Minimum Wage, or Mother Teresa Makes $4/hr at BK

This is from a long, far-ranging discussion of economics and politics a friend and I had on Facebook.  He has a BA in Business Administration, hence the reference at least once to his business degree, and presumed cluefulness about how businesses operate and how business owners think. This jumps into the middle, and I'd rather just post this as-is, so I'll paraphrase his points leading up to this (I didn't get his permission to quote him, and I want to go ahead and post this).  We wandered over to minimum wage via government regulation (which in turn stemmed from a discussion of the incestuous relationship between business and government); I'd said that most regulations are obsolete and hurt business, he pointed out that yes, some are obsolete, but others are there to protect people, and voila, minimum wage is an example of protecting workers.  My response:

You and I are coming from the minimum wage question from 2 completely different angles. You believe in (federal) government protection of workers. I believe in the (federal) government sticking to the Constitution... and minimum wage isn't in the Constitution, even under the commerce clause (what Joe Shmoe is paid in Wichita, KS has nothing to do with a different franchise in Kenosha, WI selling their burgers). If it was a state minimum wage, it'd be a different thing... although I'd still be against it, the "it's not a role of government" argument wouldn't apply. 

However, setting that argument aside, I'm still coming at it from the side of "personal responsibility". You have 3 options as a burger flipper: either find an employer who will pay you what you think a burger flipper is worth at whatever quality of burger flipper you are (I'd assume shoddy, since you feel you need some kind of protectionism to get paid a 'decent' wage, but I may be wrong and you may just be ignorant and unaware that you can switch jobs without your world shattering), be the best damn burger flipper you can be and justify that raise you're asking for (what everyone making over minimum wage does when they want/need to make more money), or learn a skilled trade or get a higher education in something and stop being a burger flipper and start being something like a carpenter or architect. 

Again, I'm not talking out my ass, or in theoretical terms about things I only vaguely observe from some mystical ivory tower somewhere... I have the t-shirt. In high school and through college (and after college for a couple years, because of the recession) I worked really crappy jobs. Food Lion and Walmart didn't pay minimum wage (even McDonald's doesn't), but it was bloody close. After I moved out, I didn't make enough most of the time to cover my gas and such (I was in college by the time I moved out)... so I did the best job I could do and got raises every year. When I could, I got promotions. And when I found a job that paid me well and needed my skill set, I changed jobs and came to work at my current job. I didn't ask the government to make anyone pay me more, or wish minimum wage was $12/hr... I made myself a better employee and justified the money I was getting, and went above and beyond so raises and promotions would be justified as well. 

And since you have a BA, I assume you know as well as I do that businesses aren't charities-- they aren't there to give workers the money they 'want', or deserve for being a special snowflake human being. Businesses exist to make money, and as a side effect pay people to make money for the business... and that pay is in proportion to a person's value as an employee. If Mother Teresa sucks at flipping burgers, then dang it, Mother Teresa deserves minimum wage... or to be fired. It doesn't matter to Burger King that she's Mother flippin' Teresa, man.  She's a terrible employee, and her pay reflects that.

Also worth noting is the point he'd made earlier about employees being replaced by automation if they get too expensive to employ.  This is a very valid point that most minimum wage workers and people who advocate for them don't seem to understand.  Again, people own businesses to make themselves money.  If they can't make enough money, something's got to give.  And when there's no more non-employee overhead to cut, they need to start cutting people.  As a general rule of thumb, it costs about twice an employee's gross pay to employ them (given employer shares of FICA, certain states' income tax, worker's comp, benefits, etc.)... so that $10k/yr employee actually costs the business owner around $20k.  I'd imagine Obamacare penalties and/or post-obamacare insurance premiums have upped that 2:1 ratio.  So if it costs less than $20k/yr to set up an automated ordering kiosk and a burger flipping robot, guess what a business owner is going to do?

And then there's the economic effects of raising the minimum wage.  Less than 10% of workers make minimum wage, so this would have very little direct positive effect on people.  However, in short order, it would have great negative effects on a large number of people.  Artificially raising the wages of one segment of the population increases cost for certain businesses, they raise their prices, which raises costs for other businesses, and so on down the line until prices have increased across the board, and we're right back where we were.  This is how raising the minimum wage is a driver of inflation.

In this country, like most countries in the world, we have a fiat currency; that is, a currency whose value is not linked to a commodity (like gold, silver, or salt), but is based on the trust that the country issuing the currency can pay its bills.  By its nature, fiat currencies are subject to almost constant inflation through devaluation of the currency.  Especially when the country in question is engaging in... let's say non-optimal monetary and economic practices.  In our case, budget deficits, a high national debt, and things like quantitative easing.  It's part of the reason everyone's parents have stories of "I remember when gas was $0.35!" (for my generation's parents) or "I remember when gas was $0.98!" (the story I get to tell if/when I have kids and they're old enough to be regaled with tales of 'the good old days').  Another factor in inflation is artificially raising wages-- you've arbitrarily decided that the dollar is worth less than it is, so people need more of them.  And by deciding that one segment of the population needs more, less valuable dollars, everyone else needs to have and spend more, less valuable dollars to keep up with the sudden devaluation of a dollar for a certain segment of the population.  This is the same reason why gold at one point was always linked to $X/oz... back when a dollar bill was a gold certificate for a dollar's worth of gold, not a Federal Reserve Note; but now gold is roughly $1300/oz, and fluctuates daily based on the value of the dollar.  Gold, like most commodities (same holds true for services) have a given absolute value... this becomes evident in a barter economy.  A loaf of bread provides 2 meals for your family, so what's it worth to you to eat 2 meals?  This is what you pay for a loaf of bread.  A loaf of bread used to be worth a penny (c. 1896).  Today, a loaf of bread is worth roughly $2.  The loaf of bread still has an absolute value of 2 meals for a family... but the dollar has devalued to 1/200th of its original value (compared to the 1896 [gold-backed] dollar), relative to the value of a loaf of bread.  So, with a rough idea of how inflation works in mind, it makes sense that raising the minimum wage (or even having one, I would argue) is detrimental to the economy as a whole, and you end up chasing your own tail.  What happens when inflation catches right back up to you again?  The cycle of artificial inflation begins again, and the minimum wage is raised, devaluing the currency and forcing business costs to go up, rippling down the supply chain, raising costs of end-consumer goods, etc.  We aren't going to rein in fiat-based inflation any time soon, but we can stop wage-induced inflation by not raising the minimum wage.

Obamacare

Yesterday The Huffington Post ran a story extolling the virtues of Obamacare once again, and crowing in victory that a whopping 4 million people, according to the White House, signed up. http://www.huffingtonpost.com/2014/02/25/obamacare-enrollment_n_4855954.html  Oh frabjous day, calloo callay!

There's a problem here (as indicated by my sarcastic 'Jabberwocky' quote)-- 40 million needed to sign up by now for the program to be solvent. I thought medicare was bad, at least it started out solvent, and just got screwed up later.  Obamacare is starting off in the red.  Not good.  Also, is that enrollment in the website, or actual insurance purchases? The White House has been releasing healthcare.gov account signup figures as 'obamacare enrollment' (aka insurance purchases), not the actual insurance purchases. Just setting up a login on healthcare.gov and throwing a policy in your cart doesn't do anyone any good, neither me as a taxpayer, nor them as a prospective insurance purchaser.  That's like Amazon saying that 500 people bought a given vacuum cleaner, when only 4 people actually finished checking out, and 496 people looked at it, put it in the cart, checked their bank balance, and left the site after realizing they can't afford it.

This article from Forbes discusses some of the root problems with Obamacare:

http://www.forbes.com/sites/realspin/2013/08/21/obamacare-is-really-really-bad-for-you-especially-if-youre-young/ 
Note the use of the word 'risk' throughout the article. Insurance has never been about health care pre-payment-- originally, the way it was supposed to work was, you were basically betting with the insurance company that you wouldn't get sick (with a lower premium if that was a better bet, or a higher one if it was a worse bet), and if you lost that bet, they'd cover your care. Over the years, it's turned into a sort of pre-pay scheme, but was still linked to risk. This takes away the risk, without making insurance a true pre-payment plan. That's just one of the fundamental flaws of Obamacare.


A better way of fixing healthcare/health insurance (BTW, I hate how those 2 completely different concepts have been conflated) is through tort reform (aka medical malpractice (and generally, civil lawsuit) reform), and allowing insurance companies to truly compete across state lines. Right now, there's NO competition between insurance companies across state lines (as an example, SC might have awesome, dirt-cheap policies, but I live in NC so I'm stuck with the NC-only offerings), so there's a bit of a monopoly being forced by the states. Monopoly = lower quality products for higher prices.... economics 101. Competition = higher quality products for lower prices.

With tort reform, you'd be limited in how much you could get in a malpractice case relative to the cost of care (either fixing the problem, and/or ongoing care after the doctor screwed up), which would mean doctors have to carry FAR less malpractice insurance than they currently do. Right now, doctors have to carry millions of dollars in malpractice insurance, which ups their cost to treat patients, which means they have to charge more to treat patients so they can cover their costs. You'd probably be shocked to know how little most doctors (especially private practice doctors) actually keep as take-home pay. Plus, a lot of the cost of care through extra tests and such is due to the fear of a malpractice lawsuit-- so you're getting charged extra for pointless CYA.

Oh, and speaking of paperwork, another thing that drives up health care costs (and therefore directly impacts health insurance costs) is using insurance to pay for everything. Next time you go to the doctor, look at how many staff members are sitting behind the counter filling out paperwork. Doctors have to pay their salaries, and odds are there's more hours spent doing paperwork for filing against private insurance/medicare/medicaid than there are spent treating patients. Time is money. So your $200 doctor visit (or $200/mo insurance premium) is paying that small army of medical assistants to fill out paperwork. Obamacare has actually made that worse by adding tens of thousands of new billing codes that people have to be trained on, and spend time looking up when they fill out that paperwork. BTW, I paid out of pocket for years, and it was cheaper for me to do that than to have insurance. Most offices charge around $70 for cash patients. Generic meds cost $4-15 usually. For the average healthy person, it's nothing to pay that (even working for Walmart like I did) once every couple years. But back to my point, if we reformed the insurance market (through more competition, not top-down government control) and reformed the civil legal system, costs could be brought down to the point that people go back to paying for your average "I have a sinus infection" doctor's visit, and just carry catastrophic and hospitalization (what health insurance originally was) for when you get backed over by a bus.  One other thing that would lower costs is overhauling medical billing and coding.  That's a whole specialization within the medical field in and of itself, and for good reason-- there's tens, if not hundreds, of thousands of billing codes for insurance.  Those billing codes have to be filed just right for insurance to pay properly... picking between emergency blood work, checkup blood work, and office visit blood work (for example) is the difference between insurance paying (for someone who hasn't hit their deductible yet) 0%, 100%, and 60% respectively.  For a $400 blood panel, that's a huge difference.  But that adds more cost, in personnel (or hiring a medical billing and coding company), time, and the added time, cost, and frustration of refiling insurance multiple times until you get the code right.

One thing everyone gets wrong about pre-existing conditions: before Obamacare, preexisting conditions wouldn't keep you from getting insurance. From day 1 of your insurance policy, everything would be covered that wasn't directly related to the condition. After a 6-18 month wait (depending on the terms of the policy) the preexisting condition would be covered. Your premium would be higher, but if you're already sick, you're at a higher risk of getting sick, so again, in a risk-based system a higher premium makes sense. You could have a lower premium by opting to exclude the condition altogether. Obamacare just eliminates the waiting period, and again, takes 'risk' out of the equation for the premium cost calculation.  What about children born with a health problem, you may ask. Well, if the parents don't switch insurance plans, they're always covered. If they do, just like an older child or adult with a chronic illness... pay out of pocket for 6-18mo.  "But what about dealing with how expensive neonatal or pediatric hospital care is, if they're stuck paying out of pocket?" Well, for astronomical medical bills, there is/was already a private solution-- charity care that covers the bills, or charity hospitals that don't charge.  This is especially true of children's hospitals, for that reason.  If you want to go the government route, there's always SCHIP and Medicaid, which children automatically qualify for, regardless of the parents' income and insurance status.  "What about when the kids hit the lifetime cap, and Medicaid/SCHIP don't cover all costs?"  This is why, as is the case for anything else you buy, you shop around. Don't buy crappy insurance if the terms screw you. And employer-provided insurance is not always your best deal.  In fact, buying your own insurance has the advantage of being job-independent.

There is so much wrong with Obamacare, I don't think it can be fixed.  It's not just 'buggy'.  It's fundamentally flawed, and doesn't solve any problems while creating more.

Black Friday

Originally published 11/29/13.


Taking a break from history and politics, and delving into economics and society a bit here.  Why do people put up with Black Friday?

We’ve all seen the sales flyers and commercials– cut your holiday short, or get up at some God forsaken time in the morning, and save 20-50% off everything in the store!  Why should we buy into this crap?  Why not stay home, enjoy your holiday with your family, and take advantage of the many other sales throughout the Christmas shopping season?  It’s not like tomorrow is the only day of the year that the sweater you want to buy for little Susie or the blender you want to buy Grandma are going to be on sale.  But it’s the only day you’re going to have to stand in line for 2 hours, after getting up at 04:00 to get to the store at 05:00 and then literally fighting your way through the crowds, to get that sweater or blender.

Why aren’t people angry that they’re being charged more and more every year throughout the year on these goods that are being sold for some ‘ridiculously’ low price for part of a quarter each year?  These stores are not losing money on these sales.  So they’re either pricing everything so it’s lower than their normal price, but still brings in a nice profit, or they’re sticking it to us throughout the year to make up that major percentage they’re losing for a few hours, a day, or a week.  No one focuses on that, even today with pay stagnating or dropping, taxes going up, and prices going up– everyone just jumps on that big sale so they can get little Johnny his Xbox and dirt bike for Christmas.  Why not drop your prices throughout the year, if you can sell so much more product for a lower price, retail stores?  It seems to me you’re verging on pricing yourselves out of the market the rest of the year.  You’re not cutting your own throats to make these sales, but you’re cutting ours 10 months out of the year either because you can, or because you need to make up for that small loss to kick off your Christmas shopping season.  Sorry, Walmart, Target, Best Buy, Old Navy, Belk, etc., I refuse to play your game.  I’ll either buy things at the time and place I feel like buying them on some other, less crowded day, or I and my family will do without.  I understand making a profit, and the fact that the more successful a business is, the more money it brings in for its owners and employees, but playing games with your customers and putting a burden on us (either to catch that ‘awesome’ sale or to even afford your products) cuts into your profits.

That brings me to the people who do participate in this nonsense.  Is it worth not hearing your kid whine, or being ‘the best aunt ever’, to leave your family early on Thanksgiving to grab a nap, then go camp out on some store’s sidewalk until midnight to get that doll?  Is it worth fighting people, either just shoving through the crowds, or even worse stooping to actually punching some poor shopper in the face or trampling someone, just to get that video game your kid’s been whining about since it was previewed at E3?  How far have we fallen as a society that this is acceptable behaviour?  No material item is worth acting like an enraged, stampeding animal to me.  And don’t give me that crap about it not being about the item itself, but the joy it brings the recipient of the gift.  That smile on Christmas morning is not worth knowing that I acted like I have no dignity nor common decency just to get that present.  Even if you don’t assault someone to get that present, just knowing that you buy into the crass consumerism that has become Christmas should make you feel sad.

Christmas is not about giving big, expensive, flashy presents to everyone.  It’s about family, and if you’re Christian, it’s about the birth of Christ.  I’m not Christian, but I still celebrate Christmas– as a time for gathering together with family and friends, sharing what you can (even if it’s just some food and your companionship for a few hours), being generous with what you have even if it’s very little materially, and trying to be the best person you can and seeing the good in others even if it’s just for a day or two.  Both as a child and now as an  adult, I’ve done without quite a bit.  Some Christmases were quite lean as a kid, and as an adult my fiance and I have only celebrated 1 out of the last 3 Christmases by exchanging gifts, and this will probably be another gift-free Christmas.  He had some Christmases without a whole lot of presents under the tree, too.  But it didn’t kill us not to get that new bike the year we asked for it, but to have to wait for our birthdays or the next Christmas.  In fact, I think it made us better people for not having everything handed to us, and learning that sometimes you have to make do or do without.  I’m not saying not to buy presents at all, just weigh whether the present is worth the trouble.

Bengazi

Originally published 11/06/13, for reference.


It’s been almost 14 months since the 9/11/12 attack on our consulate in Bengazi, Libya, and we’ve only learned a little more in the last 14 months than we did in the first 14 days. We all know the timeline, for a refresher read http://www.theblaze.com/stories/2013/09/11/timeline-of-terror-benghazi-one-year-later/ or http://www.cnn.com/2013/08/06/politics/benghazi-attack-timeline/ , although the stories conflict.  The Blaze jives with most of the other stories you’ll find online; CNN jives better with the Administration’s rhetoric.

As for why the Bengazi attack happened, there’s 3 credible stories going around.  One could be right, more than one could be right, we don’t know– the administration won’t discuss it, and everything is being done to cover it up including CIA personnel being silenced and threatened, key members of the administration stepping down so that, since they’re not in public office anymore, they can plead the 5th in any hearings, etc.

First: It could’ve been incompetence, compounded with political CYA.  Ever since Bin Laden was killed, the rhetoric coming from the Obama administration is that the War on Terrorism is all but over, “Al Qaeda is on the run”, nothing to worry about.  Sunshine and rainbows, there will be peace in the Middle East any day now.  Beefing up security at the consulate would’ve been a sign that there’s something to worry about.  A timely evacuation of personnel and/or rushing in military personnel to fight the attackers would’ve been seen as a sign that all is not well in one of the bright, shining Arab Spring countries.  So, Stevens, Smith, Woods, and Doherty were hung out to dry so Obama wouldn’t lose face.  I guess the administration thought the lies and coverups would work, and we’d all forget about Bengazi in a couple days, or a month at most.

Second: It might have been a coverup for the CIA gun running op going on in Bengazi.  The gist of the op was, buy up any of Gaddafi’s weapons that were any good, buy back our own weapons that we’d given to the Libyans to fight Gaddafi, and send those weapons via Al Qaeda to Syria to help the rebels there.  Problem is, that was completely illegal.  Not even just shady like Iran-Contra– flat-out illegal.  I’m not sure if it’s been substantiated by anyone or not, but that meeting with the Turkish diplomat (and other, similar meetings) was supposedly about working out deals to funnel weapons through the Turks– tighter relationship with an ally, more accountable channel for the weapons to travel, things like that.  But, Stevens also supposedly had a report on the op that he had written up and was going to send to the State Department the next morning.  That report went missing or was destroyed in the attack, and Stevens is now permanently silenced.

The third theory comes from the UN report on the attack, based on the State Department’s Accountability Review Board’s report.  According to those reports, the attack was tied to the Egyptian protests… but not over a stupid movie trailer.  These were Muslim Brotherhood and Al Qaeda members, who trained under Muhammad Jamal and were members of his network, who were staging attacks and protests to try to force our hand to release Omar Abdel-Rahman (nicknamed the ‘blind sheik’) who was responsible for the ’93 World Trade Center bombing, and is currently in a US prison.  Remember, Muslim Brotherhood means Morsi, our guy in Egypt, which would explain why the attackers were yelling “Don’t shoot!  Morsi sent us!” (in Egyptian-accented Arabic) as they were busting in and running around the compound… and might explain why we were so hesitant to intervene.  After all, Morsi was the good guy in Egypt, and Morsi sent them, so they must be ok, right?  Heh.  A further link to Morsi is, one of the foreign policy issues Morsi pushed during and after his election was freeing the Blind Sheik; and for a week before the Bengazi attack, Morsi had been pushing again for the release of Rahman.  So if this report is true, Morsi sent some of his people to either kill or kidnap Stevens, to force us into giving up a terrorist he and his people want to see free.

So, we have 3 likely, semi-substantiated theories on what went down the night of September 11th, 2012, but in all this time, no answers.  Why has no one come out and spoken the truth?  Hmm?  Why, Mr. Obama?  Why, Mrs. Clinton?  Why, Mr. Panetta?  Is it too embarrassing, either because it made Obama’s “we have Al Qaeda on the run” statement a lie, or because Morsi is not the good guy we made him out to be?  Was it on purpose, to cover up illegal activities happening in that area?  Why will no one tell us?

It’s been over a year.  We, the American people, who actually run this country, need and deserve to know the truth.

Battering Rams and Jackboots, Oh My!

The militarization of police in this country has gotten to a ridiculous extreme.  I first noticed it in ’06 when the story broke about a Cape Fear Community College student in Wilmington, NC who had his (unlocked) door beaten in by a SWAT team with a battering ram, and was shot in the head and chest by a deputy who confused his fellow officers’ ruckus with the battering ram for gunfire coming from inside the apartment.  All over a student who got beaten and robbed (2 PS3′s were stolen).  There was bad information from the county’s informant, who claimed everything from the student was a gang member to him being armed to the teeth.  As far as I can tell, no one has proven to this day that the victim and a friend even committed the crime.

In just 7 years, it seems to have gotten worse and worse.  Now we have police departments buying MRAPs from the Pentagon, SWAT teams being called out for domestic disputes, and police departments borrowing Predator drones for everything from cattle disputes (ND police borrowed one from DHS to help arrest a family that wouldn’t give up 6 cows that wandered onto their farm) to tracking armed suspects (Christopher Dorner, among others).  Everyday cops are now carrying AR-15s and semi-auto AK-47s, or even worse, M-16s and actual full-auto AK-47s (the true assault rifles).

Why are cops now arming up like this is downtown Kabul?  Supposedly because police are outgunned.  Yet less than one-eighth of one percent of crimes (including shootouts with cops) are committed with military-grade weapons.  And that has held true since it was first studied in 1991.  When did all this start?  Back in the late 60′s, in LA, as a result of the Watts Riots.  It took a few years for the idea to gain any traction, but in 1969 LA had the first SWAT team.  SWAT teams really became popular in the 70′s when Nixon declared the War on Drugs, and SWAT teams became even more heavily armed and ubiquitous in the 80′s due, again, to the War on Drugs, because under Reagan it was ramped up into high gear.  Now, you DHS feeding every police department in the country all the money for military gear any department could want, and the Pentagon helping, all to fight the War on Terrorism.  Not even getting into the fact that Wars on Nebulous Things never work (the War on Poverty has just hurt and stagnated the poor, the War on Drugs has done nothing except bolster organized crime (plus now 58% of Americans are in favour of legalizing marijuana)… so why is the War on Terrorism going to be any different?), but again, why do we need to fight guys in weed fields or trucks full of coke wielding AR-15′s with standard 10- or 30-round magazines, or old Savage shotguns with 5-round tube mags, or 9mm Glocks with 15- or 33-round mags, with tanks, drones, and grenades?  Mr. Drug Dealer’s Glock isn’t any better than Mr. Cop’s Glock.  If Mr. Cop is better trained than Mr. Drug Dealer, he should be a better shot and better able to handle his weapon in case of malfunctions anyway.

Which is another point: training.  If Deputy Long (the deputy in the story at the beginning of this blog) had had proper training, a) he wouldn’t have confused the bang of a battering ram for the sound of gunfire, and b) he probably wouldn’t have been twitchy enough to pull the trigger.  Do your own search on SWAT raids, or especially arrests performed by SWAT or heavily-armed cops, and see how many end badly (ie someone, usually the arrestee, dying).  Also note that none of the DHS grants that give money to buy military equipment give money for training.  As we see with stories of people who go out, buy a gun, and just leave it in the night-stand, then end up injured/killed by their own weapon, you need to train with a weapon to properly use it and be comfortable with it.  In the heat of the moment, with a potential perceived threat in front of you is not the time to suddenly get cozy with your gun (or tank, or whatever).  That’s when you make mistakes, because your trigger finger’s at its itchiest (fight-or-flight, it’s a basic fact), and handling unfamiliar equipment that both makes you nervous with its unfamiliarity and makes you feel invincible because of its power just greatly exacerbates the potential and extent of those mistakes.   So if we’re going to continue essentially putting troops on our streets, proper training is a must.

I would agree with the argument that police need these military weapons taken away from them altogether.  The question is, how?  In researching for this post, I came across a Yahoo article that argued for the Federal government stepping in and banning military-grade weapons for police forces.  No.  Top-down government is never the answer.  If we’re going to take the jackboots off the thugs, the solution is a bottom-up one.  Get involved in your local government.  Elect mayors, city councils, county commissioners (all these by whatever your local names for them are), and sheriffs who will fight the growing militarization of your city and county police.  Elect state senators and representatives who will stand against militarizing your state police.  And vote for federal senators, representatives, and presidents who will defund the DHS grants that give money to those lower-level police forces to buy military weapons and vehicles from the Pentagon.

Where Things Went Wrong Pt. 1

I’ve got some heavy stuff on my mind that I feel the need to share, especially in the face of revisionist history.  I’ll start with where things really started going wrong in this country, diverging to an extreme degree from the Constitution and heading inexorably to where we are now.  Not counting Lincoln and his illegal war on the CSA (a huge deal, but I might touch on that later, not now), things started really going off the rails with the Progressive Era.  Specifically, Teddy Roosevelt and Woodrow Wilson.
What does everyone think about when I say the name Teddy Roosevelt?  War hero (Rough Riders), trust-buster, conservationist, and of course, teddy bears.  Not big government guy, nor massive expansion of federal powers.  What about Woodrow Wilson?  WWI, League of Nations,  income tax.  His criticisms of the constitution, which he swore to uphold, and the declaration of independence, along with his massive attacks on civil liberties and domestic spying programs, are largely forgotten by history.   Both presidents held Lincoln in high esteem as one of the greatest presidents in the history of our nation, largely because of the power he collected to himself at the expense of the states and people.  Oops, I said I wouldn’t talk about Lincoln.  Oh well.  He deserves his own post, and I’ve already dedicated this one to T. Roosevelt and Wilson, so that’s it for Lincoln at this time.

Despite being from 2 different political parties (TR was a Republican, Wilson a Democrat) they shared a similar view.  Basically, in the name of helping the people by controlling them from a central authority, the federal government should have ultimate authority over the US, its states, businesses, and citizens.  Teddy Roosevelt wrapped his message up in a much more paternalistic, charismatic, friendly facade than Wilson did, but it boiled down to the same thing.  Remember kids, the ‘progress’ in Progressive means progress towards subsuming the individual as an insignificant part of the state.
Reminds me of Bush and Obama– ‘Compassionate Conservative’ leading into ‘Progressive power-grabbing Liberal’.  Or, ‘Progressive Lite’ and ‘Progressive Full-Flavor’.

Teddy Roosevelt pushed for more government control of the US economy.   As we’ve seen in recent years with subsidies and incentives, government fails at picking winners and losers.  Yet this is exactly what TR did when he enforced the Sherman Antitrust Act.  He also set price limits on the railroads, leading to the decline of rail travel in this country, and ultimately to the government takeover of Amtrak.  He also passed the Pure Food and Drug Act, despite there being no need.  Snake oil cures were actually relatively rare, and about as popular as they are today.  As for bad and tainted food, most supposed cases thrown around started as propaganda by the unions; ‘The Jungle’ by Upton Sinclair and how highly regarded that book is as a ‘portrait of the meat packing industry at the turn of the century’ illustrates my point perfectly.  It was a work of fiction, and was a pro-union propaganda piece to push for more and more powerful unions to step in in factories (and by extension, all jobs).  Yet people then, and people now, think it’s a reflection of the reality in those days.  This quote on civil service explains his view of government power quite well:

“We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary.” – Theodore Roosevelt, “THE NEW NATIONALISM”. Osawatomie, Kansas, August 31, 1910

As far as TR as a good ol’ conservationist, well, not so much.  Land had been well cared for in private hands in this country until he came along and created the National Forestry Service under the Department of the Interior.  Sounds all well and good… except this is the government.  The same entity that has brought us the DMV, DOT, Dept. of Education (and thereby destroyed education in this country), Obamacare, etc.  Plus, cattle ranchers used their political clout to get grazing rights for their herds on federal land.  And to keep competing ranchers from raising good cattle, they’d destroy the lands with the herds so nothing was left for the next herd.  Not their problem.  So yeah, the conservationist movement was a real winning idea from the start.

Teddy Roosevelt also started the real, major push for the income tax (which had been ruled unconstitutional previously).  It finally passed, and was signed into law under Wilson
If Roosevelt felt the government wasn’t doing enough, and believed the Constitution was open to interpretation, Wilson was downright disdainful of the Constitution and felt that the government had to become a nanny state.  He rejected the limited powers set out in the Constitution, and was disdainful of the natural law set out in the Declaration of Independence.  His theory of government was based heavily upon European fascism.

His push to get us into WWI was to get his foot in the door for massive government intrusions into our every day lives.  He purposely got US ships sunk, ignored warnings from the German government to stay away from the blockade of the British Isles, all to get us into the war.  Once in the war, he set up a domestic spying scheme that would rival anything today.  Mail was read by the nation’s postmasters, and censored if it disagreed with the war or the government.  The press was censored.  Neighbours spied on neighbours, and the Justice Department jailed and prosecuted tens of thousands of Americans under Wilson’s Sedition Act.  A whole department of the government was created for war and domestic propaganda, the committee of Public Information.

Wilson also continued Roosevelt’s government takeover of the economy.  Under Wilson’s War Industries Board, all industries in the US were taken over to produce for the war effort, and by extension, for the government.

Wilson also gave us the Federal Reserve, which in turn was at least partially responsible for the Crash of ’29 (and subsequent Great Depression), the recessions of the 70′s, the Savings and Loan crisis of the late 80′s and the subsequent recession, and the Housing Crash in ’07.

Even if not all these presidents’ policies stuck, they created precedent that future presidents took full advantage of.  A reporter was recently investigated under Wilson’s Espionage Act.  The conservation movement is still going, and has even morphed and grown, spawning things like the EPA and Greenpeace.  Privacy, private industry, and our Constitutional rights get stomped on every day, and that started in large part with Wilson and T. Roosevelt.

That Ceiling...

Ok, I’m putting a history post on hold to comment on the debt ceiling.  So let me dive right in here…

First, some definitions, since I know some people don’t understand federal finances, especially with all the hype surrounding this stuff.

Budget deficit: any budgeted spending above the amount taken in by revenues for a single year.  Just like in a household budget, if you spend more than you bring in, you have a deficit.

National debt: the amount owed by the government at any given time.  This is the debt built up from years of deficits, by borrowing to cover those deficits, etc.  In a household, this would be how much your account is overdrawn, the balance on your credit card to cover things you couldn’t afford but paid for anyway, balance on loans you took out for that same purpose, money you might owe friends and/or family, etc.

Debt ceiling: from investopedia: “The maximum amount of monies the United States can borrow. The debt ceiling was created under the Second Liberty Bond Act of 1917, putting a “ceiling” on the amount of bonds the United States can issue. As of the end of July, 2011 the debt ceiling was set at $14.3 trillion.”  If you think of national debt as credit card debt, this is the federal equivalent of your credit card limit.

A quick note on the debt ceiling: it’s possibly unconstitutional due to section 4 of the 14th amendment.  “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”  So… you can’t limit the debt, you can’t question paying it, if the government owes it, it’s owed.  However, Obama has stated he refuses to invoke that clause to end the debt ceiling battle and ‘avert default’.

However,  not raising the debt ceiling does not mean we will definitely default on our debts.  What it means is, we have to stop borrowing our way out of debt.  We can pay what we owe– 70% of incoming government revenues service our debt (interest and principal).  The government is not going to stop collecting taxes.  What the government will have to stop doing is borrowing money from one source to pay another.  What do us private citizens do when we max out our credit cards, and run out of credit with any other creditors we could turn to?  We start cutting back to the bare necessities, and pay our debts with any money we have left after buying the minimum to get by.  We stop taking vacations every holiday weekend.  We stop buying sirloin steaks, and buy chuck steaks, or even sausage and ramen.  We stop buying new clothes every season.

Yes, this means the government will have to look long and hard at places to cut.  Different types of spending will need to be given different priorities.  You have mandatory spending, and discretionary spending.  Servicing the debt, Medicare,  Social Security, and government pensions are mandatory spending.  Those get higher priority when it comes time to cut back on spending.  Discretionary spending covers defense spending, space exploration, other R&D, the FBI, etc.  Those would get lower priority, and spending in those areas would have to be more careful and efficient.

So, assuming Obama, Reid, and Co. don’t purposely decide to allow the US to default, we’re not going to.  We always have paid our creditors, we always will, we just have to put off ‘shoe shopping’ (figuratively speaking) and vacations (literally and figuratively) until our bills are paid and our debt’s under control.  Just like every household across America does.