rigidities make employers reluctant to hire because of the penalties that they will later incur if a layoff is necessary. Such restrictions are in large part responsible for the chronically high rates of unemployment that have been prevalent in many European countries.

The impact of the practice of making it difficult to lay people off on hiring cannot be understated. Businesses are already making a big commitment when they hire a person, and making it more difficult to let people go will raise the scrutiny given to applicants at the hiring end. Another instance of unintended consequences released by do-gooders and politicians who use attacks on business to score easy points with their base. And you're not going to solve the problem by scolding businesses for not hiring either.

Charles Gasparino: Obama Building Zero Confidence

Who knows is Obama will win again. There are too many factors and too much time between now and November 2012. Charles Gasparino explains why it won't be a cake walk for the big B.O. Excerpt:

Obama's building zero confidence about the future, too. He's back to insisting on the end of the Bush tax rates after next year -- promising higher taxes on "millionaires and billionaires," meaning small businesses and families that make $250,000. And his plan to supposedly cut $4 trillion in spending over the next 12 years doesn't add up -- everyone knows it's just a pose, so he can pretend to be responsible as he fights Republican efforts to make real cuts.

As his no-drill policies help push up energy prices, his only answer is more politics -- bashing the oil companies and threatening special tax hikes on them, as if that wouldn't push up prices. For all this and more, the economy will be an albatross for Obama all the way to November 2012. He might yet win -- the weak Republican field is itself fumbling to come up with a growth agenda. But don't start the re-election parties just yet.

Bustle in your hedgerow

Here's how Thomas Sowell's article "Politics vs Gold" begins:

One of the many slick tricks of the Obama administration was to insert a provision in the massive Obamacare legislation regulating people who sell gold. This had nothing to do with medical care but everything to do with sneaking in an extension of the government's power over gold, in a bill too big for most people to read.

Did you know that? I didn't, but I can't say I'm surprised. Obamacare also messes with the college loan market. It picks up later on the same theme:

Whether gold is a good investment for individuals, and whether the gold standard is the right system for a country, are much more complicated questions than can be answered here. But what is clear is that the Obama administration sees people's freedom to buy and sell gold as something that can limit what the government can do.

Indeed, freedom in general cramps the government's style. Those on the left may not be against freedom in general. But, at every turn, they find the freedoms granted by the Constitution of the United States hampering the left's agenda of imposing their superior wisdom and virtue on the rest of us.

I'm telling you, my stash has seriously increased in value, but I ain't sellin' any yet. IMO it's still a bargain at $1295 an ounce.

The Keynesian Fallacy Explained Simply

The NCPA publishes short synopses in a "Daily Policy Digest" like this latest one from author Richard McKenzie's disembowelment of Keynes.

The basic Keynesian stimulus argument goes something like this: If the federal government engages in deficit spending during a recession, the added government expenditures (unaccompanied by tax increases) will boost "aggregate demand." Greater federal spending on a road, for instance, will create jobs for construction workers, who can then spend their additional income on, say, bread. Bakers now will have more to spend on, say, cars and so on, says Richard B. McKenzie, a professor in the Merage School of Business at the University of California, Irvine.

National income stimulated by the initial government road project can grow by some multiple of the expenditure, Keynes' theory says. A stimulus package (and budget deficit) of $1 trillion would morph into a minimum of $1.5 trillion in additional national income -- maybe even into $4 trillion or $10 trillion.

But if it sounds too good to be true, it is, says McKenzie.

* If such income growth were possible, the country would be awash in prosperity, given that the federal government increased the national debt by $1.88 trillion in fiscal 2009 and could run deficits of $1.6 trillion and $1.3 trillion in fiscal 2010 and 2011, respectively.
* Between 2012 and 2015 it will add at least another $3 trillion to the national debt.

As economist Milton Friedman observed, when the government engages in deficit spending, it must borrow the extra funds from someone who could have spent them on private-sector projects. Thus, an increase in government spending could be totally offset by a decrease in private spending, as lendable funds are diverted from private to government uses. The net effect can be no net increase in aggregate demand -- and no multiplier effect. Indeed, with the inevitable waste in government stimulus projects, the multiplier effect could as easily be negative as positive, says McKenzie.

Source: Richard B. McKenzie, "John Maynard Keynes, R.I.P.," Freeman, October 2010.

Or to phrase it in Wizard of OZ language, "Pay no attention to the theft victim behind the curtain."