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When Government Pays

   When President Obama's Pay Czar recently announced mandated cuts in salaries and bonuses of employees of companies who took bailout money, I heard the media and many Americans stand up and cheer. Many Americans seem to take an unhealthy satisfaction in seeing those with big salaries get cut down to size. I guess the masses feel these people don't deserve their salaries and in some cases that may be right. Personally, I'd leave that decision up to the Board of Directors of each company, the people actually charged with ensuring they have the best leadership in place for success.

   When asked if it's right for the Government to tell a private sector company how to run their business, many people I've heard say, "Hey, if they took Government money, then the Government should be able to say how they do business."

   Okay, fair enough. When the Government pays, they deserve control, right?

   How about National Healthcare? Do you really believe when the Government pays your medical bills they won't have a say in how you live? In what you eat? Whether you smoke? The volume of the music you listen to? Whether or not you exercise? You think they won't have a say in your body-mass index? You think they'll care if you have any injury-prone hobbies? If you think certain foods won't be taxed into non-existence, think again. If you think you won't be evaluated for "improvement" or "unacceptable risks", guess again. When it's their dollars, they’re entitled to tell you how to do business, right?

   The irony here is that it is your dollars paying for this. And in the name of "protecting the taxpayer" they will do their best to ensure you live a "Government-Approved" life.

JC

FYI: The European Union recently passed a law that restricts the volume control of all MP3 players sold in Europe. This is to protect the citizen from listening to music at levels which could damage their hearing. Public concerts will be next. Can you imagine Aerosmith at an OSHA-approved 85 decimals? Dream On.

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Too Big to Fail?

   Too big to fail. How many times have we heard that in the last year? Whether talking about investment banking, the automobile industry, the mortgage industry or even newspapers, today we have forgotten a basic tenant of nature---the law of the jungle, Natural Selection. The strong survive and adapt to their environments. The weak die. Quite often the weak become food for the strong, making them even stronger.

   Nature understands this rule and, in fact, most liberals contend this is how our species evolved from a single cell organism. Even those of us who believe in a Creator cannot deny that mankind has had to adapt to his environment. Over the millennia millions of people have fallen prey to various bacteria and viruses, thereby removing their genes from the pool of Humanity. Those who survived these illnesses developed immunities and their children who survived developed even greater immunities. The Natural Selection which occurred over the generations has produced today's Human. Many had to die in the process of delivering the immune systems our generation enjoys. This is a basic rule of nature, one that some argue we are perverting with modern medicines. Some argue that Nature no longer weeds out the weak in our species and we are producing generations of humans reliant on artificial chemistry, perhaps more susceptible to mutated micro-organisms. We may very well be condemning future generations to death as our natural immunities fail. Needless to say, as individuals, we do not want die and I for one lose no sleep over giving an anti-biotic to my four year old to cure an ear infection, regardless of what burden my great-great-grandchildren will have to bear a hundred years from now.

   So how does this apply to Government bailouts of corporations? Capitalism succeeds for the simple reason that it mirrors nature. The strong survive and adapt while the weak fail. Success is rewarded and breeds more success. Failure is the tool that weeds out the weak and inefficient. A successful company grows, creating jobs, wealth, tax revenues and goods or services people want or need. A successful company is an asset to society.

   A failing, inefficient company is a liability to society. It creates sub-standard products or services, does not create jobs, does not create wealth or tax revenues, wastes valuable natural resources and acts as a drain on Government coffers and society as a whole.

   When the Government bails out one of these failing, non-profitable companies it really amounts to little more than a transfer of wealth from its successful competitors. General Motors and Chrysler were bailed out with funds much greater than Ford paid in taxes. It could be said that all of Ford’s tax liability went to continuing the operations of its primary competitors, robbing Ford of potential customers, sales and market-share. Bailouts benefit companies that fail at the expense of those that succeed.

   But what about the jobs lost if the Government doesn’t bail out a company? Two things are wrong with the premise of this question. First, the real question may need to be how many jobs are lost at successful companies by propping up their failing competitors? The second fallacy is that all employees of companies in bankruptcy will lose their jobs. Some companies emerge from bankruptcy stronger than before, with a better business model and improved efficiencies. Other companies are bought by their competitors and the jobs are not only saved, but the new company brings with it a successful business model. Still other companies close their doors forever and their employees move on to other companies, where, in theory at least, the fruits of their labors may be more productive, benefiting themselves and society.

   One final question: how many innovative, productive, hard-working people are wasting their talents within the confines of failing companies, producing sub-par products and being kept in business by tax dollars paid by their successful competitors.

JC

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Our Fragile Society

   When I was a boy and we ran out of peanut butter, my mother would send me downstairs to get another jar off the shelf. Usually there would be two more jars behind that one. My mother, just like her mother before her, always had months of food on hand at any given moment. I grew up assuming this was normal, yet as an adult I don't shop this way. After shopping “big” we might have two weeks of food on hand, but never three jars of peanut butter, eight cans of pork and beans or six loaves of frozen bread. I once asked my grandmother why she always had so much food in the house and her answer was, “Just in case.” Now middle-aged, with children of my own, I'm beginning to understand her answer.

    My grandparents grew up during the Great Depression and World War II. They and their peers saw our fragile economy collapse in 1929, the market crashing, banks folding and an entire way of life threatened. During World War II they experienced rationing of sugar, gasoline and consumer goods. Of course the war effort required sacrifice and they lived in constant fear of an Axis victory. When the war and rationing ended, they stockpiled and never stopped.

    My family relies completely on the ability to go to our local grocery store and pick up whatever we need on a moment's notice. I drive around with my tank on empty, knowing I can stop and get gas any time I need it. The gauge on my grandfather's old Buick never fell below half a tank. I rely solely on my utility company to bring gas and electricity directly into my house, without which my family would freeze to death in the cold Upper Midwest winters. These are all normal modern day expectations, citizens completely relying on others for basic survival, the assumption being the dollar will always be able to buy these goods and services. We assume money is as close at hand as the nearest ATM and the value of the dollars we withdraw will be stable, both dangerous assumptions.

    On September 11th , while New Yorkers were pulling together for the common good and fire and police agencies all over the country were sending people and equipment to Ground Zero, what was the rest of the country doing? Many were sitting in their cars, in long lines, waiting to fill their tanks with $4.00 gasoline. Price gouging occurred all over the country as some store owners saw a chance to capitalize on people's fears. Luckily 9/11 was a one-day affair and no follow-on attacks occurred. The price gouging didn't spread beyond gasoline. If we had endured another day or two of attacks, would it have spread to food or other consumer goods? If there had been a sudden run on banks, would the ATMs have been shut off?

    Imagine the aftermath of a catastrophe, natural or otherwise. A man whose family lives paycheck to paycheck finds himself standing in line at the local grocery with a ten-dollar bill watching food disappear from the shelves before his very eyes. He has maybe two days of food in the house and he has to do something. So he throws the ten dollars on the counter, grabs what he can and runs from the store. Looting begins, followed by men carrying the only currency still honored, firearms. The store is emptied within hours and will not be restocked. What store owner wouldn't board up the windows after two thirds of his inventory is looted? Couldn't happen? Look at the looting that occurred after the Rodney King trial in Los Angeles, during the power outage that swept the northeast a few years ago, or that occurred during Hurricane Katrina. Civilization disappears along with power, water, and food. For a brief time it must have felt to those in New Orleans that they had seceded from the Union one more time. Words on paper -- even disaster response plans -- cannot feed the masses, illuminate the dark or purify water. The City of New Orleans learned the true value of their city's emergency plan was less than the paper on which it was printed. Relying on a faceless Federal government, headquartered a thousand miles away, to swoop in and save us in times of disaster is a fool's strategy.

    The most stable, civilized nation on earth is only three days from anarchy, or at least martial law, at any given moment. Our constitution, our laws and our public institutions are the framework that bonds this nation together, but when the power goes off, the water is polluted, and food becomes scarce, we are divided, and divided we fall.

   Ironically, the more technologically advanced a nation is, the more vulnerable. We rely heavily on computers, electricity, petroleum and vehicles for all aspects of our daily lives and when those technologies fail, or are unavailable, our system breaks down. In this country we expect others to pick up the pieces for us when disaster strikes. It's not that we're lazy. It's just the way we've been conditioned to have these expectations. Big Brother will rescue us. Disasters, and our survival in general, are in the hands of others: the City, the State, the National Guard, FEMA, the utility companies, etc.

   When our ancestors moved west to tame a new frontier they took no government promises. They did take horses, covered wagons, casks of water and food, rifles and ammunition for hunting and protection, axes for chopping wood, etc. They provided for themselves and their communities come hell or high water. We have to recover some of that pioneer spirit -- that need to accept responsibility for ourselves and others, rather than expecting someone else to tow the line.

   During times of crisis the human condition can lead to behaviors as destructive as any terrorist's bomb. We laugh when Homeland Security gives us tips such as keeping jugs of water on hand or fresh batteries in our flashlights, but when disaster strikes it is no laughing matter. The unprepared citizen will find himself in that grocery store, amongst the looters, risking his life for scraps to keep his family alive.

   We will have more power outages, earthquakes, tornados and hurricanes and, yes, terrorist attacks. Now is the time to prepare, to plan, to ensure our families' survival, and, yes, maybe those extra jars of peanut butter would be a good place to start.
 
JC
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Saving America by Destroying It

Saving America by Destroying it

Lately I've noticed a disturbing new trend in Democratic legislation. Whether they are attacking the healthcare, automotive or energy industries, the new laws seem to be based on a single premise: destroy the profitability of the existing companies by creating an economic environment in which they cannot compete.

The stated aim of the Energy/Climate Change bill, also called Cap and Trade, is to reduce our dependence on fossil fuels and replace them with "green" alternatives. The legislation, however, does not build "green" alternatives, rather it creates an environment where fossil fuel providers and power generators cannot make a profit. Obama himself said during the campaign his plan would "bankrupt the coal industry" and "cause electrical rates to necessarily skyrocket." His words, not mine.

If the Government proclaimed it was spending two-hundred billion dollars to build a giant solar array in the Arizona desert, or fifty new nuclear power plants, or an experimental geothermal plant, I could almost get behind that. That type of investment would at least yield something tangible. Instead, the legislation does not create new energy systems. It simply destroys the profitability of today's energy producers. The master plan relies on existing energy producers paying higher taxes in the form of carbon credits. This ensures no utility will expand their operations, since their return on investment is guaranteed to be negative. In fact, some oil company executives have already said they would shrink operations, shut down refineries and import more foreign fuels to meet demand. Cap and Trade achieves its goal by driving companies into bankruptcy. This is pure genius---if your goal is to own the energy industry. Once the energy producers' stock prices are driven below sea level due to the mass exodus of investors, it will be all that more easy for the Government to buy them out when they do go under---ala General Motors.

The same is true for the healthcare industry. By creating a non-competitive operating environment where you pit traditional insurance companies against the bottomless well of the US Treasury you guarantee the Government Option will be the only survivor. Then, when everyone is on some form of Medicare and hospitals, clinics and physicians are forced to accept government payment terms, their profitability will collapse and they will declare bankruptcy---all part of the plan for a government that wants to own the healthcare industry as well.

It seems the Master strategy is to drive these industries into the ground by sucking them dry of capital through taxation or regulation, then in the name of the "public good", bail them out and in the process gain an ownership stake and a place in the boardroom. President Obama repeatedly states he does not wish to run these industries. I believe him. His goal is not to run them, but dictate how they are to be run, through his many Czars, making the CEOs who do run them subservient to the will of the Government.

What is the end result of such a strategy? History has many examples of authoritarian governments dictating operating policy to private industries : National Socialist Germany (Messerschmitt, Daimler-Benz, Krupp), Imperial Japan (Mitsubishi) and Venezuela (CITGO) to name a few. In the United States we have some major companies cozying up to the Federal Government in preparation of this new future: General Electric, Goldman-Sachs, General Motors and Chrysler, to name a few. By the way, this is not socialism. The Government does not own the means of production. This economic model is called fascism and President Obama is correct in calling it “fundamentally transforming” the United States of America.

How's that hope and change working for you?

JC

 

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The Free Market is the Result of Our Free Will

The Importance of Free Markets

The Free Market seems to be misunderstood by most Americans. Over and over again I hear the Government and the political pundits say the Markets must be controlled, that left unregulated they lead to economic disparity and unfair outcomes. The greed of the Free Market leads to corruption and exploitation of the working man and woman. Liberals mistrust the Free Market and install through legislation and rule-making ways to limits its activities. Liberal political pundits say the Free Market is risky and has failed us. They lay our current economic woes at the feet of the Free Market. In truth the Free Market hasn't been completely free in decades.

It's easy for politicians to fear the Free Market, whether talking about the stock market, the housing market, commodities market or any other venue where market forces determine the value of things. They fear it because at its root they cannot control it. Politicians love control and make no mistake, control is what they are about. Because they fear the outcomes of a Free Market, Washington has done its best to corrupt its functioning. Politicians want people to look to them for answers, for security and something as vague as the Free Market is portrayed as risky and even anachronistic.

Americans seem to have forgotten that our wants, desires, opinions, fears, ambitions and most all, our choices are the forces which drive the Free Market. It is based on the simplest of concepts: the freedom to live our lives as we choose. We have the freedom to choose what house we buy and how much we’re willing to pay for it, what car we drive and how much we will pay for it, the companies in which we invest and how much we will pay for a good or service. It's that simple. The Free Market is our choices.

The price of a good or service is based on what we will pay for it. Competition is what keeps prices in check. If the price of some product rises due to increased demand, an opportunity is created for a competitor to offer a comparable product at a lower price. This competitor cannot sell an inferior product and expect to make sales. The competitor must produce something comparable for a lower price. This takes hard work, dedication, risk-taking and innovation. If successful they make money and the consumer benefits from the lower prices. It also serves as a wake-up call for the first company to increase their efficiency, or they go out of business. The consumers' choices drive the market. Most people do not realize that the profit, the primary goal of all businesses, is realized most often by producing a superior product or service at prices that benefit the consumer. Exploiting the consumer or providing them with unsatisfactory alternatives is a sure-fire way to bankrupt yourself.

The stock and commodities markets are no different. The price of a stock or commodity is determined by the buyers and the sellers, each operating in their own interests, opposing forces keeping the markets in check. Free choice determines where investment occurs with companies competing to attract investors. Companies strive to increase performance, which leads to sales and profits, allowing them to reward their investors through dividends or increased value of the shares.

Left to its own devices free markets can make short-term mistakes, but they are always self-correcting. If something is overvalued, the true value will eventually become evident and the price will fall. Free Market Capitalism is an economic auto-pilot that will keep an economy on a mostly even keel.

That being said, Government does its best to corrupt free markets, to exert control of the people and limit our freedoms. It does this through tax policy, regulation, price controls, subsidies, interest rates, monetary supply, wage controls, environmental regulations which defy common sense and other freedom-limiting legislation. Government continually makes decisions which limit our freedom, corrupts the natural cycle of supply and demand, disincentivizes competition and reduces choices.

One great example of Government interference is the fossil fuel industry. This country is blessed with an abundance of oil, coal and natural gas. Offshore areas of the US are rich in oil and gas and we’ve recently discovered an oil field in the Dakotas that rivals Saudi Arabia. You wouldn’t know this by where we get our fuel, however. In the name of stopping global warming the Government will not let us drill for these resources. This restricts supply, increases price and exports trillions of dollars a year to Middle Eastern countries not exactly our friends.

Why was there a housing boom for the last ten years? Why were prices rising 20% a year in California, New York and Florida? Why was the demand for new homes so high? Once again the Government interfered in the Market. Through their surrogates Freddie Mac and Fannie Mae, they created the sub-prime mortgage market, encouraging banks to make loans to people who would not normally qualify. They would in turn buy the loans from the banks. This generated false demand for homes and caused existing home prices to rise dramatically. When tens of thousands of these risky loans finally went bad, the bubble burst and the Market tried to correct itself, but Government is still fighting it tooth and nail, pouring hundreds of billions into the banking industry and trying to re-inflate the bubble. The equity of those homes are not coming back up anytime soon. They were never real to begin with.

As Americans we have to be wary of Government tampering with our free markets, recognize it for what it is and act in the best interest of the nation at each election. We cannot sit idly by and watch the economic freedoms which have made this country great be slowly destroyed, only to be replaced with a Government-planned economy designed to cement power for a new political ruling-class. Janis Joplin said freedom is just another word for nothing left to lose. We are rapidly approaching that level of “freedom.”
 
JC
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The Parable of Sonia Sotomayor and Little League Baseball

 
It was a sunny Saturday afternoon in May when the Tigers held their first practice. The draft looks to be good to us this year, thought the manager. The ten and eleven year old boys were excited to be back on the field, back playing the game they loved. As it was the first practice of the year, the manager introduced himself and his coaches and made each boy say his name and what position they'd like to play. Two of the boys, Michael Townsend and Charley Smith, said they'd like to pitch.
       "Boys, I appreciate your enthusiasm and I'm very glad to have you two on the team, but this year Pablo and Gabriel are going to be our pitchers.  Everyone knows Hispanics make better pitchers than blacks and whites. Michael, basketball season is just around the corner, and, Charley, have you thought about hockey? I'm sure you're fine baseball players, but clearly we have to go with our strengths if we want to win."
 
If you were a parent and overheard this, what would you do? Confront the manager? Complain to the League? Pull your son from the team? If this is unacceptable behavior for a Little League baseball coach, why is it acceptable for a Supreme Court Justice?
 
Jim Clonts
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Unconstitutional?

Friends of Liberty

Our Government believes the Constitution is nothing but a piece of old parchment. For
over 100 years the Courts of the United States have been usurping the Constitution by
simple interpretation. They read the carefully crafted words of the Founders, then
extrapolate meanings never originally intended.

Although Congress and the Executive Branch has been assuming powers far beyond those
outlined in Articles 1 and 2 for decades, the current regime is injecting taxpayer
dollars into private companies, then dictating how they are to do business, and when they
do not succeed, taking an ownership stake, putting themselves in competition with other
private companies. Bankruptcy proceedings are being corrupted by the Federal Government,
with secured bond-holders?  investments being redistributed to the UAW, violating their
property rights guaranteed under the 5th Amendment.  Is any of this Constitutional? What
grants this level of power? Nothing grants it, but nothing prevents it, either.

The Constitution enumerates the powers of the President and Congress. Today our leaders
interpret that as "we can do anything not specifically forbidden." President Obama stated
in an interview when he was a state senator in Illinois  he feels "constrained" by the
Constitution and that the document is a list of "negative" rights, stating what the
Government cannot do to its citizens rather than what is should be able to do.  In the
same interview he said he said the Court have fallen short in the re-distribution of
wealth. His recent Supreme Court nominee has stated "the Appeals Court is where policy is
made", a view that runs contrary to Article III of the Constitution. If our leaders don't
respect  and adhere to the Constitution, what good is it?

Laws are passed and executive orders issued every day that violate the Constitution or
exceed Constitutional mandates. How is this possible? If the law or order is not
challenged in the Courts---it just goes into effect and continues. If something seems
like a good or popular idea, but is blatantly unconstitutional, it may never be
challenged. Quite often politicians are too apt to accept popular sentiment rather than
challenge a patently unconstitutional ruling. The Courts adjudicate what is brought
before them and in some cases, if the topic is too controversial, the Supreme Court may
decide to keep a particular case off their docket.

I worry that stapled to the back of the Constitution our leaders routinely ignore is the
Bill of Rights. How long will it be before they ignore that, too? It will be easy once
they get enough Justices who rule by empathy and social justice rather than our First
Principles.
In truth...this is already  happening.


JC


Agree...disagree...sound off!


Quote of the Week

"There is hardly a political question in the United States which does not sooner or later
turn into a judicial one."

Alexis de Tocqueville
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