Saturday, January 09, 2010

Saturday AM American Musings

 I woke up this AM after a nice relaxing evening at home watching "The Battle of the Bulge" off Netflix, having some pizza and doing some reading. I have 100's of things I ought to be doing, but I'm moving slow, drinking coffee and surfing the web.

A lot of folks seem extremely confused about "what happened to America"  from all sorts of angles, so I decided to write down some thoughts.

First, there is no "right to jobs", "right to some wage", or "right to a standard of living". All of it has to be EARNED in a world where competition is a fact for weeds and crops in fields, NFL teams in playoffs, and yes businesses, employers and even governments on the world stage. SOME of what is earned can be "re-distributed", but when a nation gets to the point where the top 10% of the folks are paying for 40% of the total budget, robbing Peter to pay Paul starts to get shaky.

California used to be close to the #1 state in the country for just about everything positive -- now it has a $20 Billion deficit and is losing 1,500 taxpayers a week and is ranked 40th in the Forbes ranking.  Detroit in the late 50's was a model for the nation, now vast sections of it look like a 3rd world country and MI is 47th. Meanwhile, Texas, the Dakotas and Utah are examples of states that are improving their rankings even in the current economic climate -- Texas is essentially the new CA now ranked 9th.

Most of the reasons ARE known -- strong property rights including low taxes, reasonable levels of regulation, stable/predictable tax/regulatory environment, well educated work force with minimal unionization and increasingly a university system that fosters innovation for new business creation make winners, the opposite makes losers.

There are some GREAT opportunities to understand what works and what doesn't:

  • Virginia is #1, W Virginia is #50 -- right next to each other, the best and the worst!
  • MN #11, IL #35, WI #40 -- these are states right around where I live. It is easy to put the rules for success from above against them and see why they are where they are, and what direction they seem to be going.
Essentially, our top 25 states ARE competitive on the world stage, but our bottom 25 are not. What has happened is that increasingly (with FL and TX as shining counter examples), our most populous states have slipped from the top 25 to the bottom 25, so nationally, we are worse off.

This isn't rocket science, it has pretty much been known since Genesis and the requirement for "the sweat of our brow". Policies that encourage education excellence, work, thrift and prudent risk taking and discourage the counter behaviors create growth. However, we seem intent on rewarding massive unionization and slipping results in education, increasing regulation and costs for employers, higher taxation for those that save and invest, and rewards (bail outs) for those that take IMPRUDENT risk, while trying to pay for those bail outs from the people that took prudent risks and created and retained some level of value.

I guess it is like my waistline -- I certainly KNOW that I need to eat less, but eating more "seems too good at the time".  I think we all basically know the answers to economics, we just "wish they were different". It would be wonderful if everyone could have a great standard of living, super jobs, lots of free entitlements, all without much in the way of hard classes, stress, long hours etc, and somebody would pay for it "somehow".

We have been going along thinking that some growing population of kids in the distant future was going to provide our wishes -- basically since the '30s. Sadly, nobody had enough kids, people lived too long, and the rest of the world didn't sit by and do nothing. The IOUs are coming due, and it appears we needed to have one last big national debt tantrum before we either get down to business, or decide on a standard of living that is more like the bottom half of the nations on the planet than what we currently have.

I guess that wisdom motivated me enough to at least LOOK at my work list. We will see how much it does from there!