July, 2018, Part 6, Political Class Insanity: Fiscal Insanity In Stockton, NYC Politicians on the Take, and More Disasters Form The Iranian Nuclear Deal

It is 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.

Let’s get started:

1) In our last post we discussed the idiocy of a Chicago city government proposed pilot program that would give $500 a month to 1,000 city households with no strings attached. This is a program under the theory of a universal income that somehow people are entitled to get money without doing a darn thing for it. 

We easily showed how stupid that program could end being, theoretically adding over $5 billion to a city budget which is currently only about $8 billion. In other words, where are the city politicians going to get the money to roll out this program? And how long do we think that working, taxpaying residents are going to stay in Chicago when they are working so hard so that city politicians take their money and give it to people that are not working at all or as hard?

But politicians in Chicago are not the only idiots thinking this is a good idea:

• Politicians in Stockton, California have also proposed a similar program.
• Keep in mind as you read this that Stockton politicians have already driven the city to file for bankruptcy with their inept handling of the city’s finances but that bad experience is not stopping them from proposing this program of financial nonsense.
• The politicians hype that this program will guarantee that no one in Stockton, population of 300,000, “lives in poverty.”
• A hundred city residents will get $500 a month to do anything they want with it over an 18 month trial period.
• The city will then decide whether to rollout the program city wide.
• The program has the backing of a number of Silicon Valley billionaires who, of course, will not have to pay the tab for the program if and when it rolls out.

So many problems with this type of thinking:

• You already bankrupted the city by not having enough taxpayer money to cover city expenses, where are you going to get the type of money to pay for this program long term?
• If the money can be spent on anything then what stops a person from wasting it on drugs, booze, gambling, hookers, etc.?
• While anyone would enjoy getting $500 a month with no strings attached, this amount, $6,00, a year is not lifting anyone out of poverty as promised by the city advocates for this type of nonsense.

Let’s do some simple math and easily show how stupid this program is: 

• Assume that 10% of Stocktons’ population is eligible for the program after the trial, or 30,000 participants.
• At $500 a month, $6, 000 a year, the annual cost of just handing out the money would be $180 million a year without counting administrative expenses.
• The 2019 total revenue stream for the city is expected to be $704 million.
• Thus, this program would consume over 25% of the city’s current revenue stream which would mean more 25% more in taxes on those working and living in the city which would likely cause some productive people to leave and seek a place with less taxation which would reduce city revenues which would mean higher tax rates and we are now in a financial death spiral.

So we have a program that would never fulfill its primary objective, i.e. lift people out of poverty, would increase taxes causing outward migration which would reduce city tax streams which would require tax increases, etc. Idiocy.

Oh, one final note that Stockton and Chicago politicians should be aware of. Socialist leaning Finland has already tried a program like this. They ended up shutting it down and not rolling it out, leading one to assume that it was a financial disaster. Thus, if a socialist nation like Finland opted out of a socialist program like this, what makes you think you can make it work? 

2) Airbnb is a highly successful program what allows citizens to easily rent out their homes or apartments to strangers in order to maximize the value of their real estate. The rentals are usually short term, days vs. months. For example, if a person owns a home in a good beach town and is going to be away for a period of time, rather than allow that home to sit vacant, Airbnb facilitates that homeowner finding someone who would like to visit that good beach town for a short amount of time.

Everyone wins. The home owners gets rental money, the renter finds interesting places to stay that are often less expensive than staying in a hotel, and Airbnb makes a profit from setting things up. It is classic free market economics, a willing seller easily getting hooked up with a willing buyer.

Unless you live in New York City. According to a recent National Review article by Kyle Smith on July 19, 2018:

• Mayor Bill de Blasio and the city town council are putting together legislation that would make it more difficult for Airbnb to function in the city limits and force Airbnb to give the city the names of its city customers who rent out their homes vias the Airbnb service.
• According to the article: “Consider how viciously anti–New Yorker this law is: You’re going to be out of town for two weeks on vacation, or to look after a sick relative, or on business. You could make thousands of dollars renting out your home on Airbnb. But it’s illegal. It would be legal for you to host a guest while you yourself are still living at home for those two weeks — but how is City Hall supposed to monitor whether you lay your head down on your own pillow each night? It would take a Stasi-level surveillance regime to catch all of the violators. The law creates the predicate for massive government intrusion into private home-sharing transactions.”
• This type of over regulation caused Airbnb listings to drop a dramatic 50% in San Francisco when that city implemented a similar city ordinance, robbing that city’s residents the opportunities to earn extra money from an asset they own.
• De Blasio has increased his “Office of Special Enforcement” by four fold over the past several years to make sure that city inspectors can make sure that Airbnb customers toe the line which is forcing people to forgo the hassle of dealing with the city via Airbnb and thus losing out on extra income.
• The article points out how stupid this over enforcement is: “You might think that if an apartment is safe enough for a family of New Yorkers to live in it full-time, then it’s probably safe enough to rent out some of it for a few days.”

Now, you might try and make the case that de Blasio and the council are just trying to make sure that everyone stays safe and that is why there is such over regulation and enforcement. But you would be wrong since the article correctly points out that the mayor and council are beholden to special interest groups and that is why they are using their governmental powers to unfairly cripple one industry (Airbnb) that does not contribute to their election campaigns and favor an industry (the hotel industry and its union members) that does finance their election efforts:

• New York City average hotel room stay prices peaked in 2014 and have decreased since then, corresponding with the rise in Airbnb’s popularity.
• In response, the hotel industry paid out almost half a million dollars in campaign donations in 2013 and 2017 in an attempt to buy political influence.
• City council speaker Corey Johnson got $15,600 of that money and the anti-Airbnb bill sponsor Carlina Rivera got $33,800 of that money.
• De Blasio himself and his campaign organization, “One For New York,” received $400,000 from a hotel union related group.

Just another instance where greedy politicians have stepped into people’s personal lives not to make those lives better but to protect and prosper form their positions of power. Disgustingly insane.

3) Let’s wrap up today’s insanity with a quicker hitter from Iran. Remember how Obama’s nuclear weapons deal with Iran was supposed to minimize the risk that an nuclear armed Iran would pose to the world? We have previously discussed how this was one of the worst international agreements that this country ever made: shoddy inspection requirements, backroom deals that were not disclosed to Congress or the American people, late night, secret shipments of cold cash worth over a billion dollars to the worst terrorist sponsoring nation in the world, an aborted illegal attempt to find a way to use the American banking system to funnel billions more to the Iran regime, and the refusal to shut down an Iranian-backed group’s heroin trade.

To this list of failures we add another. According to Alice Green, writing for the Punching Bag website on July 19, 2018, the Iranians now brag that they have stockpiled 950 TONS of uranium. Iran’s Nuclear Chief Ali Akbar Salehi recently made that pubic claim of 950 tons, adding that this is enough uranium to run 190,000 enrichment centrifuges. Even worse, he claims that 400 tons of that uranium stockpile was imported since Obama signed the nuclear deal with Iran back in 2015. Salehi also claimed that Iran has completed construction of a new factory to help build the rotor blades for those centrifuges.

Way to go Barack, much like Obama Care, the nuclear deal with Iran is nothing more than a continuing array of disaster after disaster.

That will do it for today’s insanity: Iran continues its march to atomic weapons, New York politicians are on the take, and fiscal insanity and stupidity in Stockton. One more set of insanity to follow.

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