Tennessee Votes to Cut Diversity Spending So Students Protest
. . . parody that The Onion! "The House and Senate in Tennessee have both voted to cut diversity spending (that is, to stop wasting money on a an office that makes leftists feel good) and, as we read in this IHE story, many students staged a protest by walking out of class and obstructing sidewalks on campus." Why bother reading parody, even great parody when the progressives are outstripping it at every turn? I am rethinking my position on the cost of college. If these dull witted sheeple are bound and determined to be charged for all manner of nonsense, who am I to stop them. Revel in the debt slavery sheeple!
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Walter Russell Mead starts out discussing the fact that school funding is a serious problem . . .4/11/2016 A Drought of Ideas
. . . but ends indicting the entire political system noting that the failures of government create "a weakness that undermines the strength of our republic at home and endangers world peace." This is a seminal article, which you must read. I think it so important I will not comment or quote it here but implore you go and read the whole thing. This is the slow strangling death of the blue model. It must be replaced and very soon. The longer we wait the more damage we do here and abroad. Mead ends, "And of course behind the crisis of state and municipal governance, there is the broader problem of the crises of the American middle class and of American society. These are big problems and they require bold, unconventional thinking. We clearly aren’t getting enough of that today and the nation knows it. Establishment politicians leave the public unsatisfied; that opens the door to the quacks and the snake oil salesmen. But the failures of social imagination and political vision that weaken our country’s political order have graver consequences still. A nation as poorly governed as the United States now is cannot long serve as the cornerstone of world order: the combination of budget pressures and political dysfunction at home is already sapping the nation’s will and capacity to lead abroad, and this is likely to get worse rather than better without a course change. The problems of a predominantly African-American college on the South Side of Chicago may seem like small beer to those not directly involved, but they point to something larger. The decay in our institutions points to a weakness at the heart of liberal society, a weakness that undermines the strength of our republic at home and endangers world peace. It is time for America to step up its game, and as the first step in that process it is time for a wave of creative social thought, some coming from the Right and some from the Left, so that the present stale competition between parties bereft of serious policy ideas can be replaced by something meaningful and real." It is time to finally ditch the progressive blue model, and turn fully to embrace the Third Way with its ownership society, streamlined, reformed welfare state, and smaller more independent government entities. Or we can just wait for this buggy to fall apart, your call. 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. Study Finds Public Pension Promises Exceed Ability to Pay
. . . and many will fail, or partially fail stranding many of the pensioners. We've discussed this before. This is a very serious problem which is treated un-seriously because neither the politicians, nor the unions want to be limited in how much future money they can throw at the union members. This is shockingly unethical on the part of both the politicians, and the unions. Worse yet, every time I take a serious look at this problem it has become worse, more endemic, broader, and more intractable. I fully expect this to be part of the Great Realignment where Millennials take Boomers to task for screwing them out of trillion of dollars. Unless the Goal Is Lower Living Standards, Bernie Sanders Has Learned the Wrong Lesson from Europe
. . . at how poor it feels. Oregon, Maddogshome, is number 18 in state to state GDP (PPP) comparisons. Mark Perry has a nice comparison between US GDP per capita by state vs. European countries and Japan, Korea, Mexico and China. I was surprised that Oregon ($54,858.00) beat all of the listed countries, and even beat the US GDP (PPP) average ($54,629). Yes, oil rich countries like Norway at $64,856.00, Luxembourg at $97,661.90, and Switzerland at $57,235.30 are outside the EU, but within Europe and do very well, but small Norway's economy is substantially oil dependent, and both Luxembourg, and Switzerland are small countries with large banking, and financial sectors. These are factors unreproducible for the US. Like Dan Mitchell, I like and respect much of what the Nordic nations have done, but I suspect they will need to follow, and even improve upon Sweden's welfare reforms. Frankly, I suspect that the US, the Nordic countries, Switzerland, and a few other nations are beginning to slowly but surely find the sweet spot here at the End of History. Exactly what the sweet spot is, has yet to be defined, and I suspect that we will find many interpretations. The ultimate question is how much security the people feel comfortable with versus how much liberty they desire. The charts and links above seem to point out that the US has done amazingly well as a large nation in creating the economic liberty/wealth aspect of the equation, while the smaller more homogenous Nordic countries have done particularly well in creating a safety net. Sweden's welfare reforms have been particularly productive. If the US would begin adopting more of the Swedish welfare reforms is seems likely we could move more quickly to define the sweet spot. When it comes to ranking countries by per capita GDP (PPP), The US position is amazing. It comes in at 10th after 5 tiny oil kingdoms, and 4 tiny trade, and/or banking and finance countries. Unless the progressives have their way and the US economic engine is hobbled, it is clear the US will continue to accelerate economically forcing the Nordic nations to continue with welfare reforms. The alternative is to be left behind as The US pulls away economically. I have no doubt the Nordic nations will not allow this to happen. The Southern European nations are another story completely. The graph found in Dan Mitchell's piece show how clearly the southern European nations are falling behind in the economic race for per capita prosperity. This graph clearly shows that there is something about the germanic states, and areas which allow them to become far more prosperous than other parts of Europe. These nations include Norway, Sweden, Denmark, Germany (although former East Germany seems to have been damaged by its time as a Soviet Satellite), Switzerland, Austria, and the germanic parts of Italy, and France. Also interestingly the north of Spain is particularly prosperous, as is southern Ireland (an historic change). Notice also how the large cities in many of the lower GDP countries are GDP sinks, for example, London, Paris, Lisbon, Madrid, Athens, and Budapest all show up as anomalously prosperous areas against a backdrop of much lower prosperity. While we should not totally discount the tiny super prosperous nations like Switzerland, Luxembourg, Singapore, Hong Kong, and Norway, these offer far fewer opportunities to learn than will the slightly larger to medium sized nations like the Nordic countries. The super tiny tend to be wealthy because they excel at something like banking, or trade, or are sitting upon a large pool of oil. Large nations cannot replicate these specific benefits. At this point the very best thing America can do is continue to drive forward economically, creating prosperity for all of our citizens. This will pressure the other nations of the world to follow suit. The ultimate goal is to create sufficient wealth to fully eradicate world poverty. Stanley Druckenmiller: "This Is The Most Unsustainable Situation I Have Seen In My Career"
. . . is the Millennials awakening to the understanding that the Boomers have seriously screwed them to the tune of trillions of dollars. The Great Realignment of resources will be extremely painful, primarily because only one half of the Boomers have any retirement savings at all. We have friends whose parents needed to sell their primary residence and move into a much smaller place near their children because they simply never saved for retirement, but retired anyway. Now they do not have the money to support themselves. Expect to see this repeated often during the next few decades as the Boomer retire. We need to leave the progressive welfare system and build a new, and better system to protect the elderly in old age, the poor today, and those whose medical costs are too significant to bear alone. We need to do this soon. Yellen Gets Lovey-Dovey in Speech Citing “Other Tools” and More QE | MishTalk
. . . in a very weak speech to the Economic Club of New York. Mish ends, "'In essence the way in which it worked was by signaling that real assets were inferior to financial assets. The Fed, by going into an untested program of QE effectively ended up making things worse off,” said Hunt. At best, the Fed temporarily shifted some demand forward by inflating financial assets. In the process, the Fed created asset bubbles in equities and junk bonds, stimulated oil production via cheap financing to the point of a bust, and exacerbated problems of income inequality. QE wasn’t worth the problems it created. But the Fed is prepared for more of it." This is not quite true, the collapse of oil prices has had a positive economic outcome on the myriad oil despots the world round. However, this could have been accomplished without all the added pain, and problems which arose from the asset bubbles, and other problems. Is Chicago the next Detroit?
The state of Chicago is desperate. The state of Illinois is desperate. Bills Come Due in Illinois: $22 Billion The state of Chicago's schools is desperate. Chicago Is Falling Apart The blue model is done, shouldn't we retire it? Chicago Public School System Threatens Massive Tax Hikes Via “Backdoor” Bond Guarantee | MishTalk
. . . massive meaning 100%. "The Chicago Public School (CPS) system is bankrupt in every way but the final declaration. That declaration is a foregone conclusion, and bondholders will take it on the chin. CPS Treasurer Jennie Huang Bennett disagrees with my assessment. So does Matt Fabian, a partner at Concord, Mass.-based Municipal Market Analytics. For her part, Bennett explained in a January online presentation that if the school district were unable to make a debt payment, “the taxes are then extended and collected for the benefit of bondholders.” Fabian, Bennett, and others think “backdoor” tax guarantees hidden in bond offerings mean Chicago taxpayers will necessarily have to pony up if the school district defaults." Progressives live in a straw-man world. In the real world, people whose tax rate inexorably rises towards 100% vote with their feet. Well, the wealthy, and the upper middle class. The lower middle, and lower classes who don't have the money are slowly crushed until leaving is less costly than staying. Then even they leave. Last one out turn out the lights. Fortunately not everyone in the state is clinically insane. "On January 20, the “B” word hit Chicago as Governor Proposed Bankruptcy for Chicago Public School System." "This mess cannot be fixed with tax hikes or fairy dust from Springfield. There simply is no money. Heck, solvency of the entire state is in question as Illinois IOUs Projected to Hit $10.5 Billion, $163 Billion Total Accumulated Liabilities. Let’s stop pretending there is another solution for CPS, because there isn’t. A CPS bankruptcy looms. The sooner Mayor Emanuel admits that, the better for him, the better for Chicago schools, the better for Illinois, and most importantly … the better for the kids! In all this bickering, it seems we have forgotten about the kids and the taxpayers." The state is a zombie. The City of Chicago is a zombie, the school district is a zombie. The only cure is bankruptcy, but not for the state, there is no hope for the state since there is no bankruptcy protection for the state. Frankly, the state of Illinois needs to evaluate every municipality, every school district, every bankruptcy possible political subunit for fiscal health, if they are healthy fine, if not, they all should be washed in the blood of the bankruptcy provisions. The state of Illinois will need to cram a boat load of financial insolvency down the throats of the municipal subunits in order to free up enough cash flow to become even remotely functional. If this doesn't happen the entire state of Illinois will fiscally seize. This will look like Chernobyl, not a simple train wreck. Rauner seems to understand the existential possibilities, the progressives do not. I just spent $154 on 26 lightbulbs because they will save me a bazillion dollars
. . . unless he is speaking of the savings in Zimbabwe dollars. Zimbabwe waves farewell to its 100-trillion-dollar bills. I tried other "low energy" lighting in the past. I replaced all the lights I could possibly replace. The promise was, dramatically lower costs, and dramatically longer life, but at a much higher cost. This was a failed experiment. No matter how I analyzed my electric bills from the 4 years prior to the change, and the 4 years after the change, there was no discernible savings. I have a big house with lots of lights, gas heat, and we do not use air-conditioning, yet, no discernible savings. The second shoe was just as bad. All those bulbs have failed, and been replaced. They had nowhere near the advertised lifespan. Unsurprisingly, there was a third shoe, crappy light. Maddogsfamily suffered through years of dull, dishwater light, what a waste. At the demise of the incandescent bulb I bought cases of the old bulbs, in various wattages, so I would have a supply should the replacements be costly, crappy, and short lived. I will continue to use these until I see strong evidence that the new super bulbs are roughly equal in cost, light, quality, and life. I should have enough to eek me through to the grave. Suffer on Vox, er, Tim, spend lavishly, as only a true believer can. And never look back, if you do you will likely be very disappointed. |
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