Lawyer Politicians

Too many of our law makers in Washington and state houses are lawyers.

I believe excessive lawyers in government have become a major problem. We need representatives who actually represent the people. They ought to come from different job experiences. Furthermore, politicking should not be a permanent career.

I also strongly feel that we need small business men and women in Congress and in state houses. It would change the legislative outlook about taxes, business and everyday problems of the middle class as well as poor. (See the Earl J Weinreb NewsHole® comments.)

Public Employee Unions

There is a serious problem whenever government workers are unionized. This started on the federal level and required no Congressional approval; it has now grown in all layers of government.

A JFK executive order 10988 in 1962 started what has grown into a politically-influenced monster, taking over state and city governments.

Unionization controls whatever it touches. Unions influence state and big-city government bureaucracies and, therefore, too many state and local political machines.

Public employees are being unionized at a rapid pace when private employment is only about 7% unionized.

Union wages run much higher than comparable wage scales. About one third, and more beyond private earnings. Pension funds and terms usually far surpass that of private industry. In some instances, five or more times. In general, total government unionized pay packages are about triple those of comparable private industry jobs. All of which have been budget-busting, and almost impossible to control.

And the taxpayers making lesser pay are paying the bills. (See the Earl J Weinreb NewsHole® comments.)

Corporate Takeover Government Aid

In many instances, corporate proxies may make it easier for hostile takeovers to be made. It is not always true that making it easier to foster corporate takeovers is in the best interests of all stockholders.

The objectives of many of the takeover artists are often solely for quick, short-term profits. That may not be the long term interest of the corporation or most of its shareholders.

Yet, much of the recent legislative pressure in Washington from the administration has been to accomplish this purpose.

This does little for corporate democracy. It helps reimburse party loyalists and unions and their lobbyist funding. ( See the Earl J Weinreb NewsHole® comments.)

The Made in China Bugaboo, Part 2

The Chinese sell us mainly furniture and household equipment. Also durables. clothing and shoes. In the clothing and shoes category. A bit more than a third of U.S. consumer purchases in 2010 had a "Made in China" label.

But China sells us what is described as "local content." Hale and Hobijn mention sneakers. Most of that price goes for transportation in the U.S., expenses for the store where they are sold, marketing costs, profits for shareholders of the U.S. retailer, and, the salaries, wages and benefits paid to the U.S. workers responsible for getting sneakers to consumers.

About 89% of what U.S. consumers spend is on items made in the country, the bulk in the form of domestic services. These include housing, transportation, medical care, and so on. That accounts for up to about two-thirds of spending. On average, of every dollar the U.S. consumers spend on a Chinese-made product, about 55¢ pays for services in the US. (See the Earl J Weinreb NewsHole® comments.)

The Made in China Bugaboo

Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, have written the report "The U.S. Content of 'Made in China.'"

What do Americans spend on Chinese products that we complain is so enormous it ruins our economy?

It is the fraction of U.S. consumer spending for goods made in China. Hale’s and Hobijn’s data sources are from the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department's Bureau of Economic Analysis.

Total imports were about 16 percent of U.S. GDP in 2010 but only 2.5% came from China. Chinese items accounted only for 2.7% of U.S. personal consumption. That represented about one-quarter of the 11.5% from foreign sources. (See the Earl J Weinreb NewsHole® comments.)

The Federal Reserve’s Conflicting Interests

Despite the logic for the Fed’s independence, Congress always has wanted to impose influence. It has to an extent. Since 1978 the Fed has had to enforce the Full Employment and Balanced Growth Act, known as Humphrey-Hawkins. That conflicts with the Fed’s stated currency/inflation activity.

As a result, he Fed has a conflict of interest in its very mandate. The new financial Dodd-Frank regulation law has tilted the effect of the Fed in many ways, giving the executive branch of government much more influence on the Fed.

The Humphrey-Hawkins Full Employment Act enforcement creates an inflating bias; certainly not one of dollar stability. So there is always a conflict of interest.

The Fed handles monetary policy. The president, through the Treasury Department, is in control of fiscal policy. It’s difficult for the Fed to control outlandish spending by the government. (See the Earl J Weinreb NewsHole® comments.)

A President’s Moods and Sentiments

I have in the past discussed how moods are relatively long-lasting emotions; sentiments are shorter-term. They can affect how stock market cycles react and can precipitate booms and busts in industry.

Therefore, our chief cheerleader is naturally the president. In the midst of a deep recession, he should never make it a practice to single out an industry, whether industrial, communications, banking, insurance or lender of any type, as a scapegoat, when he wants the economy to recover and produce jobs. (See the Earl J Weinreb NewsHole® comments.)