America’s addiction to its Government

In looking at the upcoming congressional election I began to ponder why change is so elusive.  This led me to:

Large shifts in partisan control of U.S. House are uncommon

Large shifts in partisan control of U.S. House are uncommon

Upon further examination and holding a general knowledge of our nation’s government, I propose gerrymandering and being dependent on the dole (personal and corporate) encourages stasis in some of the stagnate House districts.  I suspect some districts with large corporations do not want to change their sugar daddy. Likewise, in areas where the rate of public assistance is high, there would be resistance to cut off funding from Uncle Sam. Although, you do see shifts in the elections of 94, 06, 10; however, they seem to be a populous repudiation of the chief executive.

My thesis of economic dependence on the federal government as shown in the chart below  made me question as to what would happen to the economy if interest rates and debt were more normalized and in balance – removing corps and public from dole.  Would we see massive shifts in the make up of congress? Maybe, but not likely, instead I see a pessimistic

Japan as a model of our economic future.

 

Educational reform is misdirected

When I hear about educational reform I normally see some mention of funding.  I agree that adequate funding must be provided in any effort at reforming our nation’s schools however, ‘fixing’ that issue alone will not solve the so called problems in our educational system.  Although this opinion is based anecdotal evidence, American ‘culture’ must be examined in any discussion of education and its outcomes. Walk into almost any classroom in America and you can see firsthand that a small number of unruly students can significantly disrupt learning. Today, many teachers are advised to ‘look the other way’ except for the most egregious violations in their classroom to avoid a dispute with their administration and or the disrupted student’s parent(s).  How could even the best educator expect large number of students to achieve when some malcontents are forced into their classroom and disrupt the learning process.

Even, in well manged classrooms, America’s cell phone-driven, must always have fun culture inhibits learning. Even in a post secondary environment teaching ‘well-prepared’ students, today’s professors are faced with electronic distractions which made it difficult for them to teach and for their students to learn.  Learning is hard work, and in many cases it is not as ‘fun’ as checking a Facebook page for likes. Learning is hard is not the message most educators tell their students so how can we expect students to react differently when required to do the hard work of learning.  When on the occasion students are assigned long difficult reading assignments reports from even prestigious colleges and universities state that outside reading is not being done today by a vast number of students.  Reading and comprehending 50 pages of Adam Smith is just too boring the students say.

 

In many inner city classrooms, students ‘get away’ with verbal and physical assaults on other students and even teachers on a regular basis.  No matter the funding, racial makeup of the school, its status as a regular or charter school can learning happen in the aforementioned environment.  I suspect this experience is not unusual in many big city school districts thus we see an achievement gap. Students must be held to account for their behavior.

Next, the romantic belief that all students can and will achieve equally is ‘bullshit’.  Education and psychology classes spend quite some time on intelligence and achievement  and they examine scientific literature which shows strong connections between IQ and academic achievement but their teachers and administrators avoid this reality. News flash, we are not all equal when it comes to intelligence. Yet, even in our best schools, they push all students through the same college prep curriculum and ‘achieve’ the same outcome – high school diploma. Then, a corrupt higher educational system takes these ‘graduates’ and lures them into another environment with low standards and high costs in the storybook world where everyone must go to and complete a  4-year college program.
We need to address these and other core issues when speaking about any educational reform. Speaking about other issues before these major American cultural flaws is a distraction from real reform.

When will the American voter wake up?

The reality is, the average  American’s economic well being has been dropping for the past 7 years and still, I hear those who want more of the same despite the facts clearly showing failure of this administration. The numbers of informed voters are not yet large enough to make a difference.

One cause of our economic malaise is our rapidly growing debt. By any measure, it is threatening to overcome us and will one day unless it is reduced. It is now time American voters look to a new way, limited government which will in turn lead to less debt and more economic activity taking place in the more efficient private sector instead of the highly inefficient and wasteful public sector.

However, there is some cause for hope. In my latest readings on the economy, I am starting to see facts being clearly communicated which show our leaders’ being called to account for their economic malfeasance.

Please voter, learn the facts and wake up!

It was mentioned but….

America’s soaring debt was mentioned by speakers during the Republican National Convention however, there was little talk of the implications of the debt’s impact on the American economy and even less treatment of a cure for the lurking economic and social threats the debt poses.

According to the Department of Treasury, it stands at  $19,402,361,890,929.46 as of 7/19/2016.

One question comes to mind, if we broke the iron triangle between the federal government, the national debt’s beneficiaries, and the Federal Reserve what would happen?  Let me proffer one scenario.  Imagine if the Federal Reserve raised interest rates to historical norms. From at dated (2014) Forbes piece:

“Historically, normal interest rates for U.S. government debt is in the range of 4 to 6%. In fact, before the recent recession both 2 and 10 year government bonds had been between 4.5 and 5.25% for the preceding two years. Rates now are approximately 0.5% for the 2 year note and 2% for the 10 year bond. The difference between the cost of the national debt at current rates and historically average ones is enormous

For the fiscal year 2014 that ended last September, the federal government paid $430.8 billion in interest on the national debt. Back in 2004 with “only” $7.3 trillion in debt, the interest bill added up to $321.6 billion. With only 40% as much debt, the government was paying 75% as much in interest. If the federal government was currently paying an historically average interest rate on the debt, instead of $431 billion in interest the annual bill would be around $900 billion.”

Now to the DC crowd, $900B may not seem like much; it is to this humble writer.  Given this, I do not see the triangle being broken and low interest rates will continue to fuel bubbles of malinvestment.

 

 

Is the empire in danger?

For better part of the current century, Americans see via the multitude of news mediums, stories depicting a weakening of the American Empire.  Almost daily, we see lower economic prosperity , diminishing social cohesion, and faltering international relations devolving our nation into despair and chaos. Seeing this reoccurring montage and showing  some level of concern is not a form of paranoia or being Chicken Little. One can reasonably infer that America is in trouble; maybe not quite to the extent of Thomas Cole’s 1836 depiction below but looking at the White House’s Friday night dump of the prediction of 1.9% GDP growth for 2016, the recent civil unrest in Dallas and other American cities, and the ISIS inspired slaughters around the world one could  with solid sanity conclude America is sliding into a morass of growing poverty and violence.

What can be done? This is not an easy question to answer however, only a fool would advocate for a continuation of the status quo big government.  So please become educated to perils facing us and speak to others about our ills so someday, American citizens will demand a real change and remove the shackles this big government has on its citizens.

 

cole62

Musings on Steel

After reading Walter Williams’ post on:

http://townhall.com/columnists/walterewilliams/2016/07/06/thinking-beyond-stage-one-n2187772 

I found this piece to be very timely and interesting…..
In a global economy, it is ludicrous to think a country can have a comparative advantage in every area. The $60B vs. $990B figure for imported raw vs. steel products is very telling. However, the “middle class”, (workers in steel and other industries under siege) must be considered to be important to any nation’s social and economic well being. In order for that group to flourish, fundamental factors must be addressed including but not limited to: currency, cost of capital and labor, education, taxation, regulation etc.
Instead of facing these issues head on, America and the world has “kicked the can down the road” using debt. Please consider total US total debt $65+T and unfunded federal liabilities $102+T.
Obviously, these debts can never be repaid so the sooner we and other countries do an economic reset the sooner we can put in place a new financial system that can carry the world into the 21st century.  When the inevitable reset happens, it will be very, very ugly so my hope is that leaders and citizens recognize that an orderly reset is preferred over a black swan that puts his webbed foot on the reset button.

Ike’s words were a warning

Ike’s 1961 warning of the Military Industrial Complex have not been fully heeded. Here is a recent example of our nation’s willingness to unquestionably believe and fund this behemoth.

A test of America’s homeland missile defense system found a problem. Why didn’t the Pentagon say so?

Santayana is popularly known for aphorisms, such as “Those who cannot remember the past are condemned to repeat it,”[3]

We are paying the price in dollars but even worse is, we could be lulled into a belief we are safe from the existential threat of nuclear warfare for not following Ike’s advice. We must continually question government and hold their feet to the fire.