Democrat Bail Out Logic Fails

No MBA. No PhD. Just a citizen with a belief that there has to be a better way.

Follow the logic here...


Throughout this campaign season Democrats have been claiming that this is the "worst economy since the great depression" for the working and middle class Americans that make up the majority of the populace. Democrats further claim that if we do not pass a $700 billion dollar economic bail out package, Wall Street will collapse resulting in a severe drop in stock prices. Given these two premises I pose the question: Why would a drop in stock prices hurt the struggling "little guy"? If the working and middle class are doing so bad, how would they be able to own significant amounts of stock? Using the Democrat's logic, working and middle class people are in such bad economic shape that they could not possibly afford to own significant caches of stocks. Therefore, again using Democrat logic, a stock market crash would have no impact on working class people!


Ahh, but you counter by saying "A crash on Wall Street would trickle down to Main Street." I heard this line over and over again in the first presidential debate. Wait a minute! According to Democrats there's no such thing as trickle down economics! How can this be?!

Ignoring this incongruity in Democrat economic dogma, let's suppose that a Wall Street failure could indeed trickle down to the working class, and eventually cause mass unemployment. Although highly unlikely (boardering on impossible), let's even go as far to assume that it could cause Great Depression-level unemployment. If that's the case, then why would we not let the free market purge Wall Street through the natural market forces, then set the $700 billion aside for the "little people" in anticipation of the great mass of unemployment and hardship that could follow? Let's assume the $700 billion doesn't make it to Wall Street and an economic meltdown follows. Let's do some math, using approximate numbers and some general assumptions, to see what $700 billion could do:


There are approximately 300 million people in the USA.
Out of those 300 million, about 70 million are children.
About 50 million people are already retired.
That leaves 180 million people.
There are about 14 million non-working spouses (a.k.a. stay-at-home moms/dads)
That leaves 166 million.
Out of that 166 million, let's assume 5% of the people are unemployable in any economy.
That leaves us with about 158 million workers that have the potential to lose their jobs if massive Great Depression-like job losses were to occur.
Jobless rates during the Great Depression reached into the 30% range.
30% of 158 million means that we are looking at a potential pool of 47 million unemployed workers at absolute worst case levels.

Even at those crazy-high, sky-is-falling, end-of-the-world-as-we-know-it rates, $700 billion would be enough to give about $15,000 of benefits to each and every one of these unemployed people.

Now, $15,000 would not be a fortune, but remember it would be $30,000 for 2 income families. With the median annual family income in the US at about $50,000, this $30,000 could possibly keep a family afloat for nearly a year assuming they tightened their belts (which is not an outrageous assumption considering they are out of work). Also, consider that this money would be in addition to any state provided unemployment insurance that currently exists. Needless to say, even in this economic Armageddon situation, the $700 billion would go a long way in getting a family back on their feet.

Being more optimistic, assume that instead of 30% the unemployment level would double to about 12%. It sounds low compared to the 30%, but it would represent a huge economic issue in the US.

12% of 158 million is about 19 million workers.
With 19 million unemployed, the $700 billion could provide a whopping $38,000 in benefits per person. A 2-income family would get $76,000. That's $26,000 more than a median income family would make working for a year! In other words, their share of the $700 billion would be a raise.


That's the numerical look.


So, what's my point? Do I really believe the government should hold $700 billion in anticipation of 30% unemployment levels? Of course not. Do I think the government should lay back and just let the economy collapse? Definitely not. My point is that $700 billion is a lot of money, there are a lot of ways that $700 billion could be used. However, the only option being discussed is a Wall Street bail out.

Our government leaders should use this No-vote as an opportunity to reevaluate their approach. Maybe I'm dreaming, but wouldn't it be nice if the so-called economic experts came up with some innovative alternatives for $700 billion besides a Wall Street bail out? In the end, a Wall Street bail out may still be the best option, but is it too much to ask for our leaders to come up with some alternatives to at least consider?

As much as I believe it makes sense to now consider other alternatives, I my expectations remain low. After all, how can I expect anything other than a Wall Street bail out approach to the current economic slide when the Senate Banking Committee Chairman is in the back-pocket of the Wall Street banks. See the graphic below courtesy of The Hartford Courant showing the top 20 donors to Senator Chris Dodd. Jeez! Money drives behavior. With that list, why would we expect anything different. It's been said that the definition of insanity is to continue to do the same thing and expect different results...

Election Over Load Creates Apathy

Typically during my normal day of work, reading, radio listening, and TV watching, I find one or two things that give me the thought "I should write a blog post about that!". Once I identify a potential topic, my mind wanders during free moments to start contemplating the pieces of the post. What are the points I can make? What research do I need to do? What format should I write in? Sometimes I'll even jot down a few random thoughts on a piece of scrap paper and fold it into my pocket until I can get to a computer. Not all of these daily epiphanies actually become posts, but almost all that do become posts have been born of this sort of haphazard process. I'm pretty sure that's not how George Will comes up with his columns, but for me, that's how the process goes. However, I've noticed that lately, I've had less of these moments. I took a moment to reflect on the cause of this observation, and I can point to one thing as the source -- election over load.

It seems that the nearly 2 years of 24-7 election coverage has finally gotten to me. Most days, much to the disappointment of Fox, CNN, and MSNBC, there is nothing going on save for the typical campaign stump speech by one of the candidates. They analyze and over-analyze every word uttered by every candidate. Sick of the faux analysis, I waited weeks for the first debate to come. When it finally arrived (and there was definitely some question whether it would arrive as scheduled) I struggled to not fall asleep on my couch as the candidates repeated talking points we've all heard dozens of times before.

The vice-presidential debates are Thursday. I fear that these debates have the potential to be another yawn-fest. It seems that dialogue the caliber of the Lincoln-Douglas debates could not live up to the hype of this upcoming debate.

So, for my own selfish reasons, and the sake of this blog, I hope these next 5 weeks produce some substance. Other than that, November 4th can't pass fast enough for me!

Spending Taxpayer Money Is The One True Bipartisan Issue

Citizens constantly hear the call for bipartisanship from whinny politicians looking to divert blame away from their culture of do-nothingness, and from a left-leaning media hoping Republicans, which they view mostly as irrelevant, kooky pests, will come over to the left side of the aisle in the name of “cooperation”. But, as much as we hear these misguided pleas, gridlock and personal-attack politics between Democrats and Republicans mostly remain the standard of the day…except on one issue -- spending taxpayer money.

As congress contemplates a $700 billion bank bailout, there has been little quibbling between the parties. The Democrat-controlled congress seems to be in unprecedented agreement with the Republican Bush administration. Oh, there have been a few descending voices, especially from the right, but for the most part both branches of the government are eager to write off an jaw-dropping chuck of taxpayer money. Never before have we witnessed such a love-fest between Bush and the liberal-controlled congress.
To put $700 billion in perspective, the national debt is about $9.2 trillion. We spend over $400 billion per year servicing interest on the national debt. This bail out would be equal to 8% of the enormous national debt that has been built every year since the 1970s. The federal budget is about $2.9 trillion dollars. The $700 billion bail out would be equal to about 24% of the federal budget.
To put the proposed bailout into individual terms, if you have a total personal debt (mortgage, car loans, credit cards, etc.) of $250,000 (this is reasonable since the median home price in the US is about $212,000), the bail out would represent a one-time payout of $20,000. I don’t know about you, but I think most middle class families would have a tough time dumping $20,000.
Thinking of the bailout in terms of income, the median household income in the US is about $50,000. If you had a $50,000 household budget, this bailout would be the equivalent of dishing out $12,000.
Whether the number is $12,000, $20,000, or $700 billion, the point is that it’s a big number relative to US government finances. Republicans and Democrats both belly-up-to-the-bar when it comes to spending taxpayer money. Republicans claim to be fiscally conservative, but seem to rarely live up to their tough talk in practice. George Bush, a supposed conservative who’s run up record spending and record deficits is a great example of the lip-service-only philosophy politicians of both parties seem to exhibit towards fiscal responsibility once they get to Washington. When it comes to politicians in practice, there seems to be no such thing as fiscal responsibility, regardless of party. Democrats don’t even bother to pretend to have fiscal responsibility. Their party platform for years has been based on reckless spending and redistribution of wealth in an attempt to buy votes with give-away programs. Their party-first philosophy gives no thought to the ramifications of their actions on the welfare of the nation. I’ve come to expect fiscal irresponsibility from Democrats. However, I expected more from our so-called free market-loving, fiscally conservative Republican leaders.

Get Government Out of the Private Sector

A quick list of private business sectors screwed up or soon to be screwed up by a meddling US government:

• Mortgages (That's obvious in light of the current Freddie/Fannie situation)
• Real estate (As a result of their meddling in the mortgage business, home prices were artificially driven up by the availability of "cheap" money, thereby actually making it harder, not easier, to get people in homes. Ironic that a programs meant to make home ownership easier, actually pushed it farther out of reach. Liberal policies continue to be disasters as a result of unintended consequences.)
• Finance/banking (The recent bail outs speak to this. Why are American tax payers subsidizing risk for private industry?)
• Energy (The government is subsidizing the oil industry with our military actions intended to protect oil access. However, we ain't seen nothin' yet! Barak Obama wants to meddle in oil company profits. If the trend of government intervention in the oil industry continues, wait and see what happens to the US oil industry.)
• Auto (For example, meddling government fuel economy standards making US companies non-competitive in North America.)
• Rail (Remember Amtrack?)
• Airlines (Just wait for more bail outs when these start failing.)
• Pharmaceuticals (Bush's prescription drug bill ensnared government into this business.)
• Medical industry (Is there any doubt government health care will be an economic and logistical nightmare?)
• Insurance (US government is now the biggest private insurer in the world thanks to AIG bail out. How do you feel about being part owner of an insurance company?)
• Farming (Subsidies have made it impossible for farmers to charge what they need to charge for their goods.)
• Education (This is a tough one because colleges and universities are run by liberals, so liberal policy-makers are hesitant to meddle in this cash cow. However, don't underestimate the desire of the 2008 Democratic ticket to extend the reach of government into every sector. Even liberal colleges are no longer safe.)

How many more fiascos will it take for the American people to realize we need government out of the private sector? Although this government meddling is the result of liberal policy, it can't all be laid at the feet of Democrats. Republicans (aka Bush) have also abandoned conservative ideals and grown the scope of government tremendously these past years. Remember, these bail outs happening now are being lead by a Republican administration. Funny that Democrats so hate Bush. Many of his policies have been more liberal in execution than his predecessor (Clinton).

Some regulations are needed to ensure a fair playing field, but the US government has clearly stepped over the line.

Are there any other industries that I've forgotten from my list?

Why Does An All-Conservative Radio Station Thrive in a Blue State?

Recently while flipping through the AM dial on my way home from work I discovered a new (to me) talk radio station in Connecticut. The station calls itself the "Talk of Connecticut". The station affiliates include WDRC 1360, WMMW 1470, WWCO 1240, and WSNG 610 providing coverage through most of Connecticut. I tune in on 1360. The stations contains a continuous stream of conservative leaning talk shows starting with local radio guy Brad Davis in the morning, moving to Bill O'Reilly in mid-day, again to local radio guy Dan Lovallo in the afternoon, and ending with Michael Savage in the evening. I enjoy listening to the station, especially the shows that put a local spin on issues. The stations website is:

http://www.talkofconnecticut.com/

Keeping in mind that Connecticut is one of the top five "bluest" states in the US, how is an all-conservative radio station able to thrive? Why do conservatives unquestioningly dominate talk radio, as well as having an upper hand in the blogosphere? I'd be interested in hearing your ideas.

I have a few theories:

Theory #1: Liberals so dominate the print and TV media, that conservatives are hungry to hear their message. Rush Limbaugh is such a powerful and successful radio personality that he pushed open the door for an entire legion of conservative radio show hosts.

Theory #2: The radio format is more conducive to a conservative message. The liberal message relies more heavily on emotional manipulation. TV and print allows the use of images that can more easily play to our emotional side. In radio it's more difficult to illicit an emotional response, therefore, it becomes more difficult to convey a liberal message. Radio plays into a more logic based conservative message.

Theory #3: Outside the urban centers, America is generally a conservative-leaning country. The news media has propagated the incorrect theory that the coasts are blue states and the heartland is red. This is not the true blue-red divide within the United States. If you look at the red-blue breakdown you will see that even in the reddest states, the urban areas are solidly blue. The real red-blue divide is between urban and rural. The coastal states are blue simply because they are the most densely populated (i.e. the most urban), not because of some liberal elixir in the ocean air.

Theory #4: The Democratic base largely does not listen to talk radio. Radio stations create a format to attract listeners, which attracts advertisers, which attacks revenue. Remember, radio stations are a for-profit business.

Regardless of the reasons, there's no denying that conservative ideals dominate talk radio, even in a blue state like Connecticut.

A New Blog: Radioviceonline.com

Perhaps you've noticed that I don't have a lot of links to other blogs or websites on Liberty Alert. That's on purpose. My thinking is that generally if a reader knows what they are looking for, they can just as easily find it as I can. Therefore, I try to be selective and only include a few links to some unique, high quality sites I've stumbled upon.
Towards the bottom right of Liberty Alert there is a short list of Favorite Links. Until today, there were only 2 links on that list. One of those links was for the Jim Vicevich radio show. I'm a big fan of Jim's radio show, and I've plugged him on Liberty Alert in the past. Jim has just created a new blog (actually, he's moved to a new host/format). The blog can be found at:

http://www.radioviceonline.com/

Jim describes himself as a Republitarian. I believe he has a unique and entertaining radio show.

I've added Jim's blog to my short list of favorite links. Check out Jim's blog and radio show.

An Observation on Immigration Policy, Globalizaton

Newsweek magazine's non-election feature article this week had to do with how the United States is prepared to compete in the global market. As China and India continue to grow, how will the United States continue to stay on top economically? Will the United States be able to stay on top economically?
One of the points made in the article was that India and China are greatly outpacing the US in producing engineers and other technical professionals. According to the Newsweek article China and India now graduate 5 times more engineers than the United States. At this rate, by 2011 90 percent of all engineers in the world will be in Asia.

With that in mind, I'm forced to consider the demographics of the technical and medical majors in American universities. The engineering departments are filled with Asian students. Most of these students come to the United States on student visas. They get educated in the American universities, then many return to their home countries without ever contributing to the American economy.

In light of the continually rising global economy and the pressures US businesses are facing from all over, why does the US government continue to allow these student visas? Americans are essentially training our competition, and if these students are being trained in public universities, Americans are using tax dollars to do it. Americans are essentially subsidizing the weakening of any US technical advantage.

Why?

There was a time when a high number of foreign students in US universities did not pose a threat. Perhaps that time has passed.

I have a suggestion. Instead of limiting student visas, the State Department will still allow student visas, but with one stipulation. If you take advantage of a US education, post-graduation you have to work at least 7 years in a job within the United States or if working outside the United States it would need to be for a US company. I suggest this stipulation should be required for all foreign students looking to take advantage of the superior American university system, but especially for students looking to go to a public university.
Why did I pick 7 years? As a engineering degree-holder myself, I know that the first two years on the job are mostly training. I figured that 5 solid years would be a fair contribution. Therefore, you need 7 years; 2 for training, 5 for production.

What would be the result of such a policy? I suspect the number of student visas would go down. Universities would not like it because they make a lot of money off these students tuition. Supply and demand would dictate that Universities might actually have to lower tuition, or at least slow the tremendous growth of tuition. Is that such a bad thing? Secondly, demand for engineers and professionals may increase in the workplace. Therefore, there would be more incentive for US students to fill the gap.

I'm not suggesting that we should keep foreign students from our universities. We should accept the best qualified students regardless of location, but is it too much to ask for a little bit back in return?

Latest Target of the Nanny-State: Plastic Bags

The nanny-staters are at it again. Westport, Connecticut has become the first community on the east coast of the United States to ban plastic shopping bags. The ban, done in the name of “green”, will levy a $150 fine to any merchant that offers a plastic bag to shoppers. No word yet if there will be a solicitation fine for any customer that asks for a plastic bag.
Starting in 2009, Seattle, Washington has instituted a $.20 per bag tax on all plastic bags, again in the name of protecting the environment.

Are plastic shopping bags really the scourge of our pristine environment? Even the liberal machine MSNBC has questions about paper versus plastic. Anne Thompson writes that the debate of paper versus plastic in not so clear-cut:

http://www.msnbc.msn.com/id/18538484/

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Plastic bags
— Each year, an estimated 500 billion to 1 trillion plastic bags are consumed worldwide.
— Plastics do NOT biodegrade. Rather, they photodegrade, a process in which sunlight breaks down plastic into smaller and smaller pieces.
— It can take up to 1,000 years for a high-density polyethylene plastic bag to break down in the environment.
— Plastic bags are on the top 10 list of most common trash items along the American coastline (both on land and in the water).
Paper bags
— Paper bags generate 70 percent more air pollutants and 50 times more water pollutants than plastic bags.
— 2,000 plastic bags weigh 30 pounds, 2,000 paper bags weigh 280 pounds. The latter takes up a lot more landfill space.
— It takes 91 percent less energy to recycle a pound of plastic than it takes to recycle a pound of paper. It takes more than four times as much energy to manufacture a paper bag as it does to manufacture a plastic bag.

Sources: reusablebags.com, NRDC and International Coastal Cleanup 2005 Report from the Ocean Conservancy
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Paper bags use trees. Trees require a significant amount of energy to harvest. The machines that harvest, transport, and convert trees into paper burn evil fossil fuels. Where’s the research backing the ban of plastic bags? Where’s the evidence that they are a public hazard?
Once again, liberal policy falls into the trap of unintended consequences.
I suspect a lot more anecdotal data was used over hardcore scientific research by the banning lawmakers in Seattle and Westport. Politicians have locked onto plastic bags as a cause celebre, using it to perpetuate the image of doing something, rather than actually accomplishing something useful. Image and intentions are everything to liberals.

Who is the city government to tell a merchant what they can and cannot give away to their customers? Who is the city government to burden merchants with keeping track of the number of bags they give out in order to support their tax collection? Talk about an unfunded mandate!

What if you owned a business selling plastic bags to merchants? Who compensates you for the loss of your livelihood? Isn’t the government supposed to promote life, liberty, and the pursuit of happiness? Once again, I guess the Constitution does not apply to liberals.
Banning in general is the juvenile solution to problems. It’s the governmental equivalent of the crying child on the playground taking his ball and going home.

Bans rarely address the root of the issue, often are triggers of multitudes of unintended consequences, and generally reduce the liberty of the public. We should demand more from our lawmakers.

A Rarity: School Board Pulls Off Budget Surplus

I've been especially tough on school boards and school administrators in this space in the past, especially the school board of my local town of Bristol, CT. Since I've been so tough in the past, I found it only fair to give credit when credit is due. The Bristol, CT Board of Education announced this week that they ended the fiscal year with a surplus of nearly $800,000.

I send my kudos to the Board of Education and administrators of all Bristol schools that made this possible.

This demonstration of efficiency and fiscal responsibility in the face of rising costs (energy, food, etc.) should be applauded. The effort will go a long way towards increasing the trust of the local tax payers in the school system management.

I don't know all the details of what created the surplus, but I'm taking this one at face value.

Great job BoE and thanks for looking out for the local tax payers! Keep it up.

Book Review: Infidel by Ayaan Hirsi Ali

Infidel is the memoirs of Ayaan Hirsi Ali. Ayaan Hirsi Ali fits so many labels it's difficult to exactly give her a title. She's a writer, a film maker, a Dutch politician, a feminist, and an opponent of Islam. She's an extraordinary person.
The book describes Hirsi Ali's life from childhood to present day. She was born in Kenya but moved around to several other Muslim countries throughout her childhood. The book describes how she survived an abusive mother, an non-present father, a religious system that treats women as property, genital mutilation ("female circumcision") at age 5, forced religious teachings, poverty, being beaten so severely by a teacher that it cracked her skull, the preventable death of her sister, forced marriage, exile from her family, the murder of her business partner, and finally her life in forced isolation due to threats on her life. Through all this Ayann Hirsi Ali survived, became a best-selling author and a member of the Dutch Parliament.
What struck me about Hirsi Ali's hardship was not how incredible they were, but how common such abuses are in the Muslim world. If fact, it is more normal for a woman to be beaten, genitally mutilated, and forced into marriage in the Muslim world than it is abnormal. Ayaan Hirsi Ali is extraordinary for how she overcame this abusive system, but not for what she went through within the system. Millions of Muslim women go through similar abuses. Hirsi Ali's main platform as a politician is to give rights to oppressed women throughout her country and the world.
The book is written in a simple, matter of fact manner. It is not written lyrically or in a fancy style. The power of the book is in Ayaan Hirsi Ali's story, and not in the style of writing. She is so raw in opening up about her emotions as well as the events in her life that it evokes a powerful response in the reader. At about 351 pages it was a quick read.
The book does not just discuss the events of her life. She delves into the lessons she has learned, and how the event of her life have shaped her philosophy. She logically explains many points regarding the farce that is modern Islam. As she explains, Islam is not a religion of peace. The religion you see in practice (violence, abuse, radicalism, anti-liberty) is not radical Islam. As Ali explains, there really is no radical Islam. All these things we observe are standard Islam, right out of the Quran. Westerners can hardly imagine such a system, so we give it the label "radical-Islam" to help us make sense of it. The system set up in countries like Kenya and Saudi Arabia is totally contrary to the concepts of liberty in which western society is built. Islam is the number one threat to liberty in the world today. Islam is the number one threat to the United States. Infidel by Ayaan Hirsi Ali has opened my eyes to the true nature of Islam in practice.
The book was highly educational for me as a westerner, relatively unfamiliar with Islam. In light of the current state of the world, this book and Ayaan Hirsi Ali's message are especially important. This is one of the most eye-opening books I have read.