Archive for August, 2013

Should McDonald’s Supersize Wages?

August 30, 2013


Corporations are the scapegoats of our time. One much vilified is McDonald’s. A basic complaint is that we like its products too much.

This was the point of Morgan Spurlock’s 2004 film, Supersize Me. He proved that eating nothing but McDonald’s for a month is unhealthy. What a shocker. I wonder how his health would fare if he ate nothing but broccoli for a month.

Now there’s a new complaint, by McDonald’s employees, demanding to be paid more than minimum wage – more than double, at $15 an hour. Their beef has gotten much sympathetic attention (on The Daily Show and Colbert Report at least). images-3We’re told McDonald’s profits are over $5 billion annually, so surely they could pay workers more, if they weren’t so greedy and heartless.

So I’m thinking if profits are so obese, buying McDonald’s stock should be a ticket to Fat City. Unknown-5Let’s see, a share is around $95 lately. Back in January 2012 it was . . . $100. Oops. And the $5+ billion in profit works out to around 5 bucks a share, or about 5%; but only around 3% is paid out in dividends (the rest being reinvested). Hmmm . . . more like Skinny City.

I’m actually quite sympathetic to McDonald’s workers. I honor anyone toiling as a productive member of society, whose work makes others’ lives (except for Morgan Spurlock’s) better. It makes mine better when (disclosure) I occasionally eat there. I know it’s tough getting by on minimum wage; and maybe in a world of ideal justice everyone would be paid according to how hard they work. (And how smart. Oops, now you’ve got problems already.)

Unknown-3But should McDonald’s stop being scroogy and just pay more? Workers say this would benefit the whole economy because they’d have more consumer dollars of their own to spend. That’s true; however, unfortunately, a $15 wage would (I did the math) turn McDonald’s $5 billion profit into a loss; the company would be cooked, with its workers then actually earning . . . zero.

So McDonald’s can’t significantly raise wages without raising prices. And that would take a bite out of the wallets of its customers – many of them low income. There’s no free lunch (or happy meal).

But actually McDonald’s has very little power to set either its wages or its prices. Both are dictated by larger economic forces. This (like most) is a fiercely competitive business. And McDonald’s doesn’t compete just against the likes of Burger King. Consumers have a vast array of food choices and alternatives. McDonald’s competes against them all, including cooking at home. It’s been successful because its products, in relation to price, make them attractive to consumers. Change that relationship and consumer choices will change. Unknown-1If McDonald’s prices rise, then not only will Burger King become a comparatively more attractive alternative, but so will upscale restaurants, and so will home cooking. That too could topple the golden arches.

This is how the entire economy works. Some people decry it, seeing McDonald’s wage levels as exemplifying the system’s rottenness. Yet it’s exactly this system that gives all of us as much as we have – this system of a market allocating resources and the production and consumption of goods and services by price and competition throughout a universe of alternatives. McDonald’s ability to profit by serving burgers at prices people willingly pay creates wealth not only for its owners (shareholders) but also for its employees and the customers. All would be worse off if McDonald’s can’t stay competitive.

The same is true for every part of the economy. The auto industry thrives by pricing products where people find them attractive relative to all other transportation alternatives. Likewise the airline industry (though actually airlines barely make money, with the bulk of their wealth creation benefits captured instead by workers and consumers). And without this economic system, where would anybody’s livelihood come from? (The Soviet Union tried doing it all by government. That didn’t work so good.)

Unknown-4Maybe Morgan Spurlock’s heart is so big (or cholesterol swollen) that he would say he’d willingly pay double for burgers if that meant McDonald’s workers getting higher wages. But I bet he’d actually eat fewer Big Macs and more broccoli.

Syria: Moral Obscenity

August 28, 2013

images-2Secretary of State Kerry calls the poison gas attack a “moral obscenity.” Were the previous 100,000 deaths, cities bombed to rubble, 2 million refugees, and children tortured not moral obscenities?

The White House insists that whatever we do, it will “not be about regime change.”

Why not? Should we not seek to change a regime engaged in “moral obscenity?” And if not, what are we aiming at?

images-1More half measures; more too-little-too-late. Earlier in the game, a fairly limited intervention might have tipped over the then-tottering Syrian regime, with at least some hope of a reasonable replacement (as I argued in March 2012). This was a classic situation where reluctance to act only makes the eventual and inevitable action harder, messier, and costlier. Since then, the Syrian regime has regained its military footing, reinforced by Lebanon’s Hezbollah fighters, while the opposition has become dominated by unpalatable radicals. Now our options are all much uglier.

My canny daughter says that from our national interest standpoint, the best outcome is actually none: continuation of war, because either side’s victory would be bad for us. But that‘s too realpolitik for me; I say we cannot avert our eyes from human suffering on this scale.

The desire to punish evil is deeply rooted in the human psyche; I certainly share it. Lobbing a few missiles at Syria may assuage that justice hunger. And be worth doing, in lieu of nothing. It’s a better world when crimes are punished.

However, while that principle makes us feel better, I doubt Bashar Assad will feel worse. To the contrary, seeing that a gross atrocity incurs what’s really just a pinprick can only embolden him. And if punishment is the only point, then it fails to come to grips with what’s really at stake.

images-3In Libya – even if too squeamish to say so – our aim was to end the war in a way favorable to our interests. Which did include prevention of humanitarian disaster. And if Libya today is not (yet) a Jeffersonian democracy, broadly speaking our global interest is removal of the vilest, bloodiest, most troublemaking dictators, with replacement by less vile regimes, in order to make a more peaceful and prosperous world wherein more people can thrive and contribute. In those regards we succeeded in Libya.

We should – hard as it may be – strive to do likewise for Syria. But I doubt America is up for such a daunting challenge.

“On The Muslim Question” – Or Avoiding It

August 25, 2013

UnknownAnne Norton’s On The Muslim Question is one of the worst books I’ve ever read.

A foreword says it’s “free of academic jargon and cultural studies clichés.” I disagree. The book piles sentence upon sentence of pseudo-portentous, pseudo-profound non-sequiturs. Like this (page 23): “It is not the foreign that fills people with fear, but the familiar; not the future, but the past.”

And little of it concerns Muslims. This is a bait-and-switch; as the flap says, the book is really “about the values not of Islamic, but of Western civilization.” Unknown-1The “Muslim Question” is a trojan horse for what is mainly just a typical lefty screech against Western society. For example (page 67), “attention to the plight of women in the Muslim world turns the gaze . . . away from the continuing oppression of women in the West.”

And much of that indictment is twisted — e.g., repeating that Western women earn a “fraction” of men’s pay. Norton says the “true issue” of the veil in France is not secularism but capitalism: women’s bodies must be treated as goods for sale! Such pathological nonsense is unaccompanied by any discussion of the matter as pertaining to Muslim societies. Norton’s only point about female genital mutilation is that Ayaan Hirsi Ali’s (“exceptionally harsh”) was perpetrated by her grandmother against the wishes of her father and imam. As if to prove

Ayaan Hirsi Ali

Ayaan Hirsi Ali

Muslim men don’t condone this widespread barbaric practice. If only that were so. And the term “honor killing” appears precisely once – in a quote Norton sneers at.

She purports to debunk negative Western ideas about Islam, but meanders in a swamp of irrelevancies. For instance, discussing “Islamofascism” and the whole issue of democracy, Norton spends pages raging that author Paul Berman pegged Tariq Ramadan as the intellectual heir of his Muslim Brotherhood forebears rather than acknowledging Ramadan’s views as his own. What Norton refuses to acknowledge is any democratic deficits in the Muslim world. Iran is not even mentioned. But she puts great weight on the writings of one Al Farabi (Norton omits placing him in the Tenth Century) with seemingly advanced views of what a democratic society should be – as if that settles the matter. Never mind that most actual Muslim societies look nothing like Al Farabi’s forgotten vision.

Then Norton has a chapter boldly titled “There Is No Clash Of Civilizations,” referring to historian Samuel Huntington’s famous thesis. Her entire argument here is that Muslims and non-Muslims actually get along fine in non-Muslim societies. But Huntington was talking about relations among societies. Moreover, Muslims do not get along fine with non-Muslims in Muslim countries – about which Norton is silent. (Huntington was all wet, but for different reasons – see my review of his book.)

It’s striking how disproportionately the world’s violent conflicts involve Muslims. Why is this? Yet again, Norton has nothing to say. She blows off the Danish cartoon affair, in part, by saying the violence “occurred in places where violence is common.” But she is determinedly incurious about why it is common in those places. In discussing the Theo Van Gogh murder, she slimes Van Gogh at great length, with nothing said about his Muslim attacker. And of course in the Rushdie affair, all the shame belonged to — Rushdie!

imagesEgypt’s horror is the latest manifestation of a problem I’ve written about. You’d think Syria’s catastrophe might have dissuaded Egypt’s military from treading the same path. But no; rather than conciliation, the resort to violence seems tragically instinctive.

But on every issue, Muslims get a pass from Norton, as if any critical word were taboo. Only the West incurs her wrath and scorn. And again that’s mostly overblown to the point of ridiculousness. She doesn’t think we’ve expiated our supposed collective guilt for the Holocaust – citing Wernher von Braun’s role in the U.S. space program – and that “We drive Volkswagens”!Unknown-3

Not surprisingly, in our conflict with (a sector of) Islam, Norton sees America as the bad guy. She’s obsessed with Abu Ghraib. And when I read the sentence, “No one should have to argue any longer that terrorism can be a rational and reasonable strategy,” I thought that here at last was something I agreed with. But no; it’s just Norton’s bad writing. She actually means that terrorism is unarguably rational and reasonable. So naturally she does not bother to explain how.

Norton’s book would more accurately have been titled “Avoiding The Muslim Question.” I should have avoided this vile book.

Can We Stop America’s Decline?

August 15, 2013

UnknownI’ve written about “Pakistan: The F**ked-Up Country.” America’s no Pakistan. But it sure is frustrating for optimists. Like Thomas Friedman and Michael Mandelbaum, whose 2011 book, That Used To Be Us, analyzes a group of key factors central to the miracle of America. And in every category, we’ve gone off the rails.

Our infrastructure grows seedy, with a huge backlog of postponed maintenance — never mind modernization. Investment in research and development shrinks. Education is inadequate for the competitive, high-tech, globalized marketplace. Cockeyed immigration policies shut out legions of motivated, brainy people we desperately need. We’re virtually ignoring climate change. We increasingly spend resources instead on burgeoning pensions, healthcare, and other “entitlements.”

In fact, we’re not paying for those either, going deeply into debt. How much can we actually borrow? Nobody can be sure, but we’re testing it, with borrowings already off the charts. There’s an old line about how one goes bankrupt: “at first gradually, then suddenly.” The “suddenly” comes when the world’s bond buyers decide we’re past the point of no return in managing (let alone repaying) our debt. imagesLike Wile E. Coyote in the old cartoons, running off a cliff and continuing till he realizes nothing holds him up. Then he drops like a stone.

We’re able to – for now – only because interest rates are at historic lows, since the market still considers U.S. bonds the safest anywhere. But if (when) that changes, interest costs on our vast national debt will go through the roof. We’ll be even deeper in the red – and deep in a vicious circle.

Economist Paul Krugman

Economist Paul Krugman

We’ll be Greeced. (Paul Krugman laughs this off. He’s wrong.)

As the authors explain, this is a stealth crisis. Americans are complacent, imagining we can just continue running as before. Like the proverbial frog in the pot coming to boil (love all these metaphors?), we don’t notice we’re being cooked. images-3That’s a big difference from past challenges – the Depression, WWII, the Cold War – wherein we knew we had to act. That past America that could come together, bite bullets, and do big things, seems gone.

Which leads to what is really our supervening problem, blocking action on all the others: our broken politics. We can no longer take any serious action because it’s always a battlefield in take-no-prisoners partisan war which, in a closely divided nation, neither side can win.

And, unlike the other mentioned problems, this one has no obvious answer. Its roots are deep and complex. It’s not only that each side brooks no compromise. Worse, each has locked itself into denial of reality. Republicans deny the reality that taxes must rise; Democrats, that entitlements must be cut. (The book calls them “reactionary liberals,” sacralizing all existing social programs and fantasizing their funding through merely taxing the richest a bit more.)

The looming failure of immigration reform is especially disheartening. This should be a no-brainer. That America can’t this done shows government is brain-dead.

images-5JFK said, “Ask not what your country can do for you, but what you can do for your country,” and we’d “pay any price, and bear any burden” to defend freedom. Such rhetoric invites derision today. Yet sacrifice is not impossible. Germany in 2003 was able to implement sweeping tax, regulatory, and labor reforms. It took real political courage and probably cost Chancellor Schroeder re-election. But it moved Germany, in a few years, from the bottom to the top for employment rates among rich nations. Why can’t America emulate that?

In fairness, the story isn’t all bleak. A key reason why we came out of the last recession while Europe remains quagmired is that we actually sorted out our banking sector problems much more expeditiously. (Technocrats did that, under the political radar.) And, to the systemic shock of 9/11, we reacted quite vigorously (indeed, overreacted).

America still has tremendous assets: relative economic openness, low corruption, strong rule of law, high social trust (contrast China in all these respects), and, most important, a lot of great human beings still filled with that great old American can-do spirit. Emblematic of this is the fracking revolution (typically hated by the left). Nothing government could do or not do would turn us into Pakistan. But staying Number One is another matter.

Americans are not a “chosen people” with God-given primacy. In many ways, we blazed a path much of Mankind has followed, but we can still be left behind, and that would be bad for the world. The Noam Chomskys who decry America’s global role are blind to how much good it does. The book’s authors see the U.S. effectively filling a world governance role, undergirding everyone’s prosperity. China won’t do this.

It’s customary in books like Friedman’s and Mandelbaum’s to offer solutions. I expected the usual laundry list of reforms that won’t happen. But instead they stressed a single idea I too have talked up. They quote Ohio Republican George Voinovich who, on quitting the Senate in 2010, said “we have to blow up the place.” Political “shock therapy” is what the authors prescribe, the political equivalent of the 9/11 shock. Specifically: a serious third party candidacy, representing a “radical centrism” that exposes the irresponsible denialism of the two other parties.

images-7This is not quixotic. What’s happened is that the two parties have come to be effectively controlled by minorities of intransigent ideological activists (through disproportionate primary voting, and just plain louder shouting). But they’re really only a small part of the whole electorate, which is still predominantly centrist and moderate. In fact, the baneful role of those zealots has undermined broader public loyalty to both parties, and consequently polls show more Americans now identify as independents than as either Democrats or Republicans.

The book’s authors don’t expect their candidate to win. Instead, they say, if she got a sizable vote, that would provide the political shock to blow up the system’s ice blockage, with both main parties scrambling to regain those votes.

images-4However, if most independents (and some others) voted for the third candidate, she would win. I cite again the Ross Perot example. His 1992 presidential campaign was just what the authors have in mind, stressing (with pie charts and graphs) our budgetary/deficit problem – which has since hugely worsened. And, despite being a damaged, goofy candidate, Perot got nineteen percent of the vote. That was actually, in a three-way race, more than halfway toward winning.

Imagine a candidate who treated American voters as adults, called out both the Democrats and Republicans for their failure to do so, and sensibly explained why painful sacrifices on taxes and entitlements are unavoidable. That candidate could have a huge impact. Especially with no incumbent running. And especially if he were well-financed, and a credible, compelling personage who would command attention.images-6

I nominate Bill Gates.

The Orphan Master’s Son

August 12, 2013

You know those dystopian portrayals of imaginary future societies (1984, Soylent Green, etc.), dark and creepy. Adam Johnson’s Unknown-3novel The Orphan Master’s Son is like that. From the start, the societal setting is like nothing we can recognize. But it’s not imaginary. It’s North Korea.

This is one of the most gripping novels I’ve read.

First we meet Jun Do (John Doe), who starts in an orphanage. That’s pretty grim in most places, but North Korea makes horrors elsewhere look like a walk in the park. Jun Do is not actually an orphan; his father runs the place (hence the title). Or so Jun Do believes. What people believe is not always true; especially in North Korea.

The adult Jun Do gets on a kidnapping team, grabbing Japanese off beaches, for conscription as language teachers and so on. But these are mainly practice runs for the headline mission of nabbing a Japanese opera singer, fancied by a higher-up. Jun Do earns brownie points by not only bringing her back, but also a team member who’d tried to abscond into Japan.

15beah-img-articleInlineThen he gets English training, and assigned on a fishing boat to covertly eavesdrop on radio traffic. His next gig is accompanying a diplomatic mission to Texas. And then he’s sent straight to a prison mine – North Korea is a fickle mistress. No reason for his fall is given; but anyone who’s seen Texas would probably be considered compromised. Even though initially at least, Planet Texas was so alien to Jun Do’s experience that he couldn’t properly process what he saw there, through his North Korean colored glasses.

Though this is fiction, in general the author aims to portray North Korea accurately. The kidnapping program, for example, was factual. It seems to have stopped, but no victims have been freed. North Korea did allow five to visit Japan with an agreement they’d be sent back. But Japan refused to return them to captivity. North Korea provided death certificates for eight further abductees, but later admitted they were fakes.

Unknown-2If anything, Johnson pulls some punches – malnutrition and outright starvation loom large in North Korea, but not in the more privileged echelons of most characters in the book, so the reader may not get the full picture.

On the other hand, there are some apparently fictional touches. One chilling detail is Wonsan, a beach resort where oldsters go to retire. Supposedly. But parents gone to Wonsan never write their children; Jun Do passed it on the fishing boat and saw no umbrellas or beach chairs. Some limited googling failed to confirm any such “retirement” scheme. The Wonsan beach resort exists, but apparently not for elderly commoners, who do continue living in North Korea. (I was going to add, “if you call it living;” but human beings have an immense capacity for adapting to circumstances.)

images-1Another issue concerns the portrayal of “Dear Leader” Kim Jong-il as a character. The Times’s reviewer criticized his depiction as a “merry prankster.” Certainly it’s not a fully rounded portrait. However, given that Kim presided over and directed the horror-show otherwise described, his seeming insouciance in the book, to me, made him all the more sinister.

The book’s depiction of the nightmare of the prison camps and mines, based on much solid information we have, is all too realistic. They are death camps. End of story for the Jun Do character.

So now we meet a new one: Commander Ga. A taekwondo master, he gained fame by beating a Japanese champion (and not defecting); also for purging North Korea’s army of homosexuals (don’t ask what became of them). Ga’s reward was marriage to the nation’s leading actress, Sun Moon (a favorite of the Dear Leader), and a cushy post as minister of prison mines. UnknownHis exalted status even exempts him from having to kiss Dear Leader’s ass. But as for other male asses . . . .

So on an inspection tour of a prison mine, down in a tunnel, he attempts a “man-attack” (as it’s phrased). But the inmate targeted not only resists, he manages to get Ga in a choke-hold, and next thing you know he’s in Ga’s uniform, out the gate, into Ga’s car, and is driven home to Sun Moon. Who basically accepts this switcheroo. As does even Dear Leader. (Each has reasons.)

Now, sometimes fiction calls for a “suspension of disbelief” – a literary term of art, meaning that for the sake of the plot you must accept things that may strain credulity. It’s voluntary of course. Here the strain skirts the breaking point. But so powerful was the book otherwise, I went along.

The new “Commander Ga” (yes, it’s our old friend) already had Sun Moon’s picture tattooed over his heart. The eventual consummation of his relationship with her was one of the funnier sex scenes I’ve read, it being North Koreanized. But by now, both of them are fully alive to the vile reality behind the country’s pervasive happy-talk brainwashing. Ga conceives a plan to get Sun Moon and her children, if not himself too, out of the country.

The book has many other characters and twists, but more of the plot I shouldn’t divulge. However (hint), I will mention one other character, who is an interrogator. There are two kinds. The “Pubyok” use brutal, direct methods. imagesOur character’s “Division 42” disdains that, preferring a more intellectualized approach. Sort of a good cop/bad cop thing. However, Division 42 does utilize the “autopilot,” a diabolical electrical apparatus (apparently another of those author embellishments). Yet Johnson manages to portray this guy sympathetically, more or less. He even winds up a hero. More or less. And what that “heroism” entails provides the final word in bleak commentary on North Korea’s society.

To read this book, ensconced in my comfy chair, in my beautiful home inhabited by my lovely wife and daughter, with whom I enjoy honest relationships, in our wonderful free and prosperous country, gave me juxtapositional goosebumps.

I’ve written before on what to do about North Korea. This is not just another garden variety dictatorship. The other concerned powers refrain from doing anything that would actually undermine the Kim regime, fearing a huge costly mess to clean up. Unknown-1Yes, it would be bloody. But the price of avoidance is to perpetuate the suffering of millions, suffering we can scarcely grasp, for generation upon generation. I say bite the bullet.

The Slime of Zimbabwe

August 9, 2013

This is supposed to be an optimist blog. And I recently wrote a very positive piece about Africa. But Zimbabwe continues to veer between tragedy and farce.

images-1I started loathing its President Robert Mugabe around 25 years ago when he started talking “one party state” like it was some utopia to be achieved. Fortunately he never quite achieved it, despite immense violence expended in the effort. What he did achieve was turning Zimbabwe from Africa’s bread-basket to its basket-case, with GDP collapsed by half, a 95% unemployment rate, and hyperinflation so extreme that I made nice profits selling genuine but worthless Zimbabwean $100 Trillion bills to collectors as novelty items.Unknown

All of which thoroughly impoverished the black inhabitants Mugabe so loudly professes to exalt. This racism of his regime, added to the incompetence, rapacious klepto-“socialism,” and blood-soaked brutality, makes it all the more detestable, with Mugabe relentlessly braying blame on white people for the economic catastrophe he himself wrought. This was exemplified by his campaign to drive out Zimbabwe’s white farmers, confiscating their lands for supposed redistribution to needy blacks (including phony “war veterans”) while of course actually giving them to rich regime cronies whose feckless mismanagement made a wasteland of them. (See again my review of The Dictator’s Handbook.)

Morgan Tsvangirai

Morgan Tsvangirai

Opposition leader Morgan Tsvangirai (“Changirai”) must get high marks for courage in battling, over long years, against this monstrous regime. It’s a miracle he’s even still alive. In the 2008 election, despite pervasive intimidation and vote rigging, Tsvangirai decisively outpolled Mugabe; but the regime cooked the electoral books enough to trigger a run-off. Tsvangirai then bowed out, on the ground that just too many of his supporters were being killed by Mugabe’s thugs. An understandable decision – but perhaps the opposition should have seen it through, to dispatch Mugabe once and for all.

Afterwards, Mugabe was forced by other African leaders into a power-sharing deal – whose terms he grossly violated. (However, the opposition did get control of the finance ministry and managed to put to rights many aspects of Zimbabwe’s shattered economy.)

Recently BBC News aired part of a nauseating so-called documentary parading Mugabe’s supposed “human” side – amiably chatting with wife and kids at dinner, and blandly burbling that if his people still need him, even at 89, he can’t say no. I wanted to get a washcloth to clean the slime off my TV.

Actually, the old monster was reported ready to slink away in ’08 – but his pals said, “Oh no you don’t,” too afraid of retribution without their front man.

Another presidential election was held July 31 – a rushed election, to foil any efforts to make it clean. Mugabe and his gang of murderers are cockily crowing their 61% landslide. If you believe their count. And ignore all the stuffed ballots. And the legions of people  stopped from voting. And beaten, tortured, or killed. Tsvangirai called the election a “farce.”

African Union Observers

African Union Observers

But the African Union’s observers saw nothing amiss; a free and fair vote they said. And South Africa’s President Zuma not only congratulated Mugabe but “profoundly” congratulated him.

I am profoundly sickened. Is there a washcloth big enough to wipe up this slime?

Motown Blues and the Bonfire of Liberal Vanities

August 5, 2013

images-2The biggest city bankruptcy ever, Detroit’s, is a shocker – or not. Inevitable, really. Detroit lost its signature industry (mostly) and with it over 60% of its peak population. It couldn’t downsize fast enough; and city services, rather than merely contracting, went to hell, driving out even more businesses and residents. But even if it could have resized appropriately (and avoided its prodigious mismanagement), Detroit still owed pension and health benefits to an army of retirees from a past workforce sized to a larger city.

Unknown-1While Detroit is in many ways unique, its basic problem of unaffordable retiree obligations is not. It’s a huge nationwide time-bomb.

Political office-holders have always found it expedient to buy off public employee unions in so-called “collective bargaining.” Unlike such negotiations in the private sector, “management” is captive to the unions for political support and even campaign money. (Mainly Democrats, it must be said.) And while voters might balk at public employee wage levels obviously out-of-whack, future pension and healthcare promises sneak through the back door. This is what really destroyed Detroit. (And what 2011’s Wisconsin battle was about.)

So whereas most private sector pensions have long since shifted to “defined contribution” approaches (keying payouts to what employees put in), most public worker pensions are still “defined benefit” plans keyed to final year pay. And many furthermore allow gimmicks (like padding overtime) to inflate that figure.

images-1State and local governments are supposed to put aside money to cover future retiree obligations. But state pension funds are deficient, in the aggregate, to the tune of around 27% or $1 trillion. And even that’s based on their assumption that pension funds will earn market returns of 7.5 to 8%. Maybe so in the go-go ‘90s, but today that’s wildly unrealistic. A 5% return (still probably optimistic) would mean the underfunding is around 50% or $2.7 trillion (just for states, not counting local governments).

And that further assumes retirees will die on schedule. Better not have any more medical breakthroughs.

(Disclosure: I get a very nice pension as a former NY state employee. New York’s pension fund is one of the least deficient; Illinois’ the worst. But New York, and especially its municipalities, face other severe fiscal problems.)

So states and localities are in a very deep hole, that gets deeper every year. The longer drastic reform is put off, the harder it gets. Already there is no politically palatable fiscal adjustment that could close the gap.

This is just one facet of the bigger problem I keep harping on: the gigantic mismatch between government’s “entitlement” promises (pensions, Social Security, Medicare, Medicaid, Obamacare, welfare, unemployment payments, disability, food stamps, etc., etc.) and the means to pay for them, as ever more people collect these benefits while ever fewer are productively employed to generate the wealth and taxes needed. President Obama seems oblivious to this inevitable future smash-up.

Back to Detroit, one bit in The Economist’s coverage caught my eye: “The Mayor is leading a campaign to shut down small businesses that do not comply with regulations – an odd priority for a city with no money.”

Odd? I’d say downright insane. This is the schizophrenia of liberals, always mewing about “good jobs at good wages” as if you could somehow have them without good businesses making good profits. (See my past post about over-regulation harming small business.)

UnknownSo here’s my Detroit revitalization plan. Stop the “campaign to shut down small businesses.” Detroit desperately needs businesses, and the jobs, wealth, and tax revenues they generate. Shut down instead all the regulations these businesses are supposedly violating. images-3Yes, all. Burn the rulebooks. Call it a Bonfire of Liberal Vanities. Leave the regulation of businesses between them and their customers.* Make Detroit the easiest and cheapest place on Earth to do business. Let’s see, once and for all, what free market economics can really do.

In Detroit, the results of such laissez-faire could hardly be any worse than what we’ve seen till now. Nonregulation’s harm to a few would be overwhelmed by economic benefits for the many.

*With the courts to sort out claims of fraud, misfeasance, breach of contract, etc. But businesses that do their customers dirty don’t tend to stay in business. Successful ones are those making customers happy.

Who are the real drug criminals?

August 2, 2013

In the great scheme of things, this story in our local paper may not seem like a big deal. But I found it very disturbing.

Donald Andrews ran a “smoke shop” in nearby Scotia. He was arrested for criminal possession and sale of a controlled substance, carrying a 25-year sentence, and spent three weeks in jail, before charges were dismissed.

628x471The evidence against him was a photo showing what was purported to be a packet of crack cocaine on his store counter. But Andrews had some photographic evidence of his own: his store’s security camera videotaped a man surreptitiously placing the packet on the counter, photographing it, and then quickly hiding it again. He was a paid Sheriff’s Department informant.

Andrews is suing Schenectady County Sheriff Dominic Dagostino and local government bodies for violation of his rights.

Dagostino ridiculed suggestions that targeting Andrews (who’s black) was racially motivated; but said his office “is seeking” the informant.

images-1My question: how, in any case, could a photo of a packet on a counter ever be considered sufficient evidence to throw a man in jail? What’s to prove the packet even actually contained crack? Or that Andrews had anything to do with it? Of course, the informant could also simply lie.

But the real point is how the insane “war on drugs” poisons society far more than drugs themselves ever could. Here is a local law enforcement agency so gung-ho to nail drug offenders that it seems to care little whether the nailees are even guilty (of what shouldn’t even be a crime).

And I’ve written before how police exploit the “drug war” pretext to fatten their coffers by confiscating (i.e., stealing) the property of alleged drug violators, usually flouting Fourth Amendment due process guarantees. Was the real motive here to grab Andrews’s assets?images

The $500,000 he’s suing for is not enough. We can only look to our courts to smack down hard and deter this criminality by “law enforcement” agencies. If the Sheriff was paying this lowlife informant, then he’s responsible for the creep’s actions. He’s the one who should go to jail.