Friday, September 9, 2011

"I Have Serious Concerns About the Level of Spending"

This was not John Boehner, Rush Limbaugh, or Ann Coulter. This was freshman West Virginia Senator Joe Manchin's take on the proposed $450 billion in new stimulus spending. It is also bad news, because Manchin has become a bell cow for the moderate Democrats in terms of Obama proposals.

Obama proposed vast sums for infrastructure improvement, payroll tax cuts, and other measures designed to prime the economic pump. But most remain wary because he promised this before. To be honest, had he actually spent the last stimulus on the "shovel ready" jobs that he claimed it was for, that might have actually worked and benefited communities at the same time. Instead, it went to groups that supported Obama and bureaucrats.

Obama's proposals were promised serious merit by Speaker Boehner, and Obama must be prepared to see House Republicans and Senate Democrats tinker and hash over his ideas. Republicans will likely push to divert money from other areas to cover the bill as much as possible. I would not be surprised to see Postal Service relief become part of this measure at the end of the day, although that needs to come with serious changes, if not complete privatization.

Of course, Obama would not be Obama without moments of condescension, as when he lectured everyone that they had to "step their game up," whatever that means. It is not the private sector that he needs to lecture. If government would remove the weights and shackles from our private sector, particularly energy production, we could compete much more effectively in the game of commerce and manufacturing. We still wait to hear him propose total relief from the regulations that his administration is using to strangle our economy.

Wednesday, September 7, 2011

What Have We Lost?

Adam Smith describes the capital of a country in terms of its labor, land, structures, and productive capacity. Countries that can enhance production by necessity enhance their capital.

In the 1930s and thereafter, the federal government introduced programs to keep food prices at a certain level. Milk, orange juice, and a wide variety of other products are priced higher than they should be. One of the programs that keeps prices for the American consumer high is that which pays farmers to not produce.

The Conservation Reserve Program pays farmers rent to do nothing with their land. It costs $2 billion, at least as of 2005, and accounts for 8% of all farm subsidies. The program started as erosion control and ended up as price support.

Here is the question. How negative of an impact does this program produce? By paying farmers to not farm, we place a triple burden on the private sector. First, we use taxpayer money to prevent production and keep prices high. Second, where land is not productive, farmers do not purchase tools, fertilizer, or other agricultural necessities. They also do not employ labor. So the private sector is triply impacted by this program that harms everyone except farmers that want to live off of rent and not their own sweat. To be fair, commercial farmers face more obstacles now than ever before, including a proposed EPA regulation against dust that could wipe many out.

However, we should not be paying anyone to not work. We would be better off buying the produce and throwing it into the ocean than paying people to not work.

Tuesday, September 6, 2011

Could the Next Chief Executive to Take on Public Service Unions Be Obama?

Democrats gave the Wisconsin governor all the trouble he wanted last winter when he took on public sector unions. While service has remained the same, savings are up, and jobs were even preserved, unions still grumble about their reduced power. Now, the question will soon come up at the federal level.

The United States Postal Service is in crisis. Its debt soars while it faces obstacles to its desire to reduce costs. Politicians oppose cuts in service while unions have vowed to fight cuts in workforce tooth and nail. As a government business, it cannot expand into other fields. What is it to do?

Layoffs will happen. The Postal Service has substantially higher labor costs than FedEx and UPS, its main competitors and operations could completely cease in December unless something dramatic happens.

The long term answer lies in privatization. Free the postal service from its government shackles and allow competition in mail delivery. When entirely in the private sector, the Postal Service can explore other avenues of profitability that can support its task of mail delivery. It needs to find a digital enterprise to complement mail delivery and enhance customer service.

In the short term, a battle looms between the executive branch and postal worker unions. Obama has no choice but to go after the unions and reduce their power. This will end the Left's love affair with him, but would likely increase his popularity overall.