The
chart above displays U.S. imports by category for 2011 (through September)
and shows that roughly 58% of imported goods are: a) industrial supplies and
b) capital equipment that are being purchased by U.S. producers. If we
were to completely eliminate tariffs on imports, U.S. manufacturers relying
on foreign inputs would receive significant benefits, while other U.S.
manufacturers competing against imports would be less protected from foreign
competition.
Global
warming became a cause to save life on earth before it had a chance to become
good science. The belief that fossil fuel use is an emergency destroying our
planet by CO2 emissions took over the media and political arena by storm. The
issue was politicized so quickly that the normal scientific process was
stunted. We have never had a full, honest national debate on either the
science or government policy issues.
Everyone
"knows" that global warming is true. The public has no idea of the
number of scientists -- precisely one thousand at last count of a
congressional committee -- who believe that global warming is benign and
natural, and that it ended in 1998. We have not been informed of the costs to
our economy of discouraging fossil fuel development and promoting
alternatives. The public need to know the choices being made on their behalf,
and to have a say in the matter. We are constantly told that the scientific
and policy debate on global warming is over. It has just begun.
What
is never discussed is this: the theory of global warming has catastrophic
implications for our economy and national security. Case in point: Obama's
recent decision to block the Keystone pipeline in order to placate global
warming advocates. Key Democrat supporters fear the use of oil more than they
care about losing jobs or our dangerous dependence on the Mideast for oil.
The president delayed the pipeline by fiat, and the general public has had no
say. (For the impact on our economy, see my article, "The Whole Country
Can Be Rich.")
President
Obama has spoken out passionately on the danger of developing oil and gas
because of man-made global warming. "What we can be scientifically
certain of is that our continued use of fossil fuels is pushing us to a point
of no return. And unless we free ourselves from a dependence on these fossil
fuels and chart a new course on energy in this country, we are condemning
future generations to global catastrophe."
Obama
calls for the debate to end. He cites hurricanes as proof: "dangerous
weather patterns and devastating storms are abruptly putting an end to the
long-running debate over whether or not climate change is real. Not only is
it real -- it's here, and its effects are giving rise to a frighteningly new
global phenomenon: the man-made natural disaster."
Happily,
our president is wrong. The worst hurricanes were in 1926, the second-worst
in 1900. The world's top hurricane experts say that there is no evidence that
global warming affects storms. There is no such thing as a man-made
hurricane. Storm cycles and long patterns of bad weather are entirely
natural. Yet this good news is suppressed by our politicized media. We hear
only one side.
More
and more scientists are revolting against the global warming consensus
enforced by government funding, the academic establishment, and media
misrepresentation. They are saying that solar cycles and the complex systems
of cloud formation have much more influence on our climate, and account for
historical periods of warming and cooling much more accurately that a
straight line graph of industrialization, CO2, and rising temperatures. They
also point out that the rising temperatures that set off the global warming
panic ended in 1998.
It
takes a lot of courage. Scientists who report findings that contradict man-made
global warming find their sources of funding cut, their jobs terminated,
their careers stunted, and their reports blocked from important journals, and
they are victimized by personal attacks. This is a consensus one associates
with a Stalinist system, not science in the free world.
Here
is how it has worked. The theory that entirely natural sun cycles best
explain warming patterns emerged years ago, but the Danish scientists
"soon found themselves vilified, marginalized and starved of funding,
despite their impeccable scientific credentials." Physicists at Europe's
most prestigious CERN laboratory tried to test the solar theory in 1996, and
they, too, found their project blocked. This fall, the top scientific journal
Nature published the first experimental proof -- by a team of 63 scientists
at CERN -- that the largest factor in global warming is the sun, not humans.
But the director of CERN forbade the implications of the experiment to be
explained to the public: "I have asked the colleagues to present the
results clearly, but not to interpret them. That would go immediately into
the highly political arena of the climate change debate."
As
more and more scientific evidence is published that debunks global warming,
the enforced consensus is ending. The Royal Society, Britain's premier
scientific institution -- whose previous president declared that "the
debate on climate change is over" -- "is being forced to review its
statements on climate change after a rebellion by members who question
mankind's contribution to rising temperatures. ... The society has been
accused by 43 of its Fellows of refusing to accept dissenting views on
climate change and exaggerating the degree of certainty that man-made
emissions are the main cause." Most of the rebels were retired, as one
of them explained, "One of the reasons people like myself are willing to
put our heads above the parapet is that our careers are not at risk from
being labeled a denier or flat-Earther because we say the science is not
settled. The bullying of people into silence has unfortunately been
effective."
In
America, Dr. Ivar Giaever, a Nobel Prize-winner in physics, resigned in
protest from the American Physical Society this fall because of the Society's
policy statement: "The evidence is incontrovertible: global warming is
occurring." Dr. Giaver:
Incontrovertible
is not a scientific word. Nothing is incontrovertible in science.
In
the APS it is ok to discuss whether the mass of the proton changes over time
and how a multi-universe behaves, but the evidence of global warming is
incontrovertible?
The
claim (how can you measure the average temperature of the whole earth for a
whole year?) is that the temperature has changed from ~288.0 to ~288.8 degree
Kelvin in about 150 years, which (if true) means to me is that the
temperature has been amazingly stable, and both human health and happiness
have definitely improved in this "warming" period.
In
2008, Prof. Giaever endorsed Barack Obama's candidacy, but he has since
joined 100 scientists who wrote an open letter to Obama, declaring: "We
maintain that the case for alarm regarding climate change is grossly
overstated."
Do
a Google search: you will find this letter reported in Britain and even
India, but not in America.
Fifty-one
thousand Canadian engineers, geologists, and geophysicists were recently
polled by their professional organization. Sixty-eight percent of them
disagree with the statement that "the debate on the scientific causes of
recent climate change is settled." Only 26% attributed global warming to
"human activity like burning fossil fuels." APEGGA's executive
director Neil Windsor said, "We're not surprised at all. There is no
clear consensus of scientists that we know of."
Dr.
Joanne Simpson, one of the world's top weather scientists, expressed relief
upon her retirement that she was finally free to speak "frankly" on
global warming and announce that "as a scientist I remain
skeptical." She says she remained silent for fear of personal attacks.
Dr. Simpson was a pioneer in computer modeling and points out the obvious:
computer models are not yet good enough to predict weather -- we cannot
scientifically predict global climate trends.
Dr.
Fred Singer, first director of the U.S. Weather Satellite Service, and
physicist Dr. Seitz, past president of the APS, of Rockefeller University and
of the National Academy of Science, argue that the computer models are fed
questionable data and assumptions that determine the answers on global
warming that the scientists expect to see.
Recently
we've had a perfect example of the enforced global warming consensus falling
apart. Berkeley Professor Muller did a media blitz with the findings of the
latest analysis of all land temperature data, the BEST study, that he claimed
once and for all proved that the planet is warming. Predictably, the
Washington Post proclaimed that the BEST study had "settled the climate
change debate" and showed that anyone who remained a skeptic was
committing a "cynical fraud."
But
within a week, Muller's lead co-author, Professor Curry, was interviewed in
the British press (not reported in America), saying that the BEST data did
the opposite: the global "temperature trend of the last decade is
absolutely flat, with no increase at all - though the levels of carbon dioxide
in the atmosphere have carried on rising relentlessly."
This
is nowhere near what the climate models were predicting," Prof Curry
said. "Whatever it is that's going on here, it doesn't look like it's
being dominated by CO2." In fact, she added, in the wake of the
unexpected global warming standstill, many climate scientists who had
previously rejected sceptics' arguments were now taking them much more
seriously. They were finally addressing questions such as the influence of
clouds, natural temperature cycles and solar radiation - as they should have
done, she said, a long time ago.
Other
scientists jumped in, calling Muller's false claims to the media that BEST
proved global warming "highly unethical." Professor Muller,
confronted with dissent, caved and admitted that indeed, both ocean and land
measurements show that global warming stopped increasing in 1998.
Media
coverage on global warming has been criminally one-sided. The public doesn't
know where the global warming theory came from in the first place. Answer:
the U.N., not a scientific body. The threat of catastrophic warming was
launched by the U.N. to promote international climate treaties that would
transfer wealth from rich countries to developing countries. It was political
from the beginning, with the conclusion assumed: the Intergovernmental Panel
on Climate Change (U.N. IPCC) was funded to report on how man was changing
climate. Its scientific reports have been repeatedly corrected for
misrepresentation and outright fraud.
This
is important. Global warming theory did not come from a breakthrough in
scientific research that enabled us to understand our climate. We still don't
understand global climate any more than we understand the human brain or how
to cure cancer. The science of global climate is in its infancy.
Yet
the U.N. IPCC reports drive American policy. The EPA broke federal law
requiring independent analysis and used the U.N. IPCC reports in its
"endangerment" finding that justifies extreme regulatory actions.
Senator Inhofe is apoplectic:
Global
warming regulations imposed by the Obama-EPA under the Clean Air Act will
cost American consumers $300 to $400 billion a year, significantly raise
energy prices, and destroy hundreds of thousands of jobs. This is not to
mention the 'absurd result' that EPA will need to hire 230,000 additional
employees and spend an additional $21 billion to implement its [greenhouse
gas] regime.
Former
top scientists at the U.N. IPCC are protesting publicly against falsification
of global warming data and misleading media reports. Dr. John Everett, for
example, was the lead researcher on Fisheries, Polar Regions, Oceans and
Coastal Zones at the IPCC and a former National Oceanic and Atmospheric
Administration (NOAA) senior manager, and he received an award while at NOAA
for "accomplishments in assessing the impacts of climate change on
global oceans and fisheries." Here is what he has to say on global
warming:
It
is time for a reality check. Warming is not a big deal and is not a bad
thing. The oceans and coastal zones have been far warmer and colder than is
projected in the present scenarios ... I would much rather have the present
warm climate, and even further warming...No one knows whether the Earth is
going to keep warming, or since reaching a peak in 1998, we are at the start
of a cooling cycle that will last several decades or more.
That
is why we must hear from all the best scientists, not only those who say
fossil fuel use is dangerous. It is very important that we honestly discuss
whether this theory is true and, if so, what reasonable steps we can afford
to take to mitigate warming. If the theory is not based on solid science, we
are free to develop our fossil fuel wealth responsibly and swiftly.
Instead,
federal policies are based on global warming fears. Obama has adopted the
California model. The Global Warming Solutions Act of 2006 has shed a million
jobs in that state. California now has almost 12% unemployment, ranking 50th
in the nation.
The
country could be following North Dakota, where oil development has led to a
3.5% unemployment rate, or Texas, which has created 40% of the jobs
nationwide since the 2009 economic crash thanks to its robust energy sector.
These are good jobs. An entry-level job on an oil rig pays $70,000 a year. A
roughneck with a high school diploma earns $100,000 a year in Wyoming's Jonah
Fields. Brazil's new offshore oil discoveries are predicted to create 2
million jobs there. We have almost three times more oil than Brazil.
When
we treat oil and gas companies like pariahs, we threaten America's economic
viability. For global warming alarmists who believe that man-made CO2
threatens life on earth, no cost is too high to fight it. They avert their
eyes from the human suffering of people without jobs, with diminished life
savings, limited future prospects, and looming national bankruptcy.
This
is not all about idealism. There are crasser reasons of money and power for
wanting to close the debate. Billions of dollars in federal grants and
subsidies are spent to fight global warming. The cover of fighting to save
the planet gives the government unlimited powers to intrude into private
business and our individual homes. The government can reach its long arm
right into your shower and control how much hot water you are allowed to use.
In the words of MIT atmospheric scientist Dr. Lindzen, "[c]ontrolling
carbon is kind of a bureaucrat's dream. If you control carbon, you control
life."
Warming
advocates persistently argue that we cannot afford to pause for a reality
check; we must not ignore the possibility that global warming theory might be
true. Limiting fossil fuels and promoting green energy are presented as a
benign, a "why not be on the safe side," commonsense approach.
There
is a lot of emotion and little common sense in this argument. If a diagnosis
is based on a shaky and partly fraudulent theory, ignores much more
convincing evidence, and has terrible negative side effects, you don't
perform major surgery. We do not have to run around like Chicken Little on
the off-chance that the sky may be falling.
There
has been a high economic cost to limiting our oil and gas wealth, with much
human anguish because of government-imposed economic contraction. Responsible
government policy requires honest media coverage, unfettered scientific
inquiry, and robust political debate. Our country cannot afford the costs of
foolish energy policy based on politicized science and fear.
The
good news is that America has wealth beyond dreams that can be realized in
the next decade, producing a million new jobs. According to a recent
Congressional report, the United States' combined recoverable natural gas,
oil and coal endowment is the largest on Earth. Our resources are larger than
Saudi Arabia, China and Canada, combined. Our known resources can meet the
country's need for oil and gas for the rest of the century. That's not
including shale oil, the true energy future. If we used our own oil, we could
replace imported oil from the Persian Gulf for the next fifty years. By then
cars will probably be running on something else.
Now
turn your eyes to where real jobs are being created.
States
that have grown jobs in the last decade are states using their energy
resources, such as North Dakota, Wyoming, Utah, Texas, and Alaska. Texas has
created 40% of the jobs in America since 2009, with half a million jobs
directly in the energy sector. These are good jobs. A roughneck with a high
school diploma can earn $100,000 a year in Wyoming's Jonah Fields. An entry
level job on an oil rig pays $70K.
40%
percent of our energy is from petroleum, almost 25% from natural gas and 23%
from coal. Nearly half the electricity in this country is from coal. Oil and
gas industry employment increased between 5-11% in 2010, yes that is 2010.
Nine out of eleven of the fastest growing jobs in America were in the oil and
gas sector.
To
understand the potential of developing our resources further, contemplate
this: Brazil expects to add 2 million jobs in the next decade working in
their new off-shore oil fields, producing a million barrels a day. It could
be us. We have almost three times more oil than Brazil according to U.S.
government statistics.
The
American west is ten years away from producing more oil and natural gas
energy on a daily basis than current U.S. imports from Saudi Arabia, Iraq, Kuwait,
Venezuela, Colombia, Algeria, Nigeria, and Russia combined. This development
is expected to produce half a million jobs. Fossil fuel energy will also
produce $5 billion in state revenues for schools and infrastructure. Think
states with no income taxes.
The
Marcellus natural gas fields in Pennsylvania, West Virginia, New York and
Ohio is ten years away from creating 250,000 jobs, $2 billion in state and
local taxes, and $20 billion in GDP, according to a Penn State study.
Marcellus alone will provide a quarter of the nation's energy needs, says the
U.S. Energy Information Administration.
The
Bakken oil field in North Dakota and Montana is estimated by the U.S.
Geological Survey to have 25 times more recoverable oil than previously
believed. State geologists expect to be producing a million barrels a day in
ten years. Think 100,000 jobs. Add together all the country's shale oil, and
you double those numbers.
Exxon
has discovered new oil in the Gulf of Mexico with the potential for 700
billion barrels of oil. For comparison, Saudi Arabia has reserves of 300-800
billion. The bad news: the Obama administration is still blocking new leases
(see below).
Lifting
restrictions on oil drilling in Alaska and off our coasts would add more than
530,000 jobs and increase our oil production by 4 million barrels a day.
Doubling
down on the good news: if America were to allow development of our fossil
fuel resources, added to those of Canada and Mexico, North America would be
"energy secure," no longer dependent on the terror-supporting
regimes of the Middle East.
More
good news: despite all the hype about the dangers of fracking, the key
technology for extracting oil and gas from shale and tar sands, EPA
Administrator Lisa Jackson testified before Congress, she knows "no
proven cases where fracking has affected water." Fracking has been in
use for sixty years and is used in 9 out of 10 wells nationwide, including
100% of the wells in Pennsylvania since the 1950's.
Yes,
fracking requires safety standards, as does all energy development. A study
by the prestigious, National Academy of Sciences found "no evidence that
fracking fluids were leaching into wells," despite alarmist New York
Times reports. "Methane can leak into well water totally
naturally," the study reported, and can provide dramatic images of
people igniting the water from their faucets. They did find some cases where
methane leakages can be traced to fracking, but the Academy study concluded
"the methane was probably coming from leaky well pipes, which would mean
an easy fix." Israel has discovered shale oil a mere 30 miles from
Jerusalem, in a field as large as all Saudi Arabia's reserves, second only to
the United States. They plan to use fracking which they believe will pose no
ecological threat to their precious aquifer.
Now
for the bad news.
The
bad news is that only the Republicans want to develop fossil fuel energy.
Only
one-tenth of 1 percent of the electric power used in the United States each
year comes from solar power, yes, that is 1%. Yet Democrats are blocking
fossil fuel development with every tactic they can use, legal and illegal,
and shoving billions of dollars into subsidies for green energy. All this
money has been wasted: there has been a net loss of green jobs.
Obama's
administration is in contempt of federal court for imposing an
"arbitrary and capricious" moratorium on oil leases in the Gulf of
Mexico. This summer Obama did an end run around the court and extended the
moratorium, which has wiped out 1 billion dollars in wages, yes that is 1
billion. Even former President Clinton criticized Obama for the
"ridiculous delays in permitting when our economy doesn't need it."
The
comparison between two energy rich states, liberal California and
conservative Texas says it all. Texas added 800,000 jobs while California
lost 700,000 jobs. California has blocked oil drilling, subsidized expensive
green energy and forces utilities to buy green energy, at the projected cost
of losing one million jobs, yes that is one million jobs. Two months ago,
California Gov. Jerry Brown signed legislation requiring the state to obtain
one-third of its electricity from renewable energy sources by 2020. How's it
going for them? There's been a cascade of taxpayer funded bankruptcies, and
venture money is pulling out of the alternative energy field.
Federal
subsidies in this sector cannot erase the realities of the marketplace: you
can't sell something expensive and impractical that consumers don't want. The
'green jobs' mirage pursued by the White House has been a total failure
measured by jobs or cost effective energy production or even quantity of
energy. Producing electricity from solar energy is 300 times more expensive
than our current use of coal. Wind is 40% more expensive, runs only at 20%
capacity, requires backup fossil fuel plants, destroys wildlife habitat and
massacres birds, and causes human health problems. It can only succeed if
utilities are forced by law to purchase it, with the costs being passed to
the consumer.
Adding
insult to injury, 80% of the money given by Obama to American solar companies
was used to buy Chinese products, subsidized under Communism. Ignoring this
disaster, on his Midwest bus tour following the debt ceiling crisis, Obama
pledged 2.4 billion more taxpayer dollars for green jobs. His core liberal
voting base doesn't understand the economic and human cost in suffering
caused by the green assault on our economy.
The
poster child of the Obama administration's energy policy was Solyndra, a
solar energy company that was given almost half a billion dollars by Obama,
who touted it as the jobs future for our country. Shortly after Obama's
summer campaign stop at Solyndra, it went bankrupt, amidst evidence of
criminal fraud reaching all the way to the White House. The major investor in
the company happens to be one of Obama's billionaire campaign bundlers.
Obama
is not changing course on green jobs, despite the scandals of taxpayer
billions going down the bankruptcy hole. There have been three bankruptcies
of companies he recently touted as America's future. Green jobs were the only
private sector jobs Obama aimed for in the first trillion dollar stimulus
package, and they continue to be the linchpin of Stimulus II. So what if no
jobs are actually created - Obama believes green poverty is preferable to oil
wealth for our country.
Obama
used to point to Spain as a model for our future. By dint of promising 25
years of above-market price guarantees, Spain is a world leader in reliance
on solar energy - which met a pathetic 2.5% of their energy needs. Spanish
taxpayers spent $788,000 on each solar energy job, and subsidies of
$1,400,000 per job for wind power. The ruinous cost of green energy lead to
the loss of 2.2 jobs elsewhere in the economy for every green job created.
Measured by energy production, each "green" megawatt destroyed 5
jobs. Now that Spain is facing bankruptcy, such subsidies will cease and the
whole phoney edifice of alternative energy will collapse.
Germany
is also pulling back from their policies forcing utilities to buy expensive,
taxpayer subsidized, green energy. A recent German study concluded it has
been a failure on all fronts, in their words, "massive expenditures that
show little long-term promise for stimulating the economy, protecting the
environment, or increasing energy security."
Which
future do we want? Should Europe or Texas be our model? The Democrat path:
national debt at 100% of GDP (that's Greek territory) by 2013 and ruinous
energy costs for all of us. The Republican path: millions of high paying
jobs, affordable energy, lower taxes and independence from Arab oil. Democrat
or Republican? Come 2012, you decide.
As
I watch the various college-aged Occupiers in their True Religion jeans talk
about how bad they’ve got it while they tweet on their Macs during a
catered lunch consisting of salmon filets with dill sauce as a Rasta Columbia
grad student strums gently on his Washburn 118SW, I keep thinking, “You
charmed babies don’t have it that bad.”
Matter
of fact, from an earth angle, you are truly the fortunate ones and have hit
the lifestyle lotto. Trust me, there are stacks of people from developing
countries who would love to have what you ingrates whine about. Just ask an
illegal alien.
For
instance…
1.
Clean Water. Please bear in mind, Occupiers, that when you crack open your
Evian or get a glass of water from your dorm room faucet that 884 million
people worldwide drink water out of crap puddles. Also, even though it
doesn’t look like many of you cats bathe, when you do scrub your
undercarriage during a five-minute shower, know that you have burned more
aqua in that foray than a normal Joe in a third world county has in the last
24 hours. Just a little FYI.
2.
Toilets. I know some of your crew like to forego toilets and port-a-potties
and drop deuces on police cars and American flags and urinate in public, but
please understand that the mere fact that you’ve got an option to use
an American Standard truly tosses you into the cultural elite class. Yep, worldwide
40% of our globe’s population (2.6 billion people) is forced, out of
poverty, to pop a squat in the brush because they are that broke.
3.
Electricity. Next time you power up your iPhone 4S or HDTV, think about this
ditty: 1.6 billion folks live without the little extravagance of electricity.
4.
A Roof. Globally, one billion people would kill to live in that tent
you’re inhabiting right now in that swank park you’re ruining.
One-sixth of the world’s collective live in cardboard boxes. According
to the NYC arrest records of the 984 OWS protestors arrested between 9/18 and
10/15, they’re dwelling in digs that average about $305,000 a pop. Can
you say, “1%”?
5.
Grub. Did you know the rats you guys are attracting by the food you toss away
during your protest would actually be a delicacy in developing countries? If you
have three squares a day (or even one) please note that you are blessed
because 790 million folks, give or take, go to bed every night with their
stomachs sucking up against their spines.
I
could go on and on talking about how great we have it here amidst all of our
inequities and absurdities, but I’ve got a Thanksgiving dinner to eat,
a cigar to smoke and a giant screen HDTV to watch the Dolphins lose on that
forbid me to go any further with this diatribe. For more 411 on why the OWS
crowd and all Americans should bow their knee and thank God we have this
nation, check
out this column.
And
if you’re looking for a book for parents for Christmas that’ll
keep kids from being part of the OWS crowd, get
my barn burner here.
11/22/2011: Government
vs. Soup Kitchen
At Thanksgiving, the poor pay for
dumb regulation.
This
Thursday, in a parish hall not far from the New Jersey town green where
George Washington once made his winter headquarters, as many as 300 people
will gather for their Thanksgiving meal. Some will be homeless, some will be
mentally ill, some will be old, and some will be folks and families who have
just hit a hard patch. For all of them, Morristown’s Community Soup
Kitchen and Outreach Center is one of the few blessings they can count on.
In
many ways, this soup kitchen illustrates Tocqueville’s point about the
American genius for voluntary association. Having started out in a local
Episcopal church, it has grown into a network that links restaurants, corporate
sponsors and community groups with volunteers from nearly three dozen church
congregations, including this reporter’s. The result is a hot meal to
anyone who comes to the door each noon, no questions asked.
This
the men and women of the Community Soup Kitchen have provided for 26 years,
not once missing a day. Now comes a challenge greater than any snowstorm or
power outage. Earlier this year, the Morristown Division of Health ruled that
henceforth the soup kitchen would be considered a “retail” food
establishment under New Jersey law.
From
that single word far-reaching consequences have flowed. In a column for a
local blog, Ray Friant, a volunteer from the Morristown United Methodist
Church, called the rule “crazy.” Over Sunday breakfast at a local
diner, Mr. Friant, his wife, Emmy Lu, and another church couple who also
volunteer at the kitchen, Barbara and Jim Morris, spell out what they mean by
crazy.
Most
obvious is the higher cost: at least $150,000 more a year. To meet this
increase, the kitchen is asking each participating church to up its own
contribution. Some congregations don’t have the money. For those that
do, it will mean less for some other need.
Much
of this cost results from a new prohibition on people donating food
they’ve prepared at home. For those on the giving end, often this was
the only way they could participate, so eliminating their contributions means
eliminating volunteers. For those on the receiving end, it means no more
homemade meat loaf, lasagna, cakes and so forth.
All,
of course, in the name of food safety. Still, one suspects that when a
co-worker brings a tin of Christmas cookies to a friend inside
Morristown’s Division of Health, those cookies are not forbidden
because they do not come wrapped from a supermarket or approved restaurant.
Yet this is precisely the restriction these officials have imposed on men,
women and children whose only hope for a home-baked cookie might be at the
soup kitchen.
Finally,
there’s the utter soullessness of the thing. For example, many of the
women would bring their own aprons from home. No more. Now it’s all
latex gloves, throw-away aprons, and a ban on food servers even entering the
kitchen. In short, more institutional cafeteria than Grandma’s house.
Teresa
Connolly, the soup kitchen’s director, did not return phone calls. No
doubt her top priority is keeping the kitchen going, and many appear to have
concluded that the best option is getting along with the government. The
senior pastor of the Friants’ church, Neill Tolboom, notes that the
soup kitchen appreciates that the town continues to let it do its work right
near the main square, and he says his hope is that by adapting to the new
government rules the result will be healthier meals for those whom the
kitchen feeds.
Mr.
Friant and his fellow volunteers say no one opposes reasonable measures to
improve cleanliness. The question is whether this is a solution in search of
a problem. In the 26 years this kitchen has been open, there seems to be no
case of food poisoning. Maybe Morristown officials would do better to seek
out those who actually eat there, and put to them this question: Do you feel
safer and better off now that we’ve protected you from home-baked apple
pie?
So
what’s the solution? It may be as simple as getting the Division of
Health to reconsider. Unfortunately, Darlene O’Connell, the
town’s health officer, refused to comment, directing a reporter to her
superior, Thomas Alexander, who did not return several calls. If, on the
other hand, it turns out the push is from the state, surely Gov. Chris
Christie and state lawmakers would be happy to work out a resolution that
advances health while preserving the more personal elements that make this
kitchen such a gift to those in need.
On
a 1995 trip to New Delhi, Hillary Clinton visited an orphanage run by Mother
Teresa’s nuns. She came away impressed by the great love and care she
found there. With no small irony, she noted it was a place that “would
not have passed inspection in the U.S.”
At
least not in Morristown.
“Alice
in Wonderland” was written by a professor who also wrote a book on
symbolic logic. So it is not surprising that Alice encountered not only
strange behavior in Wonderland, but also strange and illogical reasoning --
of a sort too often found in the real world, and which a logician would be
very much aware of.
If
Alice could visit the world of liberal rhetoric and assumptions today, she
might find similarly illogical and bizarre thinking. But people suffering in
the current economy might not find it nearly as entertaining as “Alice
in Wonderland.”
Perhaps
the most remarkable feature of the world envisioned by today’s liberals
is that it is a world where other people just passively accept whatever
“change” liberals impose. In the world of Liberal Land, you can
just take for granted all the benefits of the existing society, and then simply
tack on your new, wonderful ideas that will make things better.
For
example, if the economy is going along well and you happen to take a notion
that there ought to be more home ownership, especially among the poor and
minorities, then you simply have the government decree that lenders have to
lend to more low-income people and minorities who want mortgages, ending
finicky mortgage standards about down payments, income and credit histories.
That
sounds like a fine idea in the world of Liberal Land. Unfortunately, in the
ugly world of reality, it turned out to be a financial disaster, from which
the economy has still not yet recovered. Nor have the poor and minorities.
Apparently
you cannot just tack on your pet notions to whatever already exists, without repercussions
spreading throughout the whole economy. That’s what happens in the ugly
world of reality, as distinguished from the beautiful world of Liberal Land.
The
strange and bizarre characters found in “Alice in Wonderland”
have counterparts in the political vision of Liberal Land today. Among the
most interesting of these characters are those elites who are convinced that
they are so much smarter than the rest of us that they feel both a right and
a duty to take all sorts of decisions out of our incompetent hands -- for our
own good.
In
San Francisco, which is Liberal Land personified, there have been attempts to
ban the circumcision of newborn baby boys. Fortunately, that was nipped in
the bud. But it shows how widely the self-anointed saviors of Liberal Land
feel entitled to take decisions out of the hands of mere ordinary citizens.
Secretary
of the Treasury Timothy Geithner says, “We’re facing a very
consequential debate about some fundamental choices as a country.”
People talk that way in Liberal Land. Moreover, such statements pass muster
with those who simply take in the words, decide whether they sound nice to
them, and then move on.
But,
if you take words seriously, the more fundamental question is whether
individuals are to remain free to make their own choices, as distinguished
from having collectivized choices, “as a country” -- which is to
say, having choices made by government officials and imposed on the rest of
us.
The
history of the 20th century is a painful lesson on what happens when collective
choices replace individual choices. Even leaving aside the chilling history
of totalitarianism in the 20th century, the history of economic central
planning shows it to have been such a widely recognized disaster that even
communist and socialist governments were abandoning it as the century ended.
Making
choices “as a country” cannot be avoided in some cases, such as
elections or referenda. But that is very different from saying that decisions
in general should be made “as a country” -- which boils down to
having people like Timothy Geithner taking more and more decisions out of our
own hands and imposing their will on the rest of us. That way lies madness
exceeding anything done by the Mad Hatter in “Alice in
Wonderland.”
That
way lie unfunded mandates, nanny state interventions in people’s lives,
such as banning circumcision -- and the ultimate nanny state monstrosity,
ObamaCare.
The
world of reality has its problems, so it is understandable that some people
want to escape to a different world, where you can talk lofty talk and forget
about ugly realities like costs and repercussions. The world of reality is
not nearly as lovely as the world of Liberal Land. No wonder so many people
want to go there.
Global
warming has re-entered public consciousness in recent days, partly because of
the buzz surrounding the release of warming results from the Berkeley Earth
Surface Temperature (BEST) project. The reaction of the
“warmistas” has been jubilant, yet hilariously wrong. Will they
ever learn?
They’ve
latched on to the BEST result as their last best hope for rescuing misbegotten
schemes to control emissions of the greenhouse gas CO2. Leading the pack has
been the Washington Post (Oct. 25), whose columnist tried to write off
Republican presidential candidates Bachmann, Cain, and Perry as
“cynical diehards,” deniers, idiots, or whatever.
I
sent the Washington Post a letter pointing out obvious errors, but I got a
peculiar response. It turned out that they were willing to publish my letter,
but not my credentials as emeritus professor at the University of Virginia
and former director of the U.S. Weather Satellite Service. Apparently, they
were concerned that readers might gain the impression that I knew something
about climate.
Unfortunately,
it has become expedient (for those who condemn CO2 as the cause of warming)
to deride their opponents with terms like “climate deniers.” A
complacent and inattentive media has made the problem worse, by giving the
impression that anyone who doesn’t buy the CO2 hypothesis doesn’t
believe that climate changes, and hence is a total Luddite. Even the Wall
Street Journal got carried away. Prof. Richard Muller, the originator and
leader of the BEST study, complained to me that some eager editor changed the
title of his op-ed (Oct. 21) to “The Case Against Global-Warming
Skepticism” from his original “Cooling the Global Warming
Debate.”
The
(formerly respected) scientific journal Nature chimed in and announced in an
(Oct. 26) editorial[i] that any results confirming “climate
change” (meaning anthropogenic global warming -- AGW) are welcome, even
when released before peer review. Of course, we’ve known for many years
that Nature does not welcome any contrary science results, but it’s
nice to have this confirmation.
Their
hearts filled with bubbling joy and their brains befuddled, none of the
warmistas have apparently listened to the somewhat skeptical pronouncements
from Prof. Muller. He emphasizes that the analysis is based only on land
data, covering less than 30% of the earth’s surface and housing
recording stations that are poorly distributed, mainly in the U.S. and
Western Europe. In addition, he admits that 70% of U.S. stations are badly
sited and don’t meet the standards set by government; the rest of the
world is probably worse. He disclaims to know the cause of the warming found
by BEST and favors naturally caused oscillations of the atmosphere-ocean
system that no climate model has yet simulated or explained.
The
fact that the BEST results agree with previously published analyses of
warming trends from land stations may indicate only that there is something
very wrong with all of these. There are two entirely different ways to
interpret this agreement on surface warming. It might indicate important
confirmation, but logic allows for an alternate possibility: since both
results rely on surface thermometers, they are not really independent and
could be subject to similar fundamental errors. For example, both datasets
could be affected by urban heat islands or other non-global effects -- like
local heating of airports, where traffic has been growing steadily.
But
the main reason I have remained a skeptic is that the atmosphere, unlike the
land surface, has shown no warming during the crucial period (1978-1997),
either over land or over ocean, according to satellites and independent data
from weather balloons. And did you know that climate models run on high-speed
computers all insist that the atmosphere must warm faster than the surface --
and so does atmospheric theory?
BEST
has no data from the oceans, which cover 71% of the planet’s surface.
True, oceans are not subject to urban heat islands, but they have problems
with instrumentation. It is very likely that the reported warming during
1978-97 is simply an artifact -- the result of the measurement scheme rather
than an actual warming. Anyway, supporting data don’t show any ocean
warming, either.
And
finally, we have non-thermometer temperature data from so-called proxies:
tree rings, ice cores, lake and ocean sediments, stalagmites. Most of these
haven’t shown any warming since 1940!
Contrary
to some commentary, BEST in no way confirms the scientifically discredited
hockey stick graph, which was based on multi-proxy analysis and had been so
eagerly adopted by climate alarmists. In fact, the hockey stick authors never
published their post-1978 temperatures in their 1998 paper in Nature -- or
since. Their proxy record suddenly just stops in 1978 -- and is then replaced
by a thermometer record that shows rapid warming. The reason for hiding the
post-1978 proxy data: it’s likely that they show no warming. Why
don’t we try to find out?
None
of the warmistas can explain why the climate hasn’t warmed in the 21st
century, while CO2 has been increasing rapidly. It’s no wonder that
Herman Cain, a former math and computer science major in college, says that
“man-made global warming is poppycock” (New York Times, Nov. 12).
He blames climate fears on “scientists who tried to concoct the
science” and “were busted because they tried to manipulate the
data.”
Mr.
Cain is not far from the truth -- at least when one listens to Rich Muller.
Muller’s careful to make no claim whatsoever that the warming he finds
is due to human causes. He tells us that one third of the stations show
cooling, not warming. Muller admits that “the uncertainty [involved in
these stations] is large compared to the analyses of global warming.”
He nevertheless insists that if he uses a large enough set of bad numbers, he
could get a good average. I am not so sure.
Muller
thinks that he has eliminated the effects of local heating, like urban heat
islands. But this is a difficult undertaking, and many doubt that the BEST
study has been successful in this respect. Some of Muller’s severest
critics are fellow physicists: Lubos Motl in the Czech Republic and Don Rapp
in California. Somewhat harshly, perhaps, Rapp would change the study
designation from BEST to “WORST” (World Overview of
Representative Station Temperatures).
I
am one of those doubters. While many view the apparent agreement of BEST with
previous analyses as confirmation, I wonder about the logic. It might be a
good idea if BEST would carry out some prudent internal cheeks:
* Plot number of stations used between
1970 and 2000 and make sure that there have been no significant changes in
what I call the “demographics”: station latitudes, altitudes, or
anything that could induce an artificial warming trend.
* I would pay particular attention to
the fraction of temperature records from airport stations -- generally
considered among the best-maintained, but subject to large increases in local
warming.
* I would also decompose the global
record of BEST into regions to see if the results hold up.
Of
course, the most important checks must come from records that are independent
of weather station thermometers: atmospheric temperatures, ocean temperatures,
and temperatures from non-thermometer proxy data. But even then, it may be
difficult to pinpoint the exact causes of climate change.
I
conclude, therefore, that the balance of evidence favors little if any global
warming during 1978-1997. It contradicts the main conclusion of the IPCC --
i.e., that recent warming is “very likely” (90-99% certain)
caused by anthropogenic greenhouse gases like CO2.
And
finally, what to do if CO2 is the main cause, and if a modest warming has bad
consequences -- as so many blindly assume? I am afraid that the BEST project
and Muller are of no help.
On
the one hand, Muller is dismissive of policies to control CO2 emissions in
the U.S. -- much less in his State of California. In an Oct. 31 interview
with the Capital Report of New Mexico, he stated:
... the public needs to know this, that
anything we do in the United States will not affect global warming by a
significant amount. Because, all projections show that most of the future
carbon dioxide is going to be coming from China, India, and the developing
world. ... [A]nything we do that will not be followed by China and India is
basically wasted.
On
the other hand, Muller told MSNBC’s Morning Joe” (Nov. 14):
[W]e’re getting very steep
warming ... we are dumping enough carbon dioxide into the atmosphere that
we’re working in a dangerous realm, where I think, we may really have
trouble in the next coming decades.
So
take your choice. But remember -- there is no evidence at all for significant
future warming. BEST is a valuable effort, but it does not settle the climate
debate.
S.
Fred Singer, an atmospheric physicist, is Research Fellow at the Independent
Institute, Professor Emeritus of Environmental Sciences at the University of
Virginia, and former founding Director of the U.S. Weather Satellite Service.
He is author of Hot Talk, Cold Science: Global Warming’s Unfinished
Debate (The Independent Institute).
In
America, the federal government seems to control everything. Light bulbs,
shoe leather, refrigerators, even the water strength in your shower. Your
banker, your doctor, your lawyer, your computer all are regulated beyond
belief. What is it in America that the feds can’t control? The answer
is simple: human nature. We need to eat, and we need to move about; and that
means we will use the free market in order to do so, with or without the
government.
Every
capable human engages in market exchanges, even in those countries where
it’s illegal. Through all of history, humans have advanced civilization
by building up the avenues of trade so as to increase their standards of
living. When you buy a loaf of bread or a gallon of gas, you are freely
choosing to engage in what remains of the free market. I emphasize
“what remains” because when you buy bread, you are paying the
local or state government a tax for a product that was baked under conditions
set forth by the feds and one of the 50 states, and when you buy fuel for
your car, up to one quarter of the cost of the fuel consists of state and
federal sales taxes.
Sales
taxes constitute a grand theft concocted by politicians and bureaucrats so as
to provide them with a never-ending supply of cash they can use to bribe
people for their votes. Sales taxes also make items we need more expensive.
And they intrude upon our privacy. Think about it. If I want a loaf of bread
and you are a grocer willing to sell me one, what business is that of the
government? None. What involvement has the government had? None. What has the
government done to add value to that transaction? Nothing.
The
protesters on Wall Street seem not to understand that free trade is a natural
right -- like speech, travel, religion, self-defense, privacy -- and is
mutually beneficial to the buyer and the seller. That’s why at the end
of a transaction, each party says “thank you.” We have both
benefited. It’s a win-win. I have food and fuel, and the seller has
revenue. So how is it today that this natural and daily activity has become
much maligned and exploited and hated by government elites?
As
the global economies have collapsed in the past decade, nothing has been
certain except for uncertainty. The world’s central banks, drunk on
power, loaded their people up with debt and then slowly guided their
economies to destruction. That’s the consequence of government control
of the monetary system and means of exchange. Prices in an economy are like
traffic signals, signaling where goods and resources should go and how fast.
Central banks distort those traffic signals and even give the wrong signals.
That’s why we get crashes -- because of government traffic signals,
because the government has taken “free” out of the marketplace.
But
free trade does occur in the United States in some ways. The black markets
are where people trade what they want for the price agreed on, free of taxes
and free of government regulations, and at prices that are acceptable to the
parties. Simply banning the transaction will not deter some portion of the
population from attempting to acquire something -- whether it’s bread,
tobacco, drugs or guns -- that the government doesn’t want us to have,
at prices we are willing to pay. People will always trade what they have for
what they want or need. That’s human nature. That’s a natural
human right. The government cannot stop that. But, of course, governments
have tried to stop the exercise of this right.
During
World War II, for example, FDR and his cronies rationed sugar, leather, tea,
tobacco, guns, coffee, fuel and many other items our parents and grandparents
needed for everyday use. The stated purpose was that the troops needed these
items and there was not enough to go around, so the feds would decide who got
what and how much all these things would cost. But there was a black market
for all these items, and there, the items were plentiful and the price was
freely agreed upon. If the government had stayed out of the picture, the
market could have existed in the light of day. We now know that FDR was as
much interested in control of the population as in supplying the troops.
The
government fears trade because it can’t control it. The feds would do
well to remember the historical truth that where goods and services
don’t move freely, armies will; and where goods and services do move
freely, armies don’t. And when the black market becomes more prosperous
than the one the government regulates, it will be time to change the
government.
Pension Prop 13 California’s
pension hawks file a detailed, alternative plan to the governor’s that
builds on his proposals.
Last
week I discussed the primary features of California Gov. Jerry Brown’s
thoughtful 12-point plan to reform the state’s unsustainable pension
mess. The night before my column published, a group called California Pension
Reform (or CPR, an artfully chosen name) filed two ballot proposals that
called the governor’s bid and raised him two. Their plan is to test the
waters with two proposals and pick one to begin collecting petition
signatures. This is the long-awaited “Pension Prop 13” -- the
pension-reform descendent of the legendary grassroots tax-limitation measure
that swept through California and several other states three decades ago. It
is the most comprehensive pension reform language ever filed in any state in
the country, yet less severe than Rhode Island’s recent narrower,
sharper proposals to actually freeze, modify and cut incumbents’
benefits.
In
this column, I will explain the key features of these two proposals, how they
differ and how they compare with the governor’s plan. Then I’ll
try to analyze what may happen next, as these two announcements are just the
opening act of what will be a year of political theatre in the Golden State.
To
set the stage, the Democrat-controlled Legislature adopted a law in October
that essentially forces all ballot proposals in 2012 onto next
November’s ballot, where they feel that voter turnout on their side
will be stronger with President Obama running for re-election and a higher
turnout favoring a vastly larger statewide number of registered Democrats.
There will likely be other issues on the ballot, such as a measure to reduce
union and corporate contributions that the unions see as a direct threat,
thus bringing out that voting bloc. Pundits believe the governor is likely to
put a tax increase measure on the ballot, especially if he can link it to
pension reform to appease voters. So it will be a crowded, complicated
“bedsheet ballot” with well over $100 million expected to be
spent on TV and radio ads bewildering an electorate that otherwise would
prefer to think about anything but politics and pensions if the state were
not in such a mess.
Now
enter the CPR group on stage right, led by former Schwarzenegger administration
fiscal experts and a former GOP leader who called the various reform factions
together to assemble a “best of breed” proposal that has been
vetted through constitutional attorneys and a host of pension specialists.
(Full disclosure: As with any such pension proposal, I have made myself
available for expert commentary on technical matters, and the CPR leaders ran
some of the specific provisions by me, including their hybrid plan language,
remedies for severely underfunded plans, anti-abuse provisions, and
definitions. They used some of my suggestions, and rejected others, so
I’m not a partisan here. Any other group, including the state
Legislature, the governor’s office or any ballot petitioner -- on the
left, the center or the right -- is welcome to likewise seek my independent,
uncompensated, critical reviews of their state-level retirement reform
proposal at any time).
The
two CPR proposals contain many common features, so let’s start with
those first. As with last week’s analysis of Brown’s proposal, I
will present them in two categories: anti-abuse provisions and fundamental
fiscal reforms.
Anti-abuse provisions. Brown’s
announcement was incredibly timely, as it gave the CPR folks a template for their
own proposals. They worked diligently in the week before they filed their
initiatives to incorporate several of the governor’s specific
anti-abuse proposals. Great minds think alike, so there really isn’t
too much difference on many of these key concepts. Thus, what you find in
these two new proposals are many elements shared with the governor’s
proposal, but now expressed in constitutional terms to assure they endure
beyond one legislative session. The anti-abuse provisions that are comparable
to Brown’s plan are:
-
Anti-spiking provisions, including a tighter
definition of “base pay” to eliminate all the abusive overtime
and non-recurring and special pay features that bloat pensions, plus a
three-year averaging process which is conventional in many other states.
-
No more retroactive benefits increases -- a hot button
for pension reformers, because such ‘retros’ never actually
“attract and retain employees” which has been the traditional
baloney we’ve been fed for years about those giveaways. SB 400 in California
was the millennial poster child for the failure of this selfish gambit which
has since been discredited by the professional associations. That landmark
bill’s 50 percent retroactive increase in pension benefits was based on
a projection of stock market gains equivalent to DJIA 25,000 today and we all
know how that worked out. Nationwide, many of today’s unfunded pension
liabilities are directly attributable to these retros. Anybody who opposes
this reform is either greedy or unteachable.
-
No more employer pension-contribution holidays. Just
look at Illinois for proof positive on this one. When politicians cut corners
in pension funding, the results are predictably disastrous. Californians need
only look at CalSTRS, the state teacher’s system, for a classic example
of the systematic failure of legislative underfunding.
-
Felons would be ineligible for public pensions related
to their government employment. This feature will win votes every time after
Bell, Calif.’s compensation scandals.
-
No more “air time,” or purchasing service
credits for time never worked in the first place. Military and qualified
prior public service credit purchases are still permitted. Experience has
taught us that taxpayers lose every time an employee makes this selection because
they know their personal life better than the government actuaries.
-
Governance reforms are included to assure that a
majority of pension board members are actually qualified for the job by
virtue of professional expertise and are independent of the benefits. CPR
also provides for the state director of finance (presumably through a
designate, as the treasurer and the controller do now) to serve on all the
large pension boards in the state.
Before
I go on to the other provisions, let me now say, Hurrah! Each feature here
deserves the support of everybody serious about preserving retirement
security for public employees. These anti-abuse measures simply convert the
rhetoric and the essence of the governor’s proposals into clear
constitutional language, and there should be no quibbling about the details.
If the Legislature needs a template for the work they need to do, they should
start here. CPR’s language is cleaner, clearer and more concrete than
similar provisions I have seen in any other state’s laws or legislative
proposals.
The
notable shortcoming in these measures is that they really don’t fix the
underlying financial problem. As strong as the anti-abuse proposals presented
by the governor and CPR are, the fact is that by themselves they do not come
anywhere close to fixing the underlying fiscal problem any more than a
band-aid will fix intestinal bleeding. We have to stop thinking in terms of
solutions that save millions of dollars and confront the reality that
California alone faces a problem with a price tag in the hundreds of
billions.
Fundamental fiscal reforms. In terms of
fundamental financial reforms affecting new employees, CPR goes beyond the
governor’s proposals in several key areas:
-
Most importantly, both CPR proposals empower public
employers to change benefits plans for new hires without limitation. This
puts an end to California’s crazy judicial concept of
“vested” benefits that cannot ever be reduced prospectively after
an employee walks in the door. This is a fundamental constitutional difference
in their plans, and a major deficiency in the governor’s proposal, in
my opinion.
-
CPR follows the governor’s lead with age 67 as
the new retirement age for general employees, and then goes on to define a
full-service career for them as 35 years. For public safety workers, the CPR
selects age 58 (accepted by unions in the San Francisco mayor’s 2011
“consensus” ballot proposal) with 30 years of service, whereas
the governor’s proposal left those details unspecified. CPR also allows
earlier retirements with an actuarial reduction.
-
Both CPR proposals require new employees to share at
least half of the total cost of their benefits. The governor’s proposal
stops at half the normal service cost, and leaves employers and taxpayers on
the hook for the rest. Thus, employees under the governor’s proposal
bear only one-third of the total market risk of the state system (the
defined-contribution component) since federal and state taxpayers remain on
the hook for all unfunded liabilities of the defined benefit and Social
Security systems.
-
CPR would move disability benefits outside of the
pension system, where it’s widely abused because of privileged federal
tax treatment. In some cities, the disability claims are totally out of
control. CPR’s provisions would remove the HR staff and pension board
co-workers who are susceptible to peer pressure from the process and require
intergovernmental self-insurance agencies, insurance companies or impartial
arbitrators to make these decisions when taxpayer money is involved.
-
CPR would outlaw supplemental defined-benefits plans
that could circumvent the limitations of their proposals. No more “top
hat plans” and special deals for management employees, for example.
-
The governor’s proposal has wisely and
skillfully addressed retiree medical benefits for new hires, which could be
addressed by statute in a package of bills. The CPR folks avoided this
subject because of legal limitations on what can be included in a single
ballot proposal. They had also watched a pension-reform proposal in San
Francisco fail last year, partly because it also dared to address
skyrocketing health benefits costs. Thus, CPR decided to focus only on
pensions and similar defined benefits in their constitutional amendment.
If
there is one feature I’d urge the governor and allied reformers to push
through the Legislature independent of all these pension issues, it would be
his sensible proposal for retiree health-care benefits reform, plus a
statutory requirement for all public employees to eventually pay one-half of
the normal costs of their retiree medical (part of OPEB, which stands for
“other post-employment benefits”) plans as with their pensions.
Just like the governor’s basic cost-sharing plan, these could be
phased-in, perhaps over 3 or 4 years. These two related reforms would likely
require a separate statute and probably cannot be placed in the same
constitutional amendment with pension reform. Even if enacted by statute,
they would virtually double the overall savings from public-sector retirement
reform. State law must require all public employers to begin incrementally to
fund their OPEB plans actuarially and stop this neglectful nonsense of paying
only the retirees’ benefits costs, which will snowball in the coming
decade and guarantee the next crisis. Because the stakes are so huge here,
OPEB reform is one area where some hard-nosed horse-trading between the two
political parties could still result in a Grand Compromise, as I will discuss
later.
Comparing basic benefits: The Hybrid. With these
basic reforms discussed, the next logical place for explanation and
comparison is the CPR proposals for basic benefits for new employees. Here,
they have filed two versions. I will begin with the one closest to the
governor’s proposal: the CPR hybrid plan.
The
CPR hybrid puts constitutional structure and teeth into the governor’s
general outline for pension reform for employees hired after June 30, 2013
(seven months after the election). For those employees, the Legislature would
be instructed to implement a statewide system that provides for
“hybrid” plans that provide retirement benefits not exceeding 75
percent of an employee’s eligible pre-retirement income. Benefits would
include a combination of a defined-benefit and a defined-contribution plan.
As with the governor’s proposal, defined benefits would be integrated
with Social Security: those in that system would get a smaller pension, and
those outside the federal system would get a larger pension to compensate.
Employees can then supplement their employer benefits with voluntary deferred
compensation as many governmental-sector financial planners already
recommend. Those who save 5 percent of pay as normally recommended should
ultimately exceed the common industry benchmarks for retirement replacement
income -- and they will clearly receive much richer retirement benefits than
the average private-sector employee.
The
CPR proposal then mirrors the governor’s proposal to require that
employees pay one-half of the cost of this plan. Using the industry-classic
analogy of a “three-legged stool,” the hybrid plan must include a
defined-contribution plan for one-third of the total benefit structure, again
consistent with the governor’s plan. To again be comparable, the CPR
proposal also provides that employees with Social Security would receive a
defined-benefit pension plan that provides about 1/3 or less of the total
benefit. (Social Security typically provides 25 to 40 percent of most
employees’ replacement income with participating lower-paid workers receiving
a higher percentage which would be offset by a lower pension ratio under both
the governor’s and the CPR hybrid’s integrated benefit
structure.) Those outside Social Security would receive a pension paying
about one-half of their pensionable pay. CPR also addresses the
“$100,000 pension club” issue by restricting the pension
component of this overall package to that level, adjusted for future
inflation. That will forever control outrageous pensions such as those in the
notorious cities of Vernon and Bell, and high-end pensions for all highly
paid public employees earning more than $250,000 elsewhere, whatever their
profession may be. Overall, the plan design is structured to require
employees to bear one-half of the plan costs and to bear roughly half of the
investment risks for those in Social Security. (Miller’s sidebar
opinion: Ultimately, future public employees will most likely be required to
participate in Social Security as Congress realistically confronts the
subsidy they now receive, so all these proposals should be viewed in the
light of a universal Social Security system in the future.)
The
CPR hybrid plan also requires all public employers to offer retirees an
option to convert their defined-contribution account into a life annuity
(including a spousal-survivor option), and also permits the use of a
collective defined-contribution trust, which I have described in a prior
column, to assure that employees do not outlive their money. When the
Legislature considers the governor’s hybrid proposal, I would urge them
to include these protective retirement-security features as well.
-
Administrative notes: To forestall a state monopoly,
CPR wisely allows every public employer to select its own
defined-contribution administrator, which will encourage competition that can
still include an efficient state-run plan. Also, their hybrid plan would
allow supplemental defined-contribution benefits for the upper-income
employees subject to pension caps, as long as the plan remains faithful to
the overall 75 percent retirement benefits cap.
The 6 percent/9 percent plan: CPR’s
other plan design presents a clear philosophical alternative to the
governor’s hybrid proposal for new employees. Appealing more to staunch
conservatives and libertarians, it would:
-
Limit the government employer’s annual
contributions to 6 percent of base income for general employees and 9 percent
for public safety. Employees pay all remaining costs including amortization
of unfunded liabilities in a defined-benefit plan, and no less than the
employer’s share. This provision shifts all investment risk to the
employees and away from employers.
-
Provide an additional Social Security equivalent
replacement income plan for those outside that system. To put this in
perspective, public employees in the Social Security system would see
combined employer/employee contributions of at least 24 percent of their base
pay, and public safety professionals would see combined contributions of 30
percent or more. That’s still a lot of money going for retirement: few
private employers provide retirement benefits at such a level. Those outside
the Social Security system would receive equivalent benefits at lower cost
because pension plans can deliver the same benefits for less without
contributing to national income redistribution like the rest of us taxpayers.
-
Prohibit any defined-benefit plan for new employees
from burdening a government employer with liabilities beyond its annual
contributions. Some reporters have assumed that this requires 401(k)-style,
defined-contribution plans, but that oversimplification is erroneous. This
version of the CPR proposal simply requires that somebody other than the
taxpayers must hereafter bear the risks. If employees want a guaranteed
benefit, they can (1) demand a union-run, Taft-Hartley-like plan in which the
workers run the system and collectively bear the investment risks, or (2) the
pension trustees can buy institutional group annuities underwritten by third
parties or (3) existing pension funds can offer a qualifying defined-benefit
plan in which future employees and not the employers are responsible for all
unfunded liabilities. This version simply says that employees can’t
have their cake and eat it too. Government employees can no longer expect
taxpayers to guarantee benefits on the basis of the unpredictable and
variable stock market returns now used to calculate advantageously low
contribution rates, while they tell the world that they themselves should not
be subjected to market risk.The price tag of that privilege nationwide now
exceeds $400 billion as I see it. This proposal recognizes that investment
risk has a cost as well as a benefit, and freedom from investment risk has a
price. So it requires those who want freedom from risk to pay the price of
that freedom in a risky world -- and not the taxpayer who has never had a
voice in the matter. Here, the “6 percent/9 percent” proposal
differs significantly from the governor’s and the CPR hybrid, which
would share market and actuarial risks more equally. I personally prefer the
hybrid design for new hires, as my prior columns have explained, but this
version has its rationale and a legion of strong advocates.
-
In both plans, CPR will require three-year averaging
to control pension spiking by current employees after a three-year transition
period. Those who want to game the system had better hustle and get out by
then, or try to tell the judge later why they are so special.
The
Hammer. Finally, we come to the most interesting and thoughtful part of the
CPR proposal -- its remedy for severely underfunded pension plans. Governors,
mayors, school boards and underwater pension boards nationwide will be
watching this one. Going well beyond anything Brown has proposed, the CPR
folks figured out a way to begin fixing the broken pension systems’
massive unfunded liabilities. They have looked at federal case law regarding
the revision of pension benefits, and established what I would call an
“emergency remedial provision” that empowers employers to require
higher contributions for current employees if their budgets cannot tolerate
proper funding of a distressed plan without impairing essential public
services.
First
the pension plans must evaluate and begin to shore up their funding status
using standards similar to those required of private companies under federal
pension laws. What’s good for the goose is good for the gander, CPR
proponents would say: A severely underfunded governmental pension plan
requires just as much public intervention as a corporate plan. Thus, the same
rules that protect private-sector workers would be used to protect California
taxpayers. These standards require the plan to attain the 80 percent funding
level that is often cited as prudent, using a more-conservative valuation
based on federal rules for the private sector.
Thus,
most major pension plans in the state are presently “at risk”
under this definition. Until their funding improves, that status triggers a
requirement for the public employer to properly fund its required
contributions to relieve the plan of its “at risk” status. If the
employer cannot afford to make those contributions without impairing
essential services, then it can impose a similar 6 percent/9 percent
limitation on its contributions towards the plan’s normal cost, and
compel current employees to pay the difference. The employer’s savings
must still be contributed toward the unfunded liabilities in most cases, so
the pension plan receives more money each year as a result.
Balancing the impact on current employees. These
employers may also require current employees to contribute toward the
unfunded liabilities if “necessary and equitable.” That will
require due process and findings of fact. Employees are protected by a
3-percent-of-pay comprehensive annual cap on such contribution increases, to
phase-in the remedial funding. Employees also would be allowed to suspend
their participation in the plan and opt instead into the plan offered to new
hires, if they don’t want to pay the higher costs of continuing to
receive more service credits in their current, richer plan. It should go
without saying, but employers are still free to raise non-recurring pay under
this system to equitably mitigate part of the contribution increases, if such
can be done without impairing public services or the plan’s actuarial
status.
This
provision might have been simpler in design, but its structure and logic flow
from the new hire provisions explained earlier. More importantly, it takes
into account the time-tested pension funding standards used by the federal
government for private-sector plans in a way that provides a rational basis
for determining which pension plans really require a remedy and which
employers need to raise employee contributions from incumbent workers. If the
employer’s budget can bear the costs of fixing its pension problems,
then current employees can continue with the status quo. But if the public
would be required to suffer a loss of essential services in order to properly
fund the pension plan, then it’s time for the employees to step up and
pay more -- or opt into a lower-cost benefit plan.
Unlike
pension reforms and benefits modifications in other states that have been
upheld by federal courts, this arrangement is legally even softer for
employees: it requires only that their future contributions increase, not
that their benefits must change. These modifications cannot be invoked
unilaterally without cause, using the federal government’s own
standards for evaluating pension plan funding. There must be a finding of
compelling necessity and equitable treatment of the employees by the
employers. In my lay opinion, this legal structure should stand up well
against the “minimum change necessary” and “reasonable
remaining benefit” tests that federal courts have applied historically
when upholding public pension plan changes for vested government employees.
The one missing piece. If I have any
criticism of this arrangement, it would be the same one I expressed
previously: it would be better if it included OPEB retiree benefits plans as
well. Almost all OPEB plans in the state flunk this 80 percent test, and they
should be addressed in a similar fashion by legislators when they start
deliberating over the governor’s proposal. It’s too bad that CPR
couldn’t also apply this remedy to OPEB, for legal reasons explained
above.
Credit where credit is due. What I
haven’t said thus far, and must say here, is that regardless of how
this all plays out in the California political theatre, the CPR folks have
done the state, its citizens, its local governments and the pension community
a great service by putting their ideas out there for everybody to consider
and evaluate. They have crafted a carefully constructed proposal with plenty
of legal advice that is invisible to the naked eye but obvious to those who
follow these issues closely. They address three of the four major weaknesses
I identified in the governor’s proposal last week, and for that alone
they deserve credit. The Legislature now faces earnest competition for
thought leadership and the voters’ support. Pension reform is not
pleasant work; sacrifices are inevitable all-around. There are hundreds of
billions of dollars of pension and OPEB debt in California alone. A
sustainable remedy is urgently needed, which these alternative measures can
provide. As with the governor’s proposal last week, CPR’s
initiative will be a game-changer. Californians can finally hope to see light
at the end of the dark tunnel of pension abuses and pension deficits
entrapping the state and its municipalities.
What’s next? The CPR folks
will select a single proposal for signature-gathering after they hear from
the attorney general and the legislative analyst, who review ballot
proposals. Unions have opposed these measures and spokesmen have labeled them
“extremist” or “illegal.” (I’m always amazed
that a constitutional amendment that clears the attorney general’s
office, seeking to cure judicial interpretations and defects in current laws,
could be called “illegal” on its face. I would like to think that
in a democracy, voters can trump lawyers and spin-doctors, but I’m not
qualified to argue that one before the bar. With respect to federal law
issues: The CPR remedies for current employees appear to be tame, disciplined
and informed by standards upheld in federal courts in other states, so
it’s hard to see an obvious federal issue here.) What’s more
important now is the manner in which the Legislature takes up the
governor’s proposal, as I suggested they ought, in my column last week.
Labor
lobbyists now have to decide where and when to pick their fight. Journalists
have already reminded everybody of the consequences of legislative dithering
in 1978 when tax-limitation-fever swept the original Prop 13 into law.
(Historical note: Jerry Brown was a first-term governor in 1978 and will surely
remind the Legislature and labor lobbyists of the lessons he learned.) So
I’d be willing to bet we’ll see something noteworthy come out of
Sacramento that includes most of the seasoned, wiser governor’s
proposals.
Thus
the wild card now is whether the Legislature can include enough of the
fundamental CPR reform proposals to swing a Grand Compromise that would call
off the dogs who will be circulating their competing petition. Unless
union-friendly legislators agree to install the governor’s hybrid,
enable prospective changes in benefits for new hires, craft a comparable
remedial process for the severe under-funding problems of today’s
system, and clear a viable path for current employees to share more of those
fix-it costs, I seriously doubt that the pension hawks will withdraw once
they raise the money to fight this battle.
That
said however, a genuine long-term compromise solution might still be possible
if it includes most of CPR’s fundamental fiscal reform provisions and a
companion bill in the legislative package to enact similar reforms of the
equally large OPEB mess that CPR can’t fix on its own. If they could
also secure statewide OPEB reform in the final Sacramento package, GOP
legislators and the CPR leaders should consider settling for a little less on
the pension side. That would provide a loaf-and-a-half for everybody
who’s serious and pragmatic about fixing California’s retirement
plan finances, and not just the half-a-loaf-plus-margarine in the
governor’s proposal. At least, that’s what I’d encourage.
(Theatre program): Following
these proposals and the ensuing media response, the curtain has now dropped
on Pension Prop 13, Act One, Scene One: The Gauntlets. Without intermission,
the cast will next present Scene Two: The Petitioners and The Horse-Traders.
After a full intermission, Act Two will feature the Midsummer Nights’
Campaigns which will be followed by a second, brief intermission and then the
closing Act Three: The Fall Election. In the next twelve months, we can all
look forward to some great political theatre featuring high drama, pageantry
and a cast of thousands.
You may use or reference this
story with attribution and a link to
http://www.governing.com/columns/public-money/pension-prop-13.html
11/8/2011: from the Daily Reckoning
All Eyes on the Problem of the Day
Italian Debt Crisis Takes Center Stage
Reckoning
today from Paris, France...
What’s
in the news today? More of Europe’s attempts to ignore its own
breakdown.
Now
Papandreou is gone and the Greeks are trying to put together a new coalition
government with more credibility. At least, that’s what the newspapers
tell us. For our part, we don’t believe the new government will have
any more credibility than the old one. Why would it? Papandreou was not a bad
egg. He was just in an impossible situation. And that situation hasn’t
changed.
“In
Greece, the developments are cataclysmic,” said Wolfgang Schauble,
German Finance Minister. “Every day it’s a new problem.”
Right.
And Greece was yesterday’s problem.
Today,
Italy is the problem du jour. Or, perhaps we should say the problem di
giorno. Analysts make comparisons and contrasts. Both Italy and Greece have
olive trees. Both produce wine. Both have sunny weather and nice beaches. And
both have a credibility problem. But only Greece has a real “point of
no return” debt problem.
Italy’s
debts really aren’t so bad. Yes, it has government debt-to- GDP of
120%. But its household sector has little debt, only 40% of GDP compared to
75% across the Eurozone. This is attributed to the fact that so much of the
economy is ‘off-the-books’...cash and carry. When you cash and
carry you don’t have much debt. At least, not in Italy. The Italians
know how to operate an off-the-books economy...and how to collect debts.
But
they don’t collect taxes very well. Cheating on one’s taxes is a
point of honor among Italians. After all, they are a very civilized people.
They care about their pasta and their bunga-bunga parties. As for taxes, they
know tax money is squandered. They prefer to squander it themselves.
Many
Italians earn money in ways that never appear on the nation’s accounts.
That’s why Italy is probably a much richer country than the numbers
suggest. Much of the output is never recorded...and never taxed. You have to
admire a people who can do that.
The
problem in Italy, say the papers, is that investors have lost faith in the
government. It’s not surprising to us. What is amazing to us that they
ever had any faith in the government in the first place. Governments are not
to be trusted; every thinking person knows that.
Italy
has a deficit only half the size of the US deficit. Its problem is that it
needs to roll over a quarter of its debt in the next couple of years. That
would be no problem — because Italy can afford it — as long as
interest rates remain low. But when investors lose faith in the
government’s ability or willingness to squeeze taxpayers on their
behalf...things begin to fall apart. Last time we looked, Italian 10-year
bonds were yielding 6.66%. That has a sinister sound to it. And it has a
deadly look about it.
The
Financial Times says Italy is in the “danger zone.” Silvio
Berlusconi vows to “fight on”...but it looks like the war may be
already lost.
But
who knows? Every day is a new problem. And exactly the same old problem. The
world has too much debt. All the sturm and drang in Europe...as in
America...is really about who pays it, how, and when.
Remember
our report from yesterday: “Generation Jobless” was how The Wall
Street Journal put it. Here’s more. From the blog “Economic
Collapse:”
19 Statistics About The Poor That Will
Absolutely Astound You.
#1
According to the US Census Bureau, the percentage of “very poor”
rose in 300 out of the 360 largest metropolitan areas during 2010.
#2
Last year, 2.6 million more Americans descended into poverty. That was the
largest increase that we have seen since the US government began keeping
statistics on this back in 1959.
#3
It isn’t just the ranks of the “very poor” that are rising.
The number of those just considered to be “poor” is rapidly
increasing as well. Back in the year 2000, 11.3% of all Americans were living
in poverty. Today, 15.1% of all Americans are living in poverty.
#4
The poverty rate for children living in the United States increased to 22% in
2010.
#5
There are 314 counties in the United States where at least 30% of the
children are facing food insecurity.
#6
In Washington DC, the “child food insecurity rate” is 32.3%.
#7
More than 20 million US children rely on school meal programs to keep from
going hungry.
#8
One out of every six elderly Americans now lives below the federal poverty
line.
#9
Today, there are over 45 million Americans on food stamps.
#10
According to The Wall Street Journal, nearly 15 percent of all Americans are
now on food stamps.
#11
In 2010, 42 percent of all single mothers in the United States were on food
stamps.
#12
The number of Americans on food stamps has increased 74% since 2007.
#13
We are told that the economy is recovering, but the number of Americans on
food stamps has grown by another 8 percent over the past year.
#14
Right now, one out of every four American children is on food stamps.
#15
It is being projected that approximately 50 percent of all US children will
be on food stamps at some point in their lives before they reach the age of
18.
#16
More than 50 million Americans are now on Medicaid. Back in 1965, only one
out of every 50 Americans was on Medicaid. Today, approximately one out of
every 6 Americans is on Medicaid.
#17
One out of every six Americans is now enrolled in at least one government
anti-poverty program.
#18
The number of Americans that are going to food pantries and soup kitchens has
increased by 46% since 2006.
#19
It is estimated that up to half a million children may currently be homeless
in the United States.
Now,
dear reader, we ask ourselves: how could the most sophisticated, most
dynamic, best capitalized, high tech enhanced capitalism in history produce
such an outcome?
The
answer is simple: capitalism doesn’t give you what you want. It gives
you what you deserve. And it usually does so with such a long delay that few
people connect cause with effect.
Instead,
they rant and rave. They blame the rich. They call for more regulation. More
distribution. More handouts, subsidies, and bailouts.
They
demand that the feds ‘do something!’…not realizing that the
feds — more than anyone else — are responsible for their misery:
The
feds tricked them into spending more than they could afford — with
artificially low rates and EZ credit.
The
feds loaded them up with mortgage debt — thanks to their federally
subsidized mortgage industry.
The
feds practically invented sub-prime mortgage debt; and directed lenders
towards the poorest and most vulnerable parts of the society.
The
feds enticed old people into complete dependence — with the Social
Security, Medicaid and Medicare programs.
The
feds led the young into debt too — with easy student loans that
effectively transferred money from them to the education industry.
The
feds jimmied the health system into such a mess that Americans now spend 45
times as much as Cubans…and have the same life expectancy.
The
feds’ funny money system caused the export of millions of good jobs to
emerging markets.
Rise
up, ye debt-trodden masses! Rise up against your real enemy: the feds. You
have nothing to lose but your chains
Regards,
Bill Bonner for The Daily Reckoning
Water,
water everywhere — and not a drop to drink. The U.S. labor pool has
nearly 14 million unemployed workers, yet more small businesses complain
about the dearth of qualified workers.
In
a new survey by The Hartford Financial Services Group, 40% of small
businesses (defined as companies at least one year old, with fewer than 100
employees and revenues $100,000 or more) say it is “not easy at
all” to find good help. Only 14% say hiring good workers is
“very” or “extremely” easy.
The
difficulty in finding qualified workers also shows up in the October report
by the National Federation of Independent Business that polls small
businesses that typically employ five people and have median gross sales of
about $350,000 annually.
Almost
one third of NFIB respondents say they have seen few or no qualified
applicants for their firms’ open positions. That despite an increasing
share of business owners raising compensation.
Much
has been made of the failure of the U.S. educational system to produce highly
skilled science and engineering professionals. But it isn’t only
technical expertise in demand. Finding people who get to work on time seems
to be difficult.
In
August, the Federal Reserve Bank of New York asked regional manufacturers
about finding good workers. The second biggest challenge — after
computer skills — was hiring workers who were punctual and reliable.
Businesses
of all sizes have been slowly increasing their demand for labor since the
recession ended. The Labor Department said Tuesday there were nearly 3.4
million job openings in September, the highest number since August 2008.
Hiring is also up, suggesting the rising number of openings is not the result
of companies holding back from making a job offer when the right applicant is
found.
Small-business
owners who are strapped for cash would probably like the government to
provide the retraining. But that seems unlikely in today’s political
environment.
The
end result is an economy that has 4.2 jobseekers for every opening, yet many
small businesses cannot find applicants for the work needed.
The
gap highlights the problem of structural unemployment. Unemployed workers
lack the skills needed or can’t sell their homes and move to areas
where the jobs are. And the longer a person is unemployed, the greater the
risk his or her talents will erode and become obsolete.
Fed
Chairman Ben Bernanke has called long-term unemployment a “national
crisis.” It could prove to be the longest-lasting hangover of the Great
Recession.
“Your
papers!” In old movies, the demand is barked at trembling travelers by
a Nazi with a guttural accent. If the demand is made in the opening scene,
then the audience knows immediately that they watching a totalitarian state
in which travelers are in danger.
“Your
papers!” now rings out at every American airport and border crossing.
The accent is different but travelers need to recognize with equal immediacy
that a totalitarian state is playing out in front of their eyes, and they
must be careful.
A
passport is where the security theater begins. Indeed, without a passport
those who wish to fly or cross a border are not “allowed” to be
scanned, searched, interrogated, or undergo a plethora of other indignities
imposed by uniformed thugs. The hoops through which passport carriers jump
are all prelude to “permitting” them to exercise a right
belonging to every freeborn person: the right to travel.
Things
were not always this way. It is important to remember that there once was a
world in which people traveled freely across borders without paperwork to
visit families, pursue education, conduct business, and mingle. Freedom
worked once. It enriched the world economically, culturally, and
psychologically.
European
nations pioneered many if not most aspects of the modern passport. The
passport as an official permission or protection, and not merely as
identification, arose because of armed conflicts. In the 17th century, sea
voyaging was key to trade, travel, and the maintenance of empire. With some
frequency, war interrupted that flow. Therefore, neutral vessels were granted
passports or “sea letters” from a port of departure, which
permitted them to journey in safety.
By
the mid-19th century, mandatory passports had largely disappeared from Europe
and Asia, with Czarist Russia and the Ottoman Empire being prominent
exceptions. The change was largely due to three factors. First, governments
were pressured to open up borders so that goods and services could flow
across an increasingly industrialized Europe. Second, the period between the
last Napoleonic War (1815) and World War I was unusually peaceful. Third,
railroads now dominated travel. Their speed and the sheer number of travelers
made traditional methods of checking documents impractical.
Thus,
with trade and peace, mandatory passports declined.
War
brought them back to life. With World War I, European nations once more
imposed requirements not only to identify “enemies of the state”
(e.g., spies or the citizens of belligerents) but also to control the outward
flow of skilled labor in order to maintain their own workforces. In short,
passports once again became social controls and, like the United States, many
European nations maintained their requirements after the War.
World
War II made passports mandatory on a virtually worldwide basis. Although
passport requirements loosened once more after the WWII, the war on terror in
the wake of 9/11 has raised those requirements to unprecedented levels. The
ebb and flow of passports is that of war itself.
The
American passport was also rooted in war, specifically the American
Revolution (1775-1783). The first one was issued in 1783; based on the French
“passport,” it was designed and printed by Benjamin Franklin. It
was a single page with a description of the bearer(s) and his or their
signature(s). For example, when John Adams, Benjamin Franklin, and John Jay
acted as ministers plenipotentiary in traveling to Great Britain to seal the
terms of peace, all three names were on one passport. It was addressed
“TO ALL Captains or Commanders of ships of war, privateers, or armed
Vessels…”
During
the Articles of Confederation period (1783-1789), passports were issued but
not required. When the US Constitution was ratified, creating a new
government, passports continued to be issued but not required. Many American
states and cities also issued their own “voluntary” passports
until 1856 when the Department of State exerted a federal monopoly,
ostensibly to eliminate confusion.
Nevertheless,
passports were not mandatory except for a period during the American Civil
War (1861-1865) and during World War I (1914-1918). The latter can be seen as
the beginning of the current American passport. On December 15, 1915,
President Woodrow Wilson issued Executive Order No. 2285, “[r]equiring
American citizens traveling abroad to procure passports.”
This
was followed in 1918 by an act of Congress granting the president authority
to require passports during time of war. Passports remained mandatory until
early 1921.
Thereafter,
the United States continued its “no-passport-required” travel
policy until another war: World War II (1939-1945). In 1941, passports became
mandatory for travel abroad and remain so to this day. (Travel to Canada used
to be an exception; until recently, proof of citizenship was all that was
required to cross the border.)
Passports
clearly function as an essential and effective means through which a state
can control the person and property of its residents. Consider the United
States. No one can legally leave without one.
And
yet passports can be denied for a myriad of reasons that have nothing to do
with being “an enemy of the state” but rest strictly on statutory
grounds. Common reasons for denial include owing money to the IRS, a federal
arrest, a state-criminal court order existing, a drug arrest, being on parole
or probation. Law-enforcement databases are routinely checked against both
passports and applications to weed out those who have committed such offenses
as being more than $2,500 behind on child-support payments. Passports can
also be revoked for several reasons, although revocation is far less common.
Those
who meet the legal requirements for a passport move on to the next stage of
social control. After handing over documents, a traveler is questioned about
the reasons for travel, how much money he carries, his occupation, and
virtually any other question a border agent wishes to ask. The
traveler’s person and property are “searched” in various
ways, including a strip search at the agent’s discretion. If the
traveler questions or evinces disapproval, then he could be denied the
“right” to board a plane, thus wasting an expensive ticket. Or he
may be pulled aside for special treatment, including fines or interrogation
by the police.
Requiring
a passport as the key to freedom of movement is akin to gagging someone while
maintaining that he retains freedom of speech.
The
passport has grown into what is arguably the single most powerful tool of
totalitarian America, second only to law enforcement itself. It no longer
pretends to protect individuals; not a single terrorist has been apprehended
as a result of passport checks. But it does cement the totalitarian state.
The mandatory passport should be reviled and rejected as an abuse of human
rights and common decency. A nation that requires one cannot be free.
Regards,
Wendy McElroy, for The Daily Reckoning
11/08/2011: The
Disaffected Young Men of a Depressed Economy
by Bill Bonner
What
does a modern depression look like? Take a peek. The Wall Street Journal:
Generation
Jobless: Young Men Suffer Worst as Economy Staggers
The
unemployment rate for males between 25 and 34 years old with high-school
diplomas is 14.4% — up from 6.1% before the downturn four years ago and
far above today’s 9% national rate. The picture is even more bleak for
slightly younger men: 22.4% for high-school graduates 20 to 24 years old.
That’s up from 10.4% four years ago.
For
such men, high unemployment is eroding their sense of economic independence.
Their predicament reflects that of a generation of Americans facing one of
the weakest job markets in modern history.
“We’re
at risk of having a generation of young males who aren’t well-connected
to the labor market and who don’t feel strong ownership of community or
society because they haven’t benefited from it,” says Ralph
Catalano, a professor of public health at the University of California,
Berkeley.
The
share of men age 25-34 living with their parents jumped to 18.6% this year,
up from 14.2% four year ago and the highest level since at least 1960,
according to the Census Bureau.
***
The WSJ article tells the story of young men who have been disappointed. In
the boom years it was easy to make money — too easy. One made $14 an
hour installing granite countertops. With plenty of overtime. Now, he’s
making $11 an hour, when he can get work. And his marriage has broken up.
Capitalism,
as he understands it, has been a failure for him. The Republicans have failed
him. The Democrats have failed him. Education has failed him. Marriage has
failed. It all must look like such a fraud...the American Dream...the hopes
for a better life...the consumer society...the housing boom...the suburbs,
the Hummer, the happy family. All of the promises of 2,000 years of
accumulated civilization have disappointed him.
Since
we, here at The Daily Reckoning, are making guesses...forecasts...and
predictions...
...well,
here’s one: These disappointed young men are on the cutting edge, so to
speak...where politics and economics come together. Like the disappointed
veterans of WWI, they are ready for a change...ready for revolution. For the
present, they bide their time, playing video games such as Call of Duty. They
are not sure whether the world has failed them...or whether they have failed.
Surely someone will come along to straighten them out...explaining how it was
not their fault...and telling them what to do about it.
What
rough beast, his hour come round at last, slouches towards the Potomac...?
Regards,
Bill Bonner, for The Daily Reckoning
Weak Job
Market Pushes More College Grads Into Commission Sales; They’re Hawking
Knives, Insurance
PORTLAND,
Ore.—Few groups were hit harder by the recession than young men, like
Cody Preston and Justin Randol, 25-year-old high-school buddies who
didn’t go to college.
The
unemployment rate for males between 25 and 34 years old with high-school
diplomas is 14.4%—up from 6.1% before the downturn four years ago and
far above today’s 9% national rate. The picture is even more bleak for
slightly younger men: 22.4% for high-school graduates 20 to 24 years old.
That’s up from 10.4% four years ago.
In
contrast to those men, Messrs. Preston and Randol are old enough to have had
some time in the job market. They worked together installing granite counters
before the housing bust.
Mr.
Preston married his girlfriend and settled into what he assumed would be a
secure pattern of long hours on job sites and enough cash to travel and enjoy
restaurants and bars. Mr. Randol at one point felt flush enough to buy a
63-inch television set and a 50-gallon fish tank for his apartment.
Then
the recession hit. Neither man has found steady work since that pays as much
as he earned before. Mr. Preston’s marriage broke up and he moved back
in with his parents, an increasingly common pattern for jobless young men.
Mr. Randol has made do with help from girlfriends and by living in houses
packed with roommates to keep the rent low.
For
such men, high unemployment is eroding their sense of economic independence.
Their predicament reflects that of a generation of Americans facing one of
the weakest job markets in modern history.
“We’re
at risk of having a generation of young males who aren’t well-connected
to the labor market and who don’t feel strong ownership of community or
society because they haven’t benefited from it,” says Ralph
Catalano, a professor of public health at the University of California,
Berkeley.
Mr.
Preston has a steady job, making parts for recreational vehicles for $11 an
hour. And living with his parents rent-free allows him to start paying off
debt he built up during the slump, he says. But he keeps looking for work
that will pay the $14 an hour he made installing granite. What made
construction especially attractive was the potential for lots of overtime,
which allowed him to beef up his paychecks.
On
a recent afternoon, he sat in his parents’ kitchen, combing online
classified ads. But construction work remains scarce and other positions
available for which he’s qualified don’t pay more than he makes
at the factory.
Sue
Preston, his mother, says several of her friends are helping out their grown
sons, providing either money or shelter or both. She works in payroll at a
telecommunications company, and neither she nor her husband, a truck driver
who worked his way up into operations, has a college degree. That
wasn’t an issue when they were starting out, she says: Trade and
production jobs were not only available, in many cases they paid enough that
many blue-collar wives didn’t have to work.
Now
she worries that lower wages—and, more pressingly, the dearth of
jobs—has left young men like her son disaffected and depressed.
“They’re working minimum-wage jobs and a lot of times, they
don’t have benefits, they don’t have a full 40 hours a week.
It’s such a struggle they’re kind of like, ‘What for? All
I’m doing is surviving,’ “ she says. “They have to
move back home or they have to have multiple roommates. How are you going to
take on a wife and a family in that situation?”
The
share of men age 25-34 living with their parents jumped to 18.6% this year,
up from 14.2% four years ago and the highest level since at least 1960,
according to the Census Bureau.
Mr.
Randol, an ex-convict who is in irregular contact with his parents, says he
doesn’t have access to the live-at-home reset button. So the Portland
native is stretching his $187-a-week unemployment checks by living in a
two-story $1,000-a-month house, 40 minutes away in St. Helens, Ore., that he
splits with a couple and a friend whose claim to a small bedroom fluctuates
based on whether he has a girlfriend.
Mr.
Randol admits that over the past three years he’s indulged in too much
beer and “Call of Duty,” the popular war-simulation videogame.
Empty liquor bottles line the top of his kitchen cabinets as decoration.
“I just hope stuff gets better,” he says as he battles online
rivals one evening.
Mr.
Randol says he’s looking for work but grumbles that the remodeling jobs
advertised pay between $10 and $12 an hour, with no assurance of full-time
work.
Mr.
Randol was a poor student who got in trouble in high school and earned a
high-school equivalency certificate in lieu of a diploma. He is the first to
admit that a checkered past has hampered his job prospects. In 2004 he served
a year for burglary and not long after added an assault charge that resulted
from a fist fight during a night of hard partying.
But
when the housing boom came, he says, his past wasn’t such a big issue.
After working fast-food counters and other minimum-wage jobs, in 2007 he
landed a position installing granite for Fineline Pacific. He started at $10
an hour and within six months was making $15, with plentiful overtime. Mr.
Randol told Mr. Preston to apply. He did and was hired.
“They
were looking for anybody who would show up to work,” says Ted Sherritt,
chief executive of Floform Countertops, the Winnipeg, Manitoba, company that
acquired Fineline.
Mr.
Preston lived well with his construction money. He took out his girlfriend
frequently and paid for a snowboarding trip, during which he proposed to her
at the summit of Mount Hood, Ore. Married, they settled in Canby, Ore., about
40 minutes from Portland. “I was in a hurry to grow up,” he says.
Both
Mr. Preston and Mr. Randol say the first sign of trouble appeared on a white
dry-erase board at company headquarters. The list of jobs became short, and
then empty.
Mr.
Sherritt says sales at the company dropped 40% through 2008 and 2009. When it
reduced head count, Mr. Randol was among those let go. Floform acquired
Fineline late in 2008.
Mr.
Preston was kept on a bit longer than his friend but eventually lost his job,
too. Mr. Preston was able to find work at a bike store, a skate shop and
other retailers, but at lower wages than at his construction job and often
with sporadic hours.
To
save on rent, he and his wife moved to her parents’ house in Salem,
Ore., a 45-minute drive from Portland. Later, when the couple separated, he
went to live with friends in Bend, Ore., 3½ hours from Portland. He
found occasional jobs—one was at a gas station—but after a few
months gave up and moved home.
“I
wasn’t living, I was surviving,” he says.
The
“Occupy” movement attacks only the superficial side of the
problem. It’s like blaming the gardener, instead of the weather, when
the flowers die.
Times
are hard and our first impulse is to indict what is right in front of us,
namely, banks, corporations, the people who have made money by merely
observing and accurately interpreting the idiocy around them — people
who have taken advantage of the economic distortions to make money.
Banks,
corporations, and wealthy people happily obeyed the Community Reinvestment
Act, passed by Congress, and used the cheap money created by the Fed to make
obscene profits in the five years or so before 2007. Since that time, they
have made even more profits by borrowing short-term money at almost zero
interest rates, forced into the economy by the Fed, and investing in
long-term Treasuries at 3%, the so-called carry trade. If there is a trough,
there will be pigs.
The
government is the ultimate source of the misallocations that have and
probably will continue to impoverish “the 99%.”
“Occupy” and its supporters who “believe,” in their
government-school-induced darkness, that the government can
“save” them from evil “capitalists” seem to be
screwing their heads into a socket that produces very little light.
About this Author: Erwin Haas
lives in Grand Rapids, where he writes, films videos, and plays at
Libertarian politics.
11/5/2011: Obama:
The Affirmative Action President by Matt Patterson
(columnist - Washington Post, New York Post, San Francisco Examiner)
Years
from now, historians may regard the 2008 election of Barack Obama as an
inscrutable and disturbing phenomenon, a baffling breed of mass hysteria akin
perhaps to the witch craze of the Middle Ages. How, they will wonder, did a
man so devoid of professional accomplishment beguile so many into thinking he
could manage the world’s largest economy, direct the world’s most
powerful military, execute the world’s most consequential job?
Imagine
a future historian examining Obama’s pre-presidential life: ushered
into and through the Ivy League despite unremarkable grades and test scores
along the way; a cushy non-job as a “community organizer”; a
brief career as a state legislator devoid of legislative achievement (and in
fact nearly devoid of his attention, so often did he vote
“present”) ; and finally an unaccomplished single term in the
United States Senate, the entirety of which was devoted to his presidential
ambitions. He left no academic legacy in academia, authored no signature
legislation as a legislator.
And
then there is the matter of his troubling associations: the white-hating,
America-loathing preacher who for decades served as Obama’s
“spiritual mentor”; a real-life, actual terrorist who served as
Obama’s colleague and political sponsor. It is easy to imagine a future
historian looking at it all and asking: how on Earth was such a man elected
president?
Not
content to wait for history, the incomparable Norman Podhoretz addressed the
question recently in the Wall Street Journal:
To
be sure, no white candidate who had close associations with an outspoken
hater of America like Jeremiah Wright and an unrepentant terrorist like Bill
Ayers, would have lasted a single day. But because Mr. Obama was black, and
therefore entitled in the eyes of liberaldom to have hung out with protesters
against various American injustices, even if they were a bit extreme, he was
given a pass.
Let
that sink in: Obama was given a pass – held to a lower standard [and continues to be held to a lower
standard, measured against which he is still an abysmal failure] –
because of the color of his skin. Podhoretz continues:
And
in any case, what did such ancient history matter when he was also so
articulate and elegant and (as he himself had said)
“non-threatening,” all of which gave him a fighting chance to
become the first black president and thereby to lay the curse of racism to
rest?
Podhoretz
puts his finger, I think, on the animating pulse of the Obama phenomenon
– affirmative action. Not in the legal sense, of course. But certainly
in the motivating sentiment behind all affirmative action laws and
regulations, which are designed primarily to make white people, and
especially white liberals, feel good about themselves.
Unfortunately,
minorities often suffer so that whites can pat themselves on the back.
Liberals routinely admit minorities to schools for which they are not
qualified, yet take no responsibility for the inevitable poor performance and
high drop-out rates which follow. Liberals don’t care if these minority
students fail; liberals aren’t around to witness the emotional
devastation and deflated self esteem resulting from the racist policy that is
affirmative action. Yes, racist.
Holding
someone to a separate standard merely because of the color of his skin
– that’s affirmative action in a nutshell, and if that
isn’t racism, then nothing is. And that is what America did to Obama.
True,
Obama himself was never troubled by his lack of achievements, but why would
he be? As many have noted, Obama was told he was good enough for Columbia
despite undistinguished grades at Occidental; he was told he was good enough
for the US Senate despite a mediocre record in Illinois; he was told he was
good enough to be president despite no record at all in the Senate. All his
life, every step of the way, Obama was told he was good enough for the next
step, in spite of ample evidence to the contrary. What could this breed if
not the sort of empty narcissism on display every time Obama speaks?
In
2008, many who agreed that he lacked executive qualifications nonetheless
raved about Obama’s oratory skills, intellect, and cool character.
Those people – conservatives included – ought now to be deeply
embarrassed. The man thinks and speaks in the hoariest of clichés, and
that’s when he has his teleprompter in front of him; when the prompter
is absent he can barely think or speak at all. Not one original idea has ever
issued from his mouth – it’s all warmed-over Marxism of the kind
that has failed over and over again for 100 years.
And
what about his character? Obama is constantly blaming anything and everything
else for his troubles. Bush did it; it was bad luck; I inherited this mess.
It is embarrassing to see a president so willing to advertise his own
powerlessness, so comfortable with his own incompetence. But really, what
were we to expect? The man has never been responsible for anything, so how do
we expect him to act responsibly?
In
short: our president is a small and small-minded man, with neither the
temperament nor the intellect to handle his job. When you understand that,
and only when you understand that, will the current erosion of liberty and
prosperity make sense. It could not have gone otherwise with such a man in the
Oval Office.
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