Archives for November 2011

Obama Claus

Occupy L.A.: City looks weak letting protesters stay, critics say

From LA Times:

As the effort to evict Occupy L.A. campers drags on, some critics say the standoff is hurting the city’s credibility.

The Los Angeles Police Department had set early Monday morning as the eviction deadline. But officials have not yet moved in to forcibly remove the tents and campers.

Stuart Waldman, president of the Valley Industry and Commerce Assn., said L.A. leaders lost credibility by failing to enforce an announced 12:01 a.m. Monday closure of the City Hall park.

“By not sticking to the 12:01 deadline, they’re essentially saying, ‘You need to leave by this time, but it’s OK if you don’t,'” he said. “There need to be consequences.”

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Dispute over Assembly budget records headed to court

From Sac Bee:

Assemblyman Anthony Portantino was mad about money, not records.

But his spat with Assembly Speaker John A. Pérez has sparked a rare fight over public access to legislative records, launched by The Bee and Los Angeles Times, in Sacramento Superior Court.

Hundreds of pages of documents have been filed in a case that could help define the limits of the 36-year-old Legislative Open Records Act.

At the heart of the dispute are budgets for individual Assembly members, any changes made to them by Pérez, and monthly projections about whether lawmakers are exceeding those budgets.

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Rethinking Budget Trigger Unlikely, Says Speaker

From KQED News:

Assembly Speaker John Perez isn’t ruling it out — never say never, one supposes — but nonetheless says that talk of the Legislature stopping, or even just rejiggering, the budget’s automatic spending cuts isn’t likely to go anywhere.

“I don’t know of another approach that has greater support than the triggers that we already voted on,” said Perez in comments to reporters after today’s long and contentious meeting of the regents of the University of California.

The exact depth of the so-called “trigger” cuts won’t be known for another two weeks, when Governor Jerry Brown’s budget team releases its state economic and revenue forecast. You’ll remember that the budget Brown signed into law in late June contained language that identified almost $2.5 billion in new spending cuts if revenue predictions dropped by more than $2 billion.

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Herman Cain to reassess whether to stay in GOP race

From LA Times:

Herman Cain, rocked by another allegation of infidelity, reportedly told senior advisors that he is considering ending his bid for president.

According to a transcript provided by the National Review Online, which listened in on a conference call between Cain and his top aides, Cain denied “unequivocally” an Atlanta woman’s claim that the two had engaged in a 13-year affair. He instead described it as a “friendship relationship,” and said he was helping her financially.

“That being said, obviously, this is cause for reassessment,” he said, according to the report. “We have to do an assessment as to whether or not this is going to create too much of a cloud, in some people’s minds, as to whether or not they would be able to support us going forth,” Cain said.

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Poll: Californians evenly split on Occupy movement

From Oakland Tribune:

California voters are almost evenly split, largely along ideological lines, over whether they identify with the Occupy movement, according to a new Field Poll.

The poll found 46 percent of California’s voting public identifies a lot or some with the Occupy movement, while 49 percent declare not much identification with it. But while voters are closely divided in their identification with the movement, a 58 percent to 32 percent majority say they agree with the protests’ underlying reason. The pollsters didn’t provide those it surveyed with a description of that reason.

“What I guess I was expecting to see were big differences by age, by income class, and they’re not there,” Field Poll Director Mark DiCamillo said Tuesday morning. “There are modest differences by income, little difference by age, but really, what’s driving identification is your political orientation.”

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A Quick Look at the GOP Field

From Townhall:

The GOP presidential nomination process is a roller-coaster ride — sometimes uplifting, other times discouraging, but we press forward.

President Obama and his agenda are unspeakably disastrous for the nation, so this election matters more than any in my lifetime. The national debt clock is ticking faster than Obama’s heart beats for big government, and his re-election would guarantee virtual national bankruptcy. That’s why the grass-roots tea party phenomenon sprouted, and it’s why there is so much scrutiny of the GOP candidates.

Every month or so, a new front-runner emerges in this volatile race. We’ve gone from Sarah Palin (in theory) to Donald Trump (for some, anyway) to Tim Pawlenty (sort of) to Michele Bachmann to Rick Perry to Herman Cain to Newt Gingrich, with Mitt Romney persistently vying with the “generic Republican” as the first choice of an unenthusiastic, default plurality. Throughout, some have hoped in vain that Palin, Mitch Daniels, Chris Christie or Paul Ryan would agree to be drafted.

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Occupy Wall Street Crowd Blind to Benefits of Capitalism

Whenever I watch media coverage of another Occupy Wall Street event I am reminded of an exchange between Jewish protesters in the 1979 Monte Python movie Life of Brian. One of the protesters asks another what the Romans have brought to the area and the conversation goes like this:

Question: All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?
Answer: Brought peace?
Response: Oh, peace – shut up!

The point is that the Roman institutions brought a good deal to the area that was being overlooked by the protesters. The Wall Street protesters, in their hatred of capitalism, overlook things including the fact that over the last 100 years capitalism has reduced poverty more and increased life expectancy more than in the 100,000 years prior.

Every semester I ask my students: “What would you rather be? King of England in 1263 or you?” Every student would rather be themself. They enjoy using their iPhone, indoor plumbing, central heating, refrigerators and electric lighting. All of these things are available to the average person in America today and none of them were available to the aristocracy when the West operated under the feudal system.

How is it that for thousands of years mankind made very little progress in increasing the standard of living and yet today half of the goods and services you use in the next week did not exist when I was born? It wasn’t that there was some change in the DNA such that we got smarter. The Greeks knew how to make a steam engine 3,000 years ago and never made one. The difference is in how we organize our economic system. The advent of market capitalism in the mid 18th century made all of the difference.

We need not just rely on historical data. Look at cross-section evidence. I try another experiment with my students. I tell them they are about to be born and they can choose whatever country in the world they would like to be born in. The only caveat is they will be the poorest person in that country. Every student picks a country that is primarily organized in a market capitalist system. No one picks a centrally planned state. No one says, “I want to be the poorest person in North Korea, Cuba, or Zimbabwe,” countries which are at the bottom of the Heritage Foundation’s Index of Economic Freedom.

What does it mean to be poor in our capitalist society that the Occupy Wall Street crowd so hates? Robert Rector of the Heritage Foundation has several studies of those classified as poor by the U.S. Census Bureau. He found that 80 percent of poor persons in the United States in 2010 had air conditioning, nearly three quarters of them had a car or truck, nearly two-thirds had satellite or cable television, half had a personal computer and more than two-thirds had at least two rooms per person.

Contrast this with what it means to be poor in Mumbai, India, a country that is moving rapidly towards market capitalism but was burdened for decades with a socialist system. A recent story in The Economist described Dharavi, a slum in Mumbai, where for many families half of the family members must sleep on their sides in order for the entire family to squeeze into its living space.

The Occupy Wall Street movement has shown a lack of understanding of how the market capitalist system works. They appear to think that the cell phones they use, food they eat, hotels they stay in, cars they drive, gasoline that powers the cars they drive and all the myriad goods and services they consume every day would be there under a different system, perhaps in more abundance.

But there is no evidence this could be or ever has been the case. The reason is that only market capitalism solves the two major problems that face any economy-how to provide an incentive to innovate and how to solve the problem of decentralized information. The reason there is so much innovation in a market system compared to socialism or other forms of central planning is that profit provides the incentive for innovators to take the risk needed to come up with new products.

My mother never once complained that we did not have access to the latest Soviet washing machine. We never desired a new Soviet car. The socialist system relies on what Adam Smith referred to as the benevolent butcher and while there will undoubtedly be benevolent butchers out there, clearly a system that provides monetary rewards for innovators is much more dynamic and successful. The profit that the Occupy Wall Street protesters decry is the reason the world has access to clean water and anti-viral drugs.

The other major problem that must be solved by any economic system is how to deal with the fact that information is so decentralized. There is no way for a central planner to know how many hot dogs 300 million Americans are going to want at every moment in time. A central planner cannot know the relative value of resources in the production of various goods and services. Market capitalism solves that problem through the price system. If there are too few hot dogs, the price of hot dogs will rise and more hot dogs will be produced. If too many hot dogs are produced, the price of hot dogs will fall and fewer will be produced.

Market capitalism is the key to the wealth of the masses. As Ludwig von Mises wrote in his 1920 book, Socialism, only market capitalism can make the poor wealthy. Nobel Laureate Friedrich Hayek in his famous 1945 paper, The Use of Knowledge in Society, showed that only the price system in capitalism can create the spontaneous order that ensures that goods will be allocated in a way that ensures consumers determine the use of resources. The Occupy Wall Street movement would make best use of its time and energy in protesting the encroachment of the centrally planned state that led to the disaster of the Soviet Union, fascist Germany, and dictatorial North Korea.

(Gary Wolfram is the William Simon Professor of Economics and Public Policy at Hillsdale College and an adviser for the Business & Media Institut, where this article first appeared.)

The seeds of solution are found inside our problems: Let’s get to farming

I have good news and bad news. First the bad news — a sampling of recent online headlines:

  • 46.2 million Americans are now poor…
  • 22% of children in poverty…
  • Dramatic drop in median income…
  • Likely to worsen…
  • ABBAS: Palestinians want full UN membership…
  • Netanyahu set for UN showdown…
  • Anti-Israel subway signs in NYC spark religious war of words…
  • Bloomberg warns of riots

Our world is in a state of disruption. Our nation is in a state of disruption.

Business is in a state of disruption. Marc Andreessen wrote a Wall Street Journal essay under the ominous sounding title Why Software Is Eating The World: “More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.”

It’s not really new technology that is disrupting, it’s just the new. Anything new is a disruption. And we human beings hate disruptions. We like status quo. We like comfort. We like stability. We like predictability. We like established structures. And that’s precisely why we’re in the mess we’re in. Our established structures are failing miserably.

According to the World Economic Forum, the United States has fallen from having the world’s most competitive economy in 2008 to having the fifth most competitive economy in 2011. Why? The forum cited weaknesses such as rising government debt, declining public faith in political leaders and corporate ethics. There is no way to sugar coat it. If you don’t think we have serious problems you are either dead or delusional.

Now, here’s the good news. “Every problem has in it the seeds of its own solution,” wrote Norman Vincent Peale. “If you don’t have any problems, you don’t get any seeds.”

Think of problems as seed pods. Disruption takes its meaning from the word rupture, which means to burst or break. To get the seed the pods have to be ruptured. Soil has to be disrupted in order to plant the seed. Our established structures — business, government, you name it — are being disrupted. And that’s a good thing. It’s the way we find the solutions to our problems.

Mr. Andreessen wrote about how new technology is disrupting our lives. But I also found seeds of solution in his essay: “Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.”

It was Thomas Jefferson who famously wrote, “I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” Jefferson’s statement is true not only of politics but of everything. The computer revolution was a necessary disruption. It is enabling a global technological transformation to take place.

We tend to think of technology as computers and software. But according to Wikipedia, “Technology is the making, usage and knowledge of tools, techniques, crafts, systems or methods of organization in order to solve a problem or serve some purpose.” Our problems contain the seeds of their solution — but we need new methods of farming.

We will not solve the problems we face in business and government with yesterday’s solutions. We need more disruption not less. We have to introduce new technologies (the making, usage and knowledge of tools, techniques, crafts, systems or methods of organization), disrupt the status quo (crack the pods) and find solutions (the seed).

Take another look at the headlines. The world is in a state of disruption. We have a lot of problems. That means we have a lot of seed. It’s time to fire up the tractor. We have a lot of farming to do.

(For more than 20 years, Jim Whitt has provoked people and organizations to reach their full potential as a speaker, consultant and author. This piece was first posted on his blog, Purpose Unlimited.)

Cronyism: Banks made billions on secret Federal Reserve loans

From SF Chronicle:

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required emergency loans of a combined $1.2 trillion on Dec. 5, 2008, their single neediest day.

Bankers didn’t mention that they took tens of billions of dollars at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market interest rates, Bloomberg Markets magazine reports in its January issue.

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