Why Should We Care About AAA Ratings?

Really, why should we care about deficits at all?  Michael Moore has proven beyond a shadow of a doubt that we, as a country, are not poor!  Of course, the Heritage Foundation has proved that if we took all the profits (not 60%, we're talking 100%) from all the organizations, highly-paid movie stars and athletes, advertising revenues and oil companies, and every penny of every dollar of profit earned within the US of A, we would be able to pay for ONE YEAR of our expenditures in the budget as proposed by the Obama administration.  And lest you think I'm giving the Bush administration a pass, I'm not.  I didn't like the trillions of dollars Republicans spent anymore than I like it now, when the Democrats are spending it.  In case you were wondering...that's what the Tea Party is all about.  We're not about "bagging" the middle class (I'm not sure what that means or even if we have a middle class anymore), as one liberal friend characterizes it, instead, we're about not spending our children's, children's tax dollars during our lifetimes.  It's so pathetically simple, I sometimes have to stifle a small scream.

OK, let me put it in the simplest possible terms:  Michael Moore is wrooooong!  We are no longer a rich country.  There are some rich folks living here, I'll give on that point.  But we are no longer a rich country because we have spent ourselves into oblivion.  And it's not because I hate old people, the homeless, the jobless, or the black/mexican/vietnamese, or poor white trash with 7 kids who have to take TANF; nope, don't hate them, don't even have sour thoughts about them.  I do, however, believe that 12 million illegal immigrants crossing into our country and sucking on the teat of the American tax payer is, well, sucky!  Do liberals really believe that illegal immigration is OK?  Really?  I can't get my head around that one, and I probably never will, so I guess we'll have to agree to disagree and hope like hell that the folks who pay taxes continue to outnumber those who don't.

Without getting into the fact that the top 10% of Americans pay almost 70% of our total revenues, I want to address why we should all be concerned about AAA ratings from S&P and whatever other credit rating agency decides on a whim (and with some confusing and often wrong numbers) that they are going to downgrade our bonds.  "Why should I care," you say?  I get up everyday, fill my car with $4.00/gallon gasoline, take my kid to softball and pay my bills (well, some of them), what does a bond rating have to do with my life?  I mean, we're America, right?  Who wouldn't buy our bonds?  Well, lots of people, now.  Treasuries are at around 3.7% if you buy a 10-year note, right now.  That means that if you put your money into US Treasuries, you won't even make the cost of inflation back on your money.

OK, so investors don't buy Treasury bonds.  Somebody has to buy Treasuries though, because, (and this is the part where I tie the last part of my little essay into the first part) we could not possibly tax our way out of our current problem!  We have to borrow, borrow, borrow!  So, why would China stop buying our bonds? We are, after all, the US of A; we're a great bet!  Ask George Soros, he knows.  He's been working on how to crash our dollar and make himself another gazillion dollars for quite some time now.  Don't believe me?  Look it up, that's what he does!  ANYway, without the ability to borrow money, where would our congressmen be?  What would get cut?  You can guess, can't you?  Everything but Social Security and Medicare.  Yes, even defense spending would be a dead goner.  So, with all that in mind, why should you care?  Oh, yeah, I already answered that question!  In case you missed it, we must have good credit because without a AAA rating, we won't be able to borrow any more money as a country, and if we can't do that, we've already proven, beyond a shadow of a doubt, that we cannot possibly live within our means.

Well, we could tax the rich, I suppose, and their taxes have gone down, as the news so loudly bleated today, but we may want to consider that route very carefully; they're the only ones paying taxes; if we take it all away, they may decide that their hard work is not appreciated here in the country of borrow-and-spend, and they might pack their bags and go elsewhere.  There was probably a pretty good reason for dropping those rates, (after all, when the rich get done paying 17%, the states & localities don't give them nearly the break the Feds do), perhaps it was that other countries offer better tax incentives to job creators?  Hmmm.   

They may even decide that creating and running big companies is too much of a pain to deal with for no return (you've heard of return on investment, right?), so they'll pull out their money, stick it in Treasury bonds (well, probably not) and retire to some country that is capable of hiding all their cash.  The numbers don't lie, there isn't enough money to tax the rich so that we can spend trillions of dollars each year and with bond ratings tanking, money will dry up.  The Fed (Fracking Erudite Demons) would then be forced to raise interest rates in order to generate "interest" in our luxurious social service economy (this is called inflation).  Without inflation, the only investors still buying Treasuries will be the people and companies from socialist countries who want to put their money in a free republic.  Will we still look like a free Republic in the next 20 years?  You tell me!  Socialists know what socialism looks like, and they will recognize income redistribution.  So, you should care very much about ratings and bonds and borrowing and spending.  It's not all about CARing about your fellow man, it's about survival; and we are nowhere near the fittest in this Age of Unreason.

LBlakeNelson
Tea Party Enthusiast

Economic Policy from a Conservative Entrepreneur

Do lower taxes mean higher incomes? Do higher taxes mean more federal revenue?  I just finished reading several debates about the economics of "Republican" politics.  The first debate tore asunder Bush's campaign promise of 2000 that said that lower taxes will result in higher incomes in 2000.  After I got done reading Mr. Cates arguments, which were well-supported and showed, without a doubt really, that lower taxes did not translate into higher incomes, I thought, well, why would they?  Just because GW promised this during a campaign does not mean that American conservatives were persuaded by this argument or even that they cared.  What conservatives believe has little to do with increases in income.  We believe that our government should spend what they take in (which, I believe, had they done would have left us in a better financial position today) and that increased taxes will not make everyone happier.  In fact, we're convinced that increasing taxes is going to result in increases in spending and with that spending, wasting.  And if we follow all of this to its logical conclusion, given that it has now been proven beyond a shadow of a doubt that between 2000 and 2008, this country's inhabitant's income did not increase, but decreased significantly, it should then be posited that raising taxes will increase incomes significantly (OK, maybe not significantly, but it always sounds so erudite to say "significantly"). 

OK, I don't have any big studies that I want to go and track down, after all, this is a blog that I do in my spare time and since I do not take unemployment or AFDC or food stamps (as I probably could), I need my spare time to work on my consulting projects.  ANYway, lets look at the opposite of the disproven political promise by our dyslexic president: More taxes will lead to higher incomes.  OK, OK, maybe the "opposite" isn't what the author of the debate would support either, but lets have a little fun with it. 

Let's say that we tax me and my family 60% of our income.  Well, would that be after the deductions for our house, 2% of medical expenses over and above the total of our itemized deductions, and any other things that I can dredge up out of the tax code?  Oh, and I suppose I'd better go back and figure out how many of the things on that fun K-1 schedule I get to take off any income I would be claiming; there are all sorts of mysterious deductions there.  I'm not sure what all of them are, but I remember some of the more reasonable ones like charitable donations and something called 179 recapture.  Oh, but that was an add-in, never mind, it's all becoming a muddle and I'm getting further and further from my point.  Well, no, I've arrived at my point!  Yes, there it is.  Our tax code so completely screws with our AGI, how can we possibly truly understand what policies are effective?  I can tell you absolutely that I don't want a flat tax, but that's only because I love all my deductions!  What kind of terrible tax rate would I have if I didn't have my deductions!

I guess I just made a great argument for a reasonable flat tax, sigh.  Let's pull it together folks, remember that campaign slogans do not make good tax policy and we must fight to put our economy back in the game by simplifying our tax code, spending less than we take in in revenue and stop outsourcing jobs to countries that do not allow their people the same freedoms that we have.

Well-Defined Rolls in Leadership

Though I've not done any serious research on the subject of roll definition as it affects leadership, I have read many books and articles in which the authors expound on the benefits of defining rolls in management and the affect of this definition on a manager's performance. I suggest that roll definition is vital to a leader's success as much as to the success of the generic "manager," and I'm sure there are numerous academic articles to back this up. My experience in observing the outcome of poor roll definition comes from my own work on a team where my roll was unclear and poorly defined and where the outcome of the project was important to the executive suite. I don't like to place blame elsewhere; in fact, I usually pick my own work apart ruthlessly. But in preparing for projects that will be scrutinized at the highest levels, managers must take great care to examine the power they have been given to achieve those objectives. Managers may believe that they have been given the power to achieve certain things when, in fact, they have not.

I encountered my first problems, in my example, when the "staff member," a worker bee who was basically running the whole show, came to me to regarding verbiage to use in marketing materials that, by definition, were counter to the (also poorly) defined mission.  Another manager who obviously thought the project was under her jurisdiction had given her these instrutions. It was clear after this encounter that the other manager had the support of the executive suite, but what was I doing there? Was I just another "staff" member who would coordinate with current staff? If so, it was an egregious misuse of my skills. I was not as alert as I should have been at that point to the problems that this would cause me. With a manager of my caliber caught between the manager with real power and a belligerent staff member, I should have seen that I was the perfect patsy. The power manager didn't have to blame, and therefore alienate, the worker bee, she had me there to take the heat! In this case, I should have kept my opinions to myself, done only as I was told and exited the scene as gracefully as possible. Instead, I believed that I could "help" the project by floating my ideas with the mistaken notion that they would be taken seriously. To this day, there is no evidence, beyond my own brutal self-evaluation, to suggest that I did not perform well on the project. I did request a review of my performance from the executive suite which I never received. Well, live and learn folks, that's what it's all about. But why concern myself with that now? Who cares?

I do. Not only do I care that I was put into an impossible situation doomed to failure, but I also care because there is a job now available, for which I am uniquely qualified and may not get because there were some "concerns" about my performance on the aforementioned project of doom. The manager who would like to hire me for this position understands that I am probably the best person for this job, but I fear that I did not play the political game well enough to protect myself at a time when I should have recognized the trap. Naturally, it is important to learn from this experience, and I will; but I feel a sense of loss and I have written this blog to offer support to those good managers who now find themselves in positions of responsibility with no concordant power. My advice? Play the game. Do what is absolutely necessary and no more, offer no opinions other than those that agree with the top rung and extricate yourself as soon as you possibly can! The worker bee will be blamed for any problems (though I am sure that you will still present an excellent target which means it would benefit you to help the worker bee succeed), the power manager will get any acclaim, and you will escape, if not unscathed, at least without the hint of the "dark side"clinging to your good name. And if ever you have to work for the one who put you in this position to begin with? Forget the past, make sure your roll is well-defined (with the necessary concordant power), and believe, as I do, that if given a chance, you will succeed and be recognized in due time.

I don't think executives plan to torture those they hire in these types of situations; in fact, they're probably the victims of circumstance themselves, but there is much you can do to repair those relationships (and your good name) by believing in and achieving your own success.

The Principles of Collective Bargaining

Why are we not arguing about the principles behind the collective bargaining issues we face in this country?  As someone who has studied human resources, manufacturing and entrepreneurship, I have a few thoughts.  These thoughts get down to the heart of the issue and if we know our hearts, we might not have these problems.  A couple of questions:

If I am employed as a public servant, do I have the right to walk away from the bargaining table if I don't feel that my employer is being as generous as morally possible?  Can you take the word morally out of the previous sentence and have a situation where both people believe that each party has the other's good measure at heart?  My employer is the public, so I have to rely on its representatives to understand what is morally and financially possible. Because of this, there should indeed be standards.  I believe they should be enforced between the parties with a possible mediator or several mediators used if possible. This is the definition of binding arbitration, and although it is not always the answer, it's a darn site better than the monopoly of a union with un-checked power.

I've always found it interesting that the unions believed that they must compel membership in order to enforce the morality of the public.  So far, and I've done a few searches, read a few articles, I have yet to see a valid defense of compelling union membership.  Why would a union not be voluntary?  I was incensed that I had to pay union dues at the University of Montana, because I don't believe the union at U of M represents my ideas politically.  At the university, we have the right to ask the union to donate the money on our behalf.  I felt I would be donating on behalf of an organization I do not support politically.  No-win, no-win situation; not my favorite. 

The other side of this argument is a straw man: why should I benefit from the actions of the union on my behalf?  Frankly, I am not opposed to sitting down with my employer and negotiating my own salary and benefits, who knows, I might do better than the union leaders.  In fact, I know I could do better.  I do believe that unions serve a purpose, but in the case of the public unions, I do not, unless membership is voluntary.  As a public employee, you should be prepared to be paid what your community can afford to pay you.  Binding arbitration in this case is warranted.  Why do public service unions want mandatory union membership?  I'll tell you why...power.  The power of the unions to exert influence over politicians who see voting blocks and stumble over themselves trying to ingratiate themselves.  It's sad and pathetic, and it's our political system, but those unions should not include those who do not believe in the union agenda.

I don't know a single person who would pay teachers less than they thought was morally and financially possible.  I don't believe that the money paid to teachers is the main problem, but it is one that should be handled with efficiency; one I think that should be run privately, but that's another argument for another time.

I also believe that there are statistics to bear out that more money does not equal satisfactory performance.  WI spends more per student than any other state in the union.  I think it's significant enough proof that 2/3 of their 8th graders not being proficient in reading is not due to money paid to teachers.  Top of the line teachers should earn $80,000 to $100,000 per year, but that depends on the area.  We might even want to pay teachers more than we have...usually the public is in favor of fair pay; again, not the issue. In Missoula, I would think that something a little less, $80,000 [for those with a master's degree] would be the top end of my scale here (even though housing prices were once quite high here, housing is selling for 12% less now).  This is all subjective, of course, and therefore standards should apply. 

Housing price pressure, by the way, will directly affect the budget of the states a year and a half from now.  Have we taken that into consideration?    Here in Montana we have the right to appropriate the money from other resource-rich counties to pay for our teachers.   Lucky us.  Other states, like WI must rely on taxes, big ones.  They have the 5th highest property tax burden in the country in the paper industry, anyway.  What is fair?  I think, again, binding arbitration might not be pretty, or politically powerful, but it would do the job.  The rest of the folks could then simply re-up their membership in the Democratic Party to satisfy their political urges.

Teachers have a great reputation and they are not helping it by striking in WI. Instead, the political organizations that have come out of the woodwork are doing what they do best, agitating.  They don't care about the teachers, not really.  In fact, I would go so far as to say that the union leadership doesn't care about the teachers either.  Just read some of the harrowing cases that have come before the Right-to-Work organization and you can get a feel for how the unions abuse not only membership dues, but the members themselves.  True, no organization is perfect, even union organizations, but we sure treat them like they are.  They are the untouchables, the ones whom we cannot insult lest we bring the wrath of God down upon our conservative selves. 

I think it is time to take a hard look at these unions and I hope that some of that effort will come from inside, from those who are not satisfied with their membership and wish that they could just go back to work.  Where are you?  Come on in, the water's fine, a little warm, but you'll get used to it.  I sure wouldn't want to be in their position, it's hard to buck your union, but when you start the process of questioning mandatory membership, their arguments break down.  After all, what is wrong with voluntary union membership?  Ask the question!  It's the heart of the matter.

The Danger of Words (It's Not What You'd Think)

The outrage we feel at the gunman's cavalier decision to take someone's life and the strange compression of time and space we feel inside ourselves when we think of the act itself combine to create a state of shock, rudely interrupted by the occasional poking and prodding, somewhat like what my daughter does to our unfortunate cat, by outraged politicians who see this as their opportunity to say, "I told you so!"  The thought that conservatives in their anger about losing freedoms granted in our Constitution are somehow responsible for the decision by a deranged killer to put bullets into 6 or more of our citizens is ludicrous; you'd think that a simple prayer and calls for justice would be enough.  But not for those who feel they are somehow wronged by the pundits who speak out against tyranny, no, not good enough!  After all, there might be something to that phrase, "Don't retreat, re-load" that came from a strong leader, a woman no less, in the Republican party.  Of course, if that was a call to arms against the 2,000 plus page legislation that now threatens our country's economic future, I missed it.  I naively thought that my right to vote in the last election sent a crystal clear message.

Do our detractors wish that we would whisper sweet nothings in cool voices, or would they rather that we just shut up and agree with them?  What does it take, then, to get my Senator's attention?  Perhaps a bunch of crazy Montanans shooting their rifles into the air and whooping it up outside the offices of our fine representatives?  With my luck, we'd all be thrown in jail.  So, As I check to make sure my firearms are locked in tight for the night, my fellow citizens can be assured that my intent is simply to excercise my rights as a free American and to protect my home and family, nothing more.  You were scared, weren't you?  After all, I have written words that were hot and fiery in my short career as a blogger and longer one as a writer, but never once, not in all the time during which I have had to suppress deep-seated anger at this administration's lack of concern for our freedoms have I, even once, thought about taking the life of my congressman or a nearby 9-year old girl.  I certainly hope you are all relieved and that we can get back to it without losing, once again, the freedoms that are promised us in our founding documents.