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Thursday, January 27, 2011

Obamination: State of the Union: Economics?

In this installment on the STOTU we turn to economic issues.  [Click this link for the Prepared Remarks.]

"At stake right now is not who wins the next election – after all, we just had an election. At stake is whether new jobs and industries take root in this country, or somewhere else. It’s whether the hard work and industry of our people is rewarded. It’s whether we sustain the leadership that has made America not just a place on a map, but a light to the world."


    In keeping with the manure pile concept, that paragraph contains a rich mix.  It begins with politics, with references to the immediate past and near future elections.  President Obama denied the obvious: the State of the Union Address is the first major campaign speech of the 2012 presidential contest.
   
    The establishment of new jobs and industries can not be facilitated by government action, it can only be hindered.  Creating a climate of uncertainty  is the worst possible hindrance to startups.  Business requires the ability to plan ahead, and that implies certainty, continuity & predictability.  When radical changes are threatened, the required certainty & predictability are destroyed.  Investors will keep their assets in cash or readily converted instruments in the absence of predictability. 

    Mounting deficits & debt load are counterproductive in the worst way. They discourage consumer, investor & entrepreneurial  confidence.  Hard work and industry are not rewarded by proposals to raise taxes on income.  Raising taxes reduces the funds available for investment and discretionary spending. Success is rewarded, failure is punished; hard work does not equate to success.  Most new startups fail within five years.  The success stories we hear about are the exception, not the rule.

    Escalating inflation in fuel, food, transportation, energy, insurance and medical services reduce the discretionary income available for investment and discretionary purchases.  We can't pay more and buy more without earning more.  We can't earn more without jobs.  We can't have more jobs unless people are able and willing to purchase the goods and services produced by people working in those jobs.

    We do not have any leadership to sustain; we have a misleader in the land's highest office. Obama is leading us onto the on ramp of the expressway to ruin.


"We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again."


    The stock market remains volatile and its gains are reversible.  Which corporate profits are up and how much?  Is that a function of their recent staff reductions?  How much is the economy growing and how much of that is real growth?

 "But we have never measured progress by these yardsticks alone. We measure progress by the success of our people. By the jobs they can find and the quality of life those jobs offer. By the prospects of a small business owner who dreams of turning a good idea into a thriving enterprise. By the opportunities for a better life that we pass on to our children."


    Jobs do not offer quality of life.  Jobs yield income which enables us to purchase the goods and services we need and want.  Quality of life is a complex concept involving much more than employment and income. 

    The small business owner can not make his enterprise thrive and grow while burdened by inflation, uncertainty, foreign competition and multiplying layers of regulations and restrictions.   We can not give the next generation opportunities for a better life while pursuing policies and actions that drag down and promise to destroy our economy.

"That’s the project the American people want us to work on. Together."


    "My way or the highway" would be closer to the real meaning of that sentence.   Those who understand  the elemental laws of economics must submit in silence; go along to get along or suffer condemnation as 'obstructionists'  who 'block progress'.

" We did that in December. Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year."


    In reality, you were dragged kicking and screaming into extending current income tax rates for two years. If your party would 'work together' the tax rate reductions made on Shrub's watch would be permanent, so that no extension would be required.  The ten year sunset clause was a 'crat demand.  Yours is the party of raising taxes.

    If the Republicans had not won a majority in the House of Representatives last November, you would have happily let the rate reductions expire. Disposable incomes would be considerably lower if you had not been forced to sign the extension into law.  No benefit was done; a great injury was staved off for two years.

    How many businesses have the cash reserves or credit necessary to invest in new investments in equipment?  How many  businesses have the sales potential to make economic use of expanded plants and equipment?   If full write offs are such a good thing, why do it for one year; why not make it permanent?

    How many new jobs were created last year? How many were destroyed?  What was the real net gain and how does that compare to a normal year?


"Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. You didn’t always need a degree, and your competition was pretty much limited to your neighbors. If you worked hard, chances are you’d have a job for life, with a decent paycheck, good benefits, and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company.

That world has changed. And for many, the change has been painful.  I’ve seen it in the shuttered windows of once booming factories, and the vacant storefronts of once busy Main Streets. I’ve heard it in the frustrations of Americans who’ve seen their paychecks dwindle or their jobs disappear – proud men and women who feel like the rules have been changed in the middle of the game."

   
    The change mentioned above is the result of the golden goose being strangled by by Obama's allies: unions.  With the retirement of the Baby Boom generation, those hidden costs are threatening the solvency of the government as well as major industries.  'More for less; forever more'  does not work in the long run.   Demagogues who deny that fact are part of the problem, not part of the4 solution.

"They’re right. The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100.  Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an internet connection."


    Computer software and entertainment can be delivered through an internet connection.  Real physical factors of production and consumer goods require physical delivery.  Obama's attacks on the petroleum industry are making delivery of goods more expensive, increasing inflation.

    Steel mills closed because of extortionate union contracts, burdensome government regulations and foreign competition.  Fifty years ago, economic development  was a major foreign policy objective.  It still is.  Those who want to stimulate 'economic development' in Africa & Asia seem to be incapable of comprehending the fact that competition with our own industries is an unintended consequence of their foreign policy.

"Sustaining the American Dream has never been about standing pat. It has required each generation to sacrifice, and struggle, and meet the demands of a new age."

"Now it’s our turn. We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit, and reform our government. That’s how our people will prosper.  That’s how we’ll win the future. And tonight, I’d like to talk about how we get there."


    Translation: Pay higher taxes & prices; sacrifice your lifestyle without any present or future benefit because of a power grab by greedy politicians and their cronies in the union movement.

" None of us can predict with certainty what the next big industry will be, or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do – what America does better than anyone – is spark the creativity and imagination of our people.  We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It’s how we make a living."

   
    How many people are employed by Google and Facebook?  How many people will they and similar corporations employ?  How does that compare to the number of full time jobs lost in the steel, auto and petroleum industries?  How many of the recently unemployed have a hope of gaining jobs with Google, etc?

    You can't eat innovation, warm your house with it in winter, cool your house with it in the summer or pay your taxes with it.  And when it increases productivity so that jobs are lost, you bitch about it.  You can't have it both ways.  The internet and other innovations make it possible for us to expose your contradictory statements and litany of lies. 

"Just think of all the good jobs – from manufacturing to retail – that have come from those breakthroughs."


    Great! Computer chips designed in Israel and produced in Asia. Computers assembled in Asia.  American jobs, yeah, right.

"This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. In a few weeks, I will be sending a budget to Congress that helps us meet that goal.  We’ll invest in biomedical research, information technology, and especially clean energy technology – an investment that will strengthen our security, protect our planet, and create countless new jobs for our people."


    We are faced with insolvency, so the President proposes massive new spending. Its like buying a brewery for an alcoholic.  Whenever Obama says "invest" it really means more taxes, more debt, more deficit and more inflation. 

    "Clean energy" is the biggest boondoggle.  Every day we consume vast quantities of liquid fuel which contains 160,000 btu per gallon.  It is not possible to replace that fuel without matching its energy content and there is no alternative fuel that matches its energy density.  The scope and scale of the problem are incomprehensible. 

    There is no alternative energy source.  No matter what you burn, you consume oxygen and generate products of combustion.  The problems of industrial scale production & distribution  should be  sufficient to warn off any thinking person. 

    Electricity is not an alternative energy source. Most of it is produced by burning oil, gas or coal.  We are paying more for food and riots are breaking out in other parts of the world as a predictable consequence of diverting corn from food to motor fuel production. 

    There is no replacement for oil, and if there was, reducing our dependence of Arabian oil would not increase our security unless we were willing to confront Islam, which no current politician is willing to do.  We need leadership with brains, spines & testicles; those are not functions of reduced oil consumption.

    Anthropomorphic global climate change  is a big lie, as an increasing number of people are discovering.  Countless can be a very small number such as zero, it does not need to be a large number. New jobs?  Yeah, right.   Pedicab operators & bike couriers? 

"With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015."


    Assuming 30mpg., the energy consumption is about 5,333 btu/mile. One KWH is about 3412.1416 BTUH. That is about 1.6 KWH per mile.  Assume that each of those million electric vhicles travels 10,000 miles per year.  Where are those 1.2 billion KWH coming from?  Solar cells & windmills, yeah, right.

" We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s."


    Where is Obama letting oil companies explore for and produce oil?  Where is he permitting the construction of refineries?  Why are we dependent on oil produced in areas ruled by people inimical to our interests?  Considering the current price of $3.20 per gallon, how will Obama's scheme affect our pocket books?   Where was your head when you voted for him??

" Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: by 2035, 80% of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. To meet this goal, we will need them all – and I urge Democrats and Republicans to work together to make it happen."


    Translation: drastic inflation: increased prices for electricity and motor fuel, further reductions in our lifestyles, fewer jobs and another great depression.  Natural gas is a byproduct of the oil production process.  Get a clue, for Chrissake!!  Clean coal?? Obama bragged that he would destroy the coal industry.  Nuclear power?  Litigation, regulations, insurance costs and union rates have made it impossible to build new reactors.

    You voted for change; you are getting it. Are you satisfied yet?