Archive for April, 2012

The Utterly Horrifying English Welfare State

By: admin
Published: April 30th, 2012

From Townhall
by Daniel J. Mitchell

I’ve occasionally commented on foolish public policy in the United Kingdom, including analysis on how the welfare state destroys lives and turns people into despicable moochers.

But if you really want to understand the horrifying absurdity of the welfare state, check out these passages from  a report in the Daily Mail.

Carl Cooper thought he was doing a public service by offering seven benefits claimants the chance to work for him. But the company boss was flabbergasted when none of them turned up on the first day. Astonishingly, not a single one even had the courtesy to tell the marketing firm boss they would not be coming in. Mr Cooper and other staff members called the new employees to ask them where they were. Initially, some refused to answer their phones  when they recognised the number calling them. When the staff finally got through, five said they would be better off staying on state benefits rather than doing the commission-based work. Four of the seven also claimed  torrential rain had put them off.

Wow. Five out of seven admitted that mooching off the taxpayers was a better way to live. What does that tell us about the over-generosity of handouts?

Let’s continue.

Mr Cooper, who runs Car Smart, a marketing firm for independent car dealers in Canterbury, Kent, criticised the benefits system and said it rewarded people for doing nothing. He added: ‘I was left stunned when none of the new recruits turned up for work. They are a bunch of workshy layabouts. ‘These are people who are so morally twisted that they would rather stay on the dole than work. ‘People keep saying there are not enough jobs in the UK but the real problem is that there are not enough determined or ambitious people. ‘The benefit system is too generous and encourages the unemployed to stay unemployed and just breeds more laziness.’

But it’s even worse than Mr. Cooper realizes. He’ll still be paying these people, but in the form of taxes that then get redistributed to subsidize idleness.

You might think the moochers would lose their benefits because they chose laziness over work, but you would be wrong.

Mr Cooper said all his employees received a basic retainer of £100 a week initially and are enrolled on to the company’s commission structure, which could see earnings rise to up to £400 a week. The jobseekers who failed to turn up will not lose their benefits because the basic pay is under the minimum wage.

I found the above story via Kyle Smith, who also cites a story from the Times about a crazy proposal to have bureaucrats scrub floors and serve as human alarm clocks for the welfare class.

Town hall officials have been told to get down on their hands and knees and “clean the floors” of the homes they visit under David Cameron’s Troubled Families programme. They have also been urged to turn up at family homes at 7am if necessary to get parents out of bed and children ready for school on time. The orders were issued by the programme head, Louise Casey… “I want to see people rolling up their sleeves and getting down and cleaning the floors if that is what needs to be done. If a family needs to be shown how to heat up a pizza, show them how to do it. If it takes going round three times a week at 7am to get Mum up, then do it.”

I would have included a link to the underlying story, but the Times has the most incompetently designed website I’ve ever encountered (presumably because they want to charge, but they don’t even give you a chance to click on the story and then pay).

Anyhow, I have three quick reactions to this bit of foolishness.

1. I’d like to see the head bureaucrat, Ms. Casey, spend a month scrubbing floors and waking people up at 7:00 a.m. She strikes me as the typical leftist clown, sitting in an office enjoying a cushy and overpaid job while dreaming up absurd ideas on how to waste taxpayer money. Maybe if she gets her hands dirty by “rolling up [her] sleeves,” she’ll learn the difference between blackboard theorizing and the real world.

2. My gut reaction is that the government should cut the handouts to these dysfunctional households. For every day the welfare bums aren’t up on time to get their kids to school, they lose 10 percent of their loot. If their floors are dirty, that’s another 10 percent. If you want to change their behavior, start cutting into the budget for cigarettes and booze.

3. More realistically, we’re dealing with a problem of people who have little if any self-respect, and they pass horrible habits to their children. Kicking them off the dole might wake up some of them, but I suspect more than a few of them are past the point of no return. Society would probably be better off if their kids were put in foster homes, but I’m sure government would screw that up as well.

Stories like this leave me increasingly convinced that the only good approach is radical decentralization. Get these programs out of capital cities like Washington and London. The U.S. welfare reform was a decent start, but get responsibility to the local level. And in cities, put neighborhoods in charge. Have those small communities in charge of raising the money and spending the money.

That approach is far more likely to generate good ideas and good solutions, though I confess I’m pessimistic about anything working.

But we should figure out ways to stop inter-generational poverty and welfare. I gather it’s considered bad form to suggest mandatory birth control for welfare recipients, so has anyone proposed a different approach that might work?

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Do the Wealthy Work Harder Than the Rest?

By: admin
Published: April 30th, 2012

From WSJ
By Robert Frank

One of the most controversial issues surrounding inequality is work effort.  Some on the right argue that  top earners are successful in part because they work harder than others. Many on the left argue that the middle class and poor work just as hard – maybe even harder, with multiple jobs — but that the economic deck is stacked against them.

A new study offers evidence  that higher-educated (and therefore higher-earning)  Americans do indeed spend more time working and less time on leisure than poorer income groups. In fact, while income inequality may be growing, “leisure inequality” – time spent on enjoyment – is growing as a mirror image, with the low earners gaining leisure and the high earners losing.

The paper, by Orazio Attanasio, Erik Hurst and Luigi Pistaferri, finds that both income inequality and consumption inequality (the stuff that people buy) have increased over the past 20 years.

The more surprising discovery, however, is a corresponding leisure gap has opened up between the highly-educated and less-educated.  Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours.  (Mr. Hurst says that education levels are a “proxy” for incomes, since they tend to correspond).

read the rest here

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New Obama slogan has long ties to Marxism, socialism

By: admin
Published: April 30th, 2012

From The Washington Times
By Victor Morton

The Obama campaign apparently didn’t look backwards into history when selecting its new campaign slogan, “Forward” — a word with a long and rich association with European Marxism.

Many Communist and radical publications and entities throughout the 19th and 20th centuries had the name “Forward!” or its foreign cognates. Wikipedia has an entire section called “Forward (generic name of socialist publications).”

“The name Forward carries a special meaning in socialist political terminology. It has been frequently used as a name for socialist, communist and other left-wing newspapers and publications,” the online encyclopedia explains.

The slogan “Forward!” reflected the conviction of European Marxists and radicals that their movements reflected the march of history, which would move forward past capitalism and into socialism and communism.

The Obama campaign released its new campaign slogan Monday in a 7-minute video. The title card has simply the word “Forward” with the “O” having the familiar Obama logo from 2008. It will be played at rallies this weekend that mark the Obama re-election campaign’s official beginning.

There have been at least two radical-left publications named “Vorwaerts” (the German word for “Forward”). One was the daily newspaper of the Social Democratic Party of Germany whose writers included Friedrich Engels and Leon Trotsky. It still publishes as the organ of Germany’s SDP, though that party has changed considerably since World War II. Another was the 1844 biweekly reader of the Communist League. Karl Marx, Engels and Mikhail Bakunin are among the names associated with that publication.

East Germany named its Army soccer club ASK Vorwaerts Berlin (later FC Vorwaerts Frankfort).

Vladimir Lenin founded the publication “Vpered” (the Russian word for “forward”) in 1905. Soviet propaganda film-maker Dziga Vertov made a documentary whose title is sometimes translated as “Forward, Soviet” (though also and more literally as “Stride, Soviet”).

Conservative critics of the Obama administration have noted numerous ties to radicalism and socialists throughout Mr. Obama’s history, from his first political campaign being launched from the living room of two former Weather Underground members, to appointing as green jobs czar Van Jones, a self-described communist.

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Steven Malanga: How Retirement Benefits May Sink the States

By: admin
Published: April 29th, 2012

From WSJ

Illinois is a lesson in why companies are starting to pay more attention to the long-term fiscal prospects of governments.

Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state’s future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, “You won’t recruit a business, you won’t recruit a family to live here.”

We’re likely to hear more such worries in coming years. That’s because state and local governments across the country have accumulated several trillion dollars in unfunded retirement promises to public-sector workers, the costs of which will increasingly force taxes higher and crowd out other spending. Already businesses and residents are slowly starting to sit up and notice.

“Companies don’t want to buy shares in a phenomenal tax burden that will unfold over the decades,” the Chicago Tribune observed after Mr. Emanuel issued his warning on April 4. And neither will citizens.

Government retiree costs are likely to play an increasing role in the competition among states for business and people, because these liabilities are not evenly distributed. Some states have enormous retiree obligations that they will somehow have to pay; others have enacted significant reforms, or never made lofty promises to their workers in the first place.

read the rest here

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‘This Is Not a Recovery at All’: Stanford’s Lazear

By: admin
Published: April 29th, 2012

The U.S. economy grew at a rate of 2.4 percent since the second half of 2009, which hardly represents a comeback, Stanford University economics professor Ed Lazear said Wednesday.

“The problem is, this is not a recovery at all,” he said on CNBC’s “The Kudlow Report.” “We haven’t made up for the lost ground, and that’s unprecedented.”

Lazear, who also chaired President George W. Bush’s Council of Economic Advisers from 2006 to 2009, authored a Wall Street Journal op-ed piece this week, titled, “The Worst Economic Recovery in History,” in which he used historical data to argue that the current period of growth is anemic at best.

In the article, Lazear writes: “The Great Depression started with major economic contractions in 1930, ’31, ‘32 and ‘33. In the three following years, the economy rebounded strongly with growth rates of 11 percent, 9 percent and 13 percent, respectively.”

……………………………………

Lazear noted that the Dow was near 14,000 pre-recession and now struggles to maintain 13,000.

“It’s four years later,” he said. “We should be is approximately 12 percent better, and we’re not.”

Lazear laid blame for the economic sluggishness with the Obama administration’s policies on trade, taxes, regulation and health care, all of which “have not been conducive to business growth.”

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Higher Education Bubble: “Government Loans And Grants Have Led To Massive Tuition Inflation”

By: admin
Published: April 29th, 2012

From Carpe Diem

From Jeff Jacoby in today’s Boston Globe:  

“For decades, American politicians have waxed passionate on the need to put college within every family’s reach. To ensure that anyone who wants to go to college will be able to foot the bill, Washington has showered hundreds of billions of dollars into student aid of all kinds — grants and loans, subsidized work-study jobs, tax credits and deductions. Today, that shower has become a monsoon.

The College Board, which tracks each type of financial assistance in a comprehensive annual report, shows total federal aid soaring by more than $100 billion in the space of a single decade — from $64 billion in 2000 to $169 billion in 2010. And what have we gotten for this vast investment in college affordability? Colleges that are more unaffordable than ever. Year in, year out, Washington bestows tuition aid on students and their families.

Year in, year out, the cost of tuition surges, galloping well ahead of inflation (see chart above). And year in, year out, politicians vie to outdo each other in promising still more public subsidies that will keep higher education within reach of all. Does it never occur to them that there might be a cause-and-effect relationship between the skyrocketing aid and the skyrocketing price of a college education? That all those grants and loans and tax credits aren’t containing the fire, but fanning it?

Directly or indirectly, government loans and grants have led to massive tuition inflation (see chart). That has been a boon for colleges and universities, where budgets, payrolls, and amenities have grown amazingly lavish. And it has been a boon for politicians, Republicans and Democrats alike, who are happy to exploit anxiety over tuition to win votes.

But for students and their families, let alone for taxpayers who don’t go to college, it has been a disaster. The more government has done to make higher education affordable, the more unaffordable it has become.”

MP: The chart above shows that the rising costs of a college education (7.5% per year) have far outpaced rising medical costs (5.7%)  and housing prices (4.2%), and have risen annually at twice the average inflation rate (3.8%).  The graph also illustrates that the rising costs of college and the resulting college tuition bubble make rising U.S. home prices and the resulting housing bubble look relatively inconsequential by comparison.

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China: is it a big bubble about to burst?

By: admin
Published: April 29th, 2012

From The Guardian
by 

So who is right: the lone voice warning that the miracle growth is over, or others who claim this shows a deep misunderstanding of the country?

Diana Choyleva is the bear in the China shop. The analyst from Lombard Street Research says last week’s China GDP figures – which revealed growth slowing to a three-year low – are an early warning signal of the hard landing to come.

Dig deep into the data, she says, and you’ll find that Chinese exports are falling. All that is propping up the economy is gargantuan investment in infrastructure financed by state- directed banks that look more and more like Western banks just before the collapse of 2008. Except they are bigger and badder.

Choyleva radiates a pessimism that is almost unique among Hong Kong’s investment professionals. Westerners, she says, are so awed by the China dream they can’t see the coming China-geddon. The excesses that drove the West into a financial crisis and, in Europe, an economic depression, are gripping the Chinese economy, too. “It’s just that they have become bigger,” she says. The country’s vast pool of savings is being squandered on dead-end infrastructure projects that make Japan’s roads to nowhere look like prudent planning.

“China’s miracle growth is over,” she proclaims, saying that if Chinese policy makers get it right they might, just, see the country’s growth halve to 5% or below. Get it wrong, and the consequences could be devastating not just for China but for the rest of the world, too. “Building those roads to nowhere can go on for a long time, but ultimately financing it will become unbearable,” warns Choyleva.

As long as US and European consumers were accumulating colossal amounts of debt, much of it to pay for goods made in China, the merry-go-round worked just fine. But as western economies deleverage, the driver for growth has been extinguished.

read the rest here

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