Sunday, April 16, 2017

April, 2017, Part 9, Political Class Insanity: Corruption and Economic Ignorance

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) We have often pointed out how politicians are usually idiots when it comes to economic affairs. Their economic policies are usually useless, dangerous, and/or ignorant of economic theory and common sense. Such is the case in the state of New York that recently celebrated the raising the state’s minimum wage to $15 an hour.

But like every other location that raised the minimum wage to $15 an hour, the politicians involved never anticipated the consequences of their actions. If you raise a company’s wage expense budget line, then that company has to find other ways to compensate by lowering expenses and costs in other parts of their operations since they usually cannot make up the difference in expenses by increasing their revenues. The increasing of the minimum wage does nothing to increase demand and revenue.

And for most companies, the easiest place to reduce costs to offset increased wage rates is in the personnel area of their budget, i.e. fire workers. In this case, the good news is that if you had a job you would be making at least $15 an hour. The bad news, and reality, is that because the political class raised the minimum wage, you do not have any job at $15 an hour.

Such was the case in a recent NBC News report which reported on a New York college cafeteria operation that fired ALL of its employees because of the increase in the minimum wage. Instead, the cafeteria has installed “food-dispensing” machines that will take the place of the entire cafeteria staff at that college. Great, a raise in the minimum wage caused unemployment to go up, go figure.

Well, we have figured that any number of times in this blog. From Los Angeles to parts of the state of Washington, the raising of the minimum wage always results in higher unemployment as businesses, trying to stay profitable and in business, end up investing in technology that does not have to be paid a higher minimum wage. Always happens, but politicians are always too stupid to understand this basic economic principle. As a result, more people are now paid $0 an hour since they have been fired because of a higher minimum wage. Insane.

2) But it is not just in New York state where there is this economic insanity as it relates to the minimum wage. According to a recent article by Breitbart:
  • An analysis of the San Diego restaurant industry has shown that just in that one California city, restaurant jobs have gone down by a whopping 4,000 position in the just the past year since the city raised the minimum wage.
  • And San Diego raised the minimum to only $11.50 an hour, not the $15 an hour that other places have done, e.g. New York state.
  • As always, raise the minimum wage and you end up raising the unemployment rate at the same time.
  • “If job growth in the restaurant sector had just kept pace with the state’s performance … the industry could have created 5,200 jobs instead of the 1,300 that took place,” Lynn Reaser, chief economist of the Fermanian Business & Economic Institute at Point Loma Nazarene University.
  • Forbes Tim Worstall’s article about what happened in Seattle was referenced in the Breitbart article, where that city also raised the minimum wage which also resulted in lost jobs, jobs that would have normally been staffed by less wealthy citizens, giving them no job and no wages at all.
When will politicians learn to stay out of economic affairs and let the market handle everything? Whenever politicians think they are economic geniuses they hurt the most vulnerable in the world, denying them jobs when their ill fated policies restrict economic growth. Idiots.

3) Alright, let’s get out of the economic realm and get back into just plain old political corruption. Consider some ethics and corruption problems that the American Outlook website reported on relative to a sitting Congressman:
  • Congressmen Luis Gutierrez from Illinois is an open advocate of illegal immigration into America and it appears that there might be other illegal acts that he is into.
  • According to a recent report from the Washington Free Beacon, Gutierrez paid both his wife and daughters hundreds of thousands of dollars from his election campaign funds over the past five or six years.
  • While this is not strictly illegal, it is illegal for the candidate to personally gain from funds raised for an election campaign, meaning if not illegal, it is certainly unethical.
  • His wife pulled down over $44,000 in his 2010 campaign, making her the top recipient of cash from that campaign, and then duplicated that feat in the 2012 campaign when she pocketed $93,000.
  • Her $93,000 was a full 25% of what his campaign committee disbursed for the whole campaign.
  • In his next two campaigns his wife pocketed $175,000.
  • His daughters also got paid during these campaigns.
Must be nice to take money from people under one pretense and then give it out to family members. Outside of Congress I believe this is a felony. Must be good to be a member of the protected political class.

4) But Gutierrez is not the only unethical person in Congress. According to reporting by the Constitution website:
  • Congressman Alcee Hasting recently got exposed when it came to light that he had given his long time girlfriend over $2.5 million over the past 20 years, keeping her on his payroll as his highest paid employee even though she was not anywhere close to being his most important staffer.
  • But he and Gutierrez are not alone in this type of unethical behavior since the Washington Free Beacon recently reported that Congresswoman Maxine Walters has paid her daughter over $600,000 since 2006 from campaign funds.
  • Her daughter served as employee on her mother’s campaign committees.
  • But this is not the first time she has dabbled in unethical and/or illegal activities since in 2010 Waters was brought up on three separate charges by her peers in the House, even after Congressman Barney Frank told her not to get involved in advocating for a bank in which she had financial interest, breaking an important ethics rule that requires Congressional “members to behave in a way that reflects creditably on the chamber.”
  • The bank she advocated for, OneUnited, was in financial trouble and Walters' husband owned a sizable amount of OneUnited stock that would have been worthless if the bank went bankrupt.
  • Waters also violated a House rule prohibiting lawmakers from using their positions for financial gain, as well as a government ethics statute banning the dispensing of “special favors.”
  • But again, we should not be surprised since various government watchdog groups have often cited her as one of the most corrupt politicians in Washington.
Just another set of examples where the concept of term limits becomes more and more attractive every day and with every unethical and corrupt act of the American political class.

That will do it for today’s and this month’s political class insanity review. Today we see that existing members of the political class in Washington know nothing about economic and everything about enriching themselves. Insanity. More of the same next month, guaranteed.

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