Tuesday, May 2, 2017

May, 2016, Part 1, Political Class Insanity: MInimum Wage Insanity, Buying Too Many Government Cars, and Congress Resolving A Non-Problem

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) Most of the world heard the story from last month on how aviation police in Chicago went onto a United Airlines flight and roughly and physically dragged a paying and sitting United Airlines customer from his seat to make room for a United Airlines flight crew. The poor customer ented up seriously injured, injured enough to be hospitalized.

Obviously, United Airlines put itself in the middle of a terrible public relations mess. The incident was all over the news and likely has had a significant impact on customer sales and financials. No one really wants to go on an airplane and then get physically dragged off despite paying for a ticket. 

In other words, the market is correcting terrible corporate behavior and customer service from a service provider. And, by the way, the airlines and the attacked customer have reached what is probably a lucrative settlement for the customer, costing the airlines plenty no doubt.

But of course, and unfortunately, the Washington political class thinks it needs to get involved, as outlined by an April 27, 2017 NewsMax article:

  • The House Transportation Committee scheduled hearings to hear from the United Airlines CEO and other airlines about the incident.
  • The official reason for the hearing is to see "what can be done to improve the flying experience for American travelers." 
  • Congressman Bill Shuster, who chairs the House committee holding the hearing Tuesday, got his name in the papers when he said the committee was looking for "much-needed answers about airline customer service policies and what is being done to improve service for the flying public."
Wonderful, Congress, as always, gets into the act, after the problem arises. The market and the lawyers have already cleared up the situation, the airlines have already taken steps to avoid these types of problems in the future, and life goes on. Except in Congress where action after the fact is a fact of life. Of all the problems facing Americans today, why are we wasting Congressional resources on such a gnat of a problem that has already been addressed? Insanity.

2) One reason we have an almost $20 TRILLION national debt is that the Federal government constantly spends money on stupid and unnecessary expenses. The Government Accountability Office (GAO) recently uncovered a whopping waste of taxpayer money:

  • Between 2011 and 2015, the Obama administration spent $1.6 billion to buy a whopping 64,500 cars at an average cost of $25,600 each.
  • This comes out to an unheard 1,290 new cars per state if you prorate the purchase.
  • Not only is the amount of cars mind boggling but according to the GAO, most of those cars are not used or are under used.
  • The biggest offenders were the Department of Defense, the Department of Homeland Security, the Department of Agriculture, the Department of Justice, and the Department of the Interior.
  • But wasting money in the Obama administration was not restricted to buying tens of thousands of vehicles that were not needed but let’s not forget the half billion disaster called Solyndra, the bogus and failed solar panel company, the running of guns to Mexican drug cartels in the failed Fast and Furious campaign, and a myriad of other failed spending adventures.

Imagine how many hungry Americans could have been fed for that wasted $1.6 billion. Imagine how many drug addicted Americans could have been treated with that wasted $1.6 billion. Imagine how many additional teachers could have been hired with that wasted $1.6 billion. The misspending and bad priorities of the Washington political class and the Federal government continue to amaze and frazzle those that work hard to pay those taxes that get wasted with no redeeming social benefit.

3) We have often showed how at all levels of government, from local towns up through the Federal government, politicians have no economic education, common sense or strategy abilities. They institute economic policies that usually do the exact opposite of what they think will happen.

This is particularly true when it comes to drastically raising the minimum wage. The ignorant politicians think that they will be raising the living standards of the people working near the current minimum wage level. But they do not realize that wages are a major expense line of a business and when you raise the expense line of a business without raising the revenue potential of that business, bad economic things usually happen. 

And with the substantial raising of the minimum wage that bad something is usually that people get paid more but more people lose their jobs, i.e. the good news is that you got a raise, the bad news is that you lost your job. Consider how this simple economic process recently played out in Los Angeles:

  • Alan Stein, writing for the US Herald website, reported that the city of LA had recently raised the local minimum wage level to $15 an hour.
  • For a big company with a lot of employees, that means a big increase in its wages expense line.
  • Such a big company, namely Walmart, decided that raising the minimum wage in one of its LA stores made that store so unprofitable that Walmart made the right business decision and closed the store rather than lose money operating a store at a loss.
  • As a result, all of the residents who worked hard and pleaded with Walmart to put one of its stores in the residents’ Chinatown neighbor now no longer have that store, all because local politicians, wanting to look good for their minimum wage voters, have now turned those minimum wage voters into unemployed voters.
  • The article also reported on how even government entities pinch pennies when their wage line raises dramatically because the University of California Berkeley recently announced that it was laying off 500 workers because it could not afford the ramping up of the state minimum wage level.
The good news is that your wage level went up, the bad news is that you lost your job because your wage level went up.

That will do it for today’s political class insanity: stupid political economic actions, still wasting billions in Washington, and Washington politicians getting involved in a minor problem they should stay out of AFTER the problem has already been resolved. 

More insanity to come in the coming days.

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