Central Perk: Mish's Global Economic Trend Analysis

joi, 3 martie 2011

Mish's Global Economic Trend Analysis

Costa Mesa to Lay Off 43% of City Workforce, Outsource Services; Nearly Half-Way There; The Ideal Number of Public Employees is Zero
Goldman's Blood-Sucking Leeches Model, Money Multipliers, Macroeconomic Dark Ages, the Taylor Rule, and Nonsense from Trichet
Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You!

Costa Mesa to Lay Off 43% of City Workforce, Outsource Services; Nearly Half-Way There; The Ideal Number of Public Employees is Zero

Posted: 03 Mar 2011 05:11 PM PST

The City of Costa Mesa, with a population over 100,000, is about to become 43% closer to the idealized goal of no city workers.

In a massive step in the right direction, Costa Mesa to lay off nearly half of city workforce, outsource services.

The city of Costa Mesa plans to lay off more than 200 employees and outsource 18 city services by the fall.

The layoffs would cut the city's municipal workforce by 43%. The City Council approved the layoffs in a 4-1 vote late Tuesday night, despite nearly unanimous opposition from the audience.

City officials said pink slips will go out in the next six months. The mayor blamed years of missteps by city staff and rising pension costs.

Almost half of city work force gets pink slips

The Daily Pilot has more details in Almost half of city work force gets pink slips

About 203 city employees will be receiving the six-month notice in the City Council effort to correct the budget.

City officials have crunched the numbers and determined that more than 200 Costa Mesa employees — or 43% of Costa Mesa's municipal workforce — could be laid off through outsourcing.

Of the 472 full-time positions, 203 city employees, give or take one or two, will get pink slips notifying them that they could be laid off in six months, said Administrative Services Director Steve Mandoki.

Tuesday's move is part of a dramatic restructuring of a city that faces potentially skyrocketing pension costs in the coming years.

Costa Mesa's own projections show that in the next few years, it will be expected to pay more into the state's public pension fund, CalPERS. It's a situation being replayed up and down the state: When the CalPERS pension fund was flush in the early 2000s, Costa Mesa did not have to pay much to the state to cover its employees' retirement costs. Now that CalPERS investments are hurting, cities have to cover the difference.

That pattern looks to continue for at least the next five years, city officials project.

Laying off hundreds of employees and their accumulating pensions by the fall would help to balance the city's budget in years to come, council members reason.

"We're going to run out of money sometime this year if nothing changes," said Councilman Eric Bever.

Costa Mesa Half-Way There

The best way to deal with public employees and their overly generous pension contracts is to not have public employees at all.

I commend Costa Mesa for a huge but incomplete step in the right direction.

Other than a small number of elected officials and a few administrative assistants, the correct number of public employees is zero.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Goldman's Blood-Sucking Leeches Model, Money Multipliers, Macroeconomic Dark Ages, the Taylor Rule, and Nonsense from Trichet

Posted: 03 Mar 2011 12:40 PM PST

Caroline Baum has an excellent column on Bloomberg today regarding money multipliers and a Goldman Sachs projection of what Republican budget cuts may do to the economy.

There were so many things in her post I wanted to reference that I asked Caroline if I could use her entire post. She graciously replied "Let 'er rip".

Goldman's Model Evokes Blood-Sucking Leeches: Caroline Baum

Macroeconomics really is stuck in the Dark Ages.

Take "fiscal stimulus," for example, the idea that the government can step in to fill the void when the private sector isn't spending and boost economic growth in the process.

Economists have been debating the pros and cons of fiscal stimulus since the 1930s, when John Maynard Keynes diagnosed the problem as one of inadequate private investment and prescribed public spending, financed by borrowing, as the cure.

The discussion hasn't advanced very much in eight decades. Sure, economists have devised elegant mathematical models that purport to show that $1 of government purchases translates into -- take your pick -- no increase in gross domestic product (the multiplier is zero, according to Harvard's Robert Barro) or $1.50 of GDP (a multiplier of 1.5, according to Berkeley's Christina Romer, who was chairman of President Obama's Council of Economic Advisers when the $814 billion stimulus was crafted in 2009). They haven't really proven anything.

Keynesian economics went into hibernation in the latter part of the 20th century following an array of stimulus failures on the part of both Democratic and Republican administrations in the 1970s. The only thing the spending stimulated was stagflation.

In the 1980s, inflation came down, the Berlin Wall came down, economists thought the volatility of the business cycle had come down, and the notion of government as the solution went out of vogue.
Keynesians All

All it took was a good financial crisis for the Keynesians to come out of the woodwork.

The debate over fiscal stimulus went viral last week (at least in the geek world) with an economic forecast from Goldman Sachs Group Inc. (GS), a counter from Stanford University economist John Taylor (he of the Taylor rule), and an addenda from Goldman yesterday.

The Goldman gang projected an economic drag (that would be the opposite of stimulus) on GDP growth of 1.5 to 2 percentage points in the second and third quarters if House-passed budget cuts of $61 billion for the remainder of fiscal 2011 become the law of the land.

Asked about the Goldman forecast Tuesday following testimony to the Senate Banking Committee, Federal Reserve Chairman Ben Bernanke demurred.

"Our analysis doesn't get a number quite like that," he said. "Two percent is an enormous effect."

He could have added: "especially when the rest of government is growing."
Wrong on Everything

"Total government spending is up 6.7 percent in 2011 from 2010," Taylor told me in a telephone interview.

Defense spending is rising, as are non-discretionary outlays for programs such as Medicare and Social Security that are on automatic pilot.

The proposed cuts would reduce non-defense non-security discretionary spending, a teensy share of the federal budget, back to 2008 levels.

In a Feb. 28 blog post, Taylor said Goldman's analysis was "wrong." He criticized it for failing to consider the beneficial effects that expectations of lower future deficits and smaller tax increases would have on the economy. He criticized the methodology for relying on the same "large multiplier theory" used to justify the 2009 stimulus. And he criticized the assumption that proposed spending equates with actual spending, which trickles out over time.

Aside from that, Mrs. Lincoln, the Goldman analysis was spot on.

'Alchemists and Quacks'

This fundamental disagreement among professional economists about whether government spending helps or hurts represents the state of the art, or science, today. In what other science do practitioners design a treatment plan based on inconclusive proof that the medicine does any good?

There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out. Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as "alchemists and quacks."

A bit harsh, perhaps, but he'd probably hold macroeconomic models in the same high regard.

Whenever oil prices spike, modelers instantly project how much the increase will subtract from GDP growth. No mention of why prices are rising. Is it the result of a supply shock, which results in higher prices and reduced quantity demanded, or an outward shift in the demand curve, which equates with higher price and quantity demanded? There is a difference.

Known Knowns

In microeconomics, which is the study of how individuals and firms interact in specific markets, certain truths are self-evident. Which doesn't mean economic planners can see them. Governments across Asia right now are using subsidies and price controls to ease the pain of higher oil and food prices even though their actions will exacerbate the crisis.

Goldman countered Taylor's critique with a clarification. The projected 1.5 to 2 percentage point hit to GDP was to the quarterly annualized growth rate, not to the level. Thanks for that.

As I said before, we entered the 21st century with macroeconomics still looking for an Age of Enlightenment.

Five thousand years ago in ancient Egypt, medics used leeches to suck the blood of ill patients, believing the practice could cure everything from fevers to food poisoning.

Today's physicians have largely forsaken bloodsuckers for modern medicine. It's about time macroeconomics emerged from the Dark Ages as well.

Caroline Baum, author of "Just What I Said," is a Bloomberg News columnist. The opinions expressed are her own.)

Dark Ages Indeed

I am wondering "How many times does an economic model have to be discredited before it is discarded?"

This idea that government spending can stimulate the economy is total nonsense. If it worked, we would see something more than 2.8% economic growth for a deficit of $1.4 trillion dollars.

The Fed purchasing Trillions of Fannie Mae and Freddie Mac bonds did nothing for housing, nor did several rounds of housing tax credits.

Government spending accounts for an ever-increasing share of GDP. Moreover, the only reason GDP is up at all is that by definition, government spending adds to GDP. The multiplier is actually negative. It takes an increasing amount of "stimulus" spending just to say in the same spot.

Taylor Model Nonsense

Taylor criticizes the Goldman multiplier model and rightfully so.

However, his own economic model is fatally flawed. He believes all the Fed needs to do is go on autopilot, hiking or lowering interest rates in accordance with the Taylor Rule.

In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank would or should change the nominal interest rate in response to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP. It was first proposed by the U.S. economist John B. Taylor in 1993. The rule can be written as follows:
$i_t = \pi_t + r_t^* + a_\pi ( \pi_t - \pi_t^* ) + a_y ( y_t - \bar y_t ).$
In this equation, $\,i_t\,$ is the target short-term nominal interest rate (e.g. the federal funds rate in the US), $\,\pi_t\,$ is the rate of inflation as measured by the GDP deflator, $\pi^*_t$ is the desired rate of inflation, $r_t^*$ is the assumed equilibrium real interest rate, $\,y_t\,$ is the logarithm of real GDP, and $\bar y_t$ is the logarithm of potential output, as determined by a linear trend.

Unmeasurable Economic Gibberish

The idea that interest rates can be set by mathematical modeling when the variables themselves are subject to debate as to how to measure them is preposterous.

Take the CPI for example. I believe home prices should be in the CPI. They used to be.

Somewhere along the line some theorist decided "owners' equivalent rent" (OER) was a more valid concept. What is OER? It is the amount one would pay himself if renting a house from himself. It is the single largest component of the CPI. The measure of inflation from 2002 to now would be wildly different if one used actual home prices instead of OER.

Which model is more accurate? Look at the Fed's chasing-its-tail actions hiking in baby steps on the way up, then lowering interest rates to zero when the economy collapsed.

ECB President Jean-Claude Trichet, a Keynesian Clown Too

Just today, Jean-Claude Trichet is talking about hiking rates in Europe.

His concern is pass-through inflation as noted in the Bloomberg article Trichet Says ECB May Raise Rates, Show `Strong Vigilance'

"There is a strong need to avoid second-round effects," Trichet said, calling for moderation from wage and price setters. The ECB is "prepared to act in a firm and timely manner."

This whole idea of pass-through inflation and second-round effects is yet more Keynesian claptrap. If someone pays more for gasoline, they have less to spend on clothes. It is as simple as that, but not to those purposely hiding behind economic models and their multiplier effects.

Alchemists and Quacks Galore

Making decisions on flawed models is bad enough in closed economic society.

Errors in every model are exacerbated by the fact we have a global economy subject to economic pressures of all kinds from countless places.

Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as "alchemists and quacks." There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out.

On that basis, the analyst from Goldman Sachs, Taylor, Bernanke, Krugman, Greenspan (and countless others) are all quacks.

Why Model at All?

There are no control studies because it is impossible to do them.

The real world is constantly changing, while mathematical models, Goldman's and Taylor's alike sit there as unmeasurable economic gibberish, when every component is subject to measurement errors and debate about what needs to be measured in the first place.

End the Fed

The free market could not possibly have done a worse job in setting interest rates than the perpetual chasing-their-own-tail central bank tactics that continually create boom-bust bubbles of ever-increasing amplitude in both directions.

If central bankers knew where interest rates should be we would not be in this mess, or at least the mess would be smaller. For further discussion about what the Fed does and does not know, I strongly encourage you to read the Fed Uncertainty Principle.

Ironically, the one thing the Fed never mentions and the ECB seldom mentions is money supply.

Here's the deal: Inflation is a direct result of the cheapening of money. Strike that, inflation IS the cheapening of money and central bank policy in conjunction with fractional reserve lending is the cause.

Central bankers do not talk about such things because they are at the root of the problem.

The solution of course is to not only get rid of the Taylor rule, but to get rid of the Fed, the ECB, and central bankers around the globe.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Paul Krugman, Stephen Colbert, Bill Maher, others, Ignore Extortion, Bribery, Coercion, and Slavery; No One Should Own You!

Posted: 03 Mar 2011 03:09 AM PST

A large number of people have recently come out in support of extortion, bribery, coercion, and even slavery. They don't realize it, but I can make a rock-solid case.

Here is a partial list of prominent names willing to support or ignore slavery for political reasons.

Paul Krugman, a Nobel prize winning economist and writer for the New York Times
Bill Maher, an extremely popular stand-up comedian and host of HBO Real Time with Bill Maher
Stephen Colbert host of Comedy Central's The Colbert Report
Harold Meyerson, a columnist for the Washington Post.
Yves Smith author of the site Naked Capitalism and one of the most popular economic bloggers country
Rick Ungar, a writer for Forbes magazine.

Of course, no one on the above list has actually stood and said "I support slavery", yet they all do. I will build the case piece by piece, ending with a charge of slavery from two different angles, from the point of view of the employer and the employee.

Coercion, Bribery, Threats

In Workers toppled a dictator in Egypt, but might be silenced in Wisconsin Harold Meyerson at the Washington Post compares the Wisconsin union protesters to Egyptian freedom fighters.

I think it is more like Grecian protests and coercion. Here are a couple of YouTube videos to consider, showing typical public union thug tactics.

Give up the Bucks

Link if the above video does not play: Give Up the Bucks

SEIU Spokesperson Threatening California Lawmakers with Union Retaliation

Link if the above video does not play: SEIU Retaliation

Meyerson supports collective bargaining as a "right". I suggest something different.

Collective Bargaining is Extortion

Collective bargaining is not what its name indicates. In fact, it means exactly the opposite of what you'd guess. Collective bargaining refers to the obligation of an employer to recognize the elected representatives of a group of workers and his further obligation to negotiate with those representatives. This last part is what makes 'collective bargaining' extortion.

Under collective bargaining laws, employers have to recognize an elected union and have to negotiate with them.

Over time, the repetitive process of extortion, coercion, and bribery (shown in the above videos), results in politicians taking bribes (votes or cash) in return for legislation unions want. No one speaks for the taxpayer any step of the way.

Businesses do not have a choice other than to move their business to another state. Then when they do, the workers cry foul. Those businesses unable or unwilling to move are slaves to the system.

The right to terminate the employer-employee relationship is a fundamental right of both employer and employee. Employment should be mutually beneficial to employer and employee and open to termination by either when it becomes non-beneficial (limited of course by any voluntary contractual agreements).

Collective Extortion

Meyerson's comparison to Egypt is 180 degrees reversed. Those Madison protesters were not fighting for democracy but rather to preserve a system of collective extortion.

Unions threaten, bully and bribe their way into power and want more every step of the way.

Convenient Nonsense

Yves Smith at Naked Capitalism takes a different tack in Wisconsin Union Battle: A Convenient Distraction From the Real Culprit in State Budget Woes.

She approaches the situation from the angle that public union workers are not overpaid, citing self-serving studies by union sympathizers at the Economic Policy Institute.

Her most preposterous claim is "The one group in which public sector workers are modestly more highly paid is non-high-school graduates, which one assumes include sanitation workers and janitors. Even then, the premium is not large."

For starters, no one in the private sector gets benefits like those in the public sector. Those who did (GM, Ford, Airlines) all went bankrupt.

Job by Job Comparison

Union apologists frequently claim that stats that show union workers make no more than their exact non-union counterparts. In some cases that may be true, but when so, it's primarily because of prevailing wage laws.

If states have to pay a "prevailing wage" and that "prevailing wage" is a union wage, then by definition non-union wages will be as high, by mandate. Is that a valid comparison?

Prevailing wage laws not only rip off taxpayers, they also discriminate against businesses who can do the job better, for less money.

Education Red Herring

The most frequently used reason for the preposterous claim that public workers are underpaid is an assertion that public workers are better educated.

Please consider prison guards, transit workers, police, janitorial services, etc., most with nothing more than a high school education plus a little training. Many of those groups have 6 figure pensions.

Nonetheless, let's pretend for a moment public sector workers are better educated. Certainly teachers are likely to be better educated than the average person in general. I will grant you that, and there certainly are a lot of teachers.

However, what would those degrees be worth in the private sector? What is an English degree worth? Art? Poetry? PE?

Let's now consider highly educated persons working for the BLS on unemployment statistics. What are those employees really worth given a Gallup survey produces comparable results for free?

Do we need the Department of Education? The Department of Energy? The BLS?

Look at all the highly educated people in the department of education. Then look at US test scores. Then look at the failure of "No Child Left Behind".

Should the Department of Education exist at all? The Department of energy? HUD?

Why?

I would fire every one of them tomorrow, regardless of their education.

All of the people in those bureaucracies may very well be highly educated, but how many of them do anything useful that the private sector would not do better, faster, and cheaper?

To be fair, I am quite sure that there are a small percentage of workers who would make far more in the private sector. However, many of them, if not most of them would struggle to find a job at all.

We should cast them all free. Then we can see what they are worth. Instead we tax everyone to death via a combination of income taxes, sales taxes, and property taxes on the assumption public workers are worth more.

Public Unions Have Bankrupted Cities and States

State pension plans are $3 trillion in the hole, and that does not count city and county plans that are likely another $3-5 trillion in the hole. Public unions have bankrupted hundreds of major cities. The day-of-reckoning is upon us.

Gina Raimondo, a Rhodes Scholar and treasurer of Rhode Island is one of few politicians willing to admit the true score. While most politicians cite underfunded liabilities of $1 trillion, the true score is $3 trillion on an actuarially sound methodology. And that is just for state pensions. It does not include cities.

PBS News Hour Interview

Please consider a recent PBS News Hour interview In Tiny Rhode Island, a Massive Public Pension Crisis Looms

GINA RAIMONDO: Today, Rhode Island has a $5 billion unfunded liability, which is the highest unfunded liability per capita of any state in the country.

In 1998, our budget was paying $145 million into the pension. This year, we will be $335 million. And five years from now, it will double again.

PAUL SOLMAN: In Rhode Island, as elsewhere, the root cause is plain and simple: Governments gave workers benefits instead of raises, salting away a pittance to pay for them.

GINA RAIMONDO: So, I could promise you today, in 25 years, when you retire, you will have a very rich benefit. And by the time you come to collect, I'm long gone. I'm no longer in office.

PAUL SOLMAN: But without dramatic changes to the pension system, Rhode Islanders face dramatically higher taxes and/or austerity.

GINA RAIMONDO: This problem of the pension, Rhode Island faces it; every state in the country faces it.

The unfunded pension liability nationwide is a $3 trillion problem. TARP, we were prepared as a country to put aside $700 billion. The bailout of Fannie and Freddie was $400 billion. They all pale in comparison to the enormity of this financial challenge.

And marginal change won't fix it. Tinkering won't fix it. Pretending we don't have a problem won't fix it. Looking in the eye of this enormous financial problem honestly and recommending fundamental changes to a system, I believe, is the solution.

How Badly is Your State Underfunded?

For a state by state look at the pension problem, please consider Interactive Map of Public Pension Plans; How Badly Underfunded are the Plans in Your State?

Promises Cannot, Will Not Be Met

Union members say it would be unfair to renege on promises. Actually it wouldn't. The reason is the contracts are fraudulent. Benefits were "guaranteed" via a process of extortion, threats, bribery, and coercion.

There is no legitimate need to honor fraudulent contracts. Secondly, it is less fair for those just out of college with low paying jobs and no chance of huge benefits to bear the brunt of the burden.

Nor is it remotely fair to tax high income wage earners for this purpose. If there is a tax on high wage earners, it should go towards reducing the deficit, not to a collective group of extortionists.

Proposed Pension Underfunding Solution

My solution would be to tax public union benefits above a certain amount at an extremely high penalty rate of say 90%. Those taxes could be fed back into the pension system to guarantee wages and benefits for those under the threshold.

The vast majority of union member should support my plan because it would guarantee their benefits. Should it come down to a bankruptcy or default situation instead, a bankruptcy court may not be as beneficial to those on the bottom of the totem-pole as my proposal.

Colbert Report and HBO Real Time with Bill Maher

Both Stephen Colbert and Bill Maher have had numerous segments lately in support of public unions. I think Colbert is one of the funniest guys on the planet. It is one of the few shows I enjoy watching.

However, the following union-suck-up was out of character as to how challenging he normally is on guests.

In the above clip, Randi Weingarten, the president of the American Federation of Teachers, talks about "people's rights" and Colbert not only goes along with it, but feeds her powder-puff pitches all along the way.

The fact of the matter is there are indeed rights, such as the right to not belong to a union and still have a job, the right to not have union dues go to things you do not support, and the right to start a business and hire who you want as long as you do not discriminate by race, religion, etc.

In one recent episode of Real Time, Maher said he does not understand the negative sentiment towards public unions.

Perhaps Maher would "get it" if HBO bumped his show off the air with a statement "I am sorry Bill. You have a popular show, but we need to cut programming. Based on union seniority rules your show is next to go".

Lies Exposed

Rick Unger writing for Forbes talks about The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Employee Pensions

Unger makes the preposterous claim that public unions pay their own way via deferred compensation.

Unger is another one who simply does not understand exponential math and what it means when pension benefits need to accrue at 8% a year to stay solvent. Nor does he seem to understand how deep in the hole these pensions are, and that unions getting in bed with politicians is the problem.

Enormous numbers of public union workers can retire at age 55, collecting more years in benefits than they ever worked, especially if they are in the public safety sectors. They make more in retirement than they do working.

Unger has no idea how much one would have to contribute to collect the benefits actually promised. However, that point is actually moot because ....

Public Union Members Contribute Nothing

Regardless of what public union workers or their supporters claim to contribute, they actually do not contribute a dime. Their salaries are taxpayer funded. Taxpayers pay those benefits.

Think of it as a highway robber holding you up at gunpoint, demanding your wallet, and then claiming he funded his retirement with it.

Once again, to be fair, most public workers do some work. However, pay scales are totally distorted by extortion, bribery, and coercion compounded over the years.

And, as I have pointed out, many of those jobs should not exist at all. In those cases it is exactly like highway robbery.

Executive Pay Distributed

One seriously misguided economic blogger went through a hypothetical example that took $150 billion in bonus money of executives to $500 to every man woman and child in the country. Supposedly that would fix things.

Here are a couple simple questions:

Exactly how would giving everyone in the country $500 fix a $6 trillion (or whatever) pension hole?
Exactly how would it fix the problem of union extortion, bribery, coercion?

Preposterous Math

Numerous union apologists cite preposterous math that says TARP recipients got $12 trillion. They fail to point out those were loans not gifts. To be sure, taxpayers are on the hook for AIG, Fannie and Freddie, GM and numerous other things but it is absurd to present this as if was a gift of $12 trillion.

Even if it was, how would it excuse bribery, coercion, and fear-mongering by public unions? Since when do two wrongs make a right?

Even FDR Understood the Problem

Public unions get into bed with management and politicians and work out sweet deals for themselves at taxpayer expense. No one looks out for the taxpayer. Even FDR understood the problem.

Message from FDR

Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937.

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.

The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.

A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.

Political Power Play

Paul Krugman attacked the issue from a political point of view in Wisconsin Power Play and a second time in Shock Doctrine, U.S.A.

To Krugman, this is all about Republicans trying to stick it to Democrats.

The ultimate irony in Krugman's rant is that he is willing to overlook extortion, bribery, coercion and slavery as long as it suits his purpose.

Such is the "Conscience of a Liberal".

Bear in mind, he did raise a second issue, as have other bloggers, about language in the bill that would allow Wisconsin to "sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state."

Krugman is entirely correct on that provision. There is absolutely no excuse for un-bid contracts of that scope. That "un-bid" provision should be stricken from the proposed law.

Union Intimidation Tactics Harm Public Safety

Last week I received an email from the wife of volunteer firefighter Chris Olbu. Chris is a firefighter in the state of Washington. If ever there was a set of true public servants, it is volunteer fire department workers.

I salute public hero Chris Olbu, and all those in his shoes.

Olbu also works for Boeing, as a firefighter. He does not want to be in the union, but he has to be in the union to work for Boeing in his current position. Moreover, as a result of being in the union, he can no longer be in the volunteer fire department for his city.

You can read about Olbu in Island residents worried union intimidation tactics may harm public safety.

Chris Olbu's Story

To get employment Chris has to be in a union he does not want to be in.
Chris has to pay union dues for causes he does not support.
The International Association of Fire Fighters (IAFF) union (not Boeing), forced Chris to resign from the volunteer fire department.
His resignation harms public safety

Chris is a Slave

Notice the cascade of events. Chris has no choice as to whether or not to belong to a union. To get a job at Boeing as a firefighter he has to belong to a union. This came about in the usual way of course, which is to say extortion, bribery, and coercion.

As a result of that involuntary servitude, the International Association of Fire Fighters (IAFF) is now telling Chris what he can or cannot do with his free time.

I am looking for free legal assistance from lawyers in the state of Washington willing to pursue this case for Chris, all the way to the Supreme Court of the United States if necessary. I am also looking for similar volunteers in other states for those in a situation like Chris.

Corporations are Slaves Too

Boeing would gladly hire Chris as a non-union employee, but it can't. Instead Boeing is pondering moving various operations to states that do not support slavery.

There is one other point as well. Promotion in unions is not based on seniority but rather longevity. No matter how much better Chris may be at his job, he will always play second fiddle to anyone with higher seniority.

Both corporations and talented employees suffer at the hands of slavery.

President Obama is the Slave Master

Please consider the following quote heard recently at a tea party in Denver.

... They are trying to distract you to make you think that what they are all about is the right thing. In reality you're just a pawn to them, a pawn that the Democratic Party and Barack Obama are using to keep them in power. This is a form of slavery. Liberals are enslaving themselves. Barack Obama is their slave master and they are doing his bidding for him. They don't see it that way but that's how it is.

Was it a white racist who said that?

No it wasn't. It is the man waving the Gadsden flag in the following image.

That is Leland Robinson, 51, a Denver native. He was hounded and harassed in Denver by an aggressive woman in a purple SEIU shirt who told him ...

"You're an entrepreneur, so you don't work. You don't know what work is until you get into an educational area. … You're uneducated, unethical, immoral, and you don't know what life is. That's your problem. Why don't you go behind that fence where you belong? Why don't you go back with your own kind?"

Another woman in red made further racial comments "I asked you a question: Do you have any children? That you claim, that you claim."

A bystander asked "What did you mean when you said does he have any children that he claims?"

To which the lady in red replied: "Because he's such a free spirit and an entrepreneur, I would assume that he's not supporting children."

Racism and Incivility

The above are clips from Racism and Incivility Aimed at Tea Party in Denver. Inquiring minds will want to give it a closer look.

Slave States

The above map courtesy of Talking Points Memo.

Willingness to Overlook Slavery

Paul Krugman, Bill Maher, Stephen Colbert, Yves Smith, Harold Meyerson, Rick Ungar, and countless others are all willing to overlook slavery because it suits their political and socialist agenda.

The blatant hypocrisy of it all is they accuse others of playing politics.

Challenge to Stephen Colbert

I would like to see Leland Robinson or Chris Olbu on the Colbert Report to discuss these issues, and I would gladly take on Bill Maher myself.

Numerous Problems

To be sure there are numerous other problems. The budget deficit is $1.4 trillion. We waste far too much money on warmongering. I would slash military spending an enormous percentage if I could decide.

We certainly have a situation of income inequality. The root of that problem is perpetual Fed bubble blowing with bank bailouts after every crisis. Too big to fail needs to stop, and it needs to stop now.

The irony of executive pay and banker bailouts is they are a result of Fed policies, not a result of lack of regulation. The solution is to end the Fed.

Unfortunately, people want to tie numerous problems together. I have received many misguided responses from people saying they would support reining in the unions if we would put bankers in jail.

However, attempts to turn this into a collective finger-pointing exercise or stacks of red herring issues cannot and will not fly. The key point is regardless of what one thinks of Walker's motivation, the fact remains he is on the right side of the issue.

Please play the following video to the end. It's depicts an extremely important concept about liberty.

Philosophy of Liberty

Link if the above video does not play: Philosophy of Liberty

Inquiring minds are reading The Adventures of Jonathan Gullible: A Free Market Odyssey

The Philosophy of Liberty is a flash animation created by Kerry Pearson based on the prologue of Ken Schoolland's book, "The Adventures of Jonathan Gullible: A Free Market Odyssey".

It's a basic summary and introduction to the theory of individual rights.

"It certainly presents basic economic principles in a very simple and intelligible form. It is an imaginative and very useful piece of work."

--Milton Friedman, Nobel Laureate in Economics

Slavery is the Issue

The motivation of Governor Walker or any other governor, is not the issue here. Slavery is the issue, and forced union membership and forced collective bargaining are nothing more than slavery imposed via campaigns of extortion, bribery, and threats, for the benefit of the slave masters.

Somehow things are so twisted that slavery is now seen as a "right" even though collective bargaining and forced union membership robs businesses of their rights to hire, robs workers of their right to seek employment, and robs workers of their right to do what they want with their free time.

There is no excuse for slavery no matter how hard union apologists try, or how many red herrings they throw. To end this form of slavery, we need a set of national right-to-work laws, an end to collective bargaining by public unions, and an end to Davis-Bacon and all prevailing wage laws.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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