Why California’s risky experiment with a $15 an hour minimum wage will likely backfire, Part I
. . . the younger brer, and Maddog have been discussing the problems, effects, and likely outcomes from the Oregon, and California experiments with a radically higher $15 minimum wage. The links it to Part II is here, and Part III is here, and Part IV is here. Part I California is unfriendly to business, this change in labor rates will make it less friendly to business. This unfriendliness is manifested in high regulations, and high taxes. It is ranked by Chief Executive Magazine as the worst state for "level of taxation, burden of regulation, workforce quality, and living environment." The Tax Foundation found California 48th worst for business tax, and 50th for its personal income tax burden. You go Cali! Part II The $15 per hour minimum wage acts like a $10,000 per year tax on full-time minimum wage workers. Many businesses which employ higher numbers of minimum wage workers operate on margins of only 2-6% profit. This large additional cost will be a serious problem to these low margin/high minimum wage worker businesses. John A (Naif) in the comments makes two inane points, first he claims, "it's not a tax." We know, as does our faithful correspondent, he utilized simile, naif! Second he claims, the law will increase the wage amount for all businesses/restaurants by the same amount. No. It will affect the ones with higher numbers of sub $15 per hour workers in very different ways than restaurants with lower numbers. Also he assumes all restaurants will need to increase costs by the same amount. No. See above. Mid and high end restaurants have ways of dealing with these changes, they could eliminate tipping since the waiters will be paid a living wage, for example. Restaurants like fast food do not have these avenues to reduce customer costs (more accurately keep total costs the same as before). Further, this problem will be localized, smaller in San Francisco and other wealthy areas, and greater in places with large numbers of low wage workers like El Centro, Merced, and Salinas. Here Naif suffers from Pauline Kael Syndrome, where the afflicted does not know anyone who makes minimum wage, and would not be affected by a $.50 or even a $1 increase in a Big Mac, so he cannot understand why anyone else would be. Well played! Naif also misses the point entirely that many people will simply see the price increase necessary in the product, and decide it is not worth the price. So, if a 10% price increase results in a 10% demand decrease, there will need to either be further price increases or job reductions. This will simply grow over time as the minimum wage is phased in. In locations with a 15 % jobless rate cutting even more workers out of the wage pool can create a sustainable downward economic spiral. You know, like Detroit. He also seems to not understand about productivity which is nothing more than making more product with less wage costs/fewer workers. Automation exists, and as wages rise, automation alternatives become economically feasible. The ultimate problem with this is once the magic number is reached, nearly all the restaurants in the category will simply adopt this technology or bankrupt. While I do not know where this number is, I suspect that it is somewhat less than $15 per hour minimum wage. Again, this will cause an increase in joblessness, so see above for more info, er, like Detroit. Phase III Many localities in California may be economically too weak to support a $15 per hour minimum wage. Outside the coastal enclaves, California is not an economic powerhouse, it is a very weak kitten. The wealthy coastal enclave cities may not suffer too much, but the low wage cities will suffer greatly with a 50% wage increase to low end workers. Part IV A one size fits all won't work for California's low wage, low cost of living cities. "To help understand how the “one-size-fits-all” approach of a $15 an hour minimum wage will have a disproportionate adverse impact on low-cost communities in California, the table above displays the local annual salaries that would be equivalent to a $100,000 salary in San Francisco, adjusted for differences in cost-of-living using this website. For example, the cost-of-living in Bakersfield is about 57% lower than San Francisco overall, including housing costs that are 79% lower, so that an annual salary of $100,000 in San Francisco would be equivalent to a salary in Bakersfield of about $43,000. Local incomes equivalent to $100,000 annually in San Francisco are displayed above for the other nine cities. Then if we assume that a $15 an hour minimum wage is appropriate for a high-wage, high-cost city like San Francisco, we can calculate what the minimum wage should be in the ten cities above adjusted for the much lower costs of living in those communities. Adjusted for the 57% lower cost of living in Bakersfield, the minimum wage there shouldn’t be $15 an hour like in San Francisco, but rather only $6.43 an hour. Minimum wages adjusted for the cost of living in the other nine California cities are displayed above, and range from $6.10 an hour in Hanford-Corcoran to $7.90 an hour in Salinas. Stated differently, we could also say that if a $15 an hour minimum wage was appropriate for Bakersfield, the minimum wage in San Francisco, adjusted for its much higher cost of living, should be about $35 an hour, and not $15. By either minimum wage comparison, the costs of living are so disparate between San Francisco and the cities listed above, that there is no way that a uniform $15 an hour wage could be optimal in both communities." So, part of the problem in all of these cities already is that the California current minimum wage of $10 per hour is too high! Brilliant. We should expect the problems of Merced, Salinas, and Bakersfield to spread to even more cities, and towns throughout California as the minimum wage slowly rises, and destroys employment in these towns. Oregon's model which has a higher minimum wage for large cities and a lower minimum wage for rural areas might be better than the California one-size-fits-all model, but neither rate above poor. The market is well equipped to evaluate and provide an accurate minimum wage for each location, and for each individual worker's skills, talents, and experiences. But legislators are the smartest people on earth, and they know everything, including what a six-layer dip maker, a cunning linguist, or a teen exorcist should make as a wage. Honestly it seems more likely the politicians understand that driving people on to the dole keeps them in work.
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Aristocracy of Talent: Social Mobility Is the Silver Lining to America’s Inequality Crisis | Newgeography.com
. . . which is creating new billionaires and will soon be infusing the entire country with massive, before unseen, wealth. "Yes, wealth concentration is insane. But the ways in which wealth is shifting are surprising—and give reason for a little optimism. * * * To get a sense of these trends, researcher Alicia Kurimska and I tapped varying analyses from the Forbes 400 list of richest Americans. No list, of course, captures all the relevant data, but the Forbes list (I am a regular contributor to that magazine’s website) allows us to look not only at who has money now, but how the dynamics of wealth have changed over the past decade or more. * * * What we are talking about is a concentration of wealth and power unprecedented since the turn of the last century. According to an analysis by the left-leaning Institute for Policy studies, America’s 20 wealthiest people own more wealth than the entire bottom half of the population—152 million people in 57 million households. The top 100 own as much wealth as the entire 44.5 million-strong African-American population (there are only two African Americans on the list), and the top 200 have more than the entire 55 million-strong Latino population (there are 15 Latinos on the list). To make an international comparison, the 400 have more wealth than the GDP of India, arguably the most up and coming big economy on the planet. The Rise of the self-made Not all the news is bad, however. The proportion of the 400 who inherited their money has been steadily decreasing. There are more self-made billionaires than existed in the 1980s. Kaplan and Rauh report that since the 1980s the share who grew up wealthy fell from 60 percent to 32 percent. This does not mean so much the return of Horatio Alger --- the share who grew up poor remained constant at 20 percent --- but that most super-wealthy came from affluent but not rich families, which gave them some head start, notably in education.They did not hand the keys to the kingdom to their offspring. Rather than country clubbers clipping coupons, the rich since the 1980s have become largely, if not entirely, self-made." Kotkin and Kurimska go on to discuss which industries have created this wealth, which regions have attracted the wealthy, and then wrap up with a summary. Read it all it is worth your time. None of this should be a surprise, but Kotkin does seem to be surprised, and his conclusion seems very misplaced. At one point he compares the current crop of wealthy with the post WWII wealthy, and at another he compares them to the turn of the 20th century wealthy, but todays wealthy do not resemble those groups. Turn of the 20th century, and post WWII wealth occurred in the middle of the Industrial Revolution, both were making wealth only once the new economic model was set, and long after the confusing early wild, wild west period. Today we are in the midst of creating a new economic model, which will transform society, work, culture, economy, technology, personal lives, living arrangements, housing, everything really. It would be most appropriate to look back at the changes at the end of the hunter/gatherer period going into the Agricultural Revolution, but there are no records for this. However, it is the time when humans underwent the most massive changes to each and every institution. The next most appropriate time would be to look at the change from the Ag Revolution to the Industrial Revolution. While the changes here were dramatic, I suspect they will ultimately prove less extensive then the changes we will see with the current shift to the Information Revolution. I find the weakening of the position of the average person to be essentially something we should expect. The average person does not have the skills or knowledge to be maximally productive in the new economy, so he remains in the old, and that, of course, pays much less. Only a few people, and, they only accidentally, discover the things which will form the new economy, even fewer capitalize on these findings. Those that do become billionaires. The wealth inequality is a natural spasm which occurs due to the chaotic changes occurring to nearly all human institutions. As the economic model becomes more well known, the lottery like effects of the early period will lessened, and more people will be able to follow the model, and build wealth, albeit a far lesser amount than the early transition "lottery" billionaires To reach steady state, the Ag Revolution took millennia , and the Industrial Revolution took more than a century. The Information Revolution will only take a few decades. The result with be income inequality, for a while, then a shift where the average person becomes increasingly productive within the new economic framework. This does assume we will follow the same longterm pattern after revolutionary economic change. I can see no reason why that would change during this economic revolution. Kotkin ends with this graph, "The prognosis for the future of American wealth, then, is for an ever-expanding role for both tech and private investors, and a gradual shift away from basic industries that are geared to our diminishing middle class. This may not be good for America but will be wondrous indeed for the ever more powerful, and outrageously wealthy, new ruling class." If this is a short term prognosis, I would agree, if it is longterm, I would strongly disagree. I fully expect that by 2100 we will see the average American's life will have improved by an order of magnitude. The comparison would be to compare lifestyle between 1700, near the end of the Ag Revolution, to the lifestyle of the average American today. Just as the accumulated wealth during the initial decades of the Industrial Revolution propelled it to its peaks in the late 20th century, so will the wealth created today propel the Information Revolution to even more incredible peaks. While the next few decades will be problematic, what with the decline and fall of the blue model economics, our children, in the end will lead wealthier, safer, and more productive lives than we. Another Climate Alarmist Admits Real Motive Behind Warming Scare
. . . redistribute wealth. "Have doubts? Then listen to the words of former United Nations climate official Ottmar Edenhofer: “One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with the environmental policy anymore, with problems such as deforestation or the ozone hole,” said Edenhofer, who co-chaired the U.N.’s Intergovernmental Panel on Climate Change working group on Mitigation of Climate Change from 2008 to 2015. So what is the goal of environmental policy? “We redistribute de facto the world’s wealth by climate policy,” said Edenhofer. For those who want to believe that maybe Edenhofer just misspoke and doesn’t really mean that, consider that a little more than five years ago he also said that “the next world climate summit in Cancun is actually an economy summit during which the distribution of the world’s resources will be negotiated.'" All that remains unspoken is the desire to bell the American economy with massive regulations and restrictions. Why? Thank American-style capitalism for this chart - AEI America is economically accelerating away from the other nations, even the wealthiest nations. Note that Sweden began to reform its welfare state just before its economic performance began improving in the 1990s. Sweden 'slimmest Nordic welfare state ' "'The generosity of the system has declined," said Gothenburg University politics professor Jonas Hinnfors. "Much of this already started changing in the 1980s and especially in the 1990s.' In the wake of a banking crisis in the early nineties, Stockholm scrapped housing subsidies, reformed the pension system and slashed the healthcare budget. A voucher-based system that allows publicly funded, privately managed free schools to compete with state schools was introduced, and has drawn attention from right-wing politicians elsewhere, including Britain's Conservative Party. In 2006, conservative Prime Minister Fredrik Reinfeldt's government accelerated the pace of reform, tightening the criteria for unemployment benefits and sick pay while lowering taxes. Income tax in Sweden is now lower than in France, Belgium and Denmark, and public spending as a share of GDP has declined from a record 71.0 percent in 1993 to 53.3 percent last year. Once the darling of progressives, Sweden has become a model for free-market-leaning thinkers including British weekly The Economist, which last year hailed the scaled-down Nordic model as "the next supermodel." "They offer a blueprint of how to reform the public sector, making the state far more efficient," it wrote." Tragically, this is one of the most useful lessons coming out of Europe today, yet neither other European countries nor America's left/progressives are willing to accept this received wisdom, and implement it. The real problem is the old progressive system allowed extensive graft and corruption, and politician find this invigorating, while the reformed system allows little room for graft and corruption. The other received wisdom coming from Europe is that the endemic political corruption, family structure, and business/employment relations of the southern European countries make them a model to avoid at all costs. They will likely return to a sub-first world economic status unless they change. As the article discusses, the budget bite which is affecting nearly all of Europe, and nearly all of the United States is serious, and demands political, economic, and welfare state reforms. Ultimately, I suspect that all will be forced to move to a blend of American and Swedish models. Here at the End of History we are finding that while we understand the macro level pillars of republican governance, free markets, and reformed religions, there is much to accomplish at the micro level implementing the three pillars with respect to each institution. So, applying the End of History received wisdom to education means determining whether vouchers, or some other mechanism works better than public schools, and whether those vouchers should be extended to all schools, or only secular schools, etc. Back to the subject at hand. America is accelerating away from the rest of the world economically. This is causing much consternation among the elite in many nations. Sweden has apparently found a way to maintain a safety net which is greater than that offered by America but also create greater economic growth. Global warming is a policy run amok, its underlying goals are venal. The idea that limiting economic growth, and per capita GDP will somehow be a benefit is wrong. We have seen that over time wealth limits population, and solves problems like pollution. This will continue to happen and improved the lives of all. Limiting economic growth in light of this is a human rights violation of the greatest magnitude. Both Sweden and America can learn much form each others economic models. Europe would do well to forget the punitive attempts to shackle America's economy, and instead take to heart the best options arriving from the American, and Swedish economic models. Making Work Work in the 21st Century
"These new forms of work are going to continue to expand, and under the right conditions they can mean more flexibility for both workers/contractors and the businesses that bring them on. But we still have a system of benefits and regulation based on the old model—the paternalistic corporation. Benefits ranging from health insurance to retirement savings to unemployment and disability have yet to be established in a sustainable way for this new class of workers. There’s an opening here to create a new kind of financial services firm that can process payments and manage benefits for contractors and businesses in the gig economy, but this will be difficult to accomplish without changes to state and federal employment law." The fault line breaks between the Millennials and the Boomers. Ask a Boomer and he will tell you how everyone wants to work an 8-5 job 40 hours per week. Ask a Millennial and she will tell you she wants more flexibility, not a rigid 8-5 routine, but hours which suit her schedule, and days too, and she might not want to work the full 2,000 hours per year. Instead she might want to spend 6 weeks in Europe. "Over time, more and more Americans will likely operate in the gig economy, mixing part time and temporary employment with independent contractor jobs. People who work in this world should not be second class citizens, and they should not be inundated with the crazed paperwork requirements of an employment system that is oriented to old-fashioned long-term employment. Taxes need to be collected, retirement savings need to be accumulated, and people have to be included in disability, healthcare, and unemployment insurance programs, some of which will need to be redesigned to accommodate job-hopping and gig work. And that structure needs to be flexible and cost effective enough to make it easier for businesses to create jobs and for people to piece together a living from several different activities." The big change here is the need to apply creative destruction to the entire employment safety net. The Boomers will be shocked by this, but the Millennials will understand the need, and with a small amount of prompting will be willing to indulge these ideas. These changes do not need to alter the outcomes for people still in the old programs, although it would be appropriate to offer them buyouts to move to the new replacement programs, which will be, without doubt, better. Many of these changes will likely create strong pressure to eliminate the income, corporate, estate/gift, and payroll taxes, and convert them into some sort of consumption/sales tax. This would be a positive outcome. On the safety net side, the individual should be able to own, and control his own safety net assets, although among the poorer we will likely need to continue some sort of government assistance. The Third Way offers some answers to these issues, and I am sure we will find new arrangements once we begin to discuss these issues more deeply. "All this is part of one of the most important and complicated tasks our society faces: creating an institutional and legal framework for an information economy that will be as different from the industrial economy as that economy was from the agricultural economy that came before it. At the moment, both political parties seem more interested in peddling competing brands of nostalgia than in promoting a workable vision for the post-industrial economy in which millions of Americans already live and work." Yes, and failure means something more like this, Japan’s elderly turn to life of crime to ease cost of living - FT.com Japan has a debt of approximately 240% of GDP. What they spent that money on is unclear, but it is clear it was not on retirement funding for the elderly. "Japan’s prison system is being driven to budgetary crisis by demographics, a welfare shortfall and a new, pernicious breed of villain: the recidivist retiree. And the silver-haired crooks, say academics, are desperate to be behind bars. Crime figures show that about 35 per cent of shoplifting offences are committed by people over 60. Within that age bracket, 40 per cent of repeat offenders have committed the same crime more than six times. There is good reason, concludes a report, to suspect that the shoplifting crime wave in particular represents an attempt by those convicted to end up in prison — an institution that offers free food, accommodation and healthcare." Yikes, Japan's oldsters are breaking into prison?! "The mathematics of recidivism are gloomily compelling for the would-be convict. Even with a frugal diet and dirt-cheap accommodation, a single Japanese retiree with minimal savings has living costs more than 25 per cent higher than the meagre basic state pension of Y780,000 ($6,900) a year, according to a study on the economics of elderly crime by Michael Newman of Tokyo-based research house Custom Products Research." The solution for a fiscally healthy society would be to calculate the real cost of living for these retirees, and then provide financial assistance to alleviate this poverty problem. Prison is a very expensive alternative. But Japan is not a healthy society. It is a society with the worlds largest government debt, and an unbalanced budget which requires the government to borrow more each year. There is simply no more money for such trivialities as old age welfare pensions. Or something. To avoid a similar outcome the US needs to rethink our welfare state, reform our welfare state, and build something better. The progressives on both sides of the political isle will fight this tooth and nail! Mish has a nice piece on the gig economy . . . The gig economy!
. . . it ends up being a solid look at what gig means, an etymological discussion, and an analysis of the economics of the gigger in the economy. Mish discovers, "In essence, virtually the entire increase in employment since 2010 was in the “gig” economy!" Growth, they name is gig! You really should also click through and read the very good Wall Street Journal article: Contract Workforce Outpaces Growth in Silicon-Valley Style ‘Gig’ Jobs The Journal finds that businesses are generally willing to re-evaluate the non-core functions within the business, and turn to giggers to obtain those services. The definition of "core" is not set, expect it to continue to grow and morph. This change allows businesses, and individuals to adopt the employment changes they want and need. Expect the antiquated Boomer progressives to fight this change tooth and nail. This change will limit governments control over either the individual or business. Progressives will be apoplectic about this. On the other hand, the Millennials will be fighting for these changes tooth and nail. Millennials want more flexible employment, and more control. While it is hard to tell which way this will swing right now, the following article seems to indicate that Boomers are slowly losing some of their power in the market. Tough Markets Catch Up With 1956 Ferrari High end cars are a Boomer investment. There are a few Millennials who like cars enough to invest in them. The GenX'ers are half in half out with the older half of the cohort looking more like Boomers, while the younger half looks more like Millennials. Also, it is the oldest half of the Boomers who are car crazy, The same group that brought us American Graffiti. Expect the car investment craze to lose steam over the next decade, and then begin to fail more rapidly thereafter. This may show us that the swing discussed above may move more rapidly towards the Millennials from now on out. I fully expect the Millennials to continue to move forcefully into the gig economy, making the world the Boomers understand that much smaller. Janet Yellen: Monetary Arsonist——–Armed, Dangerous And Lost
. . . so I will let David Stockman take this round. I am still recovering from my shock that Greenspan turn out not to be the classical liberal he advertised but a Keynesian free money acolyte. Deer in the Headlights Janet is much less than Greenspan, and we are likely at the end of the Feds ability to significantly drive the money supply. As Stockman says, it's the debt stupid! QEInfinity, money pumping, Fed balance sheet padding, none of it will work much longer, the debt is too big, and as Japan found out, once the debt gets too big, you are well and truly fuster clucked. China keeps buying up American companies, and lawmakers are starting to sound the alarm
. . . blithering idiots. "China is buying American companies at a record rate this year, and lawmakers are getting increasingly worried about it. In February, 45 members of Congress signed a letter to the US Treasury Department's Committee on Foreign Investment (CFIUS), stating their concerns about a Chinese-led investor group's bid to buy the Chicago Stock Exchange." I'm old enough to remember when the Japanese buying spree during the 1980s was considered the horror to end all horrors. If you remember, the Japs came in and bought all kinds of assets like Rockefeller Center. Mon Dieu! Then then the nation essentially went bankrupt, and they sold many of these assets and left. The beauty of this was they bought high. and sold at firesale lows! So, exactly why are the American politicians bloomers in a knot over the Chinese coming in and buying American companies for more than any American is willing to pay? Are they afraid of money? Do they think the Chinese will steal our workers? Mon Dieu!!! Only a politician could explain this nonsense. What is happening is the Chinese are beginning to realize that China is a Ponzi, and their money is at risk in China. So, they want to take it out, but can't. But China will let them buy foreign assets, and so the wealthy Chinese come to buy assets. Why here? Because we are the only truly safe and stable country on the planet. Europe has socialismed itself into uncompetitiveness with their over-regulation, and bloated welfare state. Japan is dying, with debt to GDP of nearly 250%!!! The international oil patch is in zombie mode. Where would one go to buy valuable assets which will be available in the years and decades to come? America! They can buy stock, they can buy assets, like corporation, entities, mines, wells, and land. LET THEM! Our businesses will use the money for new productive ventures. That is good for the economy. Why don't our idiot politicians know this? Autonomous Truck Update: Successful Autobahn Test of Platooned “Connect-Equipped” Mercedes Trucks | MishTalk
. . . 3, 2, 1 . . . Good article, and note that while the trucks have drivers today, they will not in the near future. Another change which will limit auto and truck interactions, is the long haul trucks will increasingly travel at night and only travel during daytime where there is low chance of auto truck interaction. This will allow truck platoons to be larger, and to be more efficient. We are facing a 10% reduction in fuel costs, and the loss of a significant number of human drivers will also drive down costs. This will have a significant deflationary effect on the economy, and lower demand for oil. The self drive revolution will happen, there is nothing that can be done to stop it. Even the federal government attempting to regulate the revolution will be thwarted. “Democratic Socialism” Is a Contradiction in Terms
"Democracy means different things to different people. To some, democracy is an end in itself, a goal that may be worth sacrificing lives for. To others, democracy is at best a means for making a small government somewhat responsive to its citizens or a means to transfer political power peacefully. Thus, as F.A. Hayek wrote in The Road to Serfdom, “Democracy is essentially … a utilitarian device for safeguarding internal peace and individual freedom.” Democracy poses an insurmountable problem for socialism. But I think most of us can agree that the ordinary meaning of democracy is at least tied to the concepts of political self-determination and freedom of expression. In this way, people tend to think of democracy as a shield against others more powerful than themselves." * * * "As with democracy, you can interpret “socialism” as either an end or a means. Some people, for example, regard socialism as the next stage of Marx’s “laws of motion of history” in which, under the authority of a proletarian dictatorship, each contributes and receives according to her ability. A more moderate version of socialism might envision a politico-economic system that places particular goals, such as “social justice,” over any individual’s profit-seeking plans. Or, you can think of socialism as a form of collectivism that uses a particular set of means — political control over the means of labor, capital, and land — to implement a large-scale economic plan that directs people to do things they might not have chosen. In its use of collectivist means, this kind of socialism has much in common with fascism, even if the two differ strongly in the ends they seek to achieve." * * * "As F.A. Hayek eloquently put it, That socialism so long as it remains theoretical is internationalist, while as soon as it is put into practice … it becomes violently nationalist, is one of the reasons why "liberal socialism" as most people in the Western world imagine it is purely theoretical, while the practice of socialism is everywhere totalitarian." * * * "Tocqueville said it well: Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude." * * * "Someone might reply that while such problems might apply to full-fledged socialism, the kind of democratic socialism that today’s intelligentsia advocate is far less extreme. If so, the question becomes this: In a mixed capitalist economy — regulatory-state, welfare-state, or crony capitalism — to what extent do these consequences emerge? How robust is the trade-off I’m describing? Clearly it’s a matter of degree. The greater the degree of central planning, the less the authority can put up with deviation and individual dissent. I also realize that there is more than one dimension along which you can trade off self-direction for direction by others, and some of these dimensions do not involve physical coercion. For example, groups can use social or religious pressure to thwart a person’s plans or shrink her autonomy, without resorting to physical aggression. More socialism means less real democracy. But there is no denying that along the dimension of physical coercion, which is the dimension along which governments have traditionally operated, the more coercive control there is by an outside agency, the less self-direction there can be. Coercion and self-direction are mutually exclusive. And as government planning supplants personal planning, the sphere of personal autonomy weakens and shrinks and the sphere of governmental authority strengthens and grows. More socialism means less real democracy. Democratic socialism, then, is not a doctrine designed to protect the liberal values of independence, autonomy, and self-direction that many on the left still value to some degree. It is, on the contrary, a doctrine that forces those of us who cherish those liberal values onto a slippery slope toward tyranny." Young people are ok with this because this represents their entire lives up to this point. They have lived under a form of family socialism where their parents have made the majority of decisions for them, and what decisions they are allowed to make, are vetted by the parents. To them socialism is family. Progressivism is a slightly less authoritarian sibling of European Socialism, but at its roots are the same, and it has the same pressures towards tyranny. This is made crystal clear in Obamacare. You must have medical payments insurance. The wizened Mandarines will regulate exactly what qualifies as medical payments insurance. Failure to follow the directives will result in penalties. It destroys individual responsibility, and liberty, in exchange for harsh unyielding regulation. Welcome to the machine. The great allure of socialism/progressivism is that it absolves the individual of personal responsibility. Its great threat is tyranny. The solution is to move to a place where the government backstops the individuals security, and provides mechanisms by which the individual may personally control his future security. So, for example, the 401K, the IRA, the HSA, all provide incentives for the individual to protect his future security. Marrying this with a reformed welfare state which would provide the actual poor with incentives to work, but which would not create draconian assistance cutoffs, could result in less welfare, and more prosperity for the poor. But for the politician, this has no value, as their is less room for graft, or corruption. The current welfare state, however, offers a rich vein of graft, corruption, vote buying, etc. It is time for a change. Socialism is slavery, free markets are liberty. Chose wisely. How Saudi Arabia Turned Its Greatest Weapon on Itself
"The oil wars of the 21st century are underway. In recent years, the Saudis have made clear that they regard the oil markets as a critical front line in the Sunni Muslim-majority kingdom’s battle against its Shiite-dominated rival, Iran. Their favored tactic of “flooding,” pumping surplus crude into a soft market, is tantamount to war by economic means: the oil trade’s equivalent of dropping the bomb on a rival. In 2006, Nawaf Obaid, a Saudi security adviser, warned that Riyadh was prepared to force prices down to “strangle” Iran’s economy. Two years later, the Saudis did just that, with the aim of hampering Tehran’s ability to support Shiite militia groups in Iraq, Lebanon and elsewhere." This is a comedy routine, the House of Saud has no substantive economy outside of oil, while Iran does, and is already rebuilding that economy after the elimination of international sanctions. ". . . [I]n 2011, Prince Turki al-Faisal, the former chief of Saudi intelligence, told NATO officials that Riyadh was prepared to flood the market to stir unrest inside Iran. Three years later, the Saudis struck again, turning on the spigot. But this time, they overplayed their hand. When Saudi officials made their move in the fall of 2014, taking advantage of an already glutted market, they no doubt hoped that lower prices would undercut the American shale industry, which was challenging the kingdom’s market dominance. But their main purpose was to make life difficult for Tehran: “Iran will come under unprecedented economic and financial pressure as it tries to sustain an economy already battered by international sanctions,” argued Mr. Obaid." There is a reason Lawrence of Arabia was necessary, it is not because the Arabs are great strategists. The elimination of the international sanctions allow Iran to begin quickly rebuilding their economy. The House of Saud, on the other hand is faced with oil prices which do not pay the bills. The Saudi's are in talks with various business consultants on developing and building their economy, to create an economy outside of oil. This is far too little, far too late. And who will be manning these industries, Saudis? What a joke. Saudis only want a position of authority in the company, the actual work must be done by others. It was not Iran which came under "unprecedented economic and financial pressure," but Saudi Arabia. "And then there is Saudi Arabia itself. All the evidence suggests that Saudi officials never expected oil prices to fall below $60 a barrel. But then they never expected to lose their sway as the swing producer within the Organization of the Petroleum Exporting Countries, or OPEC. Despite wishful statements from Saudi ministers, the kingdom’s efforts last month to make a deal with Russia, Venezuela and Qatar to restrict supply and push up prices collapsed. The I.M.F. has warned that if government spending is not reined in, the Saudis will be bankrupt by 2020. Suddenly, the world’s reserve bank of black gold is looking to borrow billions of dollars from foreign lenders. King Salman’s response has been to promise austerity, higher taxes and subsidy cuts to a people who have grown used to state largess and handouts. That raises questions about the kingdom’s internal cohesion — even as the king decided to shoulder the burden of regional security in the Middle East, fighting wars on two fronts. Has there ever been an oil state as overleveraged at home and overextended abroad? Meanwhile, by concluding the historic nuclear agreement, Iran is getting out from under the burden of economic sanctions. It will not be lost on Riyadh that this adds another oil producer to the world market that it can no longer control. The instability and economic misery for smaller oil-producing states like Nigeria and Azerbaijan look set to continue. But that’s collateral damage. The real story is how the Saudis have been hurt by their own weapon." This article is a primer on how low oil prices are helping peace loving democracies, and throttling the more malignant oil tyrants. The author makes a serious foot fault early in the article writing, "In the West, we have largely forgotten the lessons of 1974, partly because our economies have changed and are less vulnerable, but mainly because we are not the Saudis’ principal target." This misunderstands the relationship between the House of Saud and Wahhabism. The US, and the West are the target, the principal target. Iran is only a regional target, and is considered only a religious pretender, which the House of Saud believes it can swat like a fly. The House of Saud is not an ally, just as the USSR was not an ally during, and then after WWII. After we gave the USSR massive support of food, weapons, train cars, fuel, airplanes, trucks, jeeps, pretty much everything but tanks, rifles, bullets, and men, Stalin turned agains the US, and the West, and opened a new front, the Cold War. If the House of Saud ever though the US were weak enough, it would do something similar. It is not an ally. While Iran is also not an ally, it could be, if we cultivate economic prosperity, and adopt a more rational Middle East policy. I am not holding my breath on either. For now, our primary policy in the Middle East needs to be the continuation of low oil prices. The House of Saud needs to be broken, and the Islamic Reformation needs to move apace. This will only happen if the House of Saud is placed under serious economic pressure to the point it fracture sufficiently to separate from the canker of Wahhabism/Salafism. The resulting loss of funding for Wahhabism/Salafism would impoverish this terror funding entity, and allow the Shia to pressure for actual reformation. Just as the Catholic Church needed reformation prior to 1500, so does the Wahhabist/Salafist Islam. This is not a war we need be involved in, but it is a war we should monitor closely. It would be nice if we were not saddled with the worst political class in history, but we are, and we will need to force them to do what is necessary, not what is expedient, nor what is most beneficial to the political class. The destruction of the cancerous oil tyrannies, and the Islamic Reformation will be built on the back of low oil prices, which is in major part due to shale oil, and fracking. We should be expanding this not limit available, drillable reserves. This will ensure low oil prices for a very long time, perhaps well past the time we leave oil as a primary energy source. |
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