But Now You Know

The search for truth in human action

Attacking AIG-style Bonuses Will Cause MORE Companies to Fail


Money BombRecently, I wrote an article about how Golden Parachutes are important for our economy, instead of bad.

And yet now we have people objecting to AIG fulfilling its contractual obligations to people who might otherwise have abandoned the company to collapse years ago.

This needs to be re-explained, in simpler, clearer terms:

  • If a company is struggling, it needs the best people it can get, in order to TRY to save itself.
  • If you are the best man for the job, then you don’t need to work for a struggling company. You are almost certainly going to choose a healthy, growing company where your job is secure.
  • In order to obtain your services, a struggling company must either:
    1. Offer you far more money up front, which it probably can’t afford to do, or
    2. Offer you protection against the company failing, like a bonus that you will get even if, or only if, something goes wrong despite your best efforts
  • In order for struggling companies to have a chance to survive, benefiting the entire economy and all of we who are in it, you must therefore have:
    1. The power to offer bonuses in case the company fails despite a manager’s best efforts
    2. enforcement of that bonus contract, so the potential managers trust it’ll get paid, and
    3. freedom from punishment for receiving such a bonus

The problem, here, is not AIG honoring a style of contract that is absolutely necessary for the health of our economy.

The real problem here is the same that we face whenever there is government intervention with our taxpayer money:

This form of socialism will always cause conflicts of interest, that will harm the recipient, the taxpayer, and the economy ever more, in a snowball effect.

Think of how people were trapped on welfare, from the 1970s through 1990s. 

The government bailed  out people in need, but then had to punish them if they ever made any progress in getting out of poverty, because it would be irresponsible to keep paying them the same amount of welfare, when they got even a little of their own income. 

Likewise, many state governments violate your freedom of choice  on health-related issues, on the premise that those states are paying for some people’s health care. They impose gigantic taxes on tobacco, alcohol, even convenient food, claiming that people who use them are raising government health care costs.

In all three cases, the freedom of private people is violated as a natural domino cascade starting with government taking your taxpayer money, and bailing people out with it.

Our response to this obvious conflict of interest, between bailouts and people’s free choices, should be to legislate against bailouts, not liberty.

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March 19, 2009 Posted by | Economy, Politics, Society | , , , , , , , , , | Leave a comment

Thanksgiving: Happy Conservatism Day!


Thanksgiving, as it exists in America, is very special, right up there with Independence Day, as a celebration of true Conservative principles, and a repudiation of what we now know as Liberalism.

Against Collectivism

For example, what the Pilgrims were celebrating was an abandonment of the collectivist/socialist ideals they’d adopted when they first tried to form their colony.

The first colonists had starved, suffering the inefficiency and laziness bred by a “share the wealth” philosophy, where everything went into a common pool, and everyone got an equal share, much like Europe and the Clintons of the world embrace today.

When they finally started requiring people to take responsibility for themselves, adopting what amounted to a precursor of Reagan/Paul Conservatism, with community property being replaced by private property, and central planning by liberty, they found prosperity, and stopped dying out.

We’ll be in pretty much the same situation, a few years from now, after yet more years of the “share the wealth” philosophy of big government, ultimately not much of a departure from Bush’s stealth Liberalism of the past eight.

Pro-Christian

Not only were the Pilgrims celebrating the abandonment of socialism, and resulting prosperity, but the tradition of having a feast to give thanks was theirs because it was a Christian tradition to do so. Thanksgiving was not a “harvest festival”, as the politically correct in the Establishment media and government schools would have you believe.

It was, in this case, celebrating a bountiful harvest, but the “thanks giving” part was a standard Christian tradition in England, who would do this at any time of year, to celebrate whatever blessing they felt God had given them, or even to remind themselves of what they still had, when things were bad.

Puritans and other devout Christians in England, any time in the previous century or more, might have a thanksgiving feast any time a baby was born, or loved one died, for example. 

And, as we all know, Liberalism is very anti-Christian, however loudly they object to that being pointed out, in between rounds of banning voluntary religious expression in public places, unless it’s Jewish, Islamic, or something else not-Christian. In fact, even the Christian nature of Thanksgiving, as well as Christmas, has been stripped by Liberal media, schools, and government, or else I wouldn’t need to be writing this in clarification. thanksgiving

November 28, 2008 Posted by | Family, Politics, Religion | , , , , , , , , , , , | Leave a comment

Why Oil and Gas Prices Are Falling


We all know that high gas/energy prices, driven by high oil prices, are a large part of what has crippled the US economy.

But what has caused that?

Oil prices are not set by oil companies, but by futures and commodities speculators, who bid on the oil at auctions. The companies have no more control over the price than someone selling with a regular auction on EBay.

The speculators decide what they are willing to pay, based on what they believe the future of oil to be.

How Prices Rose

In 1999, the monopolistic oil cartel OPEC started cutting production, specifically to help themselves and their allies get rich by driving up the price of oil. Speculators, naturally, started bidding more for oil, expecting there to be a shortage. It went from well under $20 per barrel to over $30.

Then George W Bush got elected.

People assumed, because wealthy oil barons in Texas and Saudi Arabia were largely responsible for financing him, that plentiful oil was in their future. This ignored history, of course, because plentiful oil is cheap, and cheap oil is bad for oil barons. The more expensive oil is, the better. It would have made more sense to expect Bush to do things that would drive up the price of oil.

Bush and Abdullah Saud

Bush holds hands with a member of the Saudi tyranny, top state sponsor of terrorism, and leader of the push to keep oil prices high

But they assumed it’d be plentiful, so they bid lower on it, and the price fell. It got almost back down to its natural, under-$20 price range.

But that was bad for Bush’s financiers.

In fact, there was a lot of loud public worry, among oil barons, about how the price of oil was returning to normal.

Then came September 11th, 2001. 

Afghanistan

After 9-11, there were many ways America could go. 

The way Bush chose to lead, was to first attack Afghanistan. He said this was because they were harboring bin Laden. He promised, though, that he was going to exhaust all diplomatic means, and only attack them as a last resort.

But before he attacked, the government of Afghanistan, a long-time US ally whom Bush had just recently sent, openly and on record, a great deal of grant money for their help, offered to turn over bin Laden for war crimes trial.

Bush ignored the offer, refusing even to discuss it with them. When they offered a second time, the US attacked the very next day.

Speculators saw this as a very bad sign for oil, because Afghanistan was closely aligned with many oil-producing countries, and they bid more for it, driving the price into the high $20 range, fifty percent higher than its natural price.

Iraq

Then Bush began threatening to attack Iraq. Now Afghanistan had at least some association with Al Qaeda…but Iraq, of course, was ruled by Al Qaeda’s #2 enemy after the US: Saddam Hussein.

Oil speculators found this pretty scary, and confusing. The price of oil rose to close to $40, more than twice its natural range.

Gradually, it declined, on the promise of cheap oil from Iraq, even though every government projection of conquering Iraq anticipated years of quagmire and turmoil, jeopardizing oil supplies for a long time to come. This is why his father had not done it.

(more after this K-rad graphic)

 

Oil Prices, Real and Adjusted, from 1990 to mid 2008

Oil Prices, Real and Adjusted, from 1990 to mid 2008

Sure enough, as time war on, the war got worse, and the speculators responded by bidding ever-higher for oil.

 

General Belligerence

What’s more, whenever the price was finally stabilizing a bit, the Bush administration would do something else that threatened the oil supply, like picking fights with Hugo Chavez, or threatening to attack Iran. Each time, investors were frightened, and the oil price climbed.

Eventually, this kind of belligerent foreign policy pattern pushed it up to $140 per barrel, over 700% above its natural price of just a few years earlier.

Sane Foreign Policy?

Then, in early 2008, it began to grow increasingly likely that Barak Obama would be the Democratic nominee. Unlike Hillary, he had always opposed this kind of foreign policy. Speculators began to weigh the possibility of a different foreign policy into their price bids.

Obama's Oil Price Rescue

As Obama's election grew more likely, oil buyers became reassured that oil supplies might be secure, and bid less, driving down prices.

As he clinched the nomination, and then began to dominate the polls versus McCain, the amount speculators were willing to pay steadily declined.

 

By the time he was elected, which had been seen as a probable for some time, they had built a peaceful foreign policy into the price, so that it was half its peak. 

The day after he was elected, the price fell dramatically. 

Now it remains in a holding pattern, a fraction of its peak just a year ago…waiting to see if Barak Obama is going to keep his promise of sane foreign policy. If he does, we could see oil falling down to its natural price, which by now is probably little more than $30 a barrel.

Ironically, sane foreign policy has an even greater impact on what the investors in oil are willing to pay, than Obama’s own position as a Liberal enemy of the energy needs of Americans.

November 24, 2008 Posted by | Economy, International | , , , , , , , , , | 3 Comments

Why Nobody Wants to Bail Out Automakers (except bureaucrats)


One thing you’ll notice about the debate over bailing out the automakers is that, even more than in general, everyone’s against it except corrupt politicians, panhandling automakers, and monopolistic union officials.

That’s because it’s a lose/lose situation if we do, but things might actually get better if we don’t.

First, let’s consider the big, fat lie that three million people would be put out of work. 

We’ll ignore (for a moment) that bankrupcy will actually keep them in business and let them become more efficient.

Let’s pretend, instead that the automakers would actually [poof] ceased to exist.  Only a couple hundred thousand workers, not three million, actually are employed by those car companies.

If the companies vanished, then all other 2,800,000 workers would not only continue to have jobs…

(continued after the spiffy pic)

They claim three million jobs are at stake, but the bailout would actually cost jobs, and make a few union management types rich

They claim three million jobs are at stake, but the bailout would actually cost jobs, and make a few union management types rich

…but probably end up with better versions of their jobs. Why? Because people wouldn’t stop buying cars, they just would be buying DIFFERENT cars. Cars that need dealers, mechanics, parts sellers, and all the other jobs that the car companies are dishonestly counting as “three million jobs”. If you don’t buy a car from the Big Three oligopoly of panhandlers, you’ll buy one from someone else, instead.

 

Of course foreign cars often don’t need repairs and parts as often as American cars, but THAT would represent a savings for americans in general, that would create more jobs.

But, of course, the Big Three are in ZERO danger of magically vanishing.

Instead, they’d have to file for bankrupcy “restructuring”, which would be a way to allow them to fix a lot of the stupid inefficiency that laws and bureaucracy have trapped them with, WITHOUT them having to steal twenty five billion dollars (a number that will grow) from you and me, and then have Big Brother socialize them with mandatory “changes” that don’t represent what we consumers want, anyway.

And…well, really, that’s it. There are no other excuses for squandering $500 from the pocket of every middle-class family on yet another socialist bailout. Just “three million jobs” that is really only a couple hundred thousand jobs that would not go away, anyhow.

Sure, I could point out how restructuring, instead of a bailout, would break the back of the UAW monopoly, which forces American car companies to pay nine times as much for labor as foreign car companies. And how the UAW is therefore bribing the Democrats the way the Big Three automakers are bribing the fake-Republican neocons…which might just happen to be why they are all for the bailout, when everyone else is against it.

But, really, it boils down to “three million jobs is a lie”.

In fact, it boils down to the fact that americans would probably GAIN jobs from letting GM file for restructuring, while we will LOSE jobs by squandering more money on the bailout, which will ultimately come out of YOUR pocket, and mine. When the government wastes money, we lose the opportunity to spend the money on actual, productive things that employ people.

We need more economic freedom, to regain true American prosperity, not more handouts lifted from our own pockets.

November 22, 2008 Posted by | Economy | , , , , , , , , , , , , , | 4 Comments

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