When you hear the words Subsidy or Grant what first comes to mind? Thoughts of a benefactor giving generously to a noble cause? A charity getting money to help it achieve some worthy goal? The community benefiting from an outside contributor?
Words have meaning. Using language properly helps to successfully communicate a particular message or idea. However, language can also be twisted so that one can say a particular thing and yet mean something entirely different. Political scientists call this twisting of words, to say one thing but mean another, propaganda. The Nazi's and Soviets were masters at this game. For example, the Soviet paper was called "Pravda" and pravda means truth in Russian. However, the paper was anything but true in its reporting. It was filled with Soviet lies about America, the West and how wonderful life was in the Soviet Union.
Another group that is good at twisting words and meaning are liberals. Unfortunately their success has made it so we don't stop to think what really is happening. We just accept what is said as good and noble and move on with our day. For example, the words subsidy or grant has a positive meaning in our culture. If your industry or organization receives either, it means your group is doing something right, something well and we should all be thankful for your efforts. However, that is only true when it is a private subsidy or private grant. Private subsidies and grants come from organizations that have created wealth in the free market place. They have created a good or service that people like and in return freely given their money for said product or service. Furthermore the organization has done so in such a way to make a profit. Those profits have accumulated and now that organization decides to give back to the community in the form of a subsidy or a grant. In other words a gift. It can be in the form of a scholarship, in the form of matching funds, or just a lump sum. Private gifts are good things. They are voluntary. They are of free will. They allow for the full expression of liberty.
If you read the Sunday paper's lead article, 2012 Looking Back / 2013 Looking Forward, there were some interesting trends:
- Of the 41 opinions gathered by the paper, only two were from business leaders. The other 39 were from government employees, non-profit leaders, students and volunteers.
- The collective opinion of the group was that while 2012 was difficult, 2013 looks more promising with grand plans in store for the Basin.
- Only one of the 41 opinions said anything about the Affordable Care Act, which sinks its teeth in much deeper in 2013. Another opinion spoke about Federal and State mandates becoming more difficult to navigate.
While this is an interesting perspective from a select section of the Klamath community, my specific question is where are the opinions from Jeld-Wen, from South-Valley Bank & Trust, from Bell Hardware, from Lithia Motors, Columbia Forrest Products, Fred Meyers, Basin Mediactive, Winema Electric, your favorite restaurant owner and from a former Aqua Glass employee? If the paper was really interested in giving us a story on the real economic outlook for 2013, you would've seen fewer opinions from students, volunteers and government employees and more from business leaders.
This 90 second video says it all.
When will the people take back control of a government that has become out of control?
President Obama just announced he wants to solve the "fiscal cliff" by raising taxes on Americans (and American businesses) that earn over $250,000 annually. Mr. Obama estimates this will create $1.6 trillion in revenue over the next ten years. However, as with most Left of center politicians, he is wrong in thinking that raising tax rates will lead to the same kind of increase in Treasury revenue. His error is thinking that Americans will behave the same way before and after a tax increase. Americans rarely do. Most Americans, when faced with an expense change behaviors to avoid that expense or to lessen its impact. "Rich people" are notorious for this, and are rich because they are smart money managers.
Changing behaviors can also be seen on the other side of the fence. When tax rates have been lowered, private savings and investment has boomed, causing an economic surge. Why? Because Americans and American businesses have more money, and most Americans change their behavior and do something good with that money. Money in private hands is always more efficient than in public hands. And that efficiency leads to productivity and productivity to growth.
However, the main problem with the President's solution is that he has misdiagnosed the problem. The Federal Government's problem is not that Washington does not have enough money. The problem is that Federal Government is spending too much. In other words, the Federal Government has a spending problem. Tax increases do nothing to fix that. Nothing.
Wednesday's (Sept. 26) Herald and News had an article (page A3) summarizing an interview of Congressman Walden by several people in the community.
However if you look at who was allowed to be part of the interview, they all had something in common: they all asked Congressman Walden questions to make sure they money keeps flowing from Washington into their pockets. They were there to make sure they get their pork from the big piggy (the Federal Government). What's worse, what they are really saying is that they want the Feds to borrow and steal from us, the taxpayer, in order to keep the money coming in for them. Here is a sampling from the article:
Toby Freeman, Pacific Power — Mr. Freeman's question was about the KBRA and whether it is moving forward in congress. (Really Mr. Freeman is asking if the KBRA is moving forward because he wants the Fed's to pay for the removal of dams under the KBRA, and doesn't want his company to be on the hook. Real Motive: Free Money.)
U.S. Senator Jeff Merkley from Oregon has decided he knows best when it comes to financing houses — especially those properties that are underwater (the value of the home on the open market is worth less than what remains on the mortgage). His vast experiencing in the banking industry has led him to propose a fantastic plan requiring lending institutions to refinance any underwater mortgage at 4%. Apparently Senator Merkely's compassion from running Habitat for Humanity in Portland is now the principle value he is using to craft legislation.
However, once again, a liberal legislator is attacking the problem from the wrong end. Instead of finding ways to help businesses become more profitable (like lending institutions), therefore increase job opportunities and therefore increasing demand for housing, Senator Merkley is proposing even more burdens and further regulation on the banking industry.
Doesn't the Senator think that if mortgage companies found it in their best interest to offer current underwater home owners a 4% mortgage that would already be happening? But therein lies the rub: who is more important — the private industry or the collective (the banks or the State)? In Senator Merkley's view the State knows far better than the banking industry how to issue loans and stay in business, even though the Senator is void of any real world banking experience.
We were called "crazy right-wing conspiracy theorists" for even suggesting the idea that someday local, state and federal institutions could go bankrupt. That will never happen. It never could happen. Who would be so irresponsible to let it happen?
Well, it's happening. And we knew it was possible. It didn't take a rocket scientist to see the signs of organizations out of control. Any business person worth their weight in salt (or gold for that matter) could tell you when costs continue to increase year over year faster than the rate of inflation and at a rate that revenue could only hope to see, doom was a certain future.
The U.S. Postal Service looks to default on a $5 billion payment due in just 11 days — August 1, 2012. To make matters worse, there is another $5 billion payment due around September 1st. And guess what? The Post Office doesn't have this cash available to make either. That is what is called default and without a fix, then it becomes bankruptcy — unable to pay creditors. But what in the world costs so much and is due on these dates?
If you haven't noticed, a reoccurring theme has permeated this blog by various writers: Public Unions. The writers at KlamathNews.net have been very careful to make the clear distinction between public and private unions. We believe there can be a place for unions in the private sector. However the public sector is completely different. The public sector is a monopoly on a particular set of services for the community. It is this very fact that because governments hold monopolies on particular services that employees of the government should not be able to unionize.
Why? We'll let's look at an illustration. Suppose the union that manages the District Attorneys office think the DA and his crew aren't getting a good deal and decide to strike. Who else can prosecute a criminal case? No one. The DA's office owns a monopoly on that activity. Because this has the potential to do great public harm, Oregon law doesn't allow a public union to strike. Instead Oregon law states that if the county and a public union can't agree on a compensation package the matter goes to mediation. Almost always the mediator will rule somewhere in the middle. While that might seem fair, it isn't. What if the county doesn't have another nickel to spare? What if the voters want the commissioners is to cut costs? Does the mediator take these factors into consideration? Of course not. At best the mediator looks at the two proposals and picks something in the middle. But that is not what the voters may have wanted, so the public union process has subverted the people's will on the county controlling costs.
You've probably heard the phrase, "A government of the people, by the people and for the people." It is the last part of this phrase that public unions totally destroy. Public unions only represent the government employee's best interest (and their own), not the public at large.
Sometimes when I hear liberals talk, there is angst against corporations, and sometimes individuals, who make too much money. (First I wonder what their definition of "too much" is. Second I wonder why liberals get to determine any amount at all.) This type of discussion usually arises when trying to figure out how to raise more money for government. According to liberals, the best way to achieve this goal is by raising taxes on the wealthy — people and businesses alike.
Taxes are a penalty on productivity. If you don't think so, just look around at the wide offering of tax accountants available to help figure out how to pay fewer taxes. I have yet to hear of an individual or company that hires a tax accountant to help them pay more taxes. People and businesses alike do as much as they legally can not to pay taxes. Why? Because, taxes are a penalty on productivity.
Question: If you want to encourage more of a particular activity, would it be wise to penalize that activity more or to reward it more? Obviously the right answer is to reward the activity you desire. This simple logic is found in training a dog, raising children or coaching a sports team. Discipline and correction follow activities that are undesirable, but rewards and praises follow activities that are wanted. Therefore, if taxing is a penalty on productivity, then what does raising taxes do? Does it increase productivity or decrease it? Answer: Raising taxes decreases productivity.
How much should one be paid to be an office secretary? How much should one be paid to be road maintenance worker? How much should one be paid to be a health inspector, bus driver, school teacher, building inspector, mental health counselor or an attorney? As with all organizations, government is no different in that a large portion of its cost structure is found in employee compensation. To reduce expenses often means reducing head count. A department can delay capital expenses for a year or two, but it is unrealistic to ever imagine delaying employee compensation.
In the free market, the answer to the questions above are quickly found by the laws of supply and demand. Suppose I own a coffee shop. How much should I pay my employees to make espressos for customers? I would quickly figure this out by posting my job description with a wage and benefits package. If the compensation is too low, no one will apply or those who do are likely to be less skilled than I may need. If the compensation is too high then I will have more than enough qualified applicants to chose from but it will destroy my ability to make a profit and pay myself. Over time I will find the right balance between compensation and the skill set required to serve my coffee customers well and still make a profit.
In contrast, these market forces are completely absent from pubic union employee compensation. Public unions have "negotiated" with the government what each job is worth based on the previous negotiation — plus more. Built into the public union contract is better pay for those who have worked longer in the union. Also built into the contract is a very difficult process for dismissing a public union employee unless they commit an egregious act. So when comparing which system best reflects reality, the free market wins hands down. It pays employees what they are worth based on their skill and based on the supply and demand of the surrounding marketplace. On the other hand public employee compensation is based on tables, charts and lawyers that have no idea (and no care) what a particular job should cost.