¡Nuevo! Read Reed Hundt's book, "In China's Shadow."

If you want to understand Democrat fantasies in the absence of financial constraint or common sense, read Reed Hundt's book, "In China's Shadow." Reed Hundt is a permanent member of the American politcal class, a Yalie, a partner in a high-powered law firm, head of Bill Clinton's FCC, and a member of Barack Obama's transition team.

Free money is Reed Hundt's great idea.

Here's how it works. Muggins, that is you & me, the hard-pressed American taxpayer, should buy everyone from Nome to Tierra del Fuego a pension, healthcare, and education. By these means, the United States will win in the economic competition with China that furnishes the title of his book and a small fraction of its other content.

No, it's not a joke! He is being serious -- if you're an American with a job, you should spread the wealth around the hemisphere.

The leftist cabal currently in power and the pointy-headed intellectuals who influence them really think this way.

Jobs Summit at the White House

From Politico 44: You're invited -- On the jobs summit list ...

"CONFIRMED ATTENDEES INCLUDE: Eric Schmidt, Google; Randall Stevenson, AT&T; Surya Mohapatra, Qwest ; Frederick Smith, Fed Ex; Brian Roberts, Comcast; Bob Iger, Disney; James McNerney, Boeing; Andrew Livens, Dow; Peter Solmssen, Siemens; Stephanie Burns, Dow Corning; Phaedra Ellis Lamkins, Green for All; Reed Hundt, Coalition for the Green Bank; Larry Mishel, EPI; Alan Blinder, Princeton; Paul Krugman, Princeton; Joe Stiglitz, Columbia; Bob Greenstein, Center on Budget and Policy Priorities; and Jeffrey Sachs, Columbia. PLUS SMALL BUSINESS OWNERS, including David Ickert, Air Tractor; Woody Hall, Diversapack; and Rose Wang, Binary Group. AND Anna Burger, Change to Win; Leo Gerard, United Steel Workers; Joe Hansen, United Food and Commercial Workers; Randi Weingarten, AFT; Mayor Frank Cownie, Des Moines; Mayor Julian Castro, San Antonio; and Mayor Ed Pawlowski, Allentown, Pa."

In other (Grayling) words, we have (1) big contributors whose large corporations have been laying off workers, (2) union leaders who represent barely one-in-ten US workers and whose grasping has sent jobs overseas, (3) leftist economists, (4) war-horses of the DC policy establishment, (5) members of the red-green coalition, (6) political allies, and (7) a few small business people of whom nothing is known.


THE CRISIS IN EMPLOYMENT IS REAL. Nothing that will come out of this jobs summit will have any effect on it, however. Exhorting industry to hire will not. Shaming banks into extending more credit to business will not. Temporary subsidies and $3000 new-hire tax credits will not. Make-work schemes will not. Enterprises will not hire or commit any new resources as long as their tax and regulatory regimes are totally unsettled, as they are with this anti-enterprise statist administration. Business owners do not know what they face in terms of higher taxes and giant mandates for health care, cap-and-tax, and other pet "make-the-rich-pay" schemes of the left. But they do know for certain that these things will be burdensome, and maybe fatal. No sensible business person will hire or invest under such threat.

Better to milk your business for cash to consume while you can. Maybe now's the time to move offshore. The Chinese Communists are more business friendly than the US Democrats, and probably easier to deal with than the United Steel Workers or United Food and Commercial Workers.

General Electric profit slumps 44%

from Marketwatch: General Electric profit slumps 44%

Financial business being run down rapidly, industrial business, a basic GDP play, seeing 8% lower revenues from the year ago period.

The pre-eminent American industrial company manages decline.

Read Reed Hundt's book, "In China's Shadow"

If you want to understand Democrat fantasies in the absence of financial constraint or common sense, read Reed Hundt's book, "In China's Shadow." Reed Hundt is a permanent member of the American politcal class, a Yalie, a partner in a high-powered law firm, head of Bill Clinton's FCC, and a member of Barack Obama's transition team.

Free money is Reed Hundt's great idea. Muggins, that is you & me, the hard-pressed American taxpayer, should buy everyone from Nome to Tierra del Fuego a pension, healthcare, and education. By these means, the United States will win in the economic competition with China that furnishes the title of his book and a small fraction of its other content.

No, it's not a joke. People with power and influence really think this way.

Does Cash-For-Clunkers tell anything about Healthcare Reform?

Last night the government announced it was suspending the Cash-For-Clunkers program. In my twitterstream I reacted as follows:

dhsmith24 Cash for clunkers suspended w/i a week. What the heck are these guys doing? And they want to run #healthcare?

The doubt this #fail creates is real enough, but there is more, and Hugh Hewitt has expressed it best:

Just as with the tax credit for new home purchases, consumers altered their behavior when presented with an opportunity. Democrats thus have received a second example of an iron law of economics: People respond quickly to significant cash incentives.

The Democrats never get this. They never believe economic actors respond to incentives. There are alway massive unitended consequences of their great economic projects because they are constitutionally unable to work through all the implications of these projects. Democrats are working on a root-and-branch restructuring of the U.S. healthcare system that cannot work as they have currently proposed, they have passed a Cap and Trade energy restucturing plan that may more correctly be called the China Opportunity Act of 2009, and they think they can raise taxes on producers without limit. In every case they totally fail to reckon with the fact that producers will produce less, arrange their affairs to minimize the tax, or in the limit just bail out -- "Go Galt" in the emerging parlance.

But the people are sovereign, this is what they voted for, so all we in the reality-based community can do for now is speak out against things we know cannot work and hope they can be changed in process.

Christina Romer on Fox News Sunday

The Congressional Budget Office has pronounced the multi-trillion dollar Obama Budget too expensive and too wildly optimistic on out-year economic growth projections. Challenged on this, Christina Romer answers back that the CBO's out-year GDP growth estimates of 2.2-2.3% are too pessimistic.

Those are sluggish numbers, but the CBO is taking on board the fact that our economy will be lugging an incomprehnsible debt level. Usain Bolt is the world's fastest man, but I, fat and 46 years old though I am, might just beat him over 200 meters if he has to carry a sixty-pound bag of concrete under each arm and I do not.

It is kind of the same thing for the poor, downtrodden American economy. Given ten trillion dollars of debt to lug, and looking forward to the day when barely one-third of the people are carrying another third in government employment and the final third on government assistance, it will be a wonder if the economy does even as well as OMB assumes.




The Household Initiative Plan is posted at Household Initiative Plan Blog.

Employment in Manufacturing & Government & the Deficit with China

Around the 20th of January, I heard a couple of talkers on business news and talk radio note that government employment had exceeded manufacturing employment in the United States. When I looked into it, I found the origin of this meme at a blogpost of Fabius Maximus entitled America passes a milestone!, with interesting charts and analysis. The charts are from subscription site Contrary Investor. Instapundit, Dr. Melissa Clouthier and Citizen Paine are among the analysts who picked up the story from Fabius, and well done to him.

But I wanted to see the original data, and I found it on one of my favorite sources for primary material, the website of the Bureau of Labor Statistics, for which the relevant interactive dialog box is here.

It is the work of a few minutes to find that, yes indeed, according to BLS, the non-seasonally-adjusted figure for workers employed in the goods producing sector of the US economy was set preliminarily at 21,404,000 for 2008, down from 22,221,000 in 2007, while the comparable employment-in-government figures were 22,457,000 preliminarily for 2008, up from 22,203,000 in 2007.

The services sector is bigger than both put together, with a preliminary 115,648,000 employed for the year 2008.

It was two days after Fabius's article that Timothy Geithner had his confirmation hearings in the Senate Finance Committee. One of the hostile Senators, Jim Bunning (R-KY), roasted Geithner over the US-China trade and financial relationship. He got started in his opening statement:

Thank you, Mr. Chairman.

The financial crisis we are experiencing today did not happen overnight and it could have been avoided. As Mr. Greenspan now admits, the easy monetary policy that he and Mr. Geithner championed at the Federal Reserve created an asset bubble. Large capital inflows from countries like China, for the purpose of keeping its currency low, contributed to the bubble and they went unchecked. But, the collapse of the bubble would not have been so devastating if Mr. Geithner had been effective in his role as a regulator. . . .

. . . and in questioning he was if anything tougher, blaming Chinese manufacturers and workers, in effect, for the financial crisis in which we now find ourselves. This, I believe, is a dangerous new aspect of international financial and trade relations, as I stated in my posting of January 26.

It strikes me that there is a direct line between the manufacturing implosion and the current account deficit with China and certain other trading partners, if anyone just cared to draw it. And there's not a thing Mr. Geithner could have done about it in his role as a regulator.

The capital inflows that so trouble Senator Bunning are just the flip side of America's trade deficit with that country. It's a matter of double-entry accounting identities, rather than any cunning device to "keep its currency low."

It can be shown -- I have done the work, and will put it here at some point -- that a portion of the trade deficit with China is really with American companies who have investments there.

Nevertheless, it is clear that the US economy has gone post-industrial.

Our trading partners will not buy our manufactures if we do not manufacture.

They will buy very little of the output of our large and growing government sector.

They will buy some of our services, but of course in these times of financial crisis and straitened circumstances, they too have less need of the financial and creative services in which American business specializes.

Our trading partners will buy hardly any of the spa, tanning, psychotherapy, handyman, coaching, self-actualization, pet grooming, personal-shopping, kitchen-designing, dog-walking, SAT-essay tutoring, Search Engine Optimization consulting, skateboard training, party-planning, eBay-auctioning, credit-counseling, baby-sitting and similar personal services in which a huge number of Americans now occupy themselves and try to scratch a living.

An entrepreneurial Chinese person might as well try his hand at manufacturing. An entrepreneurial American might as well shoot himself in the head as try his hand at manufacturing. The thought of going into the business of manufacturing a product for sale, with all the nightmares of taxation and regulation that go with that in the United States in the year 2009, is not for the faint-hearted among the business-minded.

And that is why perfectly serviceable industrial parks near my home in New Jersey are rented out to ballet schools, medical offices, day care centers, basketball clinics, gymnastics facilities, skate parks, senior centers, art studios, martial arts gyms, fitness centers, churches, mosques, schools, and even government offices, but hardly at all to industry.

If this cannot be changed -- and if anything the anti-manufacturing tide is still at the flood stage -- then how can the US current account deficit be anything but a huge long-term structural problem for us?

The Household Initiative Plan is posted at Household Initiative Plan Blog

Big Economic News From China

We have CCTV4 (China Central TV Channel 4) in our house and at the moment Premier Wen Jiabao is delivering a major speech about economic stimulus. Here are a few of my notes.

The Chinese Communists are cutting corporate taxes, cutting capital gains taxes, cutting stock transfer taxes, promoting the motor industry and the housing market, promising to complete major recovery efforts for the Sichuan earthquake zone this year, and committing themselves to major infrastructure projects, agricultural and rural development, and much more. They are not giving up on their earlier forecast of 8% GDP growth for 2009.

Premier Wen's delivery is certain and confident. He is at pains to remind government officials that this is the people's money they are committing, and not "yi fen" (one penny) is to waste. The objective is to increase productivity in the Chinese economy and support employment in productive industry, and not promote make-work schemes or screwdriver assembly industry. Apart from this feint in the direction of industrial policy, the plan is highly market-oriented. It is detailed, fully-formed and ready to implement.

The Chinese Communist Party, which once said "Whatever you do never forget Class Struggle," has forgotten class struggle. There is apparently nothing in the Chinese plan for condoms, community organizers, or Maglev trains from senior politicians' districts to Disneyland.

You just have to be bullish on China. It is hard to argue that China will not emerge from the current financial crisis relatively stronger than before.

More later.