Business

The Evil Consequences of Sharing the Wealth

“The Cuban model doesn’t even work for us anymore”

– Fidel Castro (HT: Associated Press)

Fidel Castro finally saw the light. It took him long enough, but after lo the decades of multiple-hour Jeremiads, El Jefe has finally made a statement that I can contest on no rational gravamen. The Cuban Model does not work. It does not work for Cuba, it did not work for Russia, Poland or Romania. According to the World Economic Forum, the anemic version of it being exported to the United States under President Barack Obama is not working very well either.

The Cuban Model, you see, is shared ownership of what most societies would deem private property. It involves what our current president, Barack Obama, would refer to as sharing the wealth. In the past two years, according to the World Economic Forum, the United States has gone from being the number 1 country in the world to do business to the number four. This isn’t an epoch-ending crisis, but it’s a tremendous volume of wealth here that we should not be sharing.

The World Economic Forum ranks several aspects of what make up an appropriate business climate. The Associated Press describes the rankings below.

The report ranks 139 countries by assessing business efficiency, innovation, financial markets, health, education, institutions, infrastructure and other factors.

(HT: Associated Press)

The Associated Press article explained the US fall from economic grace via an analysis of the symptoms.

”There has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets,” the group said.

Mapping a clear strategy for exiting the huge U.S. stimulus “will be an important step in reinforcing the country’s competitiveness,” it said.

(HT: AP)

It’s only in the 2nd paragraph that they cut to the chase and really identify what has begun to sap the American economic foundation. The stimulus, like the Cuban Model that Fidel Castro seems to bemoan having adopted, involves an exercise in the very activity that set off Joe The Plumber. The stimulus damages America because it shares the wealth out to people who haven’t done Jack to actually earn or create any of it. The Business Insider explains why the United States is slipping in economic rank.

Take property rights. They’re at the essence of US capitalism. Last year, according to the WEF’s survey of executives, the US was the 30th best country. This year we’ve fallen to 40th.

(HT: Joe Weisenthal)

It gets funnier. Gambia ranked 39th, China, (the Frikken’ Communists), ranked 38th, Jordan ranked 30th, Namibia ranked 20th and Switzerland finished 1st. We are less secure in our property as Americans than the average citizen in Gambia. This gets us away from the economics I originally intended to blog and into more dangerous territory.

The rights to life, liberty and property are the bedrock of all other human rights. America, and other Western Democracies are unique in world history because regardless of where a lady or gentleman may rank in the peerage, a man’s home is, or was, in America, his castle. The other rights we enjoy are buttressed and fortified because we can close the doors, pull the window shades, and lead whatever life we so desire in the secure confines of the space which is ours.

We used to be able to build our wealth and pursue or dreams through the strategic husbanding and allocation of our assets. Now this wealth we so carefully tend, and meticulously build gets taken from us. We get told we have to share it.

If only we were sharing it to the truly downtrodden. I share my wealth almost every Sunday to a church that buys toothpaste, food and underwear for a bunch of homeless people. I derive satisfaction from my admittedly small role in this decent act of charity. But this is different from the wealth sharing done by Progressivism Incorporated©.

Can we really kid anyone that sharing the wealth of productive Americans to build The Chula Vista Dog Walk, The Austin, TX Frisbee Golf Course or President Barack Obama Parkway in Orlando, Florida does any moral good? I just don’t see how this accomplishes anything noble. No shoeless children get shod, no ignorant waifs learn to read, no prisoners of the soul-sucking ghetto get set free.

This is because the stimulus, like every other previous instantiation of the Cuban Model, does not genuinely aim to help any of the people it is said to be undertaken on behalf of. The Cuban Model is about the centralization of dominance and the preeminence of the Totalist State. The wealth is not so much shared, as it is confiscated. It is not confiscated for the sake of what wealth can do, it is confiscated for the sake of depriving its previous owners the freedom of action that comes with the acquisition of property.

Perhaps, if our current president wonders why he gets talked about like a dog, on some days, one of Michael Vick’s dogs, he should have a beer summit. Not with Daffy Joe Biden, not with a Harvard Professor, not with an average Joe from the police forces.

He should talk to Fidel Castro. Ask him how it all worked out. Ask him where all that wealth went that was shared after Battista was deposed. The answer, if Fidel Castro still wants to unburden his soul, would be that the wealth went to the same place as Cuba’s freedom. It all went straight to Hell.

Think of that as we approach Election 2010. We could have six more years in which we have fewer property rights than the average citizen of the Gambia. If things don’t work as well as we hope this November; YES.WE.CAN.

Did Jim Cramer Just Channel Rush Limbaugh?

There are things in life that just make you say “Huh, FTW?” If Cramer’s latest column, “Bad Data Has a Silver Lining” was a desperate bid for attention, it worked! He leads off with a good, provocative question.

Has “bad” turned good? Are we now rooting for crummy housing numbers, miserable housing data, weaker consumer confidence, and, yes, unfathomably horrible employment numbers? Do we now secretly lust for negative numbers?

Cramer goes on to say that the investor class now roots against the short-term health of the economy so that Barack Obama and the Democratic Party will die a thousand deaths on Election Day. He openly claims that people who seek to earn long-term wealth through equity investments are happy to see any piece of news that makes Barack Obama’s continuation in power a more precarious circumstance.

But if you are an owner of stock, any stock, if you are using the stock market for retirement or for savings to put your kid through school or to augment your paycheck, I think you are now beginning to see the silver lining of the miserable economic news: change in Washington. In fact, every time we see a downtick in the popular polls for the administration or Congress the large stockholders I know secretly cheer.

This sentiment is radical. It is too radical for even crazed Right-Wingers like moi. When the economy is bad, people have a really hard time selling their home if they want to move. They are probably attempting to move so that they can find a job. I wish them luck, they will need it! David Rosenberg, for example, sees the distinct possibility of 4 to 5 million jobs being taken out if current trends continue.

I totally understand the desire to see Barack Obama fail. I wish he had failed to pass either healthcare reform or the stimulus package. Both are malinvestments tantamount to state-endorsed brigandage. Thus, I’ll admit that seeing die-hard left-wingers like Joe Weisenthal having to write the following political analysis of the latest InTrade numbers.

There’s really very little for Democrats to be hopeful about come November, and the party’s odds of holding the House (under Democratic control since the 2006 midterms) has fallen to 25% on InTrade.

(HT: Business Insider.com)

Another interesting part of Cramer’s column regards the fear so many people in business seem to have of Barack Obama. When Jim Cramer compares our current president’s anger to the wrath of Richard Nixon, that says a lot coming from a man with Jim Cramer’s political beliefs and worldview.

Rich Karlgaard writes of his friends’ reaction to Jim Cramer’s assertion that people in business and finance feel a fear to speak out. Karlgaard was told the following.

Cramer is so right. And the only reason people will not speak out is because they fear [Obama] will hunt them down.

(HT: Forbes magazine)

Barack Obama has lived the Populist dream of getting to shove around and intimidate Big Business. He clearly chortled while telling America’s most powerful banking executives that he was all that separated them from the pitchforks. His motto regarding his relations to corporate America could be similar to that of Caligula’s: oderint dum metuant.

Jim Cramer, who once endorsed Barack Obama with the catchphrase “Obama’s a recession, McCain’s a depression,” now seems to have buyer’s remorse. Better yet, he has shown the courage to speak out when others have cowered. Yep, Jim Cramer just done said it!

Expect the ever-reactionary Jon Stewart to lampoon and ridicule Jim Cramer some more. I’ve taken shots at the man myself, while blogging the current state of our economy. However, this time, I commend the man’s courage.

Tyranny is destroyed when honest men speak out. Cramer may be wrong more often than right, but he can no longer ever be accused of being a boot-licking coward. Perhaps, Cramer’s fresh acquisition of courage is the harbinger of the end for these “Progressive” neo-fascists. Only through raw intimidation does their horrendous stupidity withstand the light of day.

Welcome To the Grand Illusion

Welcome to the Grand illusion
Come on in and see what’s happening
Pay the price, get your tickets for the show

- (“The Grand Illusion” – Styx)

The party is set to begin. Fanfare will blast from the rafters. Great hosannas will rain down from on high. General Motors, the official car company of the US Government, will be turned back into a private enterprise. The S1 filing with the SEC occurred; the IPO will take place in 30-90 days.

In fairness, it is somewhat of a good news story. GM will no longer be “Gubbermint Motors – Home of The American Trabant!” But there is a sense of artificiality to this entire filing. To quote an old blogosphere meme, “I question the timing!”

Joe Weisenthal, of Business Insider.com, writes up a good bare-bones briefing sheet on the IPO. According to the S1 on file, the underwriting syndicate is to Wall Street what the OJ Simpson Legal Defense Team was to the Legal Profession; a line up reminiscent of the New York Yankees when Joe DiMaggio still swung the stick. Morgan Stanley, JPMorgan, BofA/ML, Citi, Barclays, Credit Suisse, Deutsche, Bank, Goldman Sachs, and RBC all will be part of the syndicate. Details regarding syndicate management rights and take-down have not yet been negotiated.

The stock will go straight to the NYSE and will trade under the symbol GM. The offering will include both public and preferred stock. This, like everything else involving our Photo-Op President, will be a show, a party, and a gorge-fest in pointless excess. It will all be aimed at countering the perception that Barack Obama doesn’t love the free enterprise system and all that it entails.

It will be the first major corporate IPO in US History to double as a Democratic Party campaign advertisement. “Vote Team Donkey, we don’t really want to nationalize all your assets.”

Predictably, risk and moral hazard still abound. Like the old Soviet Ekranoplan Flying Boats, this IPO is a high-stakes, state-directed enterprise that may or may not ever make it off the ground. The SI filing details extensive entrepreneurial and external economic risks to GM in the near and far future. The S1 lists the business risks on page 13 of the filing. They continue until page 28.

Obvious, recession-driven risks include…Our business is highly dependent on sales volume. Global vehicle sales have declined significantly from their peak levels, and there is no assurance that the global automobile market will recover in the near future or that it will not suffer a significant further downturn.(P13, GM S1 filing) and also,“Failure of our suppliers, due to difficult economic conditions affecting our industry, to provide us with the systems, components, and parts that we need to manufacture our automotive products and operate our business could result in a disruption in our operations and have a material adverse effect on our business.”(p14)

Business plan risks include some goodies as well. They are still being pile-driven into the Astroturf by their prior contracts with the UAW. Our U.S. defined benefit pension plans are currently underfunded, and our pension funding obligations may increase significantly due to weak performance of financial markets and its effect on plan assets. (P16) The GM financier, Ally Financial has major capitalization issues. If adequate financing on acceptable terms is not available through Ally Financial or other sources to our customers and dealers, distributors, and suppliers to enable them to continue their business relationships with us, our business could be materially adversely affected. (P17)

They have a mongo conflict of interest risk. The UST (or its designee) will continue to own a substantial interest in us following this offering, and its interests may differ from those of our other stockholders. As a result of this stock ownership interest, the UST is able to exercise significant influence over our business if it elects to do so. This includes the ability to have significant influence over matters brought for a stockholder vote. (P18) And they owe the UAW their souls and first-born children as well. Restrictions in our labor agreements could limit our ability to pursue or achieve cost savings through restructuring initiatives, and labor strikes, work stoppages, or similar difficulties could significantly disrupt our operations. (p.22)

And since all of that doesn’t suck enough, they also, even with Barack Obama’s aid and abidance, were unable to successfully still all of their prior debt obligations. Despite the formation of our new company, we continue to have indebtedness and other obligations. Our obligations together with our cash needs may require us to seek additional financing, minimize capital expenditures, or seek to refinance some or all of our debt. (p.22) Not surprisingly, they have no plans on offering dividends on common stock.

The risk list finally dies. But only after listing several environmental and foreign government risks that I ran out of motivation to catalog, evaluate and include. The Hindenburg had a better margin of error than the current GM business plan. And beneath the surface of all of this lurks another risk that nobody other than I am obnoxious enough to publically air – the moral hazard that a politically-connected enterprise will saw off its creditors the first time President Barack Obama publically denounces them as speculators. Is the preferred stock in GM really going to remain preferred if President Obama decides he doesn’t like the people who own it? Try pricing that uncertainty using a standard quantitative model.

So there you have it. General Motors has filed for an IPO that has a significantly good chance to unwind a week or two before the 2010 Midterm Election. The hortatory sound bites just may save some marginal Democrats. But will the capital raised be sufficient to save a marginal car company? Only the cynical and world-weary offer prickly questions such as that one. In the meantime….

Someday soon we’ll stop to ponder
what on Earth’s this spell we’re under
We made the grade and still we wonder
who the hell we are.

99 weeks and Dems don’t care

Sung to the tune of Jimmy Crack Corn, even by crack New York Times, Nobel Prize-winning, liberal Democrat economist, Paul Krugman

[See chart above showing rising unemployment since Krugman's Democrats aka "ruling elites" took over Congress in 2007 and signaled to investors that taxes would not only not be cut, but would be raised.]

The lyrics of the famous song refer to a slave’s faux sorry over the death of his master that may have been caused by the supposed sorrowful slave. I was reminded of the song when recently accused of harboring excessive hatred of my former Democratic Party and upon hearing Democrats attack Republicans as not caring about the poor for insisting that unemployment benefit extensions to 99 weeks be paid for out of unspent stimulus funds.

The above was also accompanied by suggestions that Republican “fiscal conservatives” (including yours truly) want to “eliminate” the safety net for the truly needy, from two Democrat readers of my recent columns about fraudulent, so-called “Blue Dog” fiscal conservative Democrats (see tax raisers to balance a federal deficit quadrupled by those very Democrats and President Barack Obama) and the liberal  Georgia ‘journolist’-manufactured “split” between Karen Handel fiscal conservatives and Nathan Deal moral conservatives.

Caring means favoring Democrat bills

This was the first time in many years that I had heard the 40+ year old canard that Republicans don’t care about the poor, old, disabled weak and infirm since the Reagan days. I was a Democrat then, but always re-coiled from the claim that the GOP wanted to eliminate Social Security, Medicare, Medicaid and Unemployment Compensation.

Hearing that same claim last week, after Republicans have alternately controlled the White House and  Congress, as well as Georgia’s State House and General assembly over the past 30 years was quite shocking given that Republicans have never proposed reductions in the safety nets despite weilding the power to do so.

But the Democrats, when backed into a corner by their failed policies, still sing Jimmy Crack Corn and Republicans don’t care.

Witness for the defense

But now comes the out-of-tune-with-Democrats, Paul Krugman version substituting “ruling elites” for Democrats, so as to lessen the blow to those he voted for:

I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think.

Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal.

And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.

Nobel prize winners can be quite dense, slow learners. Paul, high structural unemployment also means high structural welfare and food stamp victims dependent on Democrats for sustenance.

I realized the intent of my fellow Democrats since at least the early 90s when they opposed continuing Reagan-like tax rate cuts that triggered rising tides of federal revenue and rising tides of the formerly poor into the middle class.

Caring, for me meant leaving Dems for the GOP

I cared about the poor and middle class so much that I finally left the party of dependence (as well weakness on defense and abortion strength against the fetus) for the party that freed the slaves, opposed Jim Crow, defeated the Evil Empire, and saved the U.S. economy for Democrat misery indexes.

Unlike my Democrat friends, the GOP judge the hearts of Democrats just because they don’t favor conservative policies, but maybe we should. After all, by the Democrats own present “caring” criteria, one can’t care about the poor unless one favors at least 99 weeks of unemployment compensation. This means that Democrats that kept maximum benefits limited to 26 weeks from the 1930s through 2008 never cared!

For the record, the overwhelming majority of Republicans favor the major programs of the safety net for the truly needy and have, at least since Reagan coined the term in 1980. I favor the 99 week extension whether paid for by the stimulus funds or not.

My question for ObamaDems is why they didn’t care enough for the poor to spend all the flawed stimulus money last year, rather than save some to put up “Recovery Act” signs as part of the get out the vote drive this year while unemployment has risen? The question answers itself.

But let us be clear, even while we judge Republicans and Democrats by their actual actions over the last 40 years, rather than attempt “heart” readings:

One can care about the poor and have been opposed to the creation of the safety net, much less to its exponential expansion since the New Deal.

Heartless Eleanor, Jack and Dick?

Do Democrats know that Eleanor Roosevelt and then Sens. Richard Nixon and John F. Kennedy toured the nation in the 1950s trying to get their colleagues to drastically scale back the Depression era programs given that the Great Depression had been over for nearly a decade?

Did JFK and the feminist former First Lady “care” enough?

I believe that most Democrats I know, care about the poor. I also believe most are economic illiterates, misguided in their policy prescriptions, and useful idiots to their liberal leaders. Their policies cause capital to go on strike, killing existing jobs and those that would have been created absent their assaults on business creation. The misguided policies include those of so-called conservative budget deficit-hawk Democrats that merely seek to raise taxes to support their gargantuan, oppressive government. They seek to cut nothing except job producers’ incomes.

But I also believe that many of the leaders of the ObamaDems care more for garnering power via victim-dependent voters than about actually increasing their prosperity and I agree with David Horowitz that the GOP needs to be willing to wield the moral card against Democrats.

Given Democrats’ continuing advocacy of economic policies that have been proven failures since at least the mid-60s, I consider the burden of proof to be on Democrats to prove they care about the poor and middle class.

Got any evidence Democrats?

Paul Krugman is now a witness for the GOP.

Trial Date: Election Day 2010.

Mike DeVine

“One man with courage makes a majority.” – Andrew Jackson

Charlotte Observer, The Minority Report and Examiner.com archives

www.devinelawvista.com

The Inevitable Endgame of Keynesian Chess

If you’ve ever played chess well, or for that matter, ever been pretentious like moi and wanted to convince others you could play chess well, you’ve studied a few openings and end games. You get these books which describe openings and end games that famous masters have played around the world. This tells you how to kick start your chess match and how to put your wily opponent down like unwanted puppy. It’s the part in the middle that always got me into check and then unceremoniously into mate. A similar analogy can be drawn to our current economic policies.

Our current Administration’s economic policy has a basic opening called Keynesianism. This involves identifying areas of our economy where private spending fails to stimulate sufficient aggregate demand and then “solving” this “problem” by pouring in the government as a super-consumer. The administration also has a vehicle to move past this opening known as stimulus. This involves borrowing vast piles of money to fuel government investments that are intended to provide the missing aggregate demand. What they seem to lack at present is any coherent sense of an end game.

Keynes doesn’t think in terms of end games. He wouldn’t. He was trained as an engineer. He wanted the economy to become a manageable system within reasonable control bounds. He wanted it to crank aggregate demand like a well-run and efficient assembly line.

To see what end game occurs from attempting to manage a 10,000 variable, meta-stable, intangible system the way Deming envisioned running a factory, we look to what is happening in Japan, where people first learned to run factories the way Deming proscribed.

Japan may not yet have hit the wall and been forced to concede, but their economy limits the moves they have available. Japan has experienced an asset deflation in real estate eerily similar to America’s subprime crisis. This put Japan’s economic vitality into check because of the negative impacts that this had on Japanese banks and insurers. Japan has attempted over a decade’s worth of Keynesian Stimulus as a way out of check.

This stimulus has become addictive, not remedial. It has become perpetual life-support. The Japanese central banks continue to pour money into government programs that achieve a temporary stasis rather than a regenerative growth. The population ages, capital and family formation fails to occur, the nation goes deeper in debt. And yet, move after desperate move, the credit markets respond to Japan with a simple and malevolent “check.”

Takahira Ogawa, is the director of sovereign ratings at Standard & Poor’s in Singapore. He tells Business Week that Japan must cut domestic spending, or the price of its sovereign debt will fall below par. This would result in the Japanese central bank having to pay higher interest rates on its bonds or get less money for them at sale than their face value. This process would be catalyzed by a downgrade in Japan’s debt rating from people like Ogawa at agencies like Standard and Poor’s.

Ogawa watches the Japanese elections with a pecuniary interest. He tells Business Week the following in an article entitled “Kan’s Loss May Be Negative for Japan’s Credit Ratings.”

The Democratic Party of Japan’s upper-house defeat yesterday is “potentially negative” because of legislative gridlock, Takahira Ogawa, director of sovereign ratings at Standard & Poor’s in Singapore, said in a phone interview today.

Prime Minister Kan faces troubles because he wants to raise more money so that he can borrow less in sovereign bonds. He plans on doing this through doubling Japan’s National Retail Sales Tax at the point of sale from 5% to 10%. The Japanese people do not want this and will be less inclined to support Prime Minister Kan as a direct result of this policy.

However, Prime Minister Kan doesn’t have viable options to do otherwise. A sovereign debt downgrade would cause debt service costs to crowd out the government spending necessary to provide all the good things that Japan Inc has promised its civilian shareholders. Telling an increasingly aged nation that the government was kinda’ sorta’ just kidding about all that healthcare they promised to Senior Citizens is not the road to political viability. Prime Minister Kan, like the chess player facing a badly tilted board, is increasingly constrained into making bad choices….

Meanwhile, in America, the Paradigm plays out in similar fashion. American real estate crashed and burned. An American government pumped in the Keynesian stimulus. The stimulus produced wounded stasis; not healing progress and the nature of that stimulus has begun to morph from amelioration to addictive sustainment.

Stephen Spruill describes the process in a National Review Article entitled “Mechanical Failure.” Detail follows below.

From 2008 to now, the composition of the stimulus bills has changed, from mostly tax rebates intended to boost consumer demand to mostly income transfers from the employed to the unemployed and from the federal government to the states. Though the stimulus machine’s architects would be loath to admit it, this transformation represents the failure of its stated purpose, which is to create jobs and to jump-start sustainable economic growth.

In other words, so went Japan and now we follow in their footsteps like a pseudo-sapient zombie. It reminds me of a line from the movie The Matrix. As Trinity said to Neo: “Because you have been down there Neo, you know that road, you know exactly where it ends. And I know that’s not where you want to be.” (HT: IMDB)

Thus, we must pull out of our Keynesian death spiral. We must realign the fundamental role of government in our economy. It can referee, but it has no business suiting up and playing ball. The only way to accomplish this necessary realignment is the short-term political destruction of the Democratic Party. In November 2010, we’d better do everything in our power to make sure Neo takes the Red Pill, not the Blue.

Stimulus, The Beatles and LeBron

““On a five-year contract worth $96 million — what he’d get from the Knicks or the Heat — LeBron would pay $12.34 million in New York taxes.” Florida has no state income tax.” – Business and Media Institute (8 July 2010).

The circus has ended and the clowns can stop clogging Twitter. NBA Superstar and Twitter Phenom, Lebron James has signed with Miami and Cleveland can continue to be Cleveland. Fans of Lebron from his boyhood home in Akron feel betrayed. Speculators in Miami are looking forward to selling off the season tickets they bought five days ago for high multiples of the prices they paid.

Lebron will join two of the finest players in the game in Miami. The Heat retained Dwayne Wade and signed Chris Bosh. Pat Riley, the famous former Head Coach who won titles with Magic Johnson, James Worthy and Kareem, will return to the bench just to be part of the spectacle. LeBron can hardly be blamed for wanting a piece of that action.

On the surface, it looks like Lebron took a financial haircut uglier than that of Tyler Durden in the Movie Fight Club. The Miami Heat will pay $96 million over five years for his services. His former team, the Cleveland Cavaliers, could have set him up with a cool $125M. To complete the picture, understand that James will rake about $20M per year in advertising regardless of which team he joins. He, like Michael Jordan, has wisely cultivated enough of an image so that he makes significant money independent of what he actually gets paid to play ball.

Thus, when we talk state taxes, the business sense LeBron displays off the court becomes way more impressive. The teams competing with Miami to sign LeBron, all represent states with significantly higher state income taxes. While money can’t completely drive the decision making of a man who will never have to work for subsistence again in his life, it certainly helped make Miami look all the more impressive. The Business and Media Institute put together the numbers on what LeBron would have paid in state and local income taxes to play in Miami, New York, New Jersey and Cleveland. Estimates for taxes on $96M follow below.

New Jersey and Ohio, the other reported frontrunners to attract James, also have state income taxes, but they are not as his as in New York. Based on a $96 million contract, James would pay $5.69 million in state taxes if he re-signed with the Cleveland Cavaliers. If he signed with the New Jersey Nets, James would pay $10.32 million in state taxes.

Using estimated offers and including LeBron’s outside earnings as well, we can reconstruct what LeBron’s accountants and he discussed. We assume Miami, New York, and New Jersey all three offer LeBron $96M.

Based on these figures, we back out that Mr. James would pay a tax of 6.21% in Cleveland, 10.75% in New Jersay, and 12.85% in New York. The table below shows the impact of this taxation on LeBron’s business decision.

To get a sense of what happened here, imagine you were LeBron James incorporated, and built motorcycles instead of playing ball. Given the differential tax regimes in the four states examined, ceteris paribus, where do you set up shop? Obviously, Florida wins. Their climate is more conducive to business; therefore, unless Cleveland, New Jersey or New York offers a major incentive to balance that tax differential out, the firm and the employees are going to Florida.

Given that under the Michael Jordan Rule, Cleveland could offer James a $3M more to hang around Cleveland next February, we can deduce that LeBron suffering that costs a bit more than $15M over 5 years. Perhaps DeLonte “Well Howdy there, Miz James” West had something to do with LeBron’s decision for reasons that we would prefer not to link at our dignified and genteel family blog. However, LeBron James would hardly be the first superstar to walk on a deal because of tax concerns.

George Harrison famously excoriated Great Britain’s top tax rate in The Beatles song “Taxman.” Bjorn Borg felt considerably less Swedish for a while over the top bracket in his homeland. High taxes cause productive members of society, and firms they direct or work for, to leave high tax jurisdictions all the time.

It’s a good thing to keep in mind next year when the tax rebates from the stimulus end and the Bush Tax Cuts expire within the next calendar year. . Low taxes are a form of stimulus. Higher taxes increase the gummed-up financial viscosity of an over-governed state. As Great Britain learned with the Beatles, a 95% tax on the income of an expatriate nets $0.00.

Where on earth is there economic optimism?

Across the 117 countries Gallup surveyed in 2009 the respondents to the poll were asked this question:

Right now, do you think that economic conditions in the city or area where you live, as a whole, are getting better or getting worse?

Now I certainly do not claim to be the citizen of the world like the current occupant of the oval office, but I had read enough economic news stories that I thought I knew which countries would be in the top five for local economic optimism. I figured they would be China, India, Brazil, Malaysia, and Indonesia. You know, the places where manufacturing is going on. I knew it was not going to be Greece, Portugal, Spain, Italy, and Ireland. The only one of the top five that I got right is China which is #1 where 81% of the respondents think local economic conditions are getting better.

Real Clear World wrote up a piece about the top five, and while I do not take issue with the Gallup poll itself the conclusions miss the mark in my opinion. The piece concludes that rich natural resources, stable populations, and globalization are what makes respondents in these five countries the most optimistic. What I conclude is that urban manufacturing populations that are in a market-oriented instead of a centrally-planned economic system have minimized regulatory and tariff trade barriers to bring about this local economic optimism. Below are the other four countries that make up the top five. You can draw your own conclusions, and let me know if you expected to see these countries listed.

#5 Djibouti

This urban concentration – coupled with the city’s strategic proximity to the Red Sea – sets Djibouti apart from the rest of the sub-Sahara. This also allows for a lot of economic experimentation and investment in the country, such as the Djibouti Free Zone.
Djibouti Free Zone was created with one primary goal in mind – to bring about a sea-change in the way Africa thinks and does business. No red tape, ruthless efficiency and genuinely exhaustive services – in essence, we offer the ideal conditions for trade and commerce to flourish in.

#4 Vietnam

After market-oriented reforms and entry into the World Trade Organization in 2007, Vietnam has enjoyed strong GDP growth of 5.3 percent in 2009, with significant exports to the United States. A booming garment industry has put thousands of Vietnamese to
work, while the country has transitioned from a centrally planned economy.

#3 Qatar

Sitting atop the world’s third largest reserves of natural gas (and plenty of oil), your average Qatari appears to have much to be optimistic about. Indeed, citizens of Qatar enjoy the second highest per capita income in the world, and the second fastest per
capita income growth rate. As for unemployment, there is nearly none. The country has the second-lowest unemployment rate in the world at 0.5 percent.

#2 Bangladesh

China has proposed to help Bangladesh build a deep-sea port in Chittagong and agreed to exchange data about the Brahmaputra river that flows from Tibet to Bangladesh through India. China has also promised assistance in installing Bangladesh’s first space satellite.

China offered last month duty-free access to some 5,000 Bangladeshi products in a goodwill gesture. The garment industry has boomed over the last decade in Bangladesh.

Across 110 countries Gallup surveyed in 2009, median approval of U.S. leadership by asking the question:

Do you approve or disapprove of the job performance of the leadership of the United States?

I thought it might be interesting to compare the results of respondents in these top five countries that are obviously on a different economic track than the US is on.

#107 Vietnam 17% approve
#103 Qatar 22% approve
#82 Bangladesh 38% approve
#18 Djibouti 81% approve

China was not surveyed, and Djibouti was lower approval than most of the polled African countries. There are a lot of reasons I would not want to move to these five countries that have nothing to do with economics. In the past these countries have been led by corrupt tyrants who put them on the wrong economic track. I think the polls indicate they are currently doing some things right. Good for them.

Cross-posted at RedState

We’re Desperate; but they’re Not Serious

“Capitalism is dead in the US . . . The US was not destroyed by the Russians, the Chinese or even the militant Islamists. They did it to themselves . . . The $104 trillion debt is beyond any possible means of repayment. The only way out will be to monetize the debt by hyperinflation . . . I’m now watching the final days from 8,000 miles away . . . In November 2008, half of the US electorate put a loaded ballot in their mouth and pulled the trigger . . .”An email to John Derbyshire. (HT: TakiMag)

Imagine you’re a lucky enough man to make an NFL roster. You’ve suited up to play The Baltimore Ravens. The QB just tossed you a safety-valve pass and it’s in your hands. You look down field and see Ray Lewis approaching…Approaching is the wrong adjective. Perhaps looming, careening, impending and generally behaving like he’s not too confused about whose ass he intends to kick. Do you say “So what? I’ve got AFLAC.”

The scenario I just posited above is ridiculous for most of my loyal passel of constant readers. It’s not so ridiculous for the people leading our nation into this enveloping Sahara dust storm of an economic cycle. Like my fictitious 3rd Down Back in paragraph #1, our nation’s political leadership has beaten remarkable odds to achieve a position of stature, renown and good fortune. Like the player described above they have both an opportunity and a problem.

Regrettably, like that player I discussed above, they’ve pretty mush shrugged and said “So what?” Not in those words, not that dismissively in public and certainly, not as idiotically as Tony Hayward. But the entire reaction of our current leadership to our national problems suggest a group of people who care nothing about solving this set of potentially detrimental difficulties afflicting the people they purport to care about and lead.

The evidence is legion that our government could truly care less what happens to people’s lives. It begins with the entire fiasco of our immigration policy. Ten percent of the able-bodied workforce seeking a job can’t land one. 13 Million Illegal Aliens are currently in the US. Many have been there for years, and everyone knows well that they are taking employment away from American citizens by contracting to do that work for a wage lower than what Americans are legally allowed to negotiate on the legally sanctioned economy.

But fear not, Good People. Secretary of Labor, Hilda Solis, has just the fix for this ongoing problem. John Derbyshire describes how the US Department of Labor is here to help us below.

The U.S. Department of Labor has a new program called We Can Help. In a promotional video on the department’s website our current Secretary of Labor, Hilda Solis, assures us that “every worker in America has a right to be paid fairly, whether documented or not.” Her department will hire 250 new field investigators to make sure that standards are enforced. (HT: TakiMag)

On top of that, we get the legal immigration fiasco. If there were ever a time when an intelligent nation would at least think about taking care of its own first it is now. But no, we bring in 1 million more a year with guaranteed jobs. Derbyshire describes this detestable state of affairs below.

With unemployment nudging ten percent, we’re accepting the now-normal million-plus a year legal immigrants for permanent settlement. We are also taking in the usual 65,000 “regular cap” H-1B visas for “specialty occupations.” An example of an H-1B visa holder would be Times Square bomber Faisal Shahzad, sponsored by Elizabeth Arden to do “a low-level accounting job.” (HT:TakiMag)

Our domestic economic program offers no further evidence that America’s leadership actually, you know, cares about Americans. In housing, we have done nothing to effectively reestablish normal market balance in the residential real estate markets. We have instead focused on sticking policy pins into Keynesian Voodoo Dolls.

Our tax credit for new home purchases did nothing but expend money the US Treasury did not have on moving consumption forward to create the appearance of robust economic health. The money spigot has run dry, the tax credit has gone “bye-bye” and the results of this now rival the most painful Tequila Sunrise.

And with the tax credits thrown like hush-puppies to one of Pavlov’s dogs, people are just stupid (in the minds of the experts like Vincent Fernando at Business Insider) and won’t buy anything. Vince, the people are not stupid. They are bunkering. They bank that money the way a soldier fills sandbags and fortifies his fighting position when motivated by mortal fear.

So why doesn’t our leadership see what Joe Snuffy sees? They see it. They, unlike Joe Snuffy, just don’t have any reason to care. An intellectually dominant Peggy Noonan column I still blog almost 6 years after it was written explains why.

I have a nagging sense, and think I have accurately observed, that many of these people have made a separate peace. That they’re living their lives and taking their pleasures and pursuing their agendas; that they’re going forward each day with the knowledge, which they hold more securely and with greater reason than nonelites, that the wheels are off the trolley and the trolley’s off the tracks, and with a conviction, a certainty, that there is nothing they can do about it.

I suspect that history, including great historical novelists of the future, will look back and see that many of our elites simply decided to enjoy their lives while they waited for the next chapter of trouble. And that they consciously, or unconsciously, took grim comfort in this thought: I got mine. Which is what the separate peace comes down to, “I got mine, you get yours.” (HT: Wall Street Journal)

Thus, my initial analogy between our political leaders and the running back about to be crunched by Ray Lewis stands invalid. Our leaders are like Boy Owner Daniel Snyder of The Washington Redskins. They sit in the luxury box above all consequence while we, the gladiators get crushed into the sodden turf far below. They watch us with the detached unconcern that a four-year old boy might show towards a nest of agitated pismires that he just stirred up with a stick. They conduct a grand Poli-Sci experiment with our very existences.

Thus, the elections of 2010 and 2012 are about reconnection. If the leadership won’t meet us at the town hall, we will not send them back to Congress. If they cannot be bothered with authoring a budget, they must be permanently banished from any legislative body with access to a serious treasury. If they cannot protect and, when necessary, seal our borders, they are morally unfit hold dominion within them.

To make America great again, we must connect our political leadership to the consequences of their feckless and solipsistic decisions the way a moron retard gets feedback from sticking his fork in an electrical outlet. Let them hear us or let them burn. If we fail to connect political leadership to the adverse consequences of their conspicuous failures, John Derbyshire will be proven as right as he is pessimistic. ”So: Heads between knees, arms over heads, hold that position. Pray if you’re inclined to. Brace for impact!”

The Pusher Man

“I hope some of these folks who are hollering about deficits and debt step-up because I’m calling their bluff. We’ll see how much of that, how much of the political arguments that they’re making right now are real and how much of it was just politics.” – President Barack Obama, RealClearPolitics.com

Convinced that Al Capone was dead-on when he declared that you get more with a kind word and a gun, President Barack Obama has just offered a veiled threat to people who want less government spending. I’ll unveil it now and tell you what our Fearless Whinger just said. He’ll make YOU pay to balance the budget. The government programs that YOU like are too wasteful and too big. If you don’t buy that logic, YOU are just playing political games. As Vice pResident Bite-Me recently opined, “Don’t be a smart-ass!”

So why would a man with more Congressional power than any American President since Lyndon Baines Johnson feel the need to behave in such a hostile and menacing fashion? What makes the small businessman in search of a tax break a smart-ass rather than just another person offering self-interested but perhaps useful advice? Why couldn’t the US government actually roll back much of its spending and stop stimulating our way to junk treasury bonds?

To understand why these people have their chains yanked to asphyxiation by suggestions that the public sector should make like a struggling S&L and start de-leveraging, you have to understand what they have actually done with the Federal stimulus already tossed about the land. To get to this ratiocination, think of the stimulus money as “needle-ready” not “shovel-ready.” This money isn’t rebuilding America. This money isn’t even maintaining much stability. It simply allows idiots to continue with untenable, destructive behaviors without the leveling impact of condign and well-earned consequence.

Stimulus money is not building The Hoover Dam or re-blazing neglected sections of The Appalachian Trail. It is not modernizing our broken roadways or rails. South Korea’s Internet and telecommunications national backbones put ours to shame. They still will when the last dollar of stimulus gets tacked on to the last significant digit of our crippling national debt. It is only being used to keep stupid, frightened and confused people afloat above their own often self-inflicted miseries.

The HAMP program gives us an example of what Stimulus has been about under Barack Obama. The Federal Government intervenes to prop up homeowners who overpaid for housing and now stare default in the eye. The government does this to prevent further erosion in the housing and banking sector which would rip through financial markets and prolong our current recession.

The Federal Government feels it has to bail out these homeowners because they will otherwise “strategically default.” Quite simply, the people will mail the keys to the bank and go rent a shack somewhere once the bank finally gets around to serving them and repossessing. If it were one or two idiots, the easy default response is “So What?” Instead, this is an orchestrated, cheer-led threat against “banksters” guilty of lending these people more than they could reasonably borrow.

The Banksters in this dynamic play the role of “The Pusher” from a dope-marinated Steppenwolf song. Like the lyrics from Hoyt Axton describing the impact of a pusher, the banks are morally neutral and unconcerned about the outcome of the transaction after they get the loan underwritten. Axton’s indictment of The Pusher follows below.

You know, I’ve seen a lot of people walkin’ ’round/ With tombstones in their eyes. But the pusher don’t care/ Ah, if you live or if you die.

Completely absent from that rant is any possible suggestion that you, as a moral agent, have any obligation whatsoever to abstain from flying on the Doofus Weed. Further down in the song we see an even better indication of how the stimulus mentality and the drug use mentality are similar. Axton tells us not to get off the substance abuse, but instead, to buy it off a nicer guy. Frustrating moral obtuseness follows below.

You know the dealer, the dealer is a man/ With the love grass in his hand….

Like the drug-addled rock-groupies, Americans still want their McMansions on the Sanitation Engineering salary. They want to have their cake and not the trans-fats. The iniquity Axton saw on the part of The Pusher wasn’t that people bought drugs and trashed themselves, it was that The Pusher didn’t stick around and hang out in the crash-pad just to make sure the trip didn’t bum out. It’s a shame people in the sixties were not exposed to rap-music. The whole concept of “Don’t hate the playa, hate the game” would sure come in handy here.

The problem with Hoyt Axton was that he blamed the guy who dipped his joint in formaldehyde rather than recognizing that it probably wasn’t very wise to have smoked an obscure, quasi-medicinal herb with unpredictable effects on the human brain in the first place. The problem Barack Obama hopes most Americans have is similar. People all want huge houses and they all expect to do so without having to be captains of industry or genius inventors. Nobody can understand why they shouldn’t get $300 – $500K mortgages based on a $45K Annual salary.

Then, when the deal blows up in the borrower’s face like a joint with seeds rolled into the reefer, he gets mad at the guy who sold the defective spliff. He ignores the fact that the banker didn’t just hand out $500K. Bankers like getting paid, and if the likelihood of that happening kind of sucks, they will charge a risk-premium in addition to the usual interest rate. Then, when the borrower can’t be bothered with paying, the bank takes the house away and the “strategic default” tantrum ensues.

At that point, Congress and The President pass HAMP and become The Dealer-man with the Love Grass in their hands. They also own your (redacted). They don’t tell you this until some freak named Santelli gripes about the terms of the deal. Then the reveal what was true all along. They are truly no different that The Pusher over at Wells Fargo or B of A. So don’t be a smart-ass.

To Hoyt Axton’s credit, his final lyric suggests that the fog of street pharmaceuticals has lifted and he understands what needs to happen next. The next time some politician offers “stimulus” as a vacation from personal and financial responsibility, we, as an electorate, should follow Hoyt Axton’s advice below.

Well, now if I were the president of this land/ You know, I’d declare total war on The Pusher man. I’d cut him if he stands, and I’d shoot him if he’d run/ Yes I’d kill him with my Bible and my razor and my gun.

God D— The Pusher Man.

So Should We Boycott British Pollution?

British Pollu…, oops, sorry Mr. Hayword, British Petroleum, has proven itself an atrocious corporate citizen on many levels. They have recently managed an oil spill that dwarfs the impact of the Exxon Valdez disaster. They have at least a decade’s worth of infamy for not maintaining their facilities and killing their workers the way people died at both Deepwater Horizon and the Texas City Refinery Fire in 2005.

They have invested $16M in regulatory capture. $73K of that went to help elect Barack Obama US President. They wrote large chunks of the EPA’s Greenhouse Gas regulation. They wrote this regulation in order to enlist the US government’s regulatory apparatus to aid and abet their corporate business plan.

When asked what he thought of the oil spill in the gulf, BP CEO Tony Hayword said. “I wish I could have my life back.” So do a whole bunch of the employees that die in your unsafe work environments, Tony. We really ought to just boycott the (decency edits)….Or should we?

There are advantages to teaching BP a lesson. If enough people drive on past BP stations and go elsewhere, maybe Terrible Tony will care about getting his customers back instead of just his life. A well-run business will pay attention to its receipts. BP can handle the EPA by buying themselves a Barack Obama, but they can’t put a gun to my head and make me buy their petrol. Hit them in the wallet hard enough and you reach their hearts the same way the shamans of Quetzalcoatl reached the hearts of their victims.

Or maybe not. I personally haven’t bought from CITGO since the early 00’s unless the alternative involved pushing my car down the side of the interstate. Boycotts work with massive popular support. That occurs when the news people are watching, and the anger at the corporation is still fresh. It’s fun to be one of the cool kids. But over time, if Hugo Chavez has a monopoly on the go-juice, Hugo Chavez will, in fact, win.

Then, there are the issues surrounding who will pay to clean up BP’s negligence. There are two sides to this issue. If BP goes TU, they spin off the US subsidiary, the spin-off declares Chapter 11. Then, the oil stays on the beaches and sea birds and Uncle Sugar Daddy pays to clean up the carnage. On the other hand, if we patronize them enough to make money, they’ll hire a legal team as oleaginous as Orange Beach, AL is right now and wrap the law around our necks. They then skate off towards the next environmental disaster Beyond Punishment.

Also, I can’t think of any oil company that doesn’t play dirty to some extent. They produce a necessary product, they have massive war-chests that they use to corrupt our government, they all run high-risk operations and they all have ties to foreign governments who like to see Americans assume room temperature in large numbers. Big Oil is a corrupt and morally compromised industry.

If you’re looking for a morally pure vendor to buy your gasoline from, enjoy that nice fresh air as you walk, jog or ride your bike to and from work tomorrow. So the question isn’t whether we can find a nice, cuddly oil company, just whether we can try and locate one less atrocious that operates a station near where we live. I think the answer to that, for the nonce is “yea, verily.”

Thus I invite everyone who reads this to join in a boycott of British Pollution’s products and services until the following terms and conditions have been met.

1) British Petroleum will cease and desist from applying for exemptions from the NEPA laws, and will operate its drilling rigs, pipelines and maritime vessels within full and rigorous compliance with American environmental law.

2) British Petroleum will compensate the victims of this disaster fully, completely and well beyond whatever back-room limits they’ve been actively negotiating with their contract employee, Barack Obama.

3) British Petroleum will henceforth invest at least triple their current expenditures on the maintenance and upkeep of their facilities. The people that live near and work at these facilities deserve a reasonable expectation of safety in their daily lives.

4) British Petroleum will strongly castigate London Mayor Boris Johnson for criticizing ,the impact of US popular sentiment on British pensioners. There are quite a few fishermen, tour guides, merchants and stevedores at ports and beaches all along the Gulf of Mexico who wonder about their pensions right about now. While I don’t believe we should advocate in a blog that the corporate officials of BP jam a can of spotted dick about 20 inches down the whinging pom’s esophagus, telling Mayor Boris to correct his severe cranial rectal inversion problem would be appreciated.

If BP does these four things without reservation or intent to deceive, they can rejoin the dubious company of Exxon, Chevron, and Occidental Petroleum. They won’t be as hateful as Chavez Petroleum, oops I mean CITGO. Unless or until these things happen, I refuse to buy from any company that would recklessly engage in high-risk petroleum refining and extraction operations and offer financially support morally compromised individuals like Barack Obama.

I encourage you all to do likewise. We need to give Mayor Boris Johnson a genuine reason to worry about the welfare of his bloody, sodding pensioners.