Posts Tagged ‘Government’

Photo by Steve Wampler

It has been interesting to watch the gnashing of teeth related to Wall Street bailouts and bonuses.  I clearly understand the outrage associated with allowing those who benefit from Washington largess being allowed to take home $millions.  For the record, I am not a big fan of the “too big to fail” argument.  As one who must compete with Wall Street types to pay my kid’s college tuition, too big to fail was preceded by “big enough to have massive competitive advantage in the marketplace.”  So, do not count me as one who feels a need to defend Wall Street.  (They still have funds necessary to pay for their respective PR agencies.)  I merely react to the argument that those who get Washington hand-outs should have limited incomes.

In our economy, we have plenty of examples of industries in receipt of government subsidies (bailouts / handouts / welfare / etc.) where employees are made very comfortable through the generosity of taxpayers.

The last time I looked, Major League Baseball was benefiting from a government granted monopoly.  By law, only 30 organizations (owners) have the privilege of paying A-Rod $25 million or more a year to play baseball.  According to ESPN, in 2008, the average franchise value for a major league baseball team is $471 million.  In the absence of the government blessings (read “bailout”), would a baseball team fetch much?  While not the $5 Billion threshold provided in the Wall Street legislation, each of these franchises is receiving a healthly little gift from Uncle Sam.  Even though, you would be hard pressed to find “employees” of these organizations taking home less than $250k, and I do not see outrage directed at players (not counting strikeouts and blown saves).

Lets go right to the meat of the matter.  Consider also broadcast TV.  Those major networks are given bandwidth each year by the FCC.  While difficult to value, surely access to the airwaves is worth a pretty penny.  A good proxy might be the wireless bandwidth auctions that require telecom providers to pay $billions for the right to use little pieces of frequency.  Should Jerry Seinfeld be asked to repay the $1 million per episode he was paid in compensation?  Brian Williams reportedly makes $4 million per year selling airtime that we taxpayers could otherwise sell, but give to NBC.  Where is the outrage?

Conclusion:  Yes, I am one of the millions who feel that Wall Street misbehaved.  Sure, I think that paying a bonus to the guy who made the mistakes is wrong.  But, we have to admit that Wall Street is not the first industry to benefit from the trough, and that most of the employees in these organizations had no decision-making responsibility and caused no problems.

Courtesy of The Washington Blade

The Supreme Court Justices of Iowa need to be praised for upholding individual rights.  Their decision on April 3rd stating that preventing gay marriage is unconstitutional was a huge milestone for gays, and just as importantly, for all individuals. 

Before I get into this ruling, I need to make it clear that I’m not a lawyer and know little law stuff.

Some, such as Newt Gingrich, will state that the justices went beyond their authority in making this decision, that they went against the people of Iowa, that they are making laws in the courtroom.  Newt, I’ve liked you in the past for your fiscal conservatism, and I thought of you as a peer when it came to favoring individual rights, but you lost me on this.  How could you honestly stand on your soapbox, proclaiming that the Iowa SCJ’s overstepped their duties.  Their duties consist of checking the other two branches of government and ensuring the legislature makes no laws that go against the state constitution.  You have narrowed the job description to “interpreting the law” but that is wrong.  The justice system is there to police the government, not citizens.  Remember Ayn Rand’s words when it came to the U.S. Constitution (and I am extending it to state constitutions):

“Ours was the first government based on and strictly limited by a written document—the Constitution—which specifically forbids it to violate individual rights or to act on whim. The history of the atrocities perpetrated by all the other kinds of governments—unrestricted governments acting on unprovable assumptions—demonstrates the value and validity of the original political theory on which this country was built.”  -from Philosophy:  Who Needs It? by Ayn Rand

That is exactly what they did.  As stated in their summary, “The court reaffirmed that a statute inconsistent with the Iowa Constitution must be declared void, even though it may be supported by strong and deep-seated traditional beliefs and popular opinion.”  How is that inconsistent?  The law, as enacted, attempted to treat some people differently than others based solely on their sexual orientation.  How could anyone defend that?  And even more importantly, the justices did something admirable by suggesting that the definition of marriage should not and can not be defined by the government.  That would just open the door to more government involvement in our personal lives.  They evade my space enough.  I don’t want to provide them with the right to decide who I can and cannot marry.

Now, those that were defending the infringement of individual rights were hoping to convince the justices that it would hurt the stability of opposite sex marriages, that children would be hurt by same sex marriages, and that it would increase the costs to the state government.  Let’s take these one at a time.  I’m straight and happily married to Mrs. H (not Mrs. Hart from Hart to Hart but someone even more sexy and elegant than Stefanie Powers).  If I read the summary opinion correctly, the defendants were arguing that I may be at risk of leaving my wife if same sex marriages were legal.  News Alert:  THE LAW IS NOT PREVENTING ME FROM LEAVING MY WIFE FOR A GUY.  I’m not gay and making gay marriage legal won’t “turn me.”  Concerning the second issue of putting children at risk by allowing gay mariage makes no sense to me.  There are way too many crappy straight parents that should be outlawed before we even think of worrying ourselves about gay parents (yes, Angela Suleman, I’m thinking of you).  Lastly, gay marriages will cost the government too much money?  Please.  Willing to sacrifice basic human rights to save a buck?  Was that used to justify slavery?  The lawyer that put that in should be bitched-slapped.

Lastly, let’s talk about Newt’s comment that the court went against the people of Iowa.  According to a Big Ten poll conducted in Decemeber, only a third oppose recognizing gays’ individual freedom to form a legal bond with a person of the same sex.  Call it ‘marriage’ or ‘civil union’.  It doesn’t matter.  The majority of Iowans believe it is none of their business to get involved in a relationship between two consenting adults.  And you, Newt, should too.

From my perspective, he bowed.  And he bowed deep and long.  It doesn’t matter if he was mistaken in protocol or was in awe of meeting a king.  To me, it shows a lack of regard for his position and a lack of understanding of America’s foundation.

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I found your March 28th Opinion piece insulting to my intelligence and demeaning to the accomplishments of all American Individuals. The article displayed your conceitedness, thinking you could mischaracterize past events, take facts out of context, and misstate the thoughts and words of individuals to justify your fantasy land. To respond, I’ll start at the beginning of your manifesto.

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Politicians are not economists and that is the biggest problem.  If you have time to read one long and boring financial piece, I suggest you choose John Mauldin’s Velocity of Money note.  If you choose to have a life and not be bothered with it, let me summarize a significant point within it.  The velocity of money is one of two variables that goes into determining our GDP, or our level of economic activity. 

The formula is GDP = M * V, which is the amount of money in the system times the number of times it trades hands (that’s the velocity of money).  In the article, he has a graph that charts the velocity of money through time.  It has averaged 1.67x (meaning money trades hands 1.67 times in a year) since 1900.  In the last decade, it was in the 2x range.  Currently, it has dropped to 1.72x.  Why the move up and then move down?  The biggest swing factor is the amount of leverage placed on money (either by banks, corporations, governments, or individuals).  The 1990s and early 2000s were years of increasing amount of leverage (debt).  In the past 18 months, we have seen people and enterprises lower their debt levels, preparing for a bad economy.  This naturally lowers the velocity.

Now, why do I say that the government wants to slow us down?  It comes down to the fact that government money velocity is thought to be lower than private sector activity.  The current administration puts the number at 1.5x.  I have heard others says that that is a best case number.  Whatever the real number, when the government spends money, it has less of an impact on our economy that when the private sector does since our velocity factor is greater than 1.5x (again, that may be putting a positive spin on the actual government influence).  For the government to spend this money, they are needing to take it from some place, and that my friends, is the private sector.  So, when the government spends $1, it has the best case scenario of making $1.5 of economic activity.  When you and I spend a $1, we make $1.7 of economic activity.  It’s just basic math.