The Market Ticker
Commentary on The Capital Markets- Category [Politics]
2015-05-11 06:45 by Karl Denninger
in Politics , 157 references

This man needs to be run out of town on a rail for his decade-long plus false claims regarding the budget.

Unnecessary, wasteful government spending is today putting America on a dangerous path, as we burden future generations with a mounting national debt – now totaling more than $18 trillion. The future of the American dream is at risk, due to Washington’s bipartisan spending addiction.

For years I have fought alongside my friend, former Oklahoma Senator Tom Coburn, a tough and sometimes lonely battle against the corrupt practice of earmark spending, which he called “the gateway drug to overspending” in Washington.

Uh huh.

By the way, it was good to ban "earmark" spending.  Don't get me wrong; the "bridge to nowhere" was an infamous example.

But it's also utterly immaterial to the outcome and diverts attention from where the real problem lies -- in the medical system.

John McCain has not done one legislative thing during his entire time in The Senate to take care of that problem despite facially visible evidence of acts that, taken by anyone in any other industry, would lead to felony indictments and prosecutions under long-standing Federal and State laws.

That is in fact where the federal overspending, that is spending more than the government takes in via taxes, comes from and only there.  If you were to address this problem that spending, specifically on Medicare and Medicaid, would drop by approximately 80% and the Federal Budget would instantly be running at a surplus.

Why?  Because with the exception of the poorest Americans were you to address this issue neither program would be necessary at all because everyone else, even those of modest means, could pay cash for their medical care and catastrophic insurance would cost just a few hundred dollars a year, which is affordable by nearly everyone.

The very same pattern of behavior of "industry" when the government starts treating things as "entitlements" and ignoring blatantly anti-competitive behavior that is supposed to be illegal is also evident in college costs.  The reason is the same: The removal of competitive forces and enforcement of the law leaves entities free to do whatever they wish to maximize their extraction of funds from those who are "customers", and if they can force you to be a customer then their extraction power becomes effectively unlimited.

Cartel-like behavior in both the medical and education industries, coupled with government "support" and a willing blind eye to that cartel-like behavior, drives the problem.

The solution in both cases is to vigorously prosecute the cartel-like behavior (e.g. any collusive act to require degrees or set prices, whether in hospitals, colleges or otherwise), remove all government regulatory sanction that makes it possible (e.g. formal so-called "degree requirements"; independent testing where there is a public safety issue is fine but if you can pass without a degree why do you need one?) and then remove the government financial support.

That change would collapse pricing -- witness the "cost" of college in other nations where no such system exists, and witness the cost of medical care in those nations as well, including first-world developed nations such as Japan.

If such a path were to be undertaken not only would health outcomes improve on balance but the Federal budget would run in surplus immediately and permanently, paying down the National Debt, and that would result in a mild monetary deflation that would improve the purchasing power of ordinary Americans on an immediate and durable basis.

In other words it would actually solve the problem, which isn't what McCain wants.  No, he wants you to be a slave, but at the same time believe he's "trying to help."

His interest in "helping" as as honest as those who once held him in the Hanoi Hilton, and simply wanted to "help" him come to the "correct" point of view.

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You knew it would come, right?

The attempt to blame all on.... liberalism.

Of those governments, perhaps the most salient fact to the objective political scientist, tasked with anatomizing the failed system, would be that both governments have long effectively functioned as one-party systems. Baltimore last had a Republican mayor, Theodore M. McKeldin, in 1967. (A wire photograph from April 1966 captured McKeldin, a bear of a man, chatting amiably with Dr. King in Baltimore, two years before the civil rights leader’s assassination in Memphis.) Maryland elected its incumbent Republican governor, Larry Hogan, in November – but that made Hogan only the second GOP governor in the Old Line State since 1969.

Incumbent mayor Stephanie Rawlings-Blake, a Democrat, deals with a city council comprised 100 percent of fellow Democrats. Other important power blocs in the political and civic life of Baltimore are likewise controlled by Democrats, such as educational institutions and public-sector unions.

See, that's easy.  Just blame "one party" rule, as if the Republicans have "better ideas" without demonstrating how their ideas are better or even providing examples of alleged ideas to be implemented.

Nobody, of course, wants to ask the salient question: Exactly how did these cities become one-party political machines?

That, of course, is because if you were to go there you'd expose the soft underbelly of corruption in the political process -- the making of political promises that the maker knows cannot be fulfilled but doesn't care as he or she is buying votes, not results.

In the meantime behind the scenes even more-perverse and outrageous corruption is taking place; the selling of America, literally, to the highest bidder.  And rather than perform its job as a guardian at the gate the press fawns over such people and their espousing of various programs without a single critical examination of the issues at hand or a question being raised.

Let us put reality out there for everyone: No, not everyone is exceptional.  In fact most of us are downright ordinary and even there, if we're in the middle of the bell curve somewhere instead of out on the ends, fully half of us are on the wrong side of it!

The question to ask becomes simply this: What are you going to do about that fact given that we all must somehow manage to find our way in the world?

This is a cancer that we invited into our nation with so-called "free trade" and the exporting of our manufacturing base.  It is the one we refuse to discuss and debate, yet we must.  We instead try to placate and paper over it while at the same time destroying the programs and structures that led individuals in that situation to have productive, happy lives.

We then wring our hands when despair turns to crime and rioting.

Baltimore was a thriving industrial community that produced, among other things, a huge amount of steel.

But Baltimore lost over 100,000 manufacturing jobs by 1995, all due to foreign imports produced under near or actual slave labor conditions with zero regard for environmental impact.  One third of the residents of Baltimore fled the city.  Worse, 90% of the jobs in Baltimore today are low-paying and often part-time service-sector jobs.

Did liberals promote all the so-called "free trade" that led to this manufacturing displacement?  Hardly; that charge is equally leveled against conservatives; that is, Republicans.

At the same time deficit spending, which both political parties consider sacrosanct, has destroyed the ability to accumulate wealth for anyone that is in the lower economic classes.  Adding to this was outright and documented predatory behavior by financial institutions toward city residents, especially black city residents, in the 2000s via subprime lending.

Where is the debate on these topics?  It's missing from the political sphere for a very good reason: To address this you must address facts -- such as the fact that if the "average" IQ is 100 then half of the people will be above and half below; unless you're willing to literally murder the lower half of the population you need a social, employment and political system that provides opportunity for all.  That in turn means you cannot export your lower-wage and lower-ability-required manufacturing jobs to places like Vietnam and China as they must be retained so your citizens have gainful employment available to them.

At the same time you cannot deficit spend because for the person in the lower economic and intellectual quantum there is no defensive move available to them to mitigate the damage done to their financial security by such policies.

Finally, accountability for every dollar spent is far more important when you have few dollars to contribute to government programs in the form of taxation.  In this regard both Democrat and Republicans fail; our current so-called "educational" system is an utter and complete joke when looked at in terms of return-on-investment.

Are you ready to have a debate on these topics yet, America?

Or will you wring your hands and point fingers, as is often the case, at this bogeyman or that while ignoring the elephant in the room -- the intentional destruction of working-class jobs in this nation over the last 40+ years, and our utter refusal to put a stop to the abusive and outrageous "trade policies" that enable it.

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