Danger Abounds for 2020 Democratic Presidential Contenders

© 2019 Steve Feinstein. All rights reserved.

 

Conventional wisdom posits that in the presidential primary season, the contenders focus most of their attention and efforts on the more extreme wing of their party, the thought being that these rabid partisans—be they extreme-left or extreme-right—dominate the primary voting turnout and thus play a decisive role in determining their party’s eventual nominee.

On the Democratic side, the first set of putative nominees (typified by Kamala Harris, Elizabeth Warren, Corey Booker, Kirsten Gillibrand, Julian Castro and the presumptive entry of Bernie Sanders) has obviously been influenced by the strain of über-liberal AOC-like thought, as they engage in a race to out-liberal each other, with their proposed Government giveaways reaching new heights. Astonishingly enough, Ocasio-Cortez’ undeservedly-hyped, bereft-of-specifics Green New Deal (along with Sanders’ 2016 tenets) has served as the blueprint for every Democratic contender’s platform. For them, no amount of Government-provided largess is too much or too unrealistic. Indeed, they present the notions of taxpayer-funded healthcare, free tuition, student loan forgiveness, guaranteed employment and income, guaranteed affordable housing, and unrestricted immigration as if they are perfectly normal, to-be-expected obligations of American government.

The liberal media—eager for political-presidential news of any kind and especially stories of the ‘we really, really hate Trump’ variety—is inclined to give these early declarees an unprecedented amount of coverage, since covering them and their hyperbolic anti-Trump rants gives the liberal networks the opportunity to present an almost unlimited amount of over-the-top anti-Trump stories under the guise of legitimate news: “We’re simply covering what Corey Booker said.” That Corey Booker’s opinion of President Trump is in ironclad lockstep agreement with CNN’s editorial stance is merely a happy coincidence.

The risk that all these early announcers face is overexposure and too-soon critical evaluation of their proposals. The danger for these early-announced Democratic contenders is threefold:

  1. Sameness and lack of individual identity and uniqueness. What is the difference between Harris, Warren, Sanders and Booker and their wildly anti-capitalist, pro-Socialist, ‘free everything for everyone” proposals? How is Harriscare different and better than Berniecare or Elizabethcare?
  2. Damaging early policy evaluation. Trump beat Hillary in large part by winning the votes of previously Democratic blue-collar voters in PA, OH, MI, FL and WI. The middle of the Democratic voting bloc doesn’t agree with all the radical positions espoused by this first wave of contenders. The longer these positions are exposed to the harsh sunlight of analysis, the more likely that a greater number of “ordinary” Democratic voters will reject them. Maybe the rabid extreme Progressive primary voters won’t, but the casual rank-and-file Democrat—the “Trump” Democrat—likely will. Polls will sour. Publicity will turn negative. That new shine will lose some of its luster.
  3. For a politician, being in the public eye for too long can be hazardous. “Familiarity breeds contempt,” as the old saying goes. Perhaps Warren’s caustic, screechy voice will wear thin after several months on center stage. Perhaps Bernie’s advanced age will suddenly become frighteningly apparent and unacceptable to Millennial Progressives, and he goes from “cool old guy” to “Who are you kidding, Grandpa?” in the blink of an eye. Perhaps some embarrassing and undeniable blemish from Harris’ or Booker’s past emerges and there’s no explaining it away. The longer the at-bat, the greater the chance of a swinging strike three.

All this leaves an opening for the Second Wave, a slightly more moderate brand of presidential contender. Seth Molton, Joe Biden, Terry McAuliffe, John Hickenlooper or someone else. Possibly more palatable to a wider swath of voters. While they are just as capable of spouting anti-Trump do-goodism, give-stuff-away-free policies as the Early Contenders, they’d have an ability to speak to the Ohio/PA/MI blue-collar Democratic voter that went for Trump in 2016—and make a convincing case—in a way that the pro-Green New Deal Harris, Booker and Warren never could. Can any of the Second Wave do it? While it’s probably easier and more convincing in a general election campaign for a relatively moderate centrist Democrat to spout ultra-left positions than it is for a super-progressive to attempt to convince the middle of the voting populace of their moderate positions, this Second Wave would suffer from being behind the curve in terms of fundraising, name recognition (except for Biden), organization/logistics and they all run the risk of appearing opportunistic and insincere.

Staking out such a far-Left position may help the Democrats in the primaries but may well prove to be a handicap in the general election. Remember, the Democrats have moved much farther Left than the Republicans have moved Right. A very strong case can be made that Republicans have not moved Right at all since 1960, but compared to a 1960 JFK Democrat, today’s Progressives are unrecognizable. Points of fact:

  1. The words, “Ask not what your country can do for you, ask what you can do for your country” from Kennedy’s 1961 inaugural speech seem laughable, utterly impossible, by today’s Democratic standards.
  2. Today’s Democrats no longer propose great national scientific or military initiatives like the Moon Landing or closing the Missile Gap, undertaken under a Democratic Administration strictly for the country’s benefit as a whole. In contrast, modern Democrats craft their policy proposals in response to the needs of special interest groups (women, minorities, immigrants, LGTB, etc.), for the purpose of buying that group’s votes with a taxpayer-funded program. As predictable as day turns into night, if there’s a perceived issue affecting a demographic group, the automatic current-day Democratic response is to invent a new Government program to “cure” it and raise taxes to pay for it.
  3. Republican positions of limited taxation, necessary-but-reasonable business and environmental regulations, a strong military, support for law and order, favoring the philosophy of giving all groups equal opportunities vs. trying to artificially fabricate equal outcomes—these are unchanged from 60 years ago. It is the Democrats who’ve moved so far Left they’ve had to change their name to Progressive. Republican governing ideals are essentially unchanged.

Pointing this out infuriates today’s Democrats, but it’s a matter of easily-observable fact, not opinion. The 2020 Democratic GND platform may appeal to effete coastal elitists who live in their unsullied theoretical world, but Joe and Jane registered Democrat factory worker/shelf stocker/middle manager isn’t going to buy into it. If Booker-Harris-Warren don’t float their boat, is Biden too old? McAuliffe too used-car-salesmanish? Molten too opportunistic? Hickenlooper too strange?

The economy is doing very well, and peoples’ kids are getting good jobs and supporting themselves. Stocks are way up vs. the Obama years, recent volatility notwithstanding. Europe has finally been told to ante up for its NATO defense. We’re producing a lot of oil and natural gas and everyone is really happy about it (whether they admit it out loud or not). The liberal media have finally met their match, and again, an awful lot of people like it. It is very easy and defensible to say that President Trump’s “official” approval numbers are understated by 5-10%, at least, by all those liberal-leaning polls with their liberal-leaning methods and overly-liberal sample compositions. Every poll that has President Trump at 45% is likely 55% in the privacy of the voting booth.

That is how and why President Trump beat HRC so handily in 2016 and why the polls were so wrong. Democrats may think that President Trump is easy pickings in 2020 and all they have to do is promise a lot of free stuff and repeat the words “Fair share!” over and over again.

In fact, Democrats are in for one very difficult uphill slog in 2020, and baring some unforeseen random outside factor, they probably will not reach the top.

The Trump Economy and Buyer Psychology

© 2018 Steve Feinstein. All rights reserved.

 

There was one thing most voters agreed on before the 2016 presidential election and that was that Donald Trump was a good businessman and would likely do a good job handling the economy. After eight years of halting, lackluster economic growth under the heavy Government hand of President Obama, Trump’s supporters hoped that The Donald would be able to unshackle the economy and inject real growth back into the country’s business environs.

He has done so. The facts are irrefutable:

Stocks are markedly higher than at the end of Obama’s tenure. The Dow is over 26k now (mid-Aug 2018) compared to 19.8k when Obama left office and the more broadly-based S&P 500 is over 2800 now compared to 2270 when Obama left office.

Unemployment is down to 3.9%, the lowest in decades.

Job creation under Trump is robust, with over 3.5 million new jobs since Jan 2017, according to the BLS.

Economic growth The GDP rose at a 4.1% annual pace in Q2 2018, compared to a tepid 2.14% average GDP growth in the 2010-2016 recovery years under Obama.

The question is, of course, why, and how much is this president—or any president—really responsible for the economy’s performance, good or bad?

Rabid, resentful liberal partisans—still reeling in utter shock and disbelief over Hillary’s ignominious defeat, and eager to downplay any Trump success—are only too quick to point out that they feel Obama handed Trump an altogether better economic hand than the one President Bush gave to Obama, so President Trump had a “head start” over Obama. With the country’s banking system supposedly teetering on the brink of total collapse in the waning Bush years (according to liberal revisionists), it is Obama who deserves the credit for stabilizing a potentially calamitous situation and bringing order and sanity back to American economic markets. In liberal chronicles, any further growth in the ensuing Trump years is the result of Obama’s measured, steady hand on the financial tiller as he masterfully guided the fragile American economic boat around the rocky shoals, as it were, and avoided any additional damage.

Nice story. Blatantly untrue, however, despite the popular narrative put forth by the liberal mainstream media and repeated endlessly by accuracy-challenged Democratic politicians. The banking crisis was brought about largely by Democratic-sponsored, PC-driven lowered lending standards, which led to the creation of mortgage loans to borrowers patently unqualified to receive them. It was a financial time bomb waiting to go off. It finally did, and when it happened, the brilliant, heroic efforts of Sheila Baer (head of the FDIC under President Bush) ensured that not a single bank failed, maintaining confidence in the system and preventing an out-of-control run on the banks. In fact, President Bush put in place all the solutions to the crisis—including TARP—and the system was already recovering by time Obama took office several months later.

Much to the total chagrin of rabid, resentful conservative partisans, however, Obama does deserve some credit. His calm, reassuring demeanor did indeed deliver a settling effect to deeply worried world markets.  And while his “Stimulus” was little more than political showmanship of essentially no tangible positive economic value, it did demonstrate that the American administration was engaged and willing to take action.  Sometimes, appearances can be as meaningful and comforting as actual substance. The world breathed a sigh of relief: The President was hands-on. Things would get better.

And they did. Unfortunately, they didn’t get that much better. Once past the immediate danger of the Great Recession, the Obama recovery was the weakest economic recovery after a recession in over 50 years. The weak recovery was indeed Obama’s fault, as he took the opportunity presented by a desperate economic situation to impose his onerous, punishing ideological thumbprint on what he saw as the unfair aspects of our free-market system.

Under the banner of the undefinable but haughty-sounding phrase of “social justice,” Obama targeted businesses with a raft of thicket-like, punitive regulations, increased their taxes and generally made it far more difficult for private businesses—large and small—to make a substantial profit. Make no mistake, the unspoken, never-admitted-to but unquestioned target of his actions was private business, owned and run, in Obama’s mind, mostly by conservative Republicans, whose ill-gotten profits never filtered down to the “deserving”—his voting base. Obama would change that.

For example, he weaponized the EPA by empowering them to impose new emissions regulations so intentionally, unrealistically strict that targeted companies would be virtually forced out of business. Another action was his ACA Obamacare, which weighed down companies with virtually untenable financial requirements and new taxes for providing mandatory healthcare coverage for their employees. These are just two of the most visible of an uninterrupted 8-year string of anti-business actions on his part. The net result of Obama’s web of politically-motivated anti-business taxes and regulations was an incredibly weak economic recovery, one that averaged only about 2% annual GDP growth from 2010-2016.

The real culprit of Obama’s actions was, of course, the creation of tremendous uncertainty. Companies simply didn’t know what new punishment, regulation or tax awaited them around the bend. One anti-business action after another was flung at them by the Obama administration; companies were shell-shocked into inaction. They dared not make a risky move in terms of aggressive expansion or major capital investment for fear of yet another social justice landmine being tossed in their path.

Whether it’s an individual, the head of a household or the CEO of a billion-dollar company, when the outlook is uncertain and likely negative, it’s human nature to play things conservatively, close-to-the-vest and take no chances. People spend the bare minimum, just enough to get by. Families cut back: No new car or extravagant vacation this year. Not until things improve. Companies don’t expand and they don’t hire beyond what’s absolutely necessary. They go into cost-cutting survival mode, hoping to merely ride out the storm and keep their heads above water.

That is precisely the negative atmosphere that Trump has removed and that’s why things are so much better. Buyer psychology is buyer psychology, regardless of scale. “Buyers”—individual consumers, heads of households, hiring agents, corporate purchasing managers, expansion-minded CEOs—all feel immeasurably more confident and certain about the economic landscape now, under president Trump, than they did under Obama. People don’t feel that they’re going to be blindsided or have the figurative rug pulled out from underneath them. This administration has earned the confidence of the business community by rolling back punitive regulations and lowering taxes in a common-sense fashion and it shows in the employment gains across all demographic groups, the markets’ performance and the GDP growth, which is averaging above 3% and poised to go higher, something that eluded the anti-business Obama administration.

President Trump deserves direct, unequivocal credit for the current economic turnaround. His removal of unneeded, punishing regulations and his tax-cutting measures have sent an unmistakable signal to buyers of all stripes and sizes that the country’s business conditions really are better and it’s safe to come out now. President Trump understands “buyer psychology” the way few, if any, past presidents have. This is a prime example of presidential leadership, coming from a skilled, experienced businessperson and exercised to the good of all Americans.

 

No Such Thing as “Democratic Socialism”

© 2018 Steve Feinstein. All rights reserved.

The new darling of the Democratic Party and the liberal mainstream media is Alexandria Ocasio-Cortez, the bright-eyed, 20-something upstart who upended long-time House member Joe Crowley in a New York state Democratic primary a few weeks ago. In their breathless, frenzied rush to anoint Ocasio-Cortez as the next coming of the Savior of the Nation, liberals across the land have wholeheartedly embraced her call for “Democratic Socialism.”

Ignoring the fact that Bernie Sanders espoused essentially the exact same things in the last presidential campaign but was unceremoniously and dishonestly pushed aside by the Democratic Party in favor of Hillary Clinton, what exactly is this “Democratic Socialism” that seems to have everyone on that side of the fence so atwitter these days?

What Democrats think it is sounds good: Income equality, a fair living wage for everyone, plentiful employment opportunities, quality healthcare coverage for all, affordable college education for all who want it, easy access to affordable, quality housing, and a tax system where the so-called rich pay their “fair share.”

While they’re at it, the Ocasio-Cortez’s of the world would also abolish ICE while ending most immigration restrictions, end what they see as our destructive international interventionism and put a stop to Israel’s wholly unjustified occupation and oppression of Palestine. What these last three have to do with either “Democracy” or “Socialism” is unclear, but there it is anyway.

Implicit in the entire discussion of their prized new order is that everything about the American economy, way of life and culture that is to their liking would remain securely in place, unaffected by the transition to Democratic Socialism. That, of course, is preposterous. The aspects of daily American life that people like and take for granted—plentiful food availability at well-stocked supermarkets, instant access to news, sports and music, the ability to get product information, make purchases and have them delivered the next day, cheap and plentiful fuel availability, an uncountable variety of non-essential consumer goods, from toys to fashion clothing to jewelry to entertainment electronics and their associated services, and millions of other items—are all made possible by the capitalistic/profit-oriented structure of our economic system. If the private business profit incentive is removed, as is the case in a socialist economy, the underlying competitive impetus for providing those goods and services disappears. It’s a zero-sum game: the more “socialism” that is introduced into the economy, the less efficient that economy becomes, because lessened private competition results in fewer choices and a diminishing incentive to increase efficiency or reduce costs.

Proponents of so-called Democratic Socialism never actually explain where the money needed to pay for all the largess will come from. There is a limit to how much simply taxing the rich will produce. Taxes on services and sales transactions would need to be raised to a stifling degree, with a commensurate negative effect on economic activity.

Europe’s supposed nirvana of universal healthcare is, in reality, a boondoggle of smoke and mirrors, where the average person has limited access to what we would consider routine medical care, at a level far lower than the average American could ever imagine. In Italy, for example, patients usually bring their own metal eating utensils and towels with them, since those are often not provided. Toilet paper is often scarce in the hospital as well. For childbirth, expectant mothers usually bring her own topical medicines, sanitary products and newborn diapers. Visitors are not asked to leave by 8:00 PM as is customary in U.S. hospitals. On the contrary, patients are advised to have a visitor stay overnight with them, because nurse staffing levels are far lower, as a matter of normal course. Bedding is not provided for overnight visitors, however.

Patients do have access to doctors and medical care via the national health system, but non-critical conditions and injuries receive lower priority and delayed attention. If a patient desires American-style “on-demand” care, they must simply pay for it out-of-pocket, an option not possible for all but the wealthiest citizens.

I know this first-hand, from an American family member living there for fourteen years and having had three children in Italy. She is fortunate enough to live in a high-income household, well above the European norm. They get around the limitations of EU-styled universal healthcare by being able to pay for any extra care they need. But that access is simply not available to the average Italian, heavily-taxed $8.00/gallon gasoline notwithstanding.

Let’s look at one other fantastical promise of Democratic Socialism: affordable college for anyone who wants it. The government can’t make college “affordable.” When the government artificially corrupts the education marketplace by injecting billions of dollars into the mix in the form of aid, scholarships, stipends and the like, they don’t reduce the ultimate cost of college. They increase it. Secure in the knowledge that a very significant portion of their students get artificially low-rate loans and generous grants/financial aid, the colleges themselves simply raise their tuition, salaries and fees—at a rate far in excess of inflation—confident that the Government will be handing out money to the students so they can pay for a significant portion of their college expenses.

What’s needed in the education marketplace is less government involvement, not more. Government-provided funds distort and obscure the real cost of education. College pricing is higher, not lower, because of government money. Remove the artificial effect of the Government’s likely one-third or more share of the $70,000 cost at Boston University and virtually no one would be able to go there. If Government-subsidized financial assistance was removed from the equation, then colleges would be forced to compete with each other in the open market for their “customers” hard-earned money. College costs would go down and the services and value they offered would go up, as the free market imposed its ruthless, unapologetic competitive lessons on the various college “brands.”

Capitalism is the best answer for raising the standard of living and delivering greater opportunities to more people. The more government is involved—funded by higher and higher taxation—the more 6-month waits we have at VA hospitals, the more $70k tuitions we have at colleges and the more $50 hammers we have being purchased by the Pentagon. Capitalism is far from perfect and not everyone benefits to the same degree—but it’s fundamentally superior to everything else. It’s kind of like what Churchill said about democracy: “Democracy is the worst form of government, except for all the others.”

“Democratic Socialism,” as envisioned by its proponents, doesn’t exist. Not in the real world. It’s just another pipe-dream fantasy with which hucksters like Ocasio-Cortez hope to fool unsuspecting, uninformed, entitlement-minded voters. Or worse yet, themselves.

 

Ford Doesn’t Have a Better Idea

© 2018 Steve Feinstein. All rights reserved.

Remember many years ago when Ford’s marketing tagline was, “Ford: We Have a Better Idea.”? Well, Ford Motor Company—the second-largest automotive company in America—just made a stunning announcement the other day: They announced that a tall hatchback version of the compact Focus and the iconic muscle car Mustang will be the only two cars it offers for sale in the North American market in the future. It will drop its slow-selling sedans like the Fusion and Taurus and concentrate primarily on the lucrative pickup and SUV categories. The Ford F-Series pickup trucks have been the country’s best-selling vehicles for decades. Ford will also be bringing back a new version of the mid-sized Ranger pickup.

Is this a brilliant, ahead-of-the-curve move that will leave its competitors flat-footed and unable to respond or is it a reactionary knee-jerk response based on today’s transitory conditions?

The automotive market has undergone a fundamental transformation in recent years as SUVs have supplanted the traditional passenger sedan as the vehicle of choice in almost every demographic buying group. SUVs alone now garner more than 40% of the vehicle market, compared to the near total dominance of the traditional passenger car only a few decades before. The buyers’ perception of the SUV’s greater passenger/parcel-carrying versatility coupled with the much-improved fuel economy of the newer compact SUVs has rendered the traditional sedan obsolete in many people’s eyes. Add to that the near-universal availability of AWD on virtually every SUV and their undeniably higher, more commanding driver’s position and it’s easy to see their growing appeal.

Ford’s decision to curtail its participation in the sedan sector mirrors that of Chrysler. Chrysler ended production of its mainstream but slow-selling compact Dodge Dart and mid-sized Chrysler 200 in 2016, concentrating instead on growing its ever-popular Jeep brand and launching its new, cutting-edge Pacifica minivan to universal critical acclaim.

Even stalwart passenger car brands like Honda are not immune to the shifting tastes and buying preferences of the newest generation of automotive customers. The excellent all-new 2018 Honda Accord—a mainstay of Honda’s line-up and arguably the cornerstone of the Honda brand—is languishing on dealers’ lots, missing sales projections, as prospective buyers pass it over in favor of Honda’s expanded line-up of SUVs such as the best-selling CR-V, the new-for-2017 compact HR-V and the recently re-styled Pilot.

One interesting unintended consequence of the shift from the popularity of passenger cars to SUVs is that SUVs (as well as pickup trucks and minivans) are considered “light trucks” for purposes of CAFE (Corporate Average Fuel Economy) calculations. As of 2010, the minimum average passenger fuel economy had to be 27.5 MPG weighted average in a given brand’s sales mix. For every gas-guzzling 18 mpg luxo-sedan a carmaker sold, they had to offset that with the sale of a 36 mpg gas-sipping carette in order to achieve the 27.5 mpg average.

But light trucks are held to a far lower fuel economy standard. In 2010, it was only 23.5 mpg. And with the lower-economy light truck category grabbing an ever-larger share of sales, the actual total combined average economy of all new vehicles sold is lower because a higher portion of those sales are low-mileage trucks instead of higher-mileage cars. The Government’s attempt to legislate higher fuel economy (for the ecological good of lower CO2 emissions and less need for environmentally-intrusive oil exploration and extraction) has run afoul of the real-world laws of consumerism and market choice. If they have the freedom to do so, people will buy the product or service that best suits their needs, which is not necessarily the one that Governmental central planners had in mind.

Ford may well find that it’s new “less-car” line-up decision is premature and ill-advised. The oil/gasoline market is subject to chaotic variances and disparate influences. While relatively linear factors such as long-range market-based supply/demand trends and improving exploration/extraction technology can be thought of as somewhat predictable, there is no way to foresee or prepare for a market-changing event such as extreme Mid-East geo/political unrest or a cataclysmic weather event that interrupts supply. A quick look back at the history of retail gasoline pricing in the U.S just in the past few decades will show repeated wild swings from well under $2.00/gallon to over $4.00/gallon, back and forth several times. Just when it seems as if pricing will never be low again, the bottom drops out. Just when consumers start feeling over-confident that high gasoline pricing is behind them forever, it shoots back towards $4.00.

Given the very long lead-time for designing and producing an all-new car, Ford is certainly taking quite a gamble by announcing the elimination of their high-mpg sedans in favor of lower-mpg SUVs, should the gasoline market reverse into high-price territory.  And it seems to be doing just that: The improving world economy has spurred the demand for oil and the price of crude oil (and hence gasoline pricing) has shot up dramatically in the last twelve months.

The takeaway is this: Under the old rules, where the purchase of individual cars and trucks comprised a huge segment of the U.S economy and those cars and trucks were powered by oil-based fuels, large and small vehicles would fall into and out of favor, depending on the arbitrary whims of the world’s oil markets. During times of $1.75/gallon gasoline, the bigger the SUV, the better. When gas is $3.85/gallon, the Civics of the world sell for $5000 above sticker.

But we’re not playing under the old rules anymore. As ride-sharing, “calling an Uber” and self-driving cars (available for hire as needed on a per-trip basis) continue to become more prevalent, individual car ownership will decline and lose its position as a visible, conspicuous symbol of a person’s economic standing. This shift in consumer spending will have a major impact on the economy. People will not desire to own the car that transports them from Point A to Point B any more than they would want to own the train they ride on from Boston to NYC. Not being tied into permanent ownership, people will simply hire what they need at that particular time: a mid-sized SUV to pick up Johnny and the team from Little League practice; an elegant quiet luxury sedan when two couples are going out to a nice restaurant on Saturday night.

The other rule that Ford is ignoring is that oil-based fuels will not likely be the predominant personal transportation fuel for much longer. If Ford thinks that because current gasoline pricing is moderate then consumers will show a strong preference for SUVs over sedans, they’re already betting on the wrong horse, given oil’s upward direction.

A gutsier—but actually more defensible—move would be for Ford to have announced that they were discontinuing their gasoline-powered sedans in favor of a new lineup of hybrid and electric SUVs and pickups, with available optional self-driving capability. Although Ford has made vague statements about making a “full commitment” to alternative propulsion vehicles, they’ve given essentially no specifics or timetable.

I’ve been wrong before, but it seems to me that Ford is charting their course with faulty maps. Perhaps it would be more accurate to say that Ford’s maps are actually fine—they just need people who can read them properly.

 

 

 

Play Ball!

© 2018 Steve Feinstein. All rights reserved.

Here’s a thought and I’d love to hear some responses.

There are about 120,000,000 households in the US. That’s about 2.75 people per household, since the total US population is around 330,000,000 people.

Now, the poverty rate is around 15% or roughly 50,000,000 people living in poverty. I realize that poverty is a relative term, whose meaning changes over time and in comparison to other countries. There is a huge difference between living between “poverty” here and living in poverty in one of the poorest countries in Africa. The meaning and nature of “poverty” can also be said to be quite different in the 1930’s to what it is today.

Nonetheless, let’s not get bogged down in those semantic particulars. Let’s just agree that “poverty” means whatever you understand it to be.

Liberal Democrats are always carping about so-called income inequality, the gap between what the richest and poorest make, or the difference between a CEO’s compensation and that of their average employee. In reality, it’s a non-issue since one person’s income is pretty much totally independent of another’s. Your neighbor’s financial fortunes do not affect yours. If they suddenly hit Powerball, the income inequality between the two of you has abruptly skyrocketed to astronomical proportions, yet, for you, nothing has changed. Your financial ability to provide for your family and pay your bills is totally unaffected by whether your neighbor’s income is equal to yours or 1000 times greater than yours. The economic concept of “income inequality” is a hoax, a straw man, vaporware. It’s merely a liberal pretext to justify higher taxes on the wealthy and create evermore income redistribution policies to buy voting support.

However…what if there was a solution to poverty? Immediate, total, complete, permanent? There is.

Jeff Bezos Bill Gates, Tim Cook, Warren Buffet. They own Amazon and the Washington Post, Microsoft, Apple and Berkshire Hathaway. They have lots of dough—combined, over 500 billion dollars. Bezos’ personal fortune alone is estimated to grow by 2.8 billion dollars/day, an amount normal people can’t actually comprehend.

They could combine to give everyone in the country a few thousand bucks. and they wouldn’t even notice. $76 billion (that’s four thousand bucks to every person in America, young, old, black, white, brown, chartreuse, any/all genders, etc.), to them is ppfffftttt, nothing. That’s 76 billion. They’ve got 500. In a month, they’ll have 75 billion more. In two months, 150 billion more.

In English: It’d be like giving away 76 dollars if you had 500 bucks in your pocket. It’d be like buying dinner for yourself and a friend.

Tomorrow. They could do this tomorrow. They’re generous, caring, feeling, compassionate, concerned, green, altruistic, liberal icons. So they should, right?

Let’s look at households—120 million. 15% are in poverty, so that’s 18 million households living in poverty. How much debt are they in? Let’s look at that realistically. What will it take to get them out of debt, pay off their bills? One thousand each? 5 thou? 10 grand for each household to get the lights back on, buy some decent clothes, fix the ’02 Olds, send Jr. to community college? Just enough to get them out of poverty. Let’s say an average of 10 grand for 18 million households.

That’s 180 billion. They have 500 billion now. In two months, they’ll have 650 billion. Two months after that, they’ll have 800 billion. They can easily afford the 180 and still fly first-class to Marseille for vacation.

The interesting thing is why no Democrat/liberal politicians have called for this. The Dems seem to favor wealth re-distribution to directly help the impoverished. Here is income-redistribution to the nth degree, exactly like the Dems like it. It’s perfect. (I have a sneaking suspicion that Dem politicians only resent Republican fortunes, like those infamous brothers they’re always complaining about. It seems as if Democratic/liberal fortunes get a pass.)

Nonetheless, the Big Four—liberal or not—could make their donation directly to the Treasury, who has all the data, names and addresses of each family living below the poverty line. The Four could make a wire transfer tomorrow. Checks could go out in two weeks. Poverty would be over by the beginning of the baseball season.

Play ball!

 

 

You’re Fired!

© 2018 Steve Feinstein. All rights reserved.

“You’re fired!” Those are the sweetest two words in the entire language. Those two words make possible everything that’s good in our daily lives: our freedom, our safety, the many modes of transportation at our disposal, the rich abundance of foods we get to choose from, the widely-varied forms of entertainment we enjoy, the incredible array of medical technologies that keep us healthy and the expansive selection of schools that educate us.

“You’re fired.” Those are the lyrics to the Anthem of the Free Market, which is the engine that keeps us safe, healthy, well-fed, entertained and educated. Those are the words that indicate that, in our system, there is personal accountability and responsibility and that there are negative consequences for doing a poor job.

The most obvious and familiar indicator of the free market is the profit potential that exists for success. Whether it’s an innovative new medical device or life-enhancing pharmaceutical, a viable large-scale alternative energy source, or a great new political drama on Netflix, in a market economy, virtually unlimited profits await the inventor or company that delivers a winning product or service, and deservedly so. Driven by hungry competitors looking to wrest their paying customers away, individual entrepreneurs and large corporations alike are motivated to perform at their best in order to stave off their adversaries. The consumer benefits from continually improving products as a result.

The penalty for marketplace failure is financial ruin. If the quality and value of a company’s offerings slip, then the company loses market share or goes out of business altogether. The threat of this degree of disastrous marketplace penalty (going out of business) is an even stronger motivator than the promise of unlimited riches. Being one of many successful entities in one’s realm is perfectly acceptable; there is no absolute requirement that you be no. 1, as long as you’re active and viable. Mazda is a profitable and ongoing company. They don’t have to overtake General Motors to be considered a successful business. But they do have to avoid making the ill-fated product and marketing decisions that sank American Motors and Studebaker. The threat of free-market penalty is what drives them.

The concept of free-market reward/penalty applies perfectly all the way down to the individual worker level. Any individual can be considered to be a small “company”: they have their product attributes, they are in a competitive environment against other “companies” vying for the same “customer,” perhaps a promotion or a new position. When the individual performs well—a TV writer creating a compelling script, an engineer improving the fuel efficiency of an engine or a research scientist synthesizing a new pain reliever without side effects—the company that employs them becomes stronger in their particular market sphere and either maintains or strengthens its financial standing. Employees continue to be employed.  Money continues to be earned. Bills continue to be paid.

It’s the fear of marketplace penalty that keeps many individuals motivated to go a good job. Yes, of course many people do an excellent job because of personal pride and a strong work ethic, or because their innate talent and aptitude enables them to perform their responsibilities well, without undue effort. But for many, the unpleasant prospect of losing one’s earning capacity is a prime motivator of doing a good job.

The aforementioned “unpleasant prospect of losing one’s earning capacity” is far, far more prevalent in the highly-competitive for-profit private sector of a market economy than it is in the Government-employed public sector. The cliché of the uncaring, inattentive DMV worker who shuts their window and puts up a “Closed” sign just as you reach their station at 30 seconds before 5:00 PM exists for one reason and one reason only: for the DMV worker, there is essentially no “marketplace penalty” for barely-acceptable, mediocre work. The quality of their work doesn’t affect the profitability or continued existence of their employer. The Springfield DMV is not in free-market competition with other DMVs and that window clerk’s performance has no real bearing on anything. Since they really can’t be fired for anything other than a gross dereliction of responsibility or some horrendous personal/moral transgression, it’s easy to understand the “I don’t care, it’s 5:00 PM, I’m closed” attitude.

This chart is illustrative of the marked difference in year-on-year price increases between the competitive for-profit private sector and the lessened financial accountability of the Government sector. The categories that show the greatest cost increases are the areas in which Government subsidies play the largest role. When the entities involved know that “free money” in the form of Government payouts are coming their way, costs tend to rise. The competitive aspect of keeping pricing low relative to market competition is not there.

The healthcare/hospital services area is particularly interesting. When Government money—“someone else’s money”—pays for medical services, costs go up dramatically. But when the individual is paying out of their own pocket and free-market rules apply, then the providers engage in fierce competition, improve their quality and lower their costs, in an attempt to woo the customer. Nowhere is this clearer than in the areas of cosmetic surgery and corrective eye surgery. Neither is generally covered by insurance or Medicare; customers must pay with their own free-market discretionary cash. As in every other area of for-profit consumer product development, quality and innovation are way up and costs are down compared to what was available just 20 years ago.

The liberal utopia of Government Run Everything will never work. Individuals must feel as if their own job security is directly related to the caliber of their work. Companies must operate with the knowledge that their continued existence is not assured and that customers are not automatically going to buy their product or service—they must be won over with quality and value. Private sector individuals and companies can be “Fired!” The DMV worker has no such fear, nor are the Meriden Public Schools worried about going out of business in the face of new competition.

While some Government/public sector portion of the economy is necessary, the more we can get the phrase “You’re fired!” into our economy, the better things will be for everyone.

 

 

The “Real” Russia Collusion: Oil

© 2018 Steve Feinstein. All rights reserved.

Russian collusion is indeed a major issue threatening the well-being of our country. It’s just not the Russia collusion that’s been bandied about in the news for over a year. No, it’s Russia colluding with OPEC to intentionally raise world crude oil pricing. That is a real threat to our economy and living standard, unlike that other, totally imaginary Russia collusion.

In case you haven’t been paying attention, crude oil prices have been on an upward tear for the better part of the last two years. From a low in the high-20’s/barrel range in February of 2016, WTI (West Texas Intermediate) closed at $65.45 on Friday Feb 2nd. Goldman Sachs goes so far as to say that North Sea Brent crude oil (the other benchmark oil besides WTI) will likely top $80 within six months.

WTI generally runs about 5% lower, so look for WTI to be around $76/bbl by the summer of 2018.

Before we look at why this is happening, it’s a good idea for a quick refresher on the four main drivers of crude oil/retail gasoline pricing. Why is oil and gasoline rising? What’s happened?  First, let’s dispense with any simplistic “the oil companies are conspiring to raise prices” nonsense.  That’s not what’s happening. Oil is a commodity, traded on the world market like any other commodity, such as gold, copper, natural gas, diamonds, etc. Oil is subject to market forces like every other commodity is.

There are four main factors that influence the price of crude oil-retail gasoline on the world market:

  1. World supply/demand
  2. Exploration/extraction activity and technology
  3. Refining/delivery capacity
  4. Geopolitical influences (Iran, North Korea, terrorism, etc.)

(There’s also a 5th factor: currency value, or the “exchange rate,” since oil is traded in dollars. However, this is normally a peripheral factor that only shades oil pricing a little bit one way or the other.)

Today’s situation is primarily one of tightening supply coupled with greater demand as the worldwide economy, led by the U.S., continues to improve. See #1 above. When the world was awash with over-abundant oil in 2015-6, with loaded tankers sitting by the dozens offshore, unable to unload their cargo for lack of empty storage facilities, it seemed as if low-priced crude oil and $1.899/gallon gasoline was a permanent fixture on the US economic landscape. Never again would we be beholden to the arbitrary whims and evil manipulations of greedy, anti-American, anti-Semitic Arab oil sheiks.

The over-supply of oil was primarily because of the shale oil boom (fracking) in the U.S. With newly-developed exploration and extraction techniques, America was finally able to tap the previously unreachable mother lode of crude oil trapped in the huge shale rock deposits in the western and southern parts of the continental U.S. With a huge influx of additional oil being delivered to the world market, supply exceeded demand and world pricing plummeted.

At first, OPEC was unsure how to respond. Initially, Saudi Arabia actually increased their oil production in an effort to lower world pricing even more and drive the U.S. shale producers out of business (since shale oil has a far higher cost of production than Saudi oil, which is easy to extract).

That didn’t work. Shale extraction technology got better and better and the Saudis were never able to force pricing down far enough to permanently hurt the American frackers.

So, they resorted to the tried-and-true economic dictum of supply and demand. Led by the Saudis, OPEC instituted strict oil production quotas to limit the amount of oil that they would supply to the market. Restricting supply would re-balance the market and bring world oil demand and supply back into equilibrium, thus raising prices as market forces began to have their normal effect.

However, Saudi Arabia is only one of the top three oil producers in the world. Although the combined oil output of the 14 OPEC member countries is certainly significant (over 40%), the other two top three countries are the U.S. and Russia, each of whose oil output is roughly equal to that of Saudi Arabia (OPEC’s largest member). The Saudis convinced Russia to voluntarily join them in their production quota. With all of OPEC now joined by another top-three producer—Russia—the world’s oil supply has come down considerably, much faster than anticipated. Pricing is on pace to more than triple from its 2016 low and the impact on our economy and spending sentiment will be significant.

Note that the recent rise in pricing has essentially nothing to do with reason #4—terrorism and geo-political tension. As of right now, there are no hostilities with North Kores to rattle the world commodity markets, Israel is not at war with anyone and since the institution of the Iranian nuclear deal a few years ago, Iran is once again supplying oil to the world market without any problem. So the terrorism front is quiet right now.

The rise in price is all pretty much #1—supply and demand, with supply being restricted by the OPEC-Russia agreement. That fact points out the truth that even though total US oil production exceeds 10m bpd, the U.S. alone can’t determine the ultimate price of oil on the world market. We can be an influential factor—larger now, to be sure, than 20 years ago before the shale boom—but the U.S. can’t control oil pricing by itself.

Nor does the potential of future alternative fuels have much influence on today’s pricing. Some industry observers have opined that EVs (electric vehicles) will reduce worldwide oil demand by the equivalent of Saudi Arabia’s entire current oil production by 2040. But that, in reality, is just a random individual guess and such statements have no actual impact on today’s pricing.

Applying the rough approximate numerical multiplier of 4x to WTI crude to get U.S retail gasoline pricing, that means that U.S retail gasoline will be above the psychologically-important $3.00 mark (4 x 76 = $3.04) by this summer. People see the price of gasoline on the corner gas station every day as they leave the house. It’s like a daily “scoreboard” telling them whether they’re winning or losing their personal economic game. When Joe/Jane middle-class sees $2.27, they feel like they’re winning, like they can spend a little more somewhere else, like things are going in the right direction.

When they see gasoline rise very quickly, seemingly for no good reason, to $3.04—especially after a prolonged period well under $2.20—it’s a very negative sign. Maybe things are getting worse and I haven’t been paying attention. Maybe I should play things safe for a while, keep things close to the vest. Let’s cut down on dinners out and tell Johnny, sorry, no new sneakers just yet. Yeah, I know my brother Bill finally got a job again after two years, but let’s not get too carried away.

Rising oil pricing impacts everything at retail, in the construction and agriculture sectors and in manufacturing, because everything is delivered from the factory to the seller and from the seller to the end user by a transportation device that uses an oil-derived fuel. Milk, sushi, iPhones, lumber and fertilizer are all made and delivered with the assistance of oil-based products. Rising oil pricing also negatively impacts business and domestic heating and utility pricing. It’s like a tax that takes billions and billions of dollars out of the economy, wrecks the exuberant business outlook and shreds consumer confidence. Rapidly-rising oil pricing is a five-run uprising in the 9th inning of a game you were leading 8-1 after eight innings. Now you’ll just be happy to hang on for the win.

Consumer and business sentiment is central to the spending that drives our economy, the very backbone that supports it. Anything that puts a damper on that sentiment will drag down spending and hence drag down economic growth along with it.

Russian “collusion” is indeed a big threat to our country’s well-being: It’s the collusion between OPEC and Russia to restrict the world’s oil supply and drive up pricing. It’s working and the tangible, undeniable, clear-as-day proof is posted in big numbers on every street corner. Maybe the media should pay some attention to that.

 

Sometimes Late is Worse Than Never

© 2018 Steve Feinstein. All rights reserved.

It seems like timing is everything in life. Job opportunities, investments, political initiatives, travel schedules, etc.—things can work out to maximum advantage or with disastrous results depending on a small shift in the timing of the event.

This is certainly true in business. Companies that have an innovative, exciting new product under development have to balance the need to announce its existence to the market on one hand with their ability to actually deliver the product in a reasonable time frame on the other hand.

Announcing an exciting new product that embodies a brand-new technology or that breaches a previously unreachable price barrier conveys undeniable market advantages to that company. The industry press writes about it and the company enjoys great publicity that shines not only on the new product, but brings great visibility and attention to the company’s other offerings as well. The competition scatters off in a frenzied attempt to match the new product, but since they usually have no idea exactly how the new technology actually works (only having read the press releases and trade write-ups), their efforts are unfocused, time-consuming and expensive.

All of this redounds to the benefit of the company that announces the cutting-edge new product. They have the spotlight. Their market attractiveness goes way up, since customers will want to be “on board” and “first in line” when the new widget is delivered.

Announcing a new product is a double-edged sword, however. Wait too long, and a competitor may beat you to the punch, robbing your forever of your day in the sun. Or even worse, if a company waits too long, the market conditions may shift away from the new product, rendering it irrelevant. If the company had made a more timely announcement, they could have moved the market’s expectations in their direction.

But do it too soon, and you risk burning your goodwill equity as customers and industry analysts alike get tired of waiting for an oft-delayed production date. The market will accept just so many delays and excuses before they write you off completely. The very worst thing that can happen to any company is when their much-ballyhooed invention is delivered to a “So what?” reaction instead of a “Yes! It’s here!” reaction.

Two excellent business examples come immediately to mind.

The first is the Tesla Model 3 electric car. Announced with great fanfare in the spring of 2016, it was going to be the first affordable electric car, suitable for the masses. At an expected price in the mid $30k range, it was no more expensive than a fully-equipped Honda Accord EX. Beautiful, fast and free of the chains of gasoline power, the Tesla Model 3 would be delivered in large quantities by the fall of 2017 and it would single-handedly usher in the era of the practical EV, ending forever the internal combustion engine’s monopoly on the personal automotive market.

It hasn’t worked out the way Tesla led us to believe it would. Maybe they knew all along that they would miss their large-quantity manufacturing dates as badly as they have, but they kept reassuring industry analysts all along that they’d meet them. Their early announcement has spurred rivals like General Motors to fast-track their Bolt competitor, which now (along with other challengers like the new Nissan Leaf) is poised to significantly reduce Tesla’s market impact with the Model 3. Tesla did enjoy the market advantages that accompany an early announcement of a game-changing new product (enhanced corporate publicity, greater attention on their existing products, even financial rewards in the form of advanced Model 3 deposits), but they are paying the penalty now of over-promising and under-delivering: increased skepticism on the part of both industry analysts and frustrated customers and the effective disappearance of their once huge EV technological/market lead.

The second great example of the perils of product announcement timing concerns a small company in the consumer loudspeaker business named Atlantic Technology. In the early 2000’s, the stereo speaker market was changing. The big, ugly freestanding speaker boxes that were everywhere in the 1970’s were no longer acceptable in the style-conscious 2000’s. Built-in speakers, known as “in-walls,” became more popular. These speakers—mounted flush in the wall or ceiling like a heating vent—were practically invisible. No ugly “wooden coffins” ruining the décor. Style-wise, they were the perfect answer.

From a sound quality standpoint however, in-walls were mostly terrible. The wooden box enclosure of those old-fashioned speakers was a major contributor to their great sound quality. Without getting overly technical, it’s critically important to the quality of sound reproduction to precisely control and optimize the amount of air behind a high-fidelity speaker. Simply cutting a hole in the wall’s sheetrock and mounting a speaker in there might get you some kind of sound, but it wouldn’t be true high-fidelity accurate sound.

Atlantic Technology came up with an incredibly clever and simple way to combine the best of both kinds of speakers: their speakers mounted in the wall, as easily and invisibly as conventional in-wall speakers. But…Atlantic perfected an “enclosure” behind the speakers that was an integral part of the in-wall speaker assembly. Instead of just cutting a hole in the wall and mounting a “naked” speaker—like everyone else was doing—Atlantic had an enclosure behind the speaker, sized perfectly to fit in the 3 ½-inch depth of the standard 2 x 4 studded wall. Atlantic’s speakers mounted as easily as anyone else’s and looked similarly invisible once in the wall. The difference was that the Atlantic Technology’s in-wall speakers sounded far, far better, because they had an optimum-sized enclosure behind the speaker, just like the best free-standing box speakers.

Unfortunately, Atlantic showed the new speakers in their very early prototype form at an industry trade show well over a year before they’d eventually go into production. From a manufacturing standpoint, it was a complicated product and there were a lot of time-consuming kinks that needed working out. Six months later, Atlantic showed them again at another industry event, accompanied by another round of press releases promising that “we’re really close now.” Six months later, they did it all again. When the speakers finally came out some 18 months after their initial public unveiling, the speaker market shrugged with bored indifference. Atlantic had cried wolf once too often. What should have been a smashing success that propelled a small company to a new higher level of market visibility and profitability was instead a drawn-out, cash-draining slog that nearly put the company out of business.

Any great new undertaking—whether it’s a new product, a life-changing medical procedure, even a highly anticipated political maneuver—is subject to the laws of optimum timing. It’s a delicate balancing act of predicting the market’s demand and readiness, assessing how far in front of your competitors you’ll be and a very realistic self-evaluation of your ability to deliver the promised entity within a timeframe that satisfies all these conflicting requirements.

Announce and promise too soon, and your target customers will tire quickly of your unfulfilled promises and missed deadlines, rendering your eventual delivery a ho-hum non-event. Wait too long to announce, and your competition may get there before you or you run the risk of introducing a product, service or legislation that no longer has real meaning and value to its original market. In business, economics, politics and many other human endeavors, timing is everything. Late is often worse than never.

 

Random Thoughts on Recent Happenings

© 2017 Steve Feinstein. All rights reserved.

No. 1—The Tax Bill

Buried away in a postage stamp-sized small parcel of this bill was the authorization to –finally!—open up the ANWR region for oil exploration. If you’ve paid attention to this issue over the last, oh, 30 years or so, I don’t have to explain that very tongue-in-cheek reference I made as to the size of the bill.

It’s not going to “ruin the environment.” The existing Alaskan Pipeline hasn’t disrupted your precious caribou nor has it besmirched the Alaskan countryside with all manner of nasty accidents. The irony is that we just may not really need ANWR’s oil at this point. When geological experts first predicted that the ANWR region like held a treasure-trove of billions of barrels of crude oil, fracking had not yet come of age. The world was still getting its oil the old-fashioned way: by drilling down for it, with conventional wells.

Fracking would come of age decades later, with horizontal as well as vertical drilling technology and the ability to drill several miles to reach the oil. Then, by injecting high-pressure water into the fissures of oil-soaked shale rock, the oil is released and able to be recovered. Not as easy and uncomplicated as those simple vertical wells in the Saudi desert, but we’ll take it. Shale fracking’s contribution to the world’s oil supply is directly responsible for the world-wide drop in oil prices that has made your gasoline $2.47/gal today, a far cry from the $4.08/gal you were paying in the pre-fracking days of 2008.

Tapping ANWR’s massive oil reserves will ensure American energy independence for decades to come—oil-based independence. It’s just that with the emergence of EVs like Tesla and the Chevy Bolt, gasoline (oil)-powered cars are on the decline. How long before oil-based transportation is no longer the dominant format? 20 years? 40 years? It’s coming, and fast, so ANWR looms as a less important piece of the American energy puzzle than seemed possible just 20 short years ago. Twenty years ago, no one could have predicted either fracking or EVs. That’s how fast things move.

No. 1a—The Tax Bill

All through its gestation, up to and including its no-Democrats passage, the bill was denounced by its political opponents with every tired, trite, incorrect reason that Democrats always use to criticize any Republican-sponsored tax-reduction bill: It will only benefit the ‘rich,’ the Republicans are doing this only to reward their fat-cat donors, the middle-class gets nothing, it’s a sham, etc., etc. We’ve heard it all before. The only thing more remarkable than the predictable inaccuracy of their criticism is the certainty that Democrats will gladly take the tax relief and pocket it to their own personal benefit. As they should. But wouldn’t we all be impressed to see some liberal business owner give back the 14% break they got from the Gov’t (from 35% down to 21%) on their corporate taxes? To quote every liberal when you back them into a logic-based corner from which there is no escape: “Well, that’s different…..”

No. 2—The Move to Recognize Jerusalem and Nikki Haley’s Shredding of the UN

U.S. Presidents from Clinton onwards have stated with unequivocal certainty that Jerusalem is the capital of Israel and America will formally recognize that and move its embassy there. Except that no President, R or D, has had the nerve to actually do so. Don’t want to upset the Palestinians, since obviously the peace process is going so well, all the terror attacks against Israel have stopped and all the Arab/Palestinian organizations have decided to formally accept Israel’s right to exist.

So, Donald Trump announces that the U.S. will move its embassy to Jerusalem, in accordance with long-stated American policy. But because it’s Trump, the liberal media go wild with criticism and condemnation and American Jews—reflexively, incongruously liberal to the core—jump on the “Oh boy, oh boy, oh boy let’s criticize Trump” bandwagon. Never mind that Israel’s Prime Minister Bibi Netanyahu applauded the move. American Jews are opposed, and to the liberal American media, that’s what counts.

The UN introduced a resolution denouncing Trump’s move and the vote was overwhelmingly in favor of the resolution, declaring our recognition of Jerusalem as Israel’s capital to be “null and void.”

In response, Nikki Haley, our mince-no-words UN ambassador, said the U.S. will not forget who voted for the resolution. “We’ll be taking names and watching the votes.” The unmistakable implication, of course, was that since the U.S. alone provides over 20% of all UN funding and also props up the economies of dozens of countries around the world with our generous-to-a-fault foreign-aid programs, this aid should no longer be considered automatic in the future.

The American public is generally pretty annoyed by the one-sided way in which the UN takes advantage of America’s generosity and the way the UN has become little more than a self-congratulatory forum for anti-Israel, anti-capitalistic, pro-globalist, pro-socialist platforms. As an organization, the UN does essentially nothing to promote world peace, but it does spend a lot of time and effort promoting countries like Syria and Iran to seats on the Human Rights council.

Haley called them out. But because she’s from the Trump administration, 50% of the American public and 95% of the liberal media will criticize her statements—even though in the privacy of their own thoughts, virtually everyone agrees with her.

How Will Non-Fossil-Fuel Cars Pay Their Way?

© 2017 Steve Feinstein. All rights reserved.

Federal and state gasoline taxes provide a very substantial amount of revenue. In fiscal 2014, the Federal gasoline tax of 18.4 cents/gallon delivered over $25 billion dollars to Federal coffers. State gasoline taxes vary from a low of 12.25 cents/gal in AK to 43.88 cents/gal in NY and a whopping 58.20/gal in PA and are balanced as part of the overall state tax ‘pie’ against that state’s property, income, sales and excise taxes. Regardless, the states’ gasoline tax represents a substantial portion of every state budget. Revenues from these local fuel taxes are supposedly earmarked for road/bridge/infrastructure maintenance and improvements, although like all taxes—Federal or local— they simply go into the General Fund, to be dispersed as the Federal or local lawmakers see fit.

No one likes paying taxes, but the gasoline tax was a relatively straightforward, uncomplicated affair from the time state gasoline tax was instituted in 1919 in Oregon and in the Federal 1932 Revenue Act right through the present day. Cars ran on gasoline; taxes were imposed on gasoline to bring in revenue. Unpopular, perhaps, but straightforward and understandable in its implementation.

Now the United States is on the cusp of a revolutionary change in the means of personal and commercial ground-based transportation. In the near-term (25-50 years, at most, according to most experts), cars and trucks not powered by fossil fuels will become a very significant portion of the transportation fleet of the country.

As that happens, the obvious, most oft-discussed effects will be a paradigm shift in the way the United States conducts its foreign policy (no longer beholden to unstable, hostile foreign entities simply as a way to preserve our unfettered access to their crude oil reserves) and the manner in which the absence of oil-derived environmental damage and pollution no longer affect domestic American environmental policies and historical political alliances to anywhere near the same degree as they do now.

Less discussed—if discussed at all—is the dramatic structural change to the mechanism by which both Federal and state governments collect a very major portion of their respective revenue. With no change to the current system of tax collection, oil-based tax revenues will fall precipitously as fossil fuel-powered cars comprise an ever-smaller percentage of the nation’s fleet.

One vague proposal afoot in some states is an unspecified “user” tax, a way of charging drivers for the miles they’ve actually driven, as opposed to the amount of fossil fuel they consume. Currently, drivers of fossil fuel cars subsidize the upkeep of roads and bridges completely for non-fossil-fuel drivers. Those cars use no gasoline; hence their drivers pay no gasoline tax and get a figurative “free ride.”

But how would a miles-based user tax be implemented? Would it be a Federal tax, a State tax or some combination of both? How would the percentages/proportion of user tax vs. gasoline tax be determined? Ostensibly, the total tax on motor vehicles would need to be kept at least equal to what it is now, so states could develop a dependable budget with known revenue sources. What would be the timeframe for bringing mileage user taxes on line and could taxpayers be assured of a commensurate rolling back of gasoline taxes as non-fossil-fuel cars began to dominate?

From a logistical/practical standpoint, how would a mileage user tax be implemented? Would it be similar to the current “Easy Pass” system whereby electronic sensors read a specific car’s transponder and assess the correct fee? Would road tolls be separate from electric fuel-based “road use” taxes or all rolled into one? Would a given car’s transponder indicate that it was a gasoline or non-fossil-fuel vehicle and the toll sensor would automatically dole out the correct fee? An extraordinary increase in the number and location of sensors would be required in order to capture the actual mileage driven by all drivers, even on back roads and side streets. One can only imagine the complexity of such widespread sensor deployment and the opportunity for fraud, unfairness and outright inaccuracy.

What about the relationship between Federal and state “user” fees? Right now, gasoline has a very specific, easily-determined amount of Federal and state taxation: 18.4 cents/gal Federal and whatever amount that particular State charges its motorists. Would a mileage-based user fee work the same way?

Other questions remain: If each state and the federal Government implemented the sensors at a different pace—complete coverage in some states, spotty in others, a highly likely scenario in the short run—how could there be an accurate fee assessment from one state to another as motorists embark on inter-state excursions? If sensor-based fees are tied into credit or debit cards, and are not cash-based, how does such a system allow for delinquent payers, poor credit, and individuals who eschew the use of credit/debit cards altogether?

This entire situation poses huge legislative challenges, many of which are simply unknowable in advance. If a per-mile use tax is deemed to be the way to go, design and installation of that sensor network needs to be put into place now, as opposed to waiting until non-fossil-fuel cars become numerically significant. Given our government’s propensity for being after-the-fact reactive instead of proactively preventative, the probability is extremely high that a huge bureaucratic revenue boondoggle awaits, one that will make the otherwise agreeable transition to non-fossil-fuel-powered transportation quite painful indeed. One thing is for sure: The gasoline tax is soon going to be the wrong way to raise revenue for infrastructure maintenance.

Electric Cars Will Revolutionize Politics, Too

© 2017 Steve Feinstein. All rights reserved.

 

Electric vehicles (EVs) are poised to have a major influence on the automotive market in the near-term future. We’re talking about pure electric vehicles, not stop-gap gasoline-battery “hybrids.” Like any paradigm-shifting technology, electric cars have started out with significant shortcomings. To date, they have been marked by exorbitantly high selling prices and driving ranges that are too short to be viable for daily, carefree use. But this is changing for the better, quite rapidly. Driven by the potential of huge market demand, R&D has dropped battery pricing very quickly and driving range is increasing to a point where EVs will soon be a workable alternative to internal combustion engine (ICE) cars.

In the opinion of many, the range needed for electric cars to be accepted by Joe/Jill Average Consumer without undue driving range anxiety is 350-400 miles. That’s a full work week’s driving with some safety margin built in, assuming an average 25-mile each way commute. That comes to 50 mi/day x 5 days = 250 miles. If you’re stuck in traffic because of an accident or unplanned construction, you still have 100-150 miles of ‘idle time’ safety margin. Looking at it another way, the drive from Boston to NYC is about 225 miles and LA to Las Vegas is about 260 miles, so a 350-400 mile range is just fine.

Electric cars are getting really close. This recent article (Aug 2017) from Ward’s Automotive

thinks by 2022, in about 5 very short years, they will be fully viable. Let’s paint that as overly optimistic and say 10 years. That’s still essentially immediate. We all remember ten short years ago—2007—like it was yesterday.

In the near term, the uncertainty/incompleteness of a nationwide charging station infrastructure will limit EV use to around town/commuter use, and restrict their use for cross-country treks and inter-state car-based vacations. In the early stages of widespread EV market penetration, it’s likely that two-car households will have one EV for short-range trips (where at-home, overnight recharging is possible) and one ICE vehicle for longer-range trips where the absolutely certain availability of remote refueling is a requirement.

For anyone under 65 or so, there’s a very good chance they will own an EV in their lifetime. For people simply going to work, an EV would be fine. They’d drive it every day and recharge it at home overnight one night a week. The idea of a remote “charging station” wouldn’t even enter the picture for them—and I suspect that’s the way a lot of people would use EVs early on.

Other than the inability of the Liberal/Green sect to be emotionally/intellectually capable of taking “yes” for an answer (reducing the oil companies’ stranglehold on their current dominant energy-providing position will rob the Green lobby of their most prized bogeyman), there is not really any net downside to anyone to the EV revolution. It’s not a perfect solution, but the prospects are quite good for a very solid Won-Lost record in upcoming seasons. Far more upside than down.

While there can be no disagreement that ICE cars are getting remarkably clean and efficient (the 2018 Accord—a full-sized, 5-passenger car—gets the remarkable mileage of 30/38 city/hwy and accelerates 0-60 in around 7 seconds!), the emotional/political tide of the younger buying generations is against them, and the thrust of that tide is inexorable. Much like scenario where the early flat-screen TVs had pictures that were inferior to the day’s best CRTs, the flat-screens took over anyway. The emotional pivot-point for EVs has been reached and the days of the 100% market dominance of the ICE are numbered.

Although much attention and publicity has been showered on the flamboyant, attention-seeking CEO/Founder of Tesla, Elon Musk, “Tesla” as a company is simply not part of this calculus. They’ve assumed the lead role and paved the way in people’s minds to the realistic possibility of actually owning an EV, and that’s a worthy contribution, but focusing on one man or one company misses the forest for the trees. Tesla’s eventual profitability or total demise is a minor aspect–very minor–of this story.

This is the story: EVs—from whatever sources—are coming in big numbers. Will it be 2022 like Ward’s says? 2030? 2040? Who knows. But with their lower maintenance and the fewer moving parts of electric drive vs. internal combustion engines, EVs are particularly well-suited to the coming expansion of driverless car-for-hire fleets, when individual car ownership is no longer the accepted business model that it is today. Make no mistake—a large, fancy, status-laden car or SUV is not the material goal for Millennials that it was for Baby Boomers and to a somewhat lesser—but still meaningful—degree for Gen X-ers. Today’s 27-year-old simply has other material/social things on their mind besides a Cadillac XTS or a BMW 7 Series. For many Millennials, a car is simply a “transportation appliance,” carrying no more emotional or egotistical importance to them than a lightbulb. It simply does a job they need done, whether that job is providing light or getting from Point A to Point B.

The flat screen TV vs. CRT analogy is essentially spot-on accurate. EVs may not be as “good” yet as ICE cars—just as early flat screens weren’t as good as CRTs—but the genie is out of the bottle and people will want a car free of petro-politics and petro-pollution. The supposed advantages of EVs in the consumer’s mind (whether totally accurate at this point or not) are just too appealing and therefore, the market is headed electric.

Here’s the political impact that EVs will have: When EVs become a significant portion of the on-the-road fleet, oil will be displaced as a primary land-based transportation fuel. OPEC will not be anything close to being as major a factor on the world stage as they are today, from either an economic or political standpoint. There will not be anywhere near as many millions of polluting ICE cars on the road. “Warming” will cease to be a dominant, divisive issue since car-produced CO2 pollution will decline precipitously. Foreign policy based on oil and access to foreign-held oil reserves will end. “Drilling” and “spills” as political/economic/environmental wedge issues will disappear.

The EV vs. ICE analysis is a complex subject, with emotions, false perceptions, and the Government’s thumb on the scale (in favor of EVs to the detriment of oil-based transportation) all playing a part.  But once there is widespread EV market penetration, be that in 5, 10, or 30+ years, the social/political issues of climate change, foreign policy strategy and alliances, environmental stewardship, and social/economic buying patterns/marketing/ownership will change in a big way. Forever.

Global Warming: The Classic Liberal vs. Conservative Argument

 

© 2017 Steve Feinstein. All rights reserved.

Here is the classic Liberal vs. Conservative Global Warming argument. I started it off with this shot across the bow:

“Global Warming is an irrelevant non-issue. One can believe the Warming alarmists at face value or believe it to be a made-up bunch of politically-driven junk science as you want.

But the fact remains that long before any man-caused “warming” has a permanent negative impact on the world. we’ll be well on our way to using non-CO2-producing energy on a large enough scale that any minuscule amount of “warming” or “higher sea levels” that have occurred in the next few decades will stop and be reversed.

The anti-business, anti-conservative, anti-Western crowd is going to have to fabricate a new boogeyman, because “warming” isn’t it. By the way, the non-CO2-producing energy that solves and eliminates the threat of “warming” is being discovered and developed by conservative Western businessmen. Deliciously ironic, no?”

To which my liberal friend replied:

“For an ‘irrelevant non-issue,’ you’ve written thousands of words on the topic over the years!  Something doesn’t quite compute.  

I know of no evidence supporting your “global warming reversal” conclusion, but I hope you’re right.

Also, what’s “deliciously ironic” about a businessperson, regardless of political affiliation, doing a 180 when there’s a buck to be made?  It’s the oldest game in the book! Thanks.”

I replied—

“It’s Irrelevant in terms of the actuality of it happening, not irrelevant in terms of how significant and emotional a topic it is to many.

The actuality of Global Warming’s long-term permanent negative effects is irrelevant. All the worst-case studies—if you even can believe them at all—say things like, ‘By the end of the century….’ or, ‘In the next few hundred years….’ etc. The Big Cure of non-CO2-emitting energy is coming fast, real fast. A major chunk of car fuel will be non-CO2 within 10-30 years. There are dozens of new technologies or refined existing technologies that are coming on-line in the next few decades and will be deployed/distributed on a widespread enough basis to displace a big portion of fossil fuels and their greenhouse gas emissions. As I said in a recent article, it’s estimated that electric cars alone will replace the equivalent of Saudi Arabia’s entire oil output by 2040. That’s 23 measly years from now.

2040 is pretty far away from ‘next century,’ no? The Warming ‘problem’ goes away, for good, very soon. That’s the absolute definition of ‘irrelevant in actuality.’

Not irrelevant emotionally, however. The Warmers/NY Times/CNN/anti-conservatives love this topic and try to hang every weather-related calamity that happens on conservatives. It’s just that all their dire predictions have failed to come true. Manhattan is not under water like they said in 2008 it would be by 2015, they have no explanation for the 20-year ‘pause’ in the rise in global temperatures, the supposed rise in temps was going to give rise to a wave of pests and bugs that would decimate our food production but that hasn’t happened, the polar bears were going extinct but in fact, their numbers have increased, and the numerous scandals and faulty/fraudulent data put forth by the IPCC is truly staggering. The liberal press covers none of this, of course, but the facts are the facts. Still, I’m not disputing the existence of anthropogenic warming, nor protesting your right to believe it. Knock yourself out. It’s merely irrelevant.

To answer your doubt about my ‘it will reverse’ assertion: When it rains for 3 days straight, the ground is soaked. When it stops raining, the situation reverses and the ground reverts to being dry. When it’s really, really cold, ice forms and precipitation takes the form of snow, not rain. When the situation reverses and it becomes warm again, it doesn’t continue to snow. It rains. But ok, just for the sake of this conversation, let’s posit two things:

  1. Measurable, actual warming has occurred thus far.
  2. When the warming stops, the thus-far effects will not

Well, as we’ve seen from the missed predictions of disaster and the fraudulent data (not all of it has been fraudulent, but a significant amount has been, enough to cast doubt on the ‘unquestionable objectivity’ of the IPCC) that’s been foisted upon us for 15 years, the actual effects of warming have been extremely moderate to date, so moderate that even if those effects were cemented in place for all time, it wouldn’t amount to a hill of beans in terms of negatively impacting anyone’s life here on earth.

And don’t you love how the liberal snoberati live such hysterically hypocritical lives, as they luxuriate in their 3000 sq. ft. air-conditioned homes with multiple big-screen TVs, driving their gasoline-powered vehicles (maybe even SUVs!) and buying all manner of the latest gadgets and fashions, while jetting off on vacation on polluting 737s owned by big corporations. I have yet to encounter a liberal in my life who walks the energy/warming walk, but they sure do love to talk the talk. Talk is cheap.

So, have I written a lot about it? Yup, I have. I have the ability to put forth exceptionally well-worded arguments that infuriate the other side and are close to being unarguable. It’s kind of like rubbing a Yankees fan’s nose in the memory of them being up 3 games to none vs. the Red Sox in 2004 and us coming back to humiliate them, 4 games to 3. It never gets old and I never get tired of doing it.

As for the irony, I think you misinterpret where the irony is. Warmers hate conservative (read: Republican) businessmen, because they (the Warmers) think that conservative businessmen (yes, men) are the cause of all the warming problems because of their ruthless pursuit of immoral profits while willfully ignoring the harm they’re inflicting on the environment.

The irony comes from the fact that it is the very pursuit of these horrible, immoral profits that is producing the cure for Warming. The Warmers’ sworn enemy is solving the problem. Ironic indeed.

My gut feel is that the Warmers would rather some permanent harmful effects be inflicted on the earth than have to admit that 1) Warming was never that big a deal in the first place and 2) Conservative Republicans solved it.

I am 97% sure I’m correct about everything.”

This was a fun dialogue.

Global Warming Is Irrelevant

© 2017 Steve Feinstein. All rights reserved.

 

There is probably no subject (outside of abortion) that has engendered more passion for a longer period of time—decades now—than Global Warming. Here are some of the issues and talking points:

  • Settled Science or Junk Science
  • Warmest Year on Record vs. hiding faulty or contradictory evidence
  • The threat of actually jailing Deniers (they even have a name, complete with a capital letter)
  • International conferences and accords
  • New regulations for businesses and equipment
  • Complicated Carbon Trading schemes
  • Dramatic declarations by politicians of Warming being a greater threat than ISIS
  • Photographic “evidence” of impending doom and impact on nature/wildlife
  • The routine, unquestioned conflation of daily weather events and long-term climate change

All of these are examples of the highly-charged, deeply-held views on the subject. I recognize and appreciate the intensity and vehemence with which the respective parties hold to their positions.

However, for the purposes of this article, let’s simply concede that anthropogenic Global Warming is real, not just a coincidental occurrence of cyclical climate patterns on earth and the relationship of those patterns to solar activity and the like. Let’s take the “Is man-caused Global Warming real?” question off the table and admit its existence.

However, even if there is certainty regarding the reality of man-caused Global Warming, it probably doesn’t matter.

Here’s why: The very same profit-driven capitalistic Western businesspeople who seem to stoke the ire of the Warmists so intensely are the ones who are well on their way to ending Warming—and long before it becomes any kind of permanent threat to mankind’s well-being.

Fossil-based fuels are simultaneously the most economically-efficient source of energy and the most politically-troublesome and ecologically-controversial source of energy. Historic relationships between nations, current foreign policy and military decisions, ecological impacts, everything is tied up in a convoluted, indecipherable cause-and-effect Gordian Knot because of fossil fuels.

Yet it is the popularly-maligned free-market capitalistic system, with its unsavory profits, rewards and unapologetic income inequality, that is the key driver to finding the eventual solution to our reliance on ecologically-detrimental carbon-based fuels. A veritable free-market fortune awaits the individual or company that delivers the first viable alternative energy system, one that is easily deployable on a mass scale across large geographic areas.

That promise of capitalistic reward has many companies feverishly pursuing different solutions. The potential of virtually unlimited free-market profits and a superior competitive market position are spurring private for-profit companies to find a viable alternative to carbon fuels. That’s undeniably true, and it’s happening primarily here in the U.S., primarily because of our freest-of-all-markets system.

An example is Lockheed Martin Corporation and their work in developing a new compact fusion reactor. L-M says a reactor small enough to fit on the back of a truck could produce 100 megawatts of electricity—enough to power a small city, without any carbon emissions. L-M estimates they’ll have a workable prototype within five years. Let’s double their likely-overly-optimistic estimate and say within ten years.

Electric cars, battery technology and solar panels are also improving all the time. They may not be totally economically-feasible in the free market at this time without Government tax subsidies and, yes, there is the undeniable irony that the electricity needed to recharge a Tesla or Chevy Volt usually comes from a greenhouse gas-producing fossil-fuel power source, but things in the battery/solar area are improving all the time. The percentage of U.S. energy provided by these “alternative” sources has increased from less than 5% before 1990 to over 13% in 2014 and will continue to increase in the future.

The Answer is out there and it’ll happen pretty soon, likely within 50-100 years, I’d confidently guess. Companies and individuals are working day and night to find The Answer—because of the rewards they’ll reap.

50-100 years is a nanosecond in terms of earth-geological-climactic time. A fraction of a nanosecond. When The Answer comes along 39 or 64 or 97 years hence, whatever minor “warming” has actually taken place, whatever small amount the seas have “risen” will all be halted and reversed.

The argument against that position is that we’ll soon reach some irreversible “tipping point,” after which no cure or remedy to the permanent destructive effects of Warming is possible. Yet there is no scientific proof of that, nor is any “proof” possible. That’s merely a totally unsubstantiated talking point, designed to rally the Believers and scare the Deniers. This, however, is scientific fact: 50-100 years is a nanosecond in terms of earth-geological-climactic time. And the practical, usable, non-carbon, non-warming Answer will certainly be discovered and deployed on a significant scale within that timespan.

Therefore, the entire anthropogenic Warming issue—whether real or imagined—is a non-issue. Profit-driven technology will solve it. As ironic as it seems, the Western capitalist economic system will be the savior of the earth.

It is fitting that as the Davos forum in the secluded luxury of Switzerland unites the global elites – even if some of the attendees would never self-identify as such – we have Rush Limbaugh pronouncing that the inevitable rise of populism in America has finally taken hold. Precisely as a result of Davos man and his (and her) way of viewing and shaping the world.

Trump’s rise seen through the prism of the post-iron-curtain world order is a logical imperative, according to this view. And while the end of history as preached by Fukuyama some 25 years ago has proven rather messy and, well, even historical, the fact is that increased connectivity, trade, and the global reach of large corporations is seen as far more sinister to their own local lives by many working families in America. Even if Davos benefits American corporations like no one else.

But holding onto your Coke and MacDonalds shares in your retirement funds is not a very convincing reply to a paretn of two kids who is about to have his or her job outsourced.

That’s a natural suspicion to have on the part of those whose jobs have been placed at risk. And wonks and pundits may occasionally – less so with each passing year it seems – worry what to do about displaced workers, but it is seen as inevitable collateral damage to an otherwise robust and worthy system of economics, and of politics.

But – as is the case with coders – what if the “bug” of disposable mid-skilled and high-skilled workers is, in fact, a feature of this program? What if increased investment in tech and connectivity is seen as a way to shift a wage and profit economy to the gig-and-even-more-profit economy? Where you don’t have A job, you have a series of little jobs that you scurry to gather up in competition with an increasing percentage of the world’s labor force who only need a laptop and a modem to compete with you?

Yes, that’s only part of the picture. Crushing regulation and high taxes do wonders at killing off jobs. So nowadays, we get the worst of both worlds. Ever increasing pressure to work harder for lower wages, and employers so bound up in red tape that they have no choice but to lay off full time employees and enter the gig economy – contracting out part-time help that sometimes delivers and sometimes doesn’t.

There are few safe harbors from this pincer-like crush on working families. But high-value professionals tend to do better in a gig economy, because we are not yet at the point where you will have your surgery done by remote control by an intern in Bangladesh. And lawyers will make sure that smart contracts need lots of lawyers to make them stand up in court. Or sue you to death if you actually dispense with their legal wisdom.

Is it any surprise then that many are drawn towards Trump in today’s world? Even if The Donald would be quite at home shaking hands, doing a little skiing, and checking out the Eurotrash nightlife. Like any Davos man worth his (or her) salt.

How long does it take new highway construction to pay for itself? And how do you tax those who presumably use it? Toll roads are not overwhelmingly popular and since Eisenhower’s Highway Act in 1956, the federal government has shouldered an important part of the burden. That means gas taxes of course. But less toll booths as the years have passed.

It should be remembered that the prime motivation was General Eisenhower’s military experience, and his observation of Germany’s infamous and famous autobahn system, which was a way to move military material around Germany in an efficient manner. Yes, the highway system is essentially a Nazi invention.

So carefully measuring internal rates of return based on the expected time it takes to return the cost of a project were not the drivers of America’s massive roadway project. It was rather a case of providing a durable and robust series of connections between military – especially Air Force – facilities in case the nation faced a soviet ground invasion.

And the beneficiaries were Americans in general, both consumers and businesses, who could trade and travel at far more efficient levels than before. Imagine Wal-Mart without the current highway system.

So highways have often come to us often by the heavy hand of a protective state. From the King’s highways in England to your local stretch of interstate, that’s being redone at a hefty cost that needs financing on terms the private sector would be reluctant to offer without revenue streams like toll booths.

And the heavy hand of government tends to take care of it’s other hand, as well as other grasping hands. So it is almost a categorical imperative that highway bills shall be leavened with K Street goodies like farm subsidies. This is not a sneaky detail snuck into a worthwhile bill in the dead of the night. This is the raison d’Atre of any hard working senator worth his or her salt.

You want federal funding for that stretch of interstate? Sure, you bet! And we’ll make sure that America benefits from protected farm production. Or at least the targeted constituency that has bent our ears.

Or instead, you could have a smaller more focused set of farm subsidies flowing to those small family farms that really need them.

America could follow that giant of capitalism and freedom, New Zealand. Where they cut farm subsidies – very substantial farm subsidies – 30 years ago. Guess what? The overwhelming majority of farmers adapted, and are thriving, diversified entrepreneurs today.

It may be a while before America’s mobile consumer economy can prosper without a subsidized highway system – even with those annoying gas taxes. But the time is long past due for a shakeout of the goodies forged by beltway insiders. And dispensed by the federal government.

It will be Tax Time Tuesday on Fox Business. Here’s what the GOP candidates who will be debating all things economic and fiscal, as well hopefully as personal finances, have said about their tax plans. All courtesy of the taxfoundation.org.

On income taxes it’s Senators Cruz and Paul who battle it out to see who has the lowest flat tax. Cruz actually is proposing a 10% flat rate while Paul favors a 14.5% flat rate but with better deductions and exemptions. Carson’s flat tax is to be between 10% and 15%, but is to be phased in over time, which may mean “we’re working on it folks.”

Rubio and Bush’s plans are structured almost identically – but Bush’s rates are a little more taxpayer friendly. Rubio’s rates, in fact, are not that much lower than what Americans pay right now. Trump has a more flexible version of the other two’s progressive rate structures, with top rates kicking in at much higher income levels.

For capital gains and dividends, Bush and Trump have very similar plans with both promising to eliminate the net investment income surtax. Carson has no details, and Cruz and Paul both propose capital gains and dividend income taxes identical to their flat income tax rates. Fair ‘n square all round, as they might say.

Rubio is the one who stands out here. He would eliminate both the capital gains and dividend income taxes. A bold step towards encouraging investment again in America. Will it fly? Will it cause corporations to start spending their countless billions of cash balances in plant, equipment and people again?

On corporate taxes, Bush and Rubio are in near-lockstep again with Bush favoring slightly lower rates (20% vs. 25%). Again. Carson? No details. Rand and Cruz? The senate former-still-kinda-bros-in-arms have very similar proposals. They both propose a business transfer tax which basically is a value added tax on stuff that actually gets consumed or sold by businesses.

Estate taxes would be eliminated by Jeb Bush, that patriarch! He clearly favors letting families – wealthy and not so wealthy – keep the money. Just like every other GOP candidate. At least among the front runners.

Carly Fiorina is an anomaly here. According to taxfoundation.org, she has no specific policy plans on any of the taxes mentioned above. It’s time for some convincing from the former CEO. Unless some of the fight has gone out of her. It might be premature to say that, however. Tuesday Tax Time will tell.

Amendment 3 in Tennessee would permanently enshrine their no-income-tax policy and is being pushed by various groups after an opinion by their AG suggested the state could at some point reimpose an income tax to meet budgetary needs. Aside from some worries about voting “no” when seeing the word “tax” on the ballot, the measure seems to have a good chance of passing. And Tennessee has one of the lowest overall state tax burdens despite having a relatively high sales tax rate of 7%. The average per capita state and local tax paid was $2.777 according to the Tax Foundation and that’s the 2nd lowest in the country. They do have a tax on dividend and interest income however, not good for retirees who depend on that income to meet monthly expenses.

More generally, the problem of spending by state governments, and by the federal government as well in each individual state, presents interesting evidence. A study of the net federal contribution of each state as a percentage of individual gross state products produces something of a contradiction. States that raise less money in federal taxes than that spent by the federal government in their state, tend to want to reduce the size of government at the same time that they benefit from overall transfers from Washington. Tennessee for example, contributes 18.7% of it’s GSP to federal revenue and receives 24.4% of it’s GSP in federal spending, for a 5.7% shortfall, coming between Hawaii at a shortfall of 4.3% and Lousiana at a shortfall of 5.8%. Now Hawaii is no red state so the contradiction of net contributors voting Democrat is not always the case. But assuming there is this contradiction in some cases – Mississippi and Kentucky have shortfalls of 13.3% and 17.9% – then is it hypocritical for them to wish to reduce the size of government? Salon ran an article gleefully pointing out 10 offending states, Mississippi and Kentucky are on the list. But all states are captive to federal welfare policies and must spend money that they perhaps would rather not, on policies like Obamacare for example. The real test is how willing voters in Tennessee, for example, would be to cut back all government spending until taxes balance out what they receive from Washington. I suspect that many in Tennessee would be willing, but I also suspect that Washington will never allow them that freedom. Is there fiscal hypocrisy on the part of low-tax states? Sure, but they operate within the constraints that the federal government imposes on them.

The US Chamber of Commerce likes Washington so much that they spent over $35 million on federal elections in 2012 according to the Center for Responsive Politics. That’s hardly surprising seeing they represent companies in the world’s largest economy. No the Chamber of Commerce is not a government department, it’s a lobby group. How conservative the Chamber of Commerce actually is, is open to debate. They supported the Clinton’s failed health care reform and lost a few members as a result. Since the early 90’s they have apparently shifted back to the right, but last fall, Bloomberg News declared that a civil war had erupted between Tea Party stalwarts like Ted Cruz and the USCC over it’s opposition to government shutdowns as a negotiating tactic. They did not support Obamacare but now a key decision is coming if Obama uses an executive order to grant amnesty to illegal immigrants. USCC members like the National Restaurant Association are in favor of amnesty and business groups worked with the gang of eight in the Senate in its attempt at immigration reform.

Assuming Obama does issue that executive order – some are beginning to doubt it because blanket amnesty would anger some labor groups as well as African Americans – there could be a further split between Tea Party members and some conservatives and big business. There is a curious confluence between those on the left who argue that illegals help keep wages low because of their vulnerable status, and those on the right who say illegals take jobs away from those Americans as well as keep wages low. Their solutions are diametrically opposed; Amnesty or Deportation. Amnesty is uncomfortable at a certain level for big labor as well; they would love to increase latino participation in union membership and turn back a steadily declining trend, but also are aware that a large pool of illegals will inevitably keep wages under pressure for their members. Whether business has thought through the consequences of a large scale amnesty and how it likely would encourage further illegal immigration on an even larger scale is uncertain. A low wage economy is hardly the recipe for future prosperity. An economy where the rule of law is respected, and where labor markets have the freedom to be flexible within that very rule of law, is something else.

Everytime I hear it, I cringe, the same way I cringe when I think of chewing aluminum foil: “The problem of income equality.” What on Earth does that mean?
There are rich people and there are poor people. A good Christian (or Jew or Muslim or Hindu) offers a portion of their money for charity, helping those in need. There’s nothing wrong with that. But the declaration of “income inequality” as a global problem makes me cringe. I have the image of bureaucratic fingers digging into our bank accounts, angry that we were able to manage and save our money well over the years.

As far as a global problem, I can understand that. You have countries with per capita income of less than $100 a year in Africa, and the despotic leaders lounging in gold bathtubs. That’s wrong, but that’s also a problem for the UN. My money has nothing to do with that scenario. But in the U.S.?

The phrase itself conjures differing mindsets of money. When I think of my savings account, 401k, 403b, pension fund and checking account, I consider the time and effort I put into building them up. Reading books on finance, advice from my father, even attending a workshop by Dave Ramsey…It’s not simply an account but a construction of patience and forward thinking. Those who believe that all people should have equal income see it as a fattened sow waiting to be butchered. THAT makes me nervous.

I don’t mind helping the poor. Really, I don’t. Show me commercials, solicit outside the grocery stores and Walgreens, that’s all fine. I’ve never been able to pass up a Humane Society stand without dropping in at least a $10.

Categorizing my financial stability as a problem tells me that if I happened to pass a Salvation Army stand and don’t drop in my change, they have every right to stop me, yank open my wallet and take the money. The oddest thing is that’s not an exaggeration. That’s exactly what liberals want as a solution for “income inequality.” If you don’t donate as much as we think you should, we’ll just take it.

To say that Detroit is economically a mess is an understatement. The large, once thriving city is under duress financially and is struggling to make ends meet. The result was a filing of bankruptcy and cry for bail out that continues to plague the citizens of the city. Millions upon millions in debt, creative new ways to pay back what is owed are being identified. Unfortunately for those workers counting on the pensions, retirement plans for public employees are on the chopping block.

The idea of cutting pensions, potentially bloated ones, may seem appealing to those that want less government and more private sector. The truth is, though, that there are people behind those pensions that may face a retirement and a financial future that is uncertain. Unions and public representatives of the workers are angered by the prospect but this highlights and important part of working for the government: what it gives it can take away.

The government is bloated across the United States. From the larger bureaucracy that sits in Washington, DC making life changing decisions that affect everyone outside the bubble to state governments steeped in corruption and even the localities that are struggling to get by, the government is a huge enterprise with millions upon millions of workers (many of which are put into unnecessary roles). The result when you have a large government and poor money management is that something has to give. Often, the fat cats at the top of the list are not the ones taking the hit. It is the workers that, right or wrong, were counting on the government to provide some type of compensation that they would stick to. Unfortunately, they are learning the lesson that small government proponents have known: the government is interested in sustaining one thing…itself, not its workers livelihoods.