Archive for August 21st, 2012
No one doubts that the coming election will be the most important referendum on the size and nature of government in a generation. But another issue is nearly as important and has gotten far less attention: our crumbling commitment to the rule of law.
The notion that we are governed by rules that are transparent and enacted through the legislative process—not by the whims of our leaders—is at the heart of that commitment. If legislators exceed their authority under the Constitution, or if otherwise legitimate laws are misused, courts must step in to prevent or remedy the potential harm.
During the 2008 financial crisis, the government repeatedly violated these principles.
Mr. Skeel goes on to argue that the 2008 crisis was where these problems reared their head.
He’s right that these issues become more serious in 2008, but he’s dead wrong that this excuse — that “in a crisis you do what has to be done, law be damned”began this series of abuses.
Leverage in fact contains an entire chapter on this subject in the second half of the book (“A Way Forward”) entitled, appropriately enough, “The Rule of Law.“ In it just some of the myriad abuses that were rampant not only during but prior to the 2008 panic are laid out in a fair bit of detail. The Market Ticker has chronicled many more.
Some of the worst abuses are found in what the government claims are laws but are in fact suggestions, as there is no penalty. Let’s simply take The Federal Reserve Act which mandates, among other things, that The Fed shall conduct monetary policy so as to produce stable prices.
The word “stable” is a common English word. It is not a matter of interpretation, it is a matter of a factual condition that either exists — or it does not.
For 100 continuous years The Fed has violated this mandate — a black-letter law.
It has never been held to account and not one candidate for President — not Obama, Romney or Johnson has come out and said “these alleged laws, such as The Federal Reserve Act, which contain no penalty for non-performance or indeed intentional violations must have violations enforced and penalties must be added to these statutes.
Is it not proof of actual intent to not enforce the law when you enact a so-called “law” without a penalty for its violation? Is it not proof positive that you intended no such law be in force at all when you willfully and intentionally ignore one hundred sequential years of violation of the very law you pass?
This isn’t complicated folks — there is no intent by our government at any level — federal, state or local — to actually follow and enforce the law on an even, honest and level basis.
Oh yes, it’s gotten much worse in the last four or five years, but do not kid yourself — this is not a new problem. Passing alleged “laws” that are supposed to proscribe conduct for everyone and then ignoring them when the government wants to is nothing new. We have run drugs in both the United States and abroad – our government – for decades and we’re still doing it today. We ran over a thousand guns to Mexican Drug Cartels – intentionally – in “Fast and Furious” (otherwise known as “Operation Gunwalker”) and not one BATFE or other Federal employee has been indicted or jailed for doing so.
Not one bankster went to prison when Wachovia laundered money for Mexican drug cartels — and they admitted it (in exchange for a fine and a “deferred prosecution agreement.) Multiple banks ran money for Iran and intentionally altered transaction data to obscure who the transfers were for — yet at most they’ve been fined and nobody has gone to jail. In Jefferson County Alabama the residents are still paying radically-jacked-up sewer and water bills and will be forever, despite the fact that a few municipal employees went to jail for bribery-related crimes on those transactions. The number of banksters jailed? Zero. Last time I checked in order to receive a bribe someone must make one. Isn’t it funny how only certain people got prosecuted and imprisoned?
I’m glad to see the WSJ publish this opinion piece, but Mr. Skeel needs to widen his lens a bit and look at the problem from more than simply a “crisis-mode” intervention issue, because it most-certainly was not and is not today.
For decades our politicians have promised us that the “free trade” agenda would bring us greater prosperity than ever before. They insisted that merging our economy into the emerging one world economy would cause millions upon millions of new jobs to be added to the U.S. economy. Unfortunately, it was all a giant lie. Trading with other countries is not a bad thing as long as the level of trade is fairly equal on both sides. When trade becomes very unequal, the consequences can be absolutely catastrophic. Since 1975, the United States has bought more than 8 trillion dollars more stuff from the rest of the world than they have bought from us. We are the only economy on earth that could have had 8 trillion dollars drained out of it and still be standing. Instead of leaving the country, those 8 trillion dollars could have gone to U.S. businesses and U.S. workers. If we could go back and have a “do over”, how much more prosperous would we be today if we had kept that 8 trillion dollars inside the country?
But instead of pursuing a balanced trade philosophy, our politicians were so enamored with the emerging one world economy that they threw all caution to the wind.
So we have lost tens of thousands of businesses, millions of jobs and trillions of dollars of our national wealth.
And this emerging one world economy is absolutely killing American workers. It lumps them into a global labor pool with workers in other countries where it is legal to pay slave labor wages.
Just think of it this way. Imagine that you are a giant corporation that makes “widgets”. You can make them in the United States, but you would have to pay your workers about $10 an hour, provide them with a whole bunch of benefits, pay very high taxes, and comply with a dizzying array of laws, rules and regulations.
Or, you could set up shop on the other side of the world where you could pay your workers a dollar an hour. Those workers would receive no benefits and you would have to deal with very little red tape.
Which would you choose?
The “giant sucking sound” that Ross Perot once warned us about has become a reality. Big employers are competing with one another to see who can outsource jobs the fastest, and American workers are the big losers in all of this.
As I wrote about the other day, right now there are some American workers that are actually personally training their replacements from overseas how to do their jobs.
If nothing is done about this, jobs are going to continue to pour out of high wage countries such as the United States and into low wage countries on the other side of the globe, and big corporations are going to keep laughing all the way to the bank as unemployment in America gets even worse.
The following are 22 stats that show how the emerging one world economy is absolutely killing American workers….
#1 One professor has estimated that cutting the U.S. trade deficit in half would create 5 million more jobs in the United States.
#2 The United States has a trade imbalance that is more than 7 times larger than any other nation on earth has.
#3 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the globe since 1975. That 8 trillion dollars could have gone to support U.S. businesses and pay the wages of U.S. workers. Federal, state and local taxes would have been paid on that 8 trillion dollars if it had stayed in the United States. This is one reason why our national debt is getting ready to cross the 16 trillion dollar mark.
#4 When NAFTA was passed in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars. In 2010, we had a trade deficit with Mexico of 61.6 billion dollars.
#5 In 2001, American consumers spent 102 billion dollars on products made in China. In 2011, American consumers spent 399 billion dollars on products made in China.
#6 The Chinese undervalue their currency by about 40 percent in order to gain a critical advantage over foreign competitors. This means that many Chinese companies are able to absolutely thrive while their competition in the United States goes out of business. The following is from a recent Fox News article….
To keep Chinese products artificially inexpensive on US store shelves, Beijing undervalues the yuan by 40 percent. It pirates US technology, subsidizes exports and imposes high tariffs on imports.
#7 According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.
#8 The U.S. trade deficit with China during 2011 was 295.4 billion dollars. That was the largest trade deficit that one nation has had with another nation in the history of the world.
#9 Back in 1985, our trade deficit with China was only about 6 million dollars (million with an “m”) for the entire year.
#10 U.S. consumers spend about 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.
#11 The United States has actually lost an average of about 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.
#12 According to the Economic Policy Institute, America is losing about half a million jobs to China every single year.
#13 The United States has lost more than 56,000 manufacturing facilities since 2001.
#14 During 2010 alone, an average of 23 manufacturing facilities closed their doors in America every single day.
#15 Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.
#16 As I have written about previously, 95 percent of the jobs lost during the last recession were middle class jobs.
#17 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.
#18 The percentage of working age Americans that are employed right now is actually smaller than it was at the end of the last recession.
#19 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.
#20 Due in part to the globalization of the labor pool, only about 24 percent of all jobs in the United States are “good jobs” at this point.
#21 Without enough good jobs, more Americans than ever before are falling into poverty. Today, more than 100 million Americans are on welfare.
#22 In recent years the U.S. economy has embraced “free trade” and the emerging one world economy like never before. Instead of increasing the number of jobs in our economy, it has resulted in the worst stretch of job creation in the United States in modern history….
If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.
Sometimes a picture is worth a thousand words.
You can get a really good idea of how nightmarish the manufacturing job losses have been in the United States over the past 40 years by checking out this map right here.
And if everything posted above was not bad enough, some U.S. companies even find themselves competing with slave labor here in the United States.
Prison labor is absolutely destroying some businesses here in America. The following comes from a recent CNN article….
Unicor is a government-run enterprise that employs over 13,000 inmates — at wages as low as 23 cents an hour — to make goods for the Pentagon and other federal agencies.
With some exceptions, Unicor gets first dibs on federal contracts over private companies as long as its bid is comparable in price, quantity and delivery. In other words: If Unicor wants a contract, it gets it.
One company that tries to compete with Unicor has been forced to lay off 150 people over the years because they lose so many contracts to them….
Wilson has been competing with Unicor for 20 years. He’s an executive at American Apparel Inc., an Alabama company that makes military uniforms. (It is not affiliated with the international retailer of the same name.) He has gone head-to-head with Unicor on just about every product his company makes — and said he has laid off 150 people over the years as a result.
“We pay employees $9 on average,” Wilson said. “They get full medical insurance, 401(k) plans and paid vacation. Yet we’re competing against a federal program that doesn’t pay any of that.”
But this is also the kind of thing that U.S. companies are dealing with when they try to compete with big corporations that are exploiting cheap labor abroad.
If you are spending ten times as much on labor as your competitor is, it is going to be really hard to survive.
That is why it has become so hard to find products that are made in America.
Most of our jobs these days are low paying “service jobs”, cushy government jobs or jobs where people push papers around all day.
But those kinds of jobs do not create lasting wealth for a country.
Did you know that there are more tax preparers in the United States than there are police officers and firefighters combined?
Our economy is a giant mirage. We consume way more wealth than we produce, but we are able to keep the party going because we are riding the biggest debt spiral the world has ever seen.
But at some point the debt spiral is going to end and the crash is going to come.
Until then, however, those at the very top are still really enjoying themselves.
For example, one of the latest trends is for rich kids to show off pictures of themselves enjoying their enormous wealth on Instagram.
Something has gone very, very wrong with this country.
So what do you think about all this? Please feel free to post a comment with your thoughts below….
I’m tired of the lies. Including those of Peter Orszag, who was President Obama’s director of the Office of Management and Budget. He said:
The vast bulk of health-care costs arise from an extremely small share of patients, whose insurance will inevitably bear a substantial share of their expenses.
That’s why competition in health care doesn’t work as well as in other sectors, and it’s also why the key to keeping costs to a minimum is to encourage providers to offer better, less costly care in complex cases.
In 1963 it cost $120.55 to have a baby in a hospital, according to one man who actually stroked the check. There was no “insurance” for any such routineand expected medical procedures (have sex, child will likely follow if you do it often enough.)
This is great because the BLS says that the CPI was 30.4 in 1963. Today it’s 229.104, or 7.54x as high.
So we’ll multiply $120.55 X 7.54 and we get $908.95, or what it should cost for everything, including the room for both baby and mother, drugs, the delivery room, circumcision (it was a boy, obviously) and lab fees. This covered four days in the hospital, incidentally, not the less-than-24 hour “quickie” that is usually the norm today.
Now I’ll grant you this was an “uncomplicated” birth. And? Most births are. Some are not, but a routine birth was, in 2012 dollars, under $1,000 in 1963.
And trust me, babies are born the same way in 2012 that they were in 1963; they are emitted out of the same place in the mother, the same labor and delivery process happens, the cord still has to be cut, etc.
Oh sure, things go wrong and when they do it can get more expensive — quickly.
But find me a hospital that will deliver a baby, with a four day stay for mother and child, for $1,000 cash anywhere in the United States. You can’t because such a hospital does not exist.
Indeed, you can’t even stay for one day in a semi-private room at Northwest Community Healthcare in Arlington Heights, IL – just stay in the room, without any care being provided whatsoever — unless you spend $1,365. Incidentally, you can stay in the Mariott downtown on the MagMile in Chicago for $209 a night, or $259 if you’d like access to the Club Lounge, roughly 1/5th of the hospital (and quite a bit nicer, I might add; I’ve been in the latter.) The Renaissance Schaumburg, a few miles from that hospital for those who claim that using downtown Chicago prices is being “unfair” (compared to a Suburban hospital), is $219.
And remember, the hospital room is just for the room – no medical procedures, no drugs, no monitoring devices, no special facilities like an ICU unit, nothing other than the physical space.
We can talk about medical care cost escalations once we remove all of the cost-shifting, monopoly protections passed by government, EMTALA’s impact and outright frauds that the medical industry foists on all of us that cause costs to be 5, 10 or even 20 or more times what inflation says this procedure should cost. A procedure that is functionally identical to the one performed in 1963 and is an utterly routine and ordinary process that humans have undergone for thousands upon thousands of years.
The point of this, my friends, is that for $1,000 you could write a check for your childbirth expenses; “insurance” would be unnecessary. If you were not well-off you could hock your car’s fancy rims (which you had plenty of money to buy, right?)
Guess what? Most of the rest of “common” medical procedures are likewise overinflated in price by similar amounts for exactly the same reason — cost-shifting, monopoly protections granted to these businesses, EMTALA and, of course, outright frauds and money-sucking off the government and private-sector teat.
The entire medical system is one gigantic scam.
There’s not a thing wrong with allowing people to buy really fancy medical care using really fancy equipment and procedures, decking out really fancy rooms in fancy hospitals, paying for it all in cash. But there is something very, very wrong when utterly routine things like childbirth, hernia repair, gallbladder operations, an inflamed appendix, setting a broken leg or arm and similar wind up costing you 5, 10 or even 20x what the inflation-adjusted price is from, say, 1963.
Every one of these politicians needs to shut the hell up until they put a stop to this crap. And make no mistake — absent the government protections that have been given to this industry there is not a snowball’s chance in hell that their pricing would survive 30 seconds in an actual competitive market where people had to write checks.
These politicians are all scam artists in bed with the medical shysters who are interested in exactly one thing — bleeding the entirety of this nation dry.
The proof is in the numbers.