No Hiring Not about Govt

Well, it's official. Even the Wall Street Journal is arguing that the stagnant employment numbers have everything to do with a lack of consumer demand. Well, duh. Businesses hire when business expands and they need to produce more product and/or service. Period. It's, for the most part, that simple.

Yet, for the same twisted ideological reasons that influence most of their naivete about the economy, many "conservatives" argue that business are simply uncertain about government policies and taxes - so they are delaying hiring.

Yeah, right.

As if a business would turn down increased commerce and orders resulting from demand because they are worried about taxes going up. It's supply and demand, people. And demand impacts hiring. That's the way it works.

Great Resort in the Perfect Mountain Town

I love Breckenridge, Colorado.

I mean I know we all do - but for me I think it goes beyond that. Since moving to Colorado eight years ago, Breckenridge has been my family's choice to celebrate the Fourth of July holiday. From its festive parade and run/bike race activities to the kids water fight courtesy of the fire department to coffee and pie at Clint's to wading in the river all afternoon to the free concert and fireworks on the Town Center lawn, an Independence Day in Breckenridge is a truly wonderful experience.

Each year, we drive up for the day and then head back down the mountain with the crowds. This year we decided to stay for a couple days and check out a time-share opportunity at the new Grand Lodge of Peak 7. Having toured it a bit last summer after eating at Sevens Restaurant, we conceded to take a closer look at the resort - and, alas, we became time share owners in Breckenridge. Despite never believing that we could, should, or would buy a place in Breck, the Grand Lodge enabled us to take our first step to becoming more regular visitors and potential long-term residents of Colorado's perfect mountain town.

In addition to having a week-long stay at a great mountain resort in one of my favorite parts of the world, being owners at the Grand Lodge offers us opportunities to use the resort any time we take a day trip to Breck, as well as providing great discount prices for stays outside of our normal time slot. The prices beat any other accommodations we would find in the area, and we're paying less for a condo suite than we would for a hotel room. Additionally, because Breckenridge is such a desirable vacation destination, we have some great bartering room to exchange our time for any of 2,600 resorts worldwide. That seems like a deal we will most likely take, considering we can access rooms at the resort for great prices anyway.

Thus, if you happen to be in Colorado, I highly recommend taking advantage of a great deal to stay two nights in Breck and tour the fabulous accommodations and vacation living at the Grand Lodge of Peak 7.

Haters on My Tax Argument

As you can probably imagine, the email responses to my article on taxes in Colorado were heated. Sadly, many people felt that because I am an English teacher, I have no right to voice an opinion about tax policy - or that my argument could have merit. Many called me a "union thug," though I am not in a union. Others charged me with corrupting the youth with liberal propaganda - though my piece was in a newspaper and not even during the school year. The reality is I made a simple argument about one temporary tax increase proposal and its effect on Colorado.

I wonder if any people bothered to read the study commissioned by the CSPR whose findings I challenged I read the study. I also called the economist and quizzed him on his conclusions for more than an hour. The "economist" predicted that this 0.5% income tax increase and 0.1% sales tax increase - for an expiring limited three-year window - will cause thousands of wealthy Coloradans to literally pack up and leave the state. Do you seriously believe that? He extrapolated their exodus - including any businesses and personal money they spend - to have a subsequent effect of additional tens of thousands of job losses. Do you seriously believe that? If so, then we can dispense with much conversation - because it is an absurd conclusion that thousands of Coloradans will move out of state to avoid these minor taxes that expire in three years.

I challenged the "study" by the CSPR precisely because of the lack of causation that it was "a proven job killer. This point which was conceded to me by the economist when, after reading the actual study, I called him and had an hour-long conversation with him. During this conversation, he acknowledged my point about the lack of causation. He could, in fact, provide no justification in terms of his algorithms, and he backed away from the assertions made by the CSPR. Thus, I'm pretty confident in my criticism of the study.

After my research, I composed my credible argument by citing specific facts about economic growth and taxes during the past forty years. As I noted in my commentary, tax policy cannot be expected to influence the economy in any predictable way. Case in point about those most responsible for stimulating the economy - In 2004, corporations were given a one-year tax amnesty program to repatriate billions of cash reserves held abroad with the expectation that they would "stimulate the economy" by hiring people. Pfizer brought home more than a billion dollars, and then proceeded to cut 10,000 jobs in the next two years. That was two years before the '08 meltdown. GE did the same thing. They dropped their tax burden to effectively zero and cuts thousands of jobs. After the recent 66% tax increase in Illinois, United Airlines moved 1300 back home to Chicago - many came from their offices in "no-tax" Houston. It's not so simple - and thus my point about a lack of causation is pretty indisputable. Wouldn't you agree?

Colorado is not heading the same way as California or Illinois with a modest and expiring tax increase - for our government spending is still quite limited, and no one in the GOP could identify cuts. Thus, I ask my critics: where are your facts? What is your model? Where is the causation? We can go tit-for-tat on states that add and cut jobs, but as I argued very effectively, that is a fallacy about correlation and causation. The economy is far more complex, and you can't count on companies to hire simply because taxes are low - or stop hiring if they go up. It doesn't work that way. Thus, voters and politicians should consider the needs of the community and stop trying to play the "grow the economy" game.

I made a basic argument about how an incredibly small sales and income tax increase for a couple years in Colorado won't cause a determined number of job losses - especially a 150,000. I stand by my assertion.

GOP is Not Normal

David Brooks points out some depressing absurdities among that GOP in its approach - or lack of one - to the debt ceiling talks.

Republican leaders have also proved to be effective negotiators. They have been tough and inflexible and forced the Democrats to come to them. The Democrats have agreed to tie budget cuts to the debt ceiling bill. They have agreed not to raise tax rates. They have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases, an astonishing concession.

Moreover, many important Democrats are open to a truly large budget deal. The Senate majority leader, Harry Reid, has talked about supporting a debt reduction measure of $3 trillion or even $4 trillion if the Republicans meet him part way.

If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.

A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth.

The party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are themselves distortionary.

But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

And then there is this - which is exactly what I argued in my last piece of commentary in the Post:

The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.

These harsh realities are what make it so difficult for rational and pragmatic moderates and independents to support the GOP these days. This ideological rigidity - one which has basically made the Republican Party subservient to the demands of one man named Grover Norquist - is not good for America. While it is easy to simply criticize spending and cross their arms over their chests about taxes, the GOP leadership is ignoring the role of governing. The government needs to govern - not refuse to do anything.

Taxes Don't Cause Job Losses

In response to a recent "study" about taxes and jobs in Colorado, I composed the following piece of commentary, which was featured today in the Denver Post.

Let’s be clear: taxes have one purpose – funding government responsibilities. Period. Taxes aren’t meant to manipulate the economy or employment, and don’t reliably impact either. Thus, Colorado voters shouldn’t try predicting potential job gains/losses from the small, temporary sales and income tax increase proposed by Senator Rollie Heath. Despite warnings from some conservative groups, tax rates don’t influence job choices or migration for average Americans.

When I relocated my family to Colorado from Illinois, the primary reasons were lifestyle – outdoor living, great schools, and cultural experiences. So, while statistics indicate we moved from a high-tax to a low-tax state, taxes had nothing to do with our decision. In fact, as I consider the migrations of many former Illinois residents I know in Colorado, the reasons were education, employment, and lifestyle. Taxes were never a factor.

Recently, the Common Sense Policy Roundtable, a local think tank, published a study warning of job losses in Colorado if Senator Heath’s proposal succeeds. However, the conclusions are hardly definitive. Voters should remember that correlation doesn’t equal causation, and the CSPR study proved no causation between tax increases and job losses. Illinois passed a 66% income tax increase last year, yet its unemployment figures are comparable to Colorado’s. Florida and Nevada, with no state income tax, are in worse shape. Additionally, studies confirm that infrastructure and education spending are far more significant in business location than tax rates. Thus, Colorado could see more growth by sustaining its infrastructure and schools than by cutting funding.

In a desire to connect low taxes and economic growth, many conservative pundits praise low-tax Texas for leading the nation in job growth. Actually, it leads the nation in minimum-wage jobs with no benefits, as well as the percentage of children without health insurance. Texas has one of the worst education records, its unemployment numbers are rising, and it’s facing a $20 billion deficit. Even when jobs and population grow, a myriad of factors are involved. Texas, for example, has lower property values and cost of living, and much of its growth is linked to oil reserves.

Economic systems are far more complex than any single tax rate, and voters are naïve to think otherwise. The Bush tax cuts produced a “jobless” recovery and no net job growth after a decade. By contrast, Clinton’s tax hike coincided with America’s greatest economic expansion. Neither situation resulted from tax policy. The 1980s saw two tax cuts and six tax increases. Yet, drops in inflation, interest rates, and oil prices predominantly influenced the decade’s growth. And the Reagan Era also saw a Wall Street meltdown, a housing bubble, a major banking scandal, and a subsequent recession. Clearly, tax policy was not the primary factor of these events.

Voters should make tax policy decisions based on one priority – the needs of the community. Colorado’s strained state budget resulted from revenue drops – not out-of-control spending. In fact, in the last gubernatorial election, Republican candidates couldn’t identify any specific cuts to the Colorado budget, despite repeated media requests. In reality, Colorado’s modest government requires more revenue to meet its communities’ needs. In this regard, Senator Heath’s minor tax increase is actually quite pragmatic precisely because it expires, allowing time for economic recovery. By maintaining well-funded schools, Colorado can continue to promote itself as a great place to relocate businesses and families.

Despite the wishes of conservative groups, government cannot cease functioning when the economy struggles. Regardless of Wall Street drops or rising unemployment, children still go to school, crimes still occur, roads still wear down. Natural forces don’t wait for good economic times, and nature doesn’t limit snowfall based on budget projections. So, even in a downturn the forest department might need more funds for firefighting or CDOT might need more funds for plowing and repairs. In fact, when the economy tanks, the government often needs to sustain spending until the private sector rebounds.

Despite the ideology of groups like the CSPR, tax policy doesn’t drive the economy. And in reviewing predictions about job growth from the economist commissioned by the CSPR, voters should recall the tongue-in-cheek wisdom of Nobel-prize winning economist Paul Samuelson – “Economists have successfully predicted nine of the last five recessions.”

The ideological debate about taxes and economic growth is not going to end - I'm just seeking to promote reasoned and well-informed discussion.

Debt Ceiling Is Unconstitutional?

This week's edition of Time Magazine posed some interesting issues for discussion about the wording of the Constitution. Perhaps nothing was more interesting than a rather simple comment about the national debt, the debt ceiling talks, and the 14th Amendment. Now, it seems the issue is gaining some serious attention. In a few words, according to the 14th Amendment of the Constitution, "The validity of the public debt, as authorized by law ... shall not be questioned."

The Constitutional scholars could - and probably will - analyze this for years. But, the members of Congress better start wrestling with it now. For, if the administration suspects in any way that these debt ceiling talks are putting the country's fiscal integrity at risk, they may decide the conflict necessitates bold action - that is, declaring the debt ceiling unconstitutional, and proceeding to finance the debt without congressional approval. For those who favor a strict interpretation of the Constitution - and yes that means the Tea Party - it is tough to argue that the government should be limited in any way to accumulate and finance existing debt. Period. Thus, in one reading of the Amendment, this debt ceiling discussion is over.

Time posed the idea that the United States defaulting on its debt is, in and of itself, unconstitutional. The Atlantic Monthly argued last month that the entire concept of the debt ceiling is unconstitutional. The Huffington Post has picked up on the story, and provides some interesting historical context - especially the Supreme Court case of Perry vs. the United States in 1935. Then the Court ruled - setting precedent - that Congress does not have the authority to default on the government's debt. Thus, they have no Constitutional choice but to raise the debt ceiling.

The discussion and threats and posturing and hullabaloo about the debt ceiling need to cease. The government needs to pay its bills, and if doing so requires borrowing more money until revenue goes up or spending goes down, the Constitution seems clear. Pay the bills. Eliminate the debt ceiling.

Bobby Flay & Bachelor Degrees

While watching the Food Network's show "Next Food Network Star" this week, I heard Bobby Flay casually make a very interesting comment. In discussing one of the finalists who is a high school dropout, Bobby said, "I stopped going to high school after my freshman year." Hmmmm. Yet another tremendously successful skilled service worker and entrepreneur who did not finish high school ... who did not go to college ... who did not need a bachelor's degree.

The story on Bobby is that he dropped out of high school after his freshman year - or at the age of seventeen, the details are unclear - and went straight to work. He began working in restaurants, supposedly working in a Baskin-Robbins and a pizza parlor. After that rough start, he began working at a restaurant in New York's Theater District, where his dad was a partner. Impressed with Bobby Flay, the owner paid for Bobby's tuition to the French Culinary Institute. From there Bobby began an impressive career in the culinary arts that has led to worldwide success and fame with ten restaurants bearing his name. He also secured a job on the fledgeling Food Network, clearly revealing his skill in front of the camera as well as behind the service counter.

Yet another American success story on a young man who did not fit our traditional education paradigm, but had great promise and success based on skills not measured by ACTs or state tests. I'd like to see more support in schools for people like Bobby Flay.

The 8:00 Bedtime

Parents today don't value bedtime enough.

The benefits of getting "enough sleep" are indisputable. From health to grades to attitude and general happiness, we need to get a good night sleep. And our children need it as much as anyone. Thus, my wife and I have always committed to consistent and early bedtimes for our children. And that doesn't change just because the sun is setting later or school is out. OK, it changes a little. But for the most part, my elementary age children are in bed by 8:00 with the lights off during the school year - regardless of weekday or weekend. Come summer, we extend the evening a bit, though they are never up past 9:00.

Children benefit from consistent schedules, and meals and bedtimes are probably the most important. Too many children never know exactly when dinner will be on the table, and bedtime is often whenever they decide to go - often that is after the movie is over. Occasionally, kids in the neighborhood will ask why my children come in and go to bed when it is "still light outside." Interestingly, my kids never ask this. Explaining to other kids that healthy bedtimes are linked to the clock, not the sun, really means nothing to them. But, that's no matter. Ultimately, my kids live rather healthy and happy lives, and my wife and I deal with far less drama from our kids than many I know.

OK, lights out.

Experience, Knowledge ... or Not

So, what is it going to be? Do we demand that politicians - especially the President - have experience running a business before they are "qualified" to lead the Executive Branch? I am tiring of the critics who trash a politician with a weak straw man argument by saying, "He's never run a business or hired people, so he's not qualified to be a political leader." Because if that is the case, then Warren G. Harding and Jimmy Carter were great choices as Presidents. Except they weren't. Often critics make loopholes if the candidate has been a governor ... but what about candidates for governor. Do they need to have experience "running a business" or "hiring people" or "creating a payroll"?

Do people need to have personal or business experience with every issue before they are allowed to have an opinion on that issue? Occasionally, when making an argument about taxes and society or unemployment, some annoying and rather obtuse thinkers will ask me, "What experience do you have running a business? How do you know how tax cuts/increases will affect hiring?" And, of course, my answer is knowledge, not experience. If you get asked that question, here are a couple follow-ups:

You're probably not a climate scientist, but I bet you have an opinion on global warming. You're not one of our military leaders, but you have an opinion on how and if to fight a war. You've got no experience in counter-terrorism, but you've got an opinion on how to win the "War on Terror." You're not an economist, but you have an opinion about supply, demand, business cycles, and taxes. You're not a constitutional scholar, but you have an opinion on the document and what it means in American history. You're not a teacher or an administrator or child psychologist, but you have an opinion on how to "fix our schools." You're not a doctor or a nurse, but you've logged on to WebMD and diagnosed yourself. You've never had a weight problem, but you have an opinion on how others should deal with theirs. You're not a lawyer or a judge, but you decide innocence or guilt after watching three minutes of the nightly news.

Few of us are experts in anything, and few have experience with everything. Yet, we can all be informed voters. And obtuse, thickheaded ideologues who disagree really piss me off sometimes.

Privacy versus Anonymity

The Supreme Court is being asked to weigh in on the rights of individuals to be anonymous on the internet - namely when posting critical views. Some companies want the right to identify detractors, and, in many ways defend themselves against libelous but anonymous comments. Critics of the companies claim that identifying the names is an infringement on freedom of speech. I'm not so sure I agree.

The anonymous quality of the internet has always bothered me for a variety of reasons. Everything I post on the internet - every comment I make anywhere in society - has my name and face attached to it. For that reason, I am accountable for what I say. And I never put anything in print that I am embarrassed or reluctant to claim. And I view with suspicion anyone who posts anonymously - or, with ridiculous pseudonyms. I have often considered refusing to post anonymous comments on my blog because I have little respect for someone who will criticize or challenge my public posts, yet refuses to put a name to the comments. It always seems a little cowardly and childish. Of course, I acknowledge the time-honored tradition of anonymous news sources, especially as whistle blowers. But they are not what I am talking about - we can't extend whistle blower, anonymous source protection to everyone who wants to write a negative review of a product on Amazon. Can we? Should we?

One of the biggest mistakes I think Americans make regarding privacy issues is to believe they have a right to be invisible, or a right to not be seen. This weighs heavily in public places like schools, airports, and streets. No one is guaranteed invisibility if they are going to walk down a public street or enter a public building. The right to privacy does not endow invisibility. And, that should probably extend to anonymity. Author Michael Lewis wrote about this years ago in his book Next: The Future Just Happened. In analyzing the unintended results of the rise of the anonymity, he chronicled stories of young people who broke down the walls of the legal profession and Wall Street by using the anonymity of the internet. For example, Jonathon Lebed was the youngest person ever indicted for internet stock fraud after he bought penny stocks and then posted anonymous hype of financial message boards. Lewis explains that his "hype" was believable only because no one knew the financial advice was coming from a teenager with no credentials. Anonymity allowed Lebed to crash the gates of financial advising - and enabled him to generate nearly $900,000 in about fifteen months. Whether that was a positive impact on society, I don't know.

Ultimately, accountability is important. This is especially true in economic situations. Trust is integral to the integrity of a system. And, outside the situation of whistle blowers, anonymity is not a positive quality for American society.

Cut Social Security? Of Course

While it may seem earth-shaking that the AARP has softened its long-held opposition - and congressional lobbying stranglehold - on cuts to Social Security benefits, it shouldn't be. In fact, it's sad that such rigidity ever existed in the first place. Social Security was, is, and always should be a simple safety net to keep retired people/elderly from slipping into poverty. A social insurance system against abject poverty is how it was sold, and how it should be treated. For that reason, cuts are in order, and that should have begun with "means-testing" years ago. Certainly, there could be some incentives against drawing early and often from the fund, and Americans should do all they can to make sure that the government payment is not their primary source of income in retirement. At the same time, it must remain, especially as wages lose ground for the lower classes. It has to be there as a safety net - but it should change.

IKEA Store a Monstrosity

Driving down Interstate-25 to Park Meadows Mall yesterday, enjoying the view of the Rocky Mountains, my mood suddenly shifted to a darker place as the monstrous new IKEA store in Centennial overwhelmed the landscape and blocked my view of the entire West Coast. Though it was heavily courted and promoted as some sort of savior to the local economy, the IKEA "Warehouse" also generated some controversy and opposition from residents who worried about its intrusiveness. The primary concern was about the size of the sign, which is, no doubt, a ridiculously over-sized sign for the area. The store asked for and received an exemption from codes. However, the sign pales in comparison to the blight represented by an enormous blue box of a structure that IKEA calls "a store."

I was already turned off to the arrival of IKEA after news began to surface about IKEA (in America) and its anti-labor practices. In Virginia, IKEA workers have been facing serious opposition to desires for collective bargaining after dealing with dangerous work conditions, discriminatory business practices and low wages. These stories are all the more disturbing considering IKEA's origin in the worker-friendly country and culture of Sweden. Where IKEA's Swedish workers make nearly $20/hour, have excellent benefits (provided by taxes), and five weeks of vacation, American workers are starting at about $8 with no benefits. Certainly, the higher wages and benefits given in Europe didn't prevent IKEA from growing into a strong company. Yet, they clearly had no desire to continue practices that improve society once a cash starved society and government allowed them all the shortcuts.

Certainly, Colorado needs the jobs and the commerce, and everyone hoped IKEA would be a boon to the local economy. But, as I've noted before, there are companies that benefit a society as a whole with a sense of being "stewards of the community" .... and then there are companies like America's version of IKEA.