Friday, March 5, 2010

The Myth of Unequal Distribution of Wealth

One of the myths perpetuated by the great socialist educators of our time is the idea that an unqual distribution of wealth is a bad thing. Educators pound it into student heads as if it is a geometry postulate. Like almost everything else they say, the socialists have it wrong here as well.

G. M. Trevelyan in his History of England is not trying to make an economic or ideological point when he describes how an unequal division of wealth helped to build a prosperous England. Medieval aristocrats had wealth, much of the rest of the country did not. When those aristocrats started developing tastes for items made outside their regions, a merchant class had to emerge to bring those items to the wealthy. later a manufacturing class emerged to produce those items closer to home. In other words an unequal distribution of wealth created a market condition that spread the wealth to those who were most productive and innovative, therefore encouraging more efficiency and innovation. The wealthy did distribute wealth, but got a fair market value of goods or services in exchange. Also they are unlikely to spend all their money at once, so they will continue rewarding good businessmen for a long time to come.

Meanwhile the formerly less wealthy individuals who work hard and make sound decisions rise to the classes of the wealthy.

An unequal distribution of wealth in a society where government interferes little will produce more real upward social mobility. We used to call that "the American Dream."

Obama wants to redistribute wealth as well. He does not propose to offer goods and services to the wealthy; he wants to seize from them the wealth that they earned legitimately. Obama does not propose to reward the industrious, efficient, or innovative, he proposes to prop up failed businesses that support him politically, give away favors to political allies, and toss out crumbs to the poor to purchase their votes. Meanwhile the productive and industrious get burdened with more taxes so that they can finance "change." Where is the incentive to be a producer? You can stick to principles and get your wealth stripped from you or get in line with the looters and beg from the benevolent fist of socialized government. Or head for the hills and go on strike like John Galt.

Which example is more likely to produce a powerful and prosperous economy?

Thursday, March 4, 2010

Congressmen Targeting Paper Mills

Last night I attended the wind energy meeting at, appropriately enough, the Wind Lea Conference Center. US Windforce representatives broke down for us the pre construction steps that needed to be taken before the turbines can go up, along with reviewing what they had done in the last six months to get this far. I came away thinking that if I had money to invest to actually build a new industrial concern, I would probably do it in China. Why would anyone want to jump through all of these regulatory hoops to build in the United States? The process is so difficult, expensive, and time consuming that it is not worthwhile to manufacture here. Since we have chosen to make new manufacturing as difficult as possible by electing leaders that pass these laws, if we want good jobs, we must keep what we have.

Around here, that means The Mill. In an economic downturn, our paper mill's employees are always worried about layoffs or even a shut down. They have to worry because it is their family's livelihood. Even more importantly is the ripple effect from employees. They can afford to surface their driveways, put in pools, and do other things that employ local small businesses. I know of one small business whose entire customer base last summer was mill employees.

That is why the new efforts to slip cap and trade back into relevance are so menacing. Joe Lieberman (I) CT, Lindsay Graham (allegedly R) SC and John Kerry (D) MA are trying to refashion the cap and trade bill to go after specific industries. Going after everything at once was too controversial. Going after industries piecemeal might not get as much negative attention.

They want to go after electric utilities first. That, of course, means coal fired plants. We are familiar with the War on Coal. However, among the next list of targets are paper mills. In both cases they want to introduce costly regulations that will have the effect of driving away jobs and perhaps entire establishments.

Clearly if this new assault on mining and manufacturing is allowed to pass, Mineral, Garrett, and Allegheny Counties will be economically devastated. Each relies so heavily on the mill at Luke for jobs.

Lindsay Graham has broken from an otherwise solid GOP stance against this further assault on manufacturing. Otherwise, Republicans by and large support the businesses and workers in mills, mines, and other traditional blue collar fields.

Mill workers and miners in this area need to get their unions active on this issue. Tell them to blast Congress with demands that they stop attacking the American worker in the name of a global warming theory based on the fraud of lying scientists. In the past, unions protected labor against company policies that sometimes neglected workers' interests. Now it is clear that labor unions and business have the common interest of keeping jobs here. They need to work together to fight legislation that kills jobs.

If the mill goes away, what will replace it? Who will employ these people? Where will they go? What will they do? John Kerry, Lindsay Graham, and Joe Liebermann should come to Luke and answer those questions personally.

Tuesday, March 2, 2010

Mission Accomplished: Thank You President Bush

An article this week in the very liberal Newsweek magazine described something that very same magazine once deemed either impossible, or too costly to succeed. It claims that the war in Iraq has been won by the forces of democracy.

Our military played a larger role than any other to make this happen and our servicemen deserve the most credit. However one must also understand that democracy does not happen without the resilience of the people of Iraq. Their desire for freedom and their demands that political violence cease were heard loud and clear. They did not just talk. They volunteered for the police and the army, braving bombs and snipers. They voted and proudly waved their purple fingers at cameras. Now they have run through their second cycle of elections. One party is peacefully about to give way to another.
Why did democracy work? President Bush deserves a lot of credit. He could have micromanaged Iraq, as Kennedy did South Vietnam. Domestic political pressures were placed on him every time they made a move that we disliked or misunderstood. Bush encouraged Iraq to find its own path without American controls. They did just fine.
Now young Iraqi women wear miniskirts and listen to rock and roll. Iraqis are free to speak and worship freely. Their neighboring countries do not fear stockpiled WMDs and their people are not terrified of random kidnapping and torture by the government. Rule of law and republican government prevail. And the Iraqi people love it.
Mission finally accomplished.

Please, Mr. Governor, Stay Out of Football Scheduling

When times are bad, one of the worst things an elected leader can indulge in is frivolity. It opens him or her up to charges that their eye is not on the ball. Governor Manchin's name in a Mitch Vingle article once again surfaced. The Charleston Gazette sports reporter claimed that Manchin remained "on standby" in case negotiations failed between West Virginia and Marshall to schedule a football series.

In pure football terms, this is a series neither school really wants. Marshall is tired of getting pounded every season and needs to alter its schedule to assure its participation in the post season. West Virginia is tired of playing a team that has littl epositive impact on its strength of schedule.

In pure political terms, Manchin's association at this point is silly. He wants to project himself as a firm hand on the economic wheel as economic storms batter the state. We have done well thus far, but attacks by the federal government on our economy have proven disastrous. How do we counter the EPA? How do we keep our pension funds solvent? How do we reduce unemployment? Manchin has so many questions to address; he hardly needs to waste his time forcing a football game on two reluctant schools.

Advocates of the game say "it's good for the state." How so? If West Virginia and Marshall both host teams from outside the state that weekend, we get an influx of outside money spent in both Huntington and Morgantown. Regardless, Marshall's move from the Mid American Conference to Conference USA deprived it of thousands of fans per game (since most schools are within driving distance.) This reduced the amount of money spent by outsiders in the state. If we have been looking at football as an economic development opportunity (desperate days indeed!) then Manchin should have nixed this conference jump in the first place.

Finally, the national media has poked fun at the governor's penchant for interfering in college football a couple of times in the past. If he wants to be seen around the country as a serious political leader, maybe a contender for the vice presidency at some point, he needs to stop fooling around in trivial affairs like football games.

Monday, March 1, 2010

What Is Coming Down the Pike If We Do Not Win In November

Our nation's birth was conceived in a union of bizarre British ideas about representation and a tax protest. With anti-tax fervor so prominent in our past, it's always interesting to note how faithful Americans are about the idea of paying taxes. Certainly we all fear the IRS, but it is almost on the level of a moral imperative. Americans believe in paying taxes much like they obey the speed limit. Most will fudge as much as they dare, but not break the spirit of the law. Americans believe paying taxes is an important part of the social order.

This social consensus comes with the implied agreement that the government will not take too much from productive Americans. During an emergency, we might be OK with high rates of taxation so long as we understood that the measure was temporary. However when you raise taxes too high for too long, you are encroaching on the goodwill of the people.

The government does not want to transform our idea of tax paying from moral imperative to something that good Americans will skirt as a statement of liberty. Too much taxation combined with the use of those taxes to redistribute wealth will change the attitude of people in this country. Redistribution of wealth on a large scale is out and out theft. It is stealing from the productive to give to the non productive. Hard work should reward the individual who transfers his wealth to other hard working people, not the government and its beneficiaries.

So what will come if this redistribution program of Obama's is brought into law? First you will see Americans hiding their wealth as never before. Capital will fly offshore to safe banks who will protect their depositors. As taxes and government theft rise, public opinion of offshore options will move from negative to positive. For those of us with lower incomes, the earning of under the table wealth will increase. Businesses will be more apt to sneak trusted individuals onto the off the books payroll to give themselves a competitive advantage in a business unfriendly environment. Individuals will do more off the books work, such as landscaping, farm labor, minor contracting, tutoring and other forms of work to make ends meet as the federal governemnt confiscates more and more of their taxable income. Money that many people would declare in earlier times will be hidden now. The government will become more zealous in their attempt to capture this wealth; already some want the state to register yard and garage sales to get taxes from these operations. Of course governemnt zeal translates to a loss of liberty in cases such as these.

At the end, barring an actual civil revolt, one will see a functioning black market that the shrinking legitimate economy will depend upon. Government will tax more of the latter to try and keep up its revenues. Overall, America will lose the rest of its prosperity, sinking into an Eastern Europe circa 1970s condition of subsistence without prosperity.

This isn't a prophecy of the future, but a vision of what could happen if our taxes and spending keep rising while our voters do nothing to stop it.