Wednesday, January 11, 2017

January, 2017, Part 6, Polticial Class Insanity: MIllennials Depressed, Congress Wasting Time, and More Minimum Wage Nonsense

It is the beginning of another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us. 

Today and for all of the insanity posts this month, let’s start off with a welcome piece of honest political dialog. It comes from a State Department spokesperson. Mark Toner, who is about to start the daily State Department press briefing. In a joking matter, he makes the following quote: "Welcome to the State Department. I think we have some interns in the back. Welcome. Good to see you in this exercise in transparency and democracy." 

He then burst out laughing at his own quote, indicating he also knew what a joke the Obama administration has been, especially Mr. Toner’s State Department, when it comes to cover ups, lack of transparency, denial of Freedom of Information Act requests, the prosecution of whistleblowers, etc. But at least it was a little refreshing to finally hear some actual honesty out of Washington as we see from the actual clip of the news conference:

With that context of honesty, let’s see what other insanity has been going down:

1)  If millennials are the future of the country, then the country is in a for a rough time. According to an annual opinion survey that was done by Country Financial Group last November:

  • Its annual financial security index found that millennials, those aged 18 to 34, had the lowest score of all age groups, 60.9 out of 100, regarding their financial optimism.
  • This score was even lower than the millennials pessimistic responses to the 2016 survey, making them the only age group to score lower on their 2017 expectations.
  • Gen X respondents had an index score of 66.6, Baby Boomers came in at 69.2, and those age over 65 had the highest optimism for the country’s financial state at 71.2.
  • Furthermore, about one out of three millennials do not think they will ever have enough money to retire comfortably, about half of them have not set any money aside in either bank accounts or investment accounts, and 29% felt unsure that they would be able to pay off their debts.
Given that Obama’s economic policies have restricted national economic growth, that most of the Obama recovery jobs have been part time or short term contract opportunities, that a record number of millennials are still living at home or with relatives, and wage and income growth has been mostly stagnant over the past eight years, it should not be a surprise that those just starting out on their own economic journeys are not optimistic on the financial future of the country or themselves. Horrific economic management by Washington in general and Obama in particular.

2) My father’s side of the family did not arrive in this country until 1914, almost fifty years after the Civil War and slavery ended in this country. My mother’s side of the family did not arrive in this country until 1920, about 55 years after the end of the Civil War and slavery. Thus, no ancestor on either side of my family had anything to do with slavery. And I would bet that there are millions of similar stories and families like mine across the country.

But that reality did not prevent the Congressional Black Caucus from again issuing a demand that white people like myself pay so-called reparations to African-Americans TODAY, none of whom were alive during the Civil War and the slavery era. According to the Washington Examiner: “Specifically, Michigan Rep. John Conyers and his fellow CBC members have “re-introduced legislation that would set up a commission to consider whether reparations should be paid to black Americans for slavery.” 

Such insanity, such stupidity, for the following reasons:

  • As we mentioned above, all white people, and black people, who took advantage of slavery, died long, long ago and many of the current non-black citizens of this country have ancestors who arrived in this country long after slavery ended.
  • No African-American living today was ever a slave in the old South and thus, none of them suffered the ills of slavery.
  • Using this argument by the Congressional Black Caucus, reparations should be paid to the families of the 600,000 or so mostly white soldiers who fought and died to end slavery in this country, a reality that the Caucus never seems to grasp or champion.
  • According to the article, “Moreover, according to The Root magazine, known for its usually unapologetically pro-black stance on the issues, even some free black Americans “bought and sold other black people, and did so at least since 1654, continuing to do so right through the Civil War.”
  • And finally, “even one of the most leftist papers in existence, The New York Times, admitted two years ago that were a reparations bill passed into law, payments wouldhave to come from taxpayers, who have no culpability for those past crimes and little, if any, of the benefit.”
Rather than working on real problems facing African Americans today, e.g. higher than average African-American unemployment rates, failing inner city schools, urban violence in cities like Chicago, etc., these politicians keep introducing a bill that is stupid and has no chance of ever passing. Einstein once said that the definition of insanity is doing the same thing over and over and expecting different results and this reparations non-issue fits that definition to perfection.

3) Given the sad state of the economy in many parts of the country and the historically weak economic recovery orchestrated by the Obama administration, it is pretty obvious, as we have pointed out many times, that the American political class does a pretty lousy job when it comes to economic policy and strategies. This inability was recently illustrated again by a Young Conservative website article by Andrew Miller on January 4, 2017. Mr. Miller reviewed how the political class in California had passed legislation to jack up the minimum wage in that state to $10.50 an hour with the intention to get it to $15 an hour by 2021. 

In their minds this will provide a better life for California workers since they would be taking home more money. But the fault in their logic is that this assumes that businesses that employ these California workers can actually afford to pay higher wages. What if they cannot? This reality never seems to enter politicians’ minds when they start messing with economic realities.

However, the article illustrated one of these realities. Houman Salem is the founder and owner of a small fashion design and clothing manufacturer in San Fernando, California. While most of the clothing industry has sent their manufacturing offshore to cheap labor countries overseas, Mr. Salem should be congratulated for keeping Americans workers employed in California in the manufacturing segment of the economy. 

But that noble effort was recently endangered by the new minimum wage increase drive by California politicians, as witnessed by an article Mr. Salem had published in the LA Times:

After two years in business, my company now has more than 150 clients from all over the world and 18 employees. It’s what’s known as a cut-and-sew house, part of the garment industry that generates about $17 billion in annual economic activity in Los Angeles County, including $6.9 billion in payroll, according to a 2016 industry report by the California Fashion Assn. This is the epicenter of apparel design and manufacturing in the United States; domestically manufactured clothing is more expensive, but retail and wholesale customers who care about quality and working conditions have historically been willing to pay for it.

Unfortunately, the industry is on a downward trend. Los Angeles County used to have more than 5,000 apparel factories; today, my company is one of roughly 2,000 — and many (e.g. American Apparel) are looking for a way out. One Los Angeles Times headline, quoting a California State University economist, warned that “the exodus has begun.”

So what did Mr. Salem do from a good business perspective? He has moved his operation out of California to Nevada which has a lower minimum wage than California in order to keep his business financially viable. Thus, bad economic policy by bad politicians had the following negative effects:

  • While California residents now have the advantage of a higher minimum wage, they have a disadvantage of not having a job or wage at all as California businesses like Mr. Salem’s move to where they can stay financially viable as a business.
  • Remaining California businesses lose the economic benefit of customer actually having a job, if at a lower salary, further depressing the local economy.
  • State and local government lose the tax inflows that these now unemployed citizens would have provided if the minimum wage had not been raised.

All of these California losses are now Nevada’s gain in Mr. Salem’s case, thanks to the continued economic ignorance of America’s politicians.

That will do it for today’s insanity: more economic ignorance from politicians, Congressional members focusing on an inane and stupid priority at the cost of other worthy efforts, and young Americans looking at the future pessimistically. More insanity tomorrow.

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