When Government Competes for Available Capital

                       

When the government spends a dollar which it must borrow or tax, there is one dollar less in the private sector with which to invest for public benefit in the form of jobs and earnings for consumer spending.

                       

That government competition produces innate damage that government do-gooders overlook in their zeal to “help.”

Here is an Economics 101 lesson. You will not learn it from the conventional media. Nor in basic economics from most college attendance these days.    (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Why So Many Leftist Billionaires?

There always have been the extraordinarily wealthy in socialist societies. The namenclatura of Soviet Russia lived like multi- millionaires, and probably had plenty more stashed safely abroad.

                           

In the U.S. the policies of leftist-minded multi- millionaires and billionaires don’t create wealth for the public. These folks may simply believe in high taxes on public citizens; they may want to redistribute wealth of others. Whatever it is they seek, they manage to make lots of money for themselves along the way. Perhaps they do consulting and advising, or have profitable connections. But they prosper enormously in the political process.

                           

Look about and see how this is true among those who carry on battles for the “little guy,” while flying about in their private jets, and living in their many grandiose mansions, both here and abroad.

Their stand for the poor never means they have taken vows for personal poverty. In fact, they have even managed to become billionaires while in pursuit of their left-leaning careers.

Oh yes, they’re for higher income taxes but most of them pay little taxes the way their income and assets are structured.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Government Subsidies or Political Slush-funds?

                       

Some states and especially the Federal government make political efforts by subsidizing some company payrolls. It’s a stupid populist attempt to show concern for workers at those jobs.

                       

One: Taxpayers must pay for  businesses who are not able to make a go of it. Perhaps inefficiencies but also including barriers placed before them by government being restrictive. Such as business taxes and fees.

Two, the assistance will inevitably be politically dominated. The funds will go to companies preferred by the politicians in office. Graft and corruption is always a consequence.

                           

Three, the whole process amounts to nothing significant. Where will it all end, short of Fed or state government winding up in a failing business?

                           

Leave companies alone, without abusive taxation and other restrictions and they will tend to do far better on their own. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Why Follow FDR's 1930s Financial Actions?

                                    

Did Franklin D. Roosevelt really get us out of the Great Depression in the 1930s. Actually, he never succeeded at creating jobs. Though the public thinks he did.

We ought to learn from his then Treasury Secretary, Henry Morgenthau. The latter admitted in his memoirs at the end of his years of effort, and just before World War II, how we were still mired in unemployment. How 1937 and 1938 were particularly bad, after all the economic pump-priming after 1932.

Roosevelt believed in high taxes and Keynesian spending by government that did not work.The very philosophy being used by the administration today.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Questionable Business Management Appraisals

Some facts worth repeating:

                           

You hear of the best management techniques that are successful and implemented. Every year or so, another business management expert is recognized for ideas,  on sales or productivity.

                           

A few years later, a fresh crop of experts and authors arise in a repetitive cycle. The concepts become regenerative fads. The same ideas regurgitate every so often. What becomes stale in a decade becomes fresh in the next. or the following.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Avoiding the Deep Recession

           

Facts worth reviewing:

                               

America has always had self-corrective economic cycles, but now we have more regulators than ever before; they are doing their man-made damage, as never before. 

We could have avoided this recession.

                               

By avoiding the massive bailout by regulators offering the illusion of doing something. All that was needed was a federal agency guarantee of all bank assets, with a fee charged to the banks.

                               

By avoiding “mark-to-market” accounting of mortgage assets, which had no market appraisal, which wiped out assets of major banks almost overnight, aided by short selling this had enticed.

                               

By having a government agency buying up, at bankruptcy, and destroying, empty tract homes in over-speculative states such as Nevada, Florida and California.

                               

The government repeated the same errors made by Herbert Hoover and Franklin Roosevelt during the Great Depression. We thus accomplished little for the economy but have revamped the form of government with state capitalism, a nasty type of socialism. The Dodd-Frank Act, in further attempting to get us out of this mess, is a disaster beyond anything America has had.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Evaluating Good Business Management

                       

There is some truth to the adage: Good management makes money and bad management loses money. It’s always applied on Wall Street where analysts usually have no idea of how to really evaluate corporations.

                       

An executive must operate with the hand being dealt. If the business environment or the economy is poor, an excellent manager may do extremely well by just minimizing losses;there are no real standards to go by.

                       

Look at the techniques used and they are all the same. The same acronyms to describe managerial approaches. Those that worked in the past may not be working now. The ones that did not work in the past may be working today.

                       

A lot of luck is involved. 

One formula: Keep an eye on protective management. Keep away from lawsuits, especially employee harassment and EEOC suits. Stick to the employee manuals you set up.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

New Financing By Industry, Other Than Banks

           

It will take decades for Dodd-Frank’s financial regulation tentacles to be clearly defined.

One of its unintended consequences: Walmart and other companies can now do more openly the type of financing that banks will not wish to undertake because of severe regulations in place under the new regulations.

                           

Large industrial companies have been giving small business loans where banks have not ventured.

                                               

Should this favorable trend continue, no doubt Uncle Sam will then step in under pressure from the anti-business Left. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Write Short, Not Verbose Legislation

                           

The Dodd-Frank financial regulation bill has an immense, adverse transformational impact on American society, as well as its economy.

It has over 2300 pages. I doubt if any of our House or Senate reps has read it entirely or ever will.

                           

The Federal Reserve Act which set up our basic banking system had 31 pages. Most other basic financial legislation of the past had been composed with about a hundred or so pages.

                           

ObamaCare runs rover a couple of thousand pages and literally hides information the public or its proponents never realized exists. Which are  only now coming to light.

Limit the size of any bill. If it is too big to be read in a couple of hours, it is too big. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Obligations of Corporate Leaders

                           

I have commented in the past on a U. S. Supreme Court ruling on “honest-services” obligations and its effect on business executives who have a responsibility for operating a public company.

                           

A CEO has to be an optimist to prevent the corporate roof from falling in; employees and customers fleeing, and a  loss of jobs. An executive must retain legal leeway and be given slack. A top executive who is not a cheerleader is doing a poor job.

Unfortunately, too many jurors and judges are not aware of this business fact.

                           

The public cannot scream “fraud” at the drop of a hat every time disaster strikes a company. That is a ploy used by plaintiff lawyers doing what they do best. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Why Insurance Companies Really Don’t Earn Enormous Profits

Politicians and most of the news media know very, very little  of the insurance business.

Add to this the fact that insurance companies must be large, to be in business.

This makes such companies ideal scapegoats for left-leaning politicos seeking votes from uninformed voters.

Remember, insurance companies are highly regulated by their state insurance departments. They’re not permitted to lose money for very long, while controls dampen “enormous” earnings.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Best Business Management Techniques

                          

You hear of the best management techniques that are successful and implemented. Every year or so, another business management expert is recognized for ideas on how to increase sales, or reduce costs, or enhance productivity.

                           

A few years later, these are usually forgotten, as a fresh crop of experts and authors arise. In fact, It’s a repetitive cycle. If you want, you can write a book on that subject alone. or teach a course for a college degree.

                           

If you save the data you find the concepts become regenerative fads. The same ideas regurgitate every so often. What becomes stale in a decade becomes fresh in the next.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

What a Business Blogger Should Know About Business

How many business-oriented blogs you read come from true business people?

In addition to my extensive Wall Street background, I became a senior-level executive for public corporations, to see what it was like to be in actual business. Most Wall Street and business advisers have never operated a successful pushcart.

A profitable publicly-owned firm I co-started from zero, grew to 74 coast-to-coast offices, by the time I sold my interests 17 years later.

My comments, unlike the bulk of those in the media, are backed by real, practical experience.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Deceiving Unemployment Rates

                          

Unemployment figures are misleading. The standards for measuring the workforce are not constant. How many folks are actually looking for work can be a matter of debate because many have given up seeking employment. The current official unemployment figure of about is far below the actual.

                           

But that is not all there is to the unemployment problem. The critical factor is loss of jobs after about six months of being out of work. That number is not easily offered up to the public. Long-term unemployment involves the loss of skills or results in less-sharpened skills. Along with poor on-the-job psychology and poor spending psychology. That is never reflected in a number.

 A vicious cycle then occurs.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Trick of Measuring “Jobs Saved”

                           

The administration, faced in the past with poor new job  numbers, had scrounged around for something of “What If” and “Would be” and “Could be” jargon and had come up with “jobs Saved.”

This was a completely meaningless number. It was imaginary and got circulation only from an ignorant media, that elected to go along with the façade.

Economic research had thrown this thinking aside years ago. If you use actual Bureau of Labor Statistics figures from the government you never arrive at such hocus pocus, arbitrary politicized cant that this had become.   (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Our Current Recession Could Have Been Easily Overcome

           

                             

America has always had self-corrective economic cycles, but now we have more regulators than ever before; they are doing their man-made damage, as never before. We could have avoided this.

                               

By avoiding the massive bailout by regulators offering the illusion of doing something. Probably, all that was needed was a federal agency guarantee of all bank assets, with a fee charged to the banks.

                               

By avoiding “mark-to-market” accounting of mortgage assets, which had no market appraisal, which wiped out assets of major banks almost overnight, aided by short selling this enticed.

                               

By having a government agency buying up, at bankruptcy, and destroying, empty tract homes in over-speculative states such as Nevada, Florida and California.

                               

The government repeated the same errors made by Herbert Hoover and Franklin Roosevelt during the Great Depression. We thus accomplished little for the economy but have revamped the form of government with state capitalism, a nasty type of socialism.

The Dodd-Frank Act, in further attempting to get us out of this mess, is a disaster beyond anything America has had.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Evaluating Good and Bad Business Management

   

                      

There is truth to the adage: Good management makes money and bad management loses money. It’s always applied on Wall Street where analysts usually have no idea of how to evaluate those who operate corporations being analyzed.

                       

Nevertheless, an executive must operate with the hand being dealt. If the business environment or the economy is poor, an excellent manager may do extremely well by just minimizing losses; there are no real standards to go by.

                       

Look at the techniques used and they are all the same. The same acronyms to describe managerial approaches. Those that worked in the past may not be working now. The ones that did not work in the past may be working today.

                       

Lessons: A lot of luck is involved. Also an eye on protective management. Keep away from lawsuits, especially employee harassment and EEOC suits. Stick to the employee manuals you set up.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Ethanol Disaster

                          

About 6 million cars on the road are “flexible fuel” vehicles. Some can run on fuel that is 85% ethanol and 15% gas. However, when using E85 you get about 15% fewer miles to the gallon.

               

E85 does burn cleaner and does not pollute as much but the overall benefits are highly questionable. And the cost exceeds that of regular fuel in time. And the use has increased the cost of corn, which is a basic food worldwide.

                       

But ethanol has now become more of a political factor than a logical fuel for consideration as an energy alternative. Slowly but surely we have found this has become an environmental boondoggle gone awry.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The College Myth Promotion

           

You don't need a college degree to be successful. Vocational education can pay off better for many who have lost jobs or are seeking entry-level positions in trades.

Even lower-level electricians today make on average $48,000 a year. Plumbers make at least $47,000. That's much more than the average American earns. And those jobs may be more plentiful.

But some people look down on vocational school. A degree from a four-year college is considered first class. A vocational-school degree is not. We must overcome that prejudice.

College administrators and politicians ought to drop promotional hype. Higher college enrollment and government loan programs and subsidies may be good for college marketers, but they don’t produce the training needed to fill real, paying jobs in industry.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Success of Risk-Taking by Chief Executive Officers

       

                                 

I have my doubts, from my personal practical experience about the operational success of CEOs who take risks.                To begin with, the sampling used by researchers testing CEO risk-taking is 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 on that subject.  (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Media Never Sees Economics Clearly

It’s about time the media pundits learned there is economic experience that goes beyond Keynesian theory that has been proven to be unsuccessful in its applications, going back to the Great Depression.

Somehow, journalism school, as most institutions of higher learning, manage to do their usual poor job.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Learn Bastiat’s Simple Economics

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

In his 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 and @BusinessNewshole at Twitter.)    

Value-Added Taxes or VATs

 

Value-Added Taxes are merely hidden means for government to raise taxes in addition to any heavy income taxes that they may be imposing.

                           

That’s because the masses are never fully aware of what they are paying. VAT 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 with 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 and @BusinessNewshole at Twitter.)    

Unemployment Among Europe’s Youth

       

                           

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

Our concern is the poor state of our budget deficit-ridden economy and the condition of our educational system.

Unemployment among those under age 25 Is10% 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.

The U.S. is headed in the same direction.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Are Liberals Realy Well-Read And 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 and @BusinessNewshole at Twitter.)

It’s Easier to be a Lawyer Than a Science Major

                       

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

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 and @BusinessNewshole at Twitter.)

The Myth Regarding “Robber Barons”

                       

The term “robber baron” was conjured up for the wrong reasons and continues to stay alive. It turns up conveniently in 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 19th 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. And consumer prices would not have been reduced as they were.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Energy Reserves and Faulty Environmental Planning

                         

America has more than sufficient natural gas and oil reserves, in addition to offshore and 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 and @BusinessNewshole at Twitter.)