Government Job Creation Mishaps

Government statists have their own idea of creating jobs: Make work. Whether at a government office or at a construction site. Hand out a pick and shovel, if that’s what it takes. Or place folks on unemployment insurance. Demand for goods and services will produce jobs.

Good old Keynesian theory that does not work in practice and never does for long, if it ever does temporarily.

Getting down to reality, left-leaning politicians have no concept of creating jobs, that of using the psychology of entrepreneurial spirit. That is why they will tax small business in the depths of a severe downturn. That’s why tax exemptions, not tax cuts, are only short-term.Why they raise minimum wages for small business during economic recessions.

Through the use of such dampening forces to see that jobs are not created by what they consider questionable private business.

Basically, the Left does not like business. They look at profits as criminal, to be taxed away for redistribution back to the community by wise governmental bureaucrats. (See the Earl J Weinreb NewsHole® comments.)

Pay Levels For Women

There is no doubt women had been discriminated against in the past. The question is whether they still are, when anti-discrimination laws have been around for decades and penalties are severe.

Women still tend to earn less. But there can be valid reasons. Many women do leave jobs in mid-career for maternity reasons that distort statistical averages. Others prefer to spend more time with family,

Still, there are more variations in certain professions than others. Hostile environment may often remain. Occurrences depend on profession or industry.

Women’s needs may also differ within those jobs, especially where measures of hostility may actually exist. (See the Earl J Weinreb NewsHole® comments.)

Real Unemployment Figures

The conventional media overlooks the missteps the administration attempts with various employment “stimuli.”

As an example: There are those, who once jobless, find new employment within reasonable time. Then, there are those with in-between jobs that may be just temporary or part time. And others during a recession, who go off for work in totally different areas, for lesser work hours.

The number of weeks someone is unemployed is an important statistic. While many unemployed give up seeking work and if able, retire earlier under Social Security at reduced benefits.

New job creation figures are important. Look also to see the type of jobs created. Government work is not creative. It does not have a multiplier effect as do private industry jobs.

The Bureau of Labor Statistics provides a whole list of unemployment categories. The real, practical number today is about 16%. (See the Earl J Weinreb NewsHole® comments.)

Charges for Pharmaceuticals

The media often give the impression that drug prices are too high in the U.S., compared to Canada and Europe.

Prices for the same pharmaceuticals are certainly much lower overseas. But pharmaceutical companies are forced to sell there below true cost.

To do that with foreign governments holding guns to their heads, they must raise prices in the U.S, to make their profit. Otherwise, no business.

And if there is no business, no drugs can be produced. A company spends as much as a billion dollars to find and research a new drug before it’s on the market.

Think about this the next tine you get a lesson from a politician on the enormous profits drug companies make. Furthermore, if the companies are so profitable, why are not all the experts on Wall Street falling over each other buying drug stocks?

You will notice that pharmaceutical securities are not investor favorites. They are merely politician scapegoats. (See the Earl J Weinreb NewsHole® comments.)

Wisdom of Mass Layoffs

I often wonder how smart management is when they announce mass layoffs of personnel.

I know the experts among the financial media and journalists are elated when companies sharply pare back expenses. But then again, these observers really don’t have genuine business acumen.

Something is amiss if management has overstaffed to a point where a sudden decision is necessary to lay off thousands of employees in one fell swoop. Forward planning to that point had to have been in considerable error.

Moreover, it’s costly to train lower, middle and then higher management, only to suddenly get rid of them; perhaps soon afterwards, to start new hiring cycles. When times become better, to start hiring new employees from scratch, at great expense. (See the Earl J Weinreb NewsHole® comments.)

Employment Agreement Fine Print

Be sure you’re agreeing to what you want, when you take a job. Don’t misread employment application fine print.

Many companies include a mandatory arbitration clause. That means you agree to give up your right to take disputes to court, even when the employer has broken the law.

Employers in financial services, health care and pharmaceuticals usually favor arbitration because it keeps costs down. It also prevents cases from being out in the media.

When the case goes to an arbitrator, the grounds for appeal are limited. The National Employment Lawyers Association estimates that more than 30 million Americans are bound by arbitration clauses at work.

A recent study found that arbitrators decided in favor of employees about 30% of the time, and when the individual arbitrator had worked previously on a case with the employer, the employee won only 12% of the time. Employees can often fare better in court because jurors are more easily swayed.

Arbitrators are not necessarily prejudiced. They may be wiser than jurors. But employees do not always have the better case. (See the Earl J Weinreb NewsHole® comments.)

A Regulatory Forerunner of ObamaCare

Doctors and hospitals now use about 18,000 codes to indicate the procedures they use when treating patients.

However, federal mandates will increase the number to about 140,000, And this is just the beginning, as ObamaCare is yet to be implemented.

The idea is to describe every and any procedure a doctor may do for a patient.. I also smell a road map for tort lawyers. ( See the Earl J Weinreb NewsHole® comments.)

insurance Company Policy Cancellations

The Obama Administration has demonized insurance companies for dropping policies, much as it demeans other industries.

I was a senior banking and insurance analyst in the past and keep in touch with the business. I wish top members of the administration were as informed.

A policyholder can have his or her policy dropped for a number of valid reasons:

One: Material lying about preexisting conditions. No one should be allowed to buy fire insurance while a fire is in progress.

Two: Fraud. Material misrepresentation which is so basic that the company would otherwise not have accepted the risk

In one of the insurance companies independently studied, only 0.1% of policies or 20,000 cancellations were made. It sounds like a lot when politicians talk, but it’s a study from millions of policies over a 5 year period.

On the other hand, our government does not tell you that it cancels 6.8% of Medicare claims. Think of that the next time you consider truth in political advertising, especially when you hear about government health care. (See the Earl J Weinreb NewsHole® comments.)

The Dodd-Frank Legislation

Politicians love power wherever and however they can get it. Unfortunately, this has become a habit in Washington. Especially when it creates a source of contributions to help finance campaigns to get out votes.

So, the Dodd-Frank legislation has investors over a barrel in so many different ways, through onerous regulation.

Yet, this type of error can sometimes be as easy to make as it is for a baseball outfielder to occasionally flub a fly ball.

And lawyers somehow have gotten more advantages from all these new restrictions. Since Democrats get well over 90% of the campaign funds from tort lawyers, guess why these tidbits are in the law passed by Congress? (See the Earl J Weinreb NewsHole® comments.)

Job Training Slight-of-Hand

Good politics makes bad economics is an often used axiom. It’s especially fitting when it comes to the ruse politicians use when they hand out taxpayer funds for job training.

It does sound good. People do lose jobs because of new technology for which they are not able to qualify.

So, instead of politicians saying so in blunt terms, the unfortunate unemployed are told they can be retrained, as they should be, But in truth, the federally-sponsored programs usually are a bust. Private efforts have been more successful.

A study as far back as 1969 showed that teens actually did worse in a federal jobs program once they started. Another study showed how tens of billions were spent on federal job training from 1961 through 1980 with no real success. Programs since then, with 1982 legislation, have fared no better.

But the charade goes on. Promises of job training programs that sound good—the government is doing something. But nothing g is accomplished for getting skilled jobs. (See the Earl J Weinreb NewsHole® comments.)

ObamaCare and Cost Reduction

We should always attempt to prevent illness. But prevention may actually increase costs not reduce them. So, that spending must be cost-effective over the years.

In an Aug.7, 2009 letter to Rep. Nathan Deal, Congressional Budget Office Director Doug Elmendorf’s aide, said: "Researchers who have examined the effects of preventive care, generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

"It is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway." This costs money that would not have been spent.

The study comes directly from the respected Congressional Budget Office. And it refutes the Obama Administration’s claim for savings that will flow from ObamaCare. (See the Earl J Weinreb NewsHole® comments.)

Why Bother To Run a Business?

Why bother to run a business when the federal government has a Bulls Eye on your back?

Example: There is a little-used federal anti-business law on the books. So why not use it during a deep recession when you say you’re creating jobs? And your deepest instincts are anti-business? No, the feds will tell you they’re not; they’re looking out for your interest.

The government passed the Food, Drug and Cosmetic Act in 1938, with a provision that authorized criminal action against corporate officers. No evidence was needed that an officer knew a crime was being committed. Being connected with the company at the top was the guilt.

You can see why this section of the law was not used, until the Obama administration got wind of it, with an eye on drug companies.

How many top execs are willing to put their personal wealth and liberty at risk , to run a company of thousands of employees, one of whose transgressions would put that CEO in jail? (See the Earl J Weinreb NewsHole® comments.)

Business Plan Advantages

Business plans never work out exactly as they are conceived. but they are most helpful. Too many small businesses fail to create an adequate plan.

For several reasons: One, folks may be too lazy to put in the effort. It takes work and a bit of basic bookkeeping. Yet, all a small business man needs is a small calculator.

Secondly, after a start, many many lose faith in its continued use. That occurs because business plans need to be adjusted as you go along. None of them are ever made in stone.

The necessary adjusted figures are not a sign of error or misuse of the plan. The whole purpose of a plan, adjustments and all, is to guide the management of the business, It is not to exactly predict outcomes. It is to show trends, problem areas to be treated, and so on.

Don’t fall for the need to have a fancy business plan. (See the Earl J Weinreb NewsHole® comments.)

Health Coverage With Postal Efficiency?

The Post Office does not operate under restrictions that burden private businesses. It enjoys a legal monopoly on many types of letter mail. And it’s a perfect example of what happens when the government tries to operate as a business.

The new health care law will establish standards of care, to determine what are proper levels of coverage. The law generates an expansion of government in the health system, such as Medicare and Medicaid; much of what we have in the Post Office.

President Obama, when pushing ObamaCare, made the point, "Private insurers should be able to compete, They do it all the time. I mean, if you think about it, UPS and FedEx are doing just fine, right? It's the Post Office that's always having problems."

Obama was actually making an argument of government ineffectiveness.

See the Earl J Weinreb NewsHole® comments.)

The Dodd-Frank Job Reduction Bill

No, that certainly was not the title that the Nancy Pelosi Congress and the Obama administrations assigned to this bill in 2010. The Obama administration says it wants jobs, but that requires lots of blind acceptance.

Take bank regulation as only one illustration. And within that, look at just one bank, the Bank of America, which has announced layoffs of 30,000 employees. All because of a loss of revenues dictated by PART of the many strait-jacket-type regulations.

Most of the Dodd-Frank regulations still haven’t been fully imposed. Great for a job recovery!! (See the Earl J Weinreb NewsHole® comments.)

Those Who Pay No Taxes

A terrible precedent is set in a country when almost half the working adults pay no taxes. Because you cannot have a true democracy with a divided citizenry.

Of about 76 million potential taxpayers who pay no taxes (2011) about 50% manage to do so because of the number of dependents claimed. And 22% for the standard deduction for the elderly. About 15% get credit for their number of children, or for being working poor. About 3% get education credit. About 10% are classified as miscellaneous.

Everyone should pay something; have “skin in the game.” Small amounts, so that their wallets are affected by government largesse. And no reimbursements of what they never paid the IRS. Those who need funds can get welfare assistance from a government agency other than the IRS.

But you cannot have voters who pay nothing into a system voting for politicians whose motto is ‘soak the rich,” while those rich are merely neighbors who are earning a little more that has become taxable. (See the Earl J Weinreb NewsHole® comments.)

For-Prorfit School Problems, Part 2

Further to my comments about schools getting hit by government pressure for reasons that, on investigation, are similar to problems that are those of conventional colleges.

The federal government is complaining that relatively too many students from these schools are deficient in their loans. And that they do not finish their course studies as they should. And worse, they are not getting the jobs many had been promised when the students signed up for study.

Has anyone really taken a look at what conventional college students learn or accomplish after they go into massive debt of up to $100,000 or more?

How many graduate? How many get decent jobs? Or are qualified for them? (See the Earl J Weinreb NewsHole® comments,)

For-Profit College Problems

For-profit schools are getting hit by government pressure these days for reasons that, on investigation, are similar to problems that are those of conventional colleges.

Politicians often complain such for-profits are making too much money. Politicos love educational mendicants they can support by throwing taxpayer funds at them.

The fact that internet and similar schools are growing is an indication their students are getting value for tuition.

Conventional colleges, which often are mismanaged, tend to lose money. They are thus highly subsidized by governments as a result. Conventional schools must also continually solicit needed funds from alumni.

Conventional colleges actually can be run as a for-profit business, and teach students properly. They can rid themselves of archaic tenure and other management foibles, as I have noted before in my comments. (See the Earl J Weinreb NewsHole® comments.)

The Government in Control of Private BPs Billions

Did it make sense to put the Executive Branch of the U.S. government in charge of $20 billion or more of BP’s funds, to hand out to victims of its oil drilling accident?

Would it not have been far better for effected individuals to have gone directly to BP for compensation through independent intermediaries, supervised by courts?

Without the politics involved? Without the federal government in the middle of what became an obviously unconstitutionally dubious form of meddling?

This was just one of many instances of state capitalism that is a slippery slope best avoided. (See the Earl J Weinreb NewsHole® comments.)

Government Involvement in Your Life

The economist, Walter Williams, in one of his columns, quoted the philosopher Bertrand Russell, suggesting that "Men are born ignorant, not stupid. They are made stupid by education." Dr.Williams also quoted Albert Einstein: "Insanity: (is) doing the same thing over and over again and expecting different results."

Professor Williams wanted to know whether it was stupidity, ignorance or insanity that explained the behavior of Americans who seek government involvement in their lives.

A large percentage of Americans believe politicians are corrupt. Congress has consistently had about a 10% approval rating. People know the poor shape of Medicaid and Medicare. And how Social Security is bankrupt. The Post Office is inefficient. Public schools fail to teach kids the basics. Why depend on government except for operating our defenses?

Sane politicians know that voters have a short memory. The media goes along with favored politicians. (See the Earl J Weinreb NewsHole® comments.)

Unemployment Statistics are Misleading

Job statistics are misleading because they don’t accurately give current employment figures. It seems their only purpose these days is to provide content for the media and data on which politicians can contrive messages to confuse an economically illiterate voting public.

Many job seekers give up looking when there is a prolonged recession. Thus the truly unemployed figure always looks better than it is.

The unemployed tend not to look for employment energetically until unemployment insurance is ready to run out. So extending the periods of insurance during recessions may appear compassionate, but makes unemployment statistics lower than they would ordinarily be.

In addition , many jobs may be part time or just temporary during recessions. Employers are unable to hire permanent help, or fear hiring because of rising costs and taxes.

So we constantly measure apples and oranges and produce questionable numbers that the media loves to repeat over and over as gospel. (See the Earl J Weinreb NewsHole® comments.)

Questionable Ivory-Tower Environmental Planning

America has sufficient natural gas and oil reserves; also offshore and in Alaska. We have practically unlimited coal supplies, in addition to oil shale. In fact, we would never need to drill for oil in deeper waters. We can build new nuclear plants whenever we decide to make that practical decision.

Developing sources of energy would save us trillions of dollars as a substitute for presently imported fuels, while increasing much-needed jobs at home. It would give the U.S. essential energy independence.

All the while we would develop more solar, wind and renewable energy for the future. Those prospects are bright only in the distant future, not now. Plus, the practical energy policy would help our foreign policy.

But our environmental policy is unhinged by unthinking, ivory-tower environmentalism. (See the Earl J Weinreb NewsHole® comments.)

The Robber Baron Falsehood

The term “robber baron” was conjured up for the wrong reasons and continues to stay alive. It turns up conveniently for the media, which helped make it popular many decades ago.

Robber baron was originally used to maliciously represent tycoons who developed our oil, steel, telegraph, railroad and other basic 19^th century industrial revolution enterprises. The term is used to describe ruthless, dishonest businessmen, bankers or successful entrepreneurs.

It took aggressive business people to succeed in those days. Rules were not the over-regulated variety of today. Were today’s in effect, much of the development of our own industrial growth would have been stifled. (See the Earl J Weinreb NewsHole® comments.)

Easier Schooling For Lawyers?

Many observers have been arguing for decades, that years of training in law school for prospective attorneys and their subsequent bar exams are merely means of keeping practitioners out of the business.

They question whether all the training is necessary in an age when legal precepts can be readily consulted and searched via the internet.

Just before World-War II, many states would not require a formal law degree, in order to take the bar exam. And remember, our most famous lawyers, including Patrick Henry and Abe Lincoln, never went to law school. They “read” law in a lawyer’s office and passed the bar with a test from a local judge.

These days, you can buy vast assortments of routine-application legal forms that are created by lawyers. You still need them for serious work but the demand for their high-priced hands-on efforts is diminished. ( See the Earl J Weinreb NewsHole® comments.)

Are Liberals Smarter?

We refer to a December 2008 study of 4835 respondents. By Zeljka Buturovic, who is a research associate of Columbia University, and at Zogby International, and Daniel Klein, a professor at George Mason University.

The results: The study found that respondents who tend to be liberal also score lower on basic, or what can be called Economics 101 tests.

Because this is highly controversial for those whose politics lean leftward, I suggest the original source. Go to Econ Journal Watch, at http://econjwatch.org for more details. ( See the Earl J Weinreb NewsHole® comments.)

European Youth Unemployment

A massive European employment problem exists that few Americans currently comprehend. If we did, we would be more concerned with aspects of our future plans as a country.

Namely, the poor state of our budget deficit-ridden economy and the condition of our educational system.

Unemployment among those under age 25 Is 10% in Germany, Austria and the Netherlands. But it averages 20% overall in Europe because of the mess elsewhere. Out-of-work youth are almost 30% in Italy, 40% in Greece and 45% in Spain. Many other countries suffer the same way, for the same reasons.( See the Earl J Weinreb NewsHole® comments.)

Value-Added Taxes or VATs are Ruses

Value-added taxes may sound great to the public but they are merely hidden means for government to raise taxes in addition to any heavy income taxes they may be imposing.

That’s because the masses are never fully aware of what, exactly, they are paying. The taxes are added on at every layer of distribution of the product or service, onto the provider and not directly on the consumer. The consumer eventually pays a much higher price for the product or service and merely blames the party making the last sale. Never the politician who imposed the VAT tax to begin with.

A consumption tax is often set as consumer subsidies as a political ploy because it smacks as favors. So it is loved by politicians. And it's sneaky. ( See the Earl J Weinreb NewsHole® comments.)

Bastiat’s Economics

Frederic Bastiat’s economic views are important for understanding practical economics.

in an 1850 essay, "What is Seen and What is Not Seen,” Bastiat noted " There the economist and member of the French parliament pointed out that law "produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them."

Bastiat further stated "there is only one difference between a bad economist and a good one: The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

Similarly, you can have compassion for workers who have lost their jobs. They can be seen. You cannot have compassion for unknown potential workers in other industries who don’t get job offers because a compassionate government subsidizes an unprofitable company. The potential employees are never hired and are therefore unseen.

You may say that unfortunate, known homeowners who lose their homes through foreclosure, make it possible for unknown potential individuals, who may not have been able to afford a home in the past, to now buy one cheaply.

Or, for that matter, many more workers profit from exports due to free trade agreements, for every worker who loses out to corresponding imports. ( See the Earl J Weinreb NewsHole® comments.)

Lessons From the Post Office

The U.S. Postal Service loses over $7 billion a year, about $240 billion estimated over the next ten years. A report from the Government Accountability Office says the Post Office's business model is not sustainable.

Demand for conventional mail has been falling. First-class mail volume has declined about 20 percent since its peak in 2001. Even though the post office has cut staff and branches, it isn’t enough. While the post office is supposed to pay for itself, it has been covering its losses by borrowing from the Treasury. But it’s nearing its borrowing limit with the U.S. Treasury, plus unfunded pension and retiree health obligations and liabilities tops $90 billion.

Wages and benefits account for 80 percent of Post Office expenses, exceeding those of other highly paid federal workers. To compound problems, about 85 percent of its postal employees are covered by union contracts which force the use of more full-time employees than are necessary; and restrict flexibility, outsourcing and layoffs.

The post office pays more for employees health and life-insurance than most other government agencies.

A lesson of what to eventually expect from all government-sponsored programs. ( See the Earl J Weinreb NewsHole® comments.)

Risk-Taking CEOs

Studies of operational success of CEOs who take risks were recently reported.

I have my doubts, at least from my personal practical experience. To begin with, the sampling used was relatively small. Secondly, the time frame of what is termed success in business is too subjective. How long a period are you measuring? Is it a year or five years?

And finally, taking risks in a publicly owned business? In practice, the risk makes little sense. Shareholders are entitled to better judgment than that. ( See the Earl J Weinreb NewsHole® comments.)