Sunday marks the 10th anniversary of the September 11 terrorist attacks on the United States, and I cannot help but reflect on such a tragic, surreal day. I remember my day, which now seems so absurd. And I reflect on the courage of heroism of so many who helped save countless numbers of lives.
I am sure we all remember where we were when we first heard the news. I was sitting in my car at the intersection of 79th Street and Metcalf, waiting for the light to turn green. The DJ on the radio reported that a plane had struck one of the World Trade Center buildings in New York. I figured it was just a prop plane, piloted by an inexperienced pilot who did not know what he was doing. The clock in my car said 7:56, so this was approximately 10 minutes after the first plane struck. A few minutes later, someone in the office reported that a second plane had struck the second tower. I knew at that point that it was intentional.
My job at the time entailed traveling downtown for Tuesday morning investment meetings, so I headed down shortly, and on my way in, the news on the radio reported that a plane crashed into the Pentagon in Washington DC. This was unreal. Finally, I don't when, but I heard about the plane crash in Pennsylvania. This was becoming a blur. Shortly after arriving in downtown Kansas City, I saw the headline flash across a Bloomberg screen that the FAA grounded all flights and ordered all planes to land immediately. The investment meeting was canceled and I was told to get back to my office and call clients.
Those were the oddest calls I ever made. There was no script, and I barely had a clue as to what to say. My bosses barely had a clue. No one had ever seen anything like this before. I spent my day reassuring customers that the financial system was still sound and that their money was safe. Paled in comparison to the tragedy unfolding. First call I made, the client told me that we were at war. With whom I asked. Whoever attacked us! I remember a call I made to a client around 1:30pm. I went through my pitch, then he said to me, "Chuck I have no idea what you're talking about." He had not heard the news yet. The story I told had to sound so unbelievable that he probably thought I had lost my mind. How could the events of that day possibly be real?
In the end, it was a day that showed the best and worst of humanity. We saw the worst that day. What emerged later was the best. Watching a special the other night that spotlighted two heroes, among many that day, Frank DiMartini and Pablo Ortiz. They rescued people from the 88th, 89th and 90th floors of the North Tower and got them out before the building collapsed, yet they died when the building collapsed. More than 300 New York firefighters died as they attempted to rescue people caught in the buildings. In all, approximately 3,000 people died that day as a result of the terrorist attacks. Yet, as we reflect on that day, I choose to remember the heroes, the people who died while saving others. The firefighters and police officers who were doing their duty when it all caved in on them.
For once, on that day and the several days that followed, we were all Americans. Just Americans. In fact, the whole civilized world became Americans that day. Ultimately we learned that America isn't about monuments or buildings. It is about freedom. And we learned that freedom is not free. Sometimes we pay a dear price for our freedom. But I love that America is about an idea. That the spirit of the people can be bent, but not broken. That the greatness of America lies in its people. Its resilient, ever optimistic people, people with a can-do spirit. The terrorists destroyed two buildings, and yes, they massacred unbelievable amounts of people. People whose lives will never be the same. But they did not destroy the spirit of any of them. All 3,000 people who died that day died as heroes. They did not die in vain. The terrorists died as cowards. As I look back, ten years later, the truth rings out: The Heroes Won.
Tuesday, September 6, 2011
Saturday, May 21, 2011
It's The End of the World As We Know It (And I Feel Fine)...
"You must be ready because the Son of Man will come at an hour when you do not expect him." Luke 12:40
These words of Jesus noted above in the Gospel of Luke have drawn attention lately thanks to the musings of Harold Camping, a founder of Family Radio, a non-commercial Christian broadcasting network. He has prophecied (is that a word?) that the Second Coming of Jesus will occur today, May 21. Thanks largely to the verse above, I do not believe him. And his prediction has come under scrutnity, been the butt of jokes, and even inspired such things as "post-Rapture looting parties."
But what if one takes a different approach? If the Second Coming were to occur today, would you be ready? What would you change about your life, if anything? Use this as an opportunity to do good in the world and serve mankind. Take time to laugh more (I could certainly use my own advice here!). Enjoy life more! Create a "bucket list" and go do it. Once again, I need to follow my own advice. Now to go make that bucket list...
Sunday, April 24, 2011
Haunting Words
"At the sixth hour darkness came over the whole land until the ninth hour. And at the ninth hour Jesus cried out in a loud voice, "Eloi, Eloi, lama sabachthani?" - which means, "My God, my God, why have you forsaken me?" Mark 15:33-35
I have just celebrated Easter service as I write this. The music this morning may have been the best I've ever heard at COR (or any other church for that matter). Very uplifting and inspiring. The sermon was really good. Yet the verse written above has haunted me all week. I have been haunted because I have been feeling the words of Jesus on the cross this week. The pastor of my church, Adam Hamilton, preached a sermon on these very words several weeks ago, noting with amazement that even Jesus, the Son of God, felt abandoned by God in his hour of greatest need. I write this today not to impart some great wisdom, but to seek answers.
I know why I am feeling forsaken by God. This week, I will celebrate my 20th wedding anniversary - alone. The great joy of such an occasion should not be overwhelmed with sadness. There are other things going on in my life that also lead to my feelings. The apostle Paul, writing in 1 Thessolonians reminded me that I should give thanks in all situations because this is God's will for me in Christ Jesus (1 Thess. 5:18). Yet I cannot help but feel differently. On top of that, Mother's Day is right around the corner. Oh joy. Easily the emptiest day of the year in our house. A day that only serves to remind my two sons how unfair life has been to them. Meanwhile, I read Genesis 2:18 (It is not good for the man to be alone. I will make a helper suitable for him, said God) and I wonder "where is God and where is my suitable helper?"
Do I worship a God that abandons His followers at their hour of greatest need? Jesus himself felt abandoned by God while on the cross! I find myself feeling that way now as I approach a very difficult time of the year. I have prayed with more intensity than ever these past few months, and I can see that some prayers have been answered, others have not. I have lashed out in anger at God, out of frustration. I want some reassurance that He is there, and that He is listening. I want some reassurance that He is hearing my prayers. Right now, it does not feel that way. I know my faith has been bent, contorted and twisted in all kinds of ways these past several years. That faith is being severely tested again. When do I come through this storm?
The words of Jesus on the cross come from Psalm 22:1. David writes this as an ultimate praise of a Lord who delivers him from his enemies and predators. At this point, when do I come out the other side, having been delivered from my demons and frustrations?
Tuesday, November 2, 2010
Don't Count Obama Out Yet
As I write this on election night, the major news services have already projected that the Republicans will win control of the House of Representatives and make gains in the Senate. Based on opinion polls leading up to the election, neither of these developments is a surprise. But these results, especially in the House where Republicans put extra effort, send a message to the current administration that the way things are done needs to change.
The Republicans made it perfectly clear that this election was a referendum on the presidency of Barack Obama. No doubt this message resonated with the voters who obviously agreed with the Republicans. President Obama must change his approach to save his presidency, but can he or will he do it? It is clear in hindsight that President Obama misinterpreted his mandate in 2008. The voters wanted a President who would fix the economy. Mr. Obama interpreted his election as a mandate to be a transformational president. The people did not want healthcare or cap-and-trade, or the heavy hand of regulation. The people wanted jobs and a greater degree of job security.
Can Mr. Obama save his presidency? Sure he can. What needs to change? Everything. For a man who campaigned so brilliantly in 2008, he has been the most tone deaf president I have ever seen. When he was inaugurated, the president's top three priorities should have read like this: 1. the economy, 2. the economy, 3. the economy. He signed a poorly conceived stimulus bill into law then promptly forgot about the economy. As a result, the economy has made a weak recovery, with just 2% GDP growth in the third quarter (it was 1.6% in the 2nd qtr), and 15 consecutive months of unemployment at 9.5% or higher. Given the depths of the 2007-2009 recession, producing 3 or 4 consecutive quarters of 6% plus GDP growth should be a lay-up. He pushed healthcare when the people wanted jobs. He pushed cap-and-trade when the people wanted jobs. The people clearly saw both these legislative priorities as job killers.
There are historical precedents here, Ronald Reagan and Bill Clinton. Reagan dealt with a large Democratic majority in the house his entire 8 years in office, but in 1982 his Republicans lost 26 seats in the House. Unemployment was at 10.8% on election day in 1982. Yet, he stuck to his agenda of limited government growth, dereguation and unleashing the private sector. It worked. In 1983, the economy recovered by creating 4 million new jobs (3.8 million private sector jobs), and grew at a 7% rate. Unemployment dropped to 8.3% by the end of 1983. In fact, the economy sustained 4 consecutive quarters of 8% plus GDP growth over the final 3 quarters of 1983 and the first quarter of 1984. So far in the current recovery, the economy has produced only 1 quarter of 4% plus GDP growth (4.9% in 4Q09), a sorry economic performance given the depth of the recent recession.
Bill Clinton encountered a different set of circumstances. On election day 1994, the economy was actually posting healthy results. The economy grew at a very healthy 4.2% in 1994 and the unemployment rate was 5.4% on election day. So what went wrong with Mr. Clinton? His ambitious agenda, largely based on his desire to pass a healthcare bill. People were clearly not on board with the bill. He appointed his wife who was not confirmed by the Senate, who held meetings in secret, hired a panel of experts who were never named, and producted a bill that would greatly expand the role of government in healthcare. In addition, Mr. Clinton always had a character deficit with the American people that sapped his political capital. After the election, Mr. Clinton embraced a more limited government in conjunction with the Republicans in Congress, and the economy enjoyed another 5 years of uninterupted prosperity.
The lesson for Mr. Obama is simple. Embrace a more limited government and unleash the private sector. His rhetoric towards various portions of the private sector has been downright hostile. There is a good reason he has been labeled as an anti-business president by former General Electric CEO Jack Welch. Jobs are not being created because business has been saddled with higher costs and a higher regulatory burden. Companies are hesitant to invest because they do not know how costly these new burdens will be. The president has created a world of uncertainty. He has taken steps to make investment money available, but has also created an environment that is hostile to risk taking and investment that will ultimately be needed to grow the economy.
In the end, it all rests on the economy. If the economy makes a stronger recovery and creates jobs, Mr. Obama will be re-elected in 2012. Simple as that. He still enjoys the personal approval of over 50% of the electorate, although his job performance barely rates 40%. This says people still like the man and want him to succeed. Mr. Reagan and Mr. Clinton both enjoyed high personal approval ratings, and each easily won re-election after horrendous mid-term elections. Don't count Mr. Obama out yet. But, the current path he's on will guarantee Mr. Obama an election defeat in 2012.
The Republicans made it perfectly clear that this election was a referendum on the presidency of Barack Obama. No doubt this message resonated with the voters who obviously agreed with the Republicans. President Obama must change his approach to save his presidency, but can he or will he do it? It is clear in hindsight that President Obama misinterpreted his mandate in 2008. The voters wanted a President who would fix the economy. Mr. Obama interpreted his election as a mandate to be a transformational president. The people did not want healthcare or cap-and-trade, or the heavy hand of regulation. The people wanted jobs and a greater degree of job security.
Can Mr. Obama save his presidency? Sure he can. What needs to change? Everything. For a man who campaigned so brilliantly in 2008, he has been the most tone deaf president I have ever seen. When he was inaugurated, the president's top three priorities should have read like this: 1. the economy, 2. the economy, 3. the economy. He signed a poorly conceived stimulus bill into law then promptly forgot about the economy. As a result, the economy has made a weak recovery, with just 2% GDP growth in the third quarter (it was 1.6% in the 2nd qtr), and 15 consecutive months of unemployment at 9.5% or higher. Given the depths of the 2007-2009 recession, producing 3 or 4 consecutive quarters of 6% plus GDP growth should be a lay-up. He pushed healthcare when the people wanted jobs. He pushed cap-and-trade when the people wanted jobs. The people clearly saw both these legislative priorities as job killers.
There are historical precedents here, Ronald Reagan and Bill Clinton. Reagan dealt with a large Democratic majority in the house his entire 8 years in office, but in 1982 his Republicans lost 26 seats in the House. Unemployment was at 10.8% on election day in 1982. Yet, he stuck to his agenda of limited government growth, dereguation and unleashing the private sector. It worked. In 1983, the economy recovered by creating 4 million new jobs (3.8 million private sector jobs), and grew at a 7% rate. Unemployment dropped to 8.3% by the end of 1983. In fact, the economy sustained 4 consecutive quarters of 8% plus GDP growth over the final 3 quarters of 1983 and the first quarter of 1984. So far in the current recovery, the economy has produced only 1 quarter of 4% plus GDP growth (4.9% in 4Q09), a sorry economic performance given the depth of the recent recession.
Bill Clinton encountered a different set of circumstances. On election day 1994, the economy was actually posting healthy results. The economy grew at a very healthy 4.2% in 1994 and the unemployment rate was 5.4% on election day. So what went wrong with Mr. Clinton? His ambitious agenda, largely based on his desire to pass a healthcare bill. People were clearly not on board with the bill. He appointed his wife who was not confirmed by the Senate, who held meetings in secret, hired a panel of experts who were never named, and producted a bill that would greatly expand the role of government in healthcare. In addition, Mr. Clinton always had a character deficit with the American people that sapped his political capital. After the election, Mr. Clinton embraced a more limited government in conjunction with the Republicans in Congress, and the economy enjoyed another 5 years of uninterupted prosperity.
The lesson for Mr. Obama is simple. Embrace a more limited government and unleash the private sector. His rhetoric towards various portions of the private sector has been downright hostile. There is a good reason he has been labeled as an anti-business president by former General Electric CEO Jack Welch. Jobs are not being created because business has been saddled with higher costs and a higher regulatory burden. Companies are hesitant to invest because they do not know how costly these new burdens will be. The president has created a world of uncertainty. He has taken steps to make investment money available, but has also created an environment that is hostile to risk taking and investment that will ultimately be needed to grow the economy.
In the end, it all rests on the economy. If the economy makes a stronger recovery and creates jobs, Mr. Obama will be re-elected in 2012. Simple as that. He still enjoys the personal approval of over 50% of the electorate, although his job performance barely rates 40%. This says people still like the man and want him to succeed. Mr. Reagan and Mr. Clinton both enjoyed high personal approval ratings, and each easily won re-election after horrendous mid-term elections. Don't count Mr. Obama out yet. But, the current path he's on will guarantee Mr. Obama an election defeat in 2012.
Friday, September 24, 2010
With Charity For All
I read Arianna Huffington's latest column today with a great deal of interest, perhaps for reasons other than what she actually wrote. The column was well written and inspired thoughts of my own. Overall, I agree with what she wrote, and I hope the actions of Mark Zuckerberg will inspire others to act as well. The column can be found at the following link: http://www.huffingtonpost.com/arianna-huffington/troubled-times-when-mark-_b_737159.html.
In this particular case, I do not think Mr. Zuckerberg's gift will solve the problems within the Newark school system. Mr. Zuckerberg's $100 million gift is certainly generous. The main question that popped into my mind as I read this dealt with the "why" behind the Newark school system's low graduation rate. I do not question the motivation behind Mr. Zuckerberg's generous gift. I would imagine that the low graduation rate has more to do with unmotivated students and uninvolved parents than the spending per student by the government. The state currently spends $22,000 per student per year, according to the article. Yet Newark's graduation rate is only around 50 percent. Approximately 1 in 5 Newark graduates go to a 4-year college, and 85 percent of the students that go to a community college need remedial help in math and English. However, my perception may be wrong on this, but the student's motivation and parental involvement are the first needs to be addressed.
The gift also made me wonder how governments and/or private citizens can meet the needs of this country's neediest citizens and institutions. With the country in a mood to cut government spending, private citizens need to step up. Just because a government entity cuts spending, the demand for the services cut does not disappear. Instead of saying that at some point, a rich person has "made enough money", why not issue a call for those so richly blessed financially to step up more? Let those blessed with the gift of making money continue to make more money. However, those with that ability should use their wealth to help those in the most dire need, and not just simply to pad an already extravagent lifestyle. To whom much has been given, much is expected. Seems this is consistent with Warren Buffet's and Bill Gates's call for the wealthiest citizens to give more of their financial wealth to charity. An added benefit is that more money would go directly to those in need, and the money would likely be spent more efficiently.
Americans have always been generous with their time and money, one of the facets that make this country so unique. Parents need to remain involved in their children's lives to every extent possible. Of course, limitations to this include long hours at work, especially when it involves out of town travel. However, millions of parents do remain involved, and these are the children that usually succeed in school and go on to lead successful, happy, prosperous lives of their own.
When the Mark Zuckerberg's of the world step up and give more, let's not be so cynical of the motives. Sure, he has his motives. Actions like Mr. Zuckerberg's gift used to inspire others to act in a similar fashion. Today's leaders can show true leadership by exhorting others in a similar position to act in a similar manner. Instead, these days, such large gifts inspire cynicism, and we villify someone else's generosity. But, as Ms. Huffington stated in her column, it is more about the gift than the motivation.
In this particular case, I do not think Mr. Zuckerberg's gift will solve the problems within the Newark school system. Mr. Zuckerberg's $100 million gift is certainly generous. The main question that popped into my mind as I read this dealt with the "why" behind the Newark school system's low graduation rate. I do not question the motivation behind Mr. Zuckerberg's generous gift. I would imagine that the low graduation rate has more to do with unmotivated students and uninvolved parents than the spending per student by the government. The state currently spends $22,000 per student per year, according to the article. Yet Newark's graduation rate is only around 50 percent. Approximately 1 in 5 Newark graduates go to a 4-year college, and 85 percent of the students that go to a community college need remedial help in math and English. However, my perception may be wrong on this, but the student's motivation and parental involvement are the first needs to be addressed.
The gift also made me wonder how governments and/or private citizens can meet the needs of this country's neediest citizens and institutions. With the country in a mood to cut government spending, private citizens need to step up. Just because a government entity cuts spending, the demand for the services cut does not disappear. Instead of saying that at some point, a rich person has "made enough money", why not issue a call for those so richly blessed financially to step up more? Let those blessed with the gift of making money continue to make more money. However, those with that ability should use their wealth to help those in the most dire need, and not just simply to pad an already extravagent lifestyle. To whom much has been given, much is expected. Seems this is consistent with Warren Buffet's and Bill Gates's call for the wealthiest citizens to give more of their financial wealth to charity. An added benefit is that more money would go directly to those in need, and the money would likely be spent more efficiently.
Americans have always been generous with their time and money, one of the facets that make this country so unique. Parents need to remain involved in their children's lives to every extent possible. Of course, limitations to this include long hours at work, especially when it involves out of town travel. However, millions of parents do remain involved, and these are the children that usually succeed in school and go on to lead successful, happy, prosperous lives of their own.
When the Mark Zuckerberg's of the world step up and give more, let's not be so cynical of the motives. Sure, he has his motives. Actions like Mr. Zuckerberg's gift used to inspire others to act in a similar fashion. Today's leaders can show true leadership by exhorting others in a similar position to act in a similar manner. Instead, these days, such large gifts inspire cynicism, and we villify someone else's generosity. But, as Ms. Huffington stated in her column, it is more about the gift than the motivation.
Sunday, August 22, 2010
A Sad Day For The Plaza
"It was first in Kansas City
It was first in the USA
America's original shopping city
The Plaza"
The above was a radio jingle for the Plaza from the early 1980's, and I can still remember hearing this commercial on the radio dozens of times. The words of this song stick in my mind as I contemplate with sadness the proposed new headquarters of the Polsinelli Shugart law firm right on the Country Club Plaza.
For those not familiar, Polsinelli Shugart is one of Kansas City's largest law firms, employing over 250 attorneys in the Kansas City area alone, and 500 attorneys overall. The firm also has attorneys in St. Louis, Washington, New York and Phoenix.
Meanwhile, the Country Club Plaza in Kansas City dates back to the 1920's when it was designed and built by Kansas City real estate developer, J.C. Nichols. The area was designed strictly as a shopping area, one of the first in the world. The Plaza would accomodate the needs of those who lived in the new mansions just to the south, and those that were over on the Kansas side, in Mission Hills. The architecture was modeled on Kansas City's sister city, Seville, Spain. The Plaza has had its ups and downs, but the core of the center remained the same, the architecture remained the same. Sometime in either the late 1970's or early 1980's, the Plaza's managers made a decision to attract upscale stores to the Plaza and turn it into a tourist destination. It worked and the Plaza has largely thrived since.
Last week, the law firm of Polsinelli Shugart proposed a new headquarters on the corner of the 47th Street and Broadway, right on the Plaza. The headquarters building would be 8 stories tall, and would require the demolition of one of the Balcony Building, one of the Plaza's historic buildings, plus the parking garage behind the building and an apartment complex, all of which are on the same block. The new building would have 192,000 square feet of office space and ultimately be able to acommodate 300 attorneys.
My take on this new proposed headquarter building for the Polsinelli Shugart law firm: I hate it. Period. This is one instance where progression is actually regression, or worse. The original character of the Plaza is that of a retail center. It was built as a retail center, with some upstairs offices in a series of two-story buildings. This new office building will have no retail space, will dominate the skyline, thereby ruining the park-like setting of the Plaza, and will be architectually inconsistent with the Plaza. What I can see happening is that the Plaza will become another generic office park, the retail and restaurant presence will be greatly diminshed, and the Plaza will lose its unique standing among the nation's shopping areas. Should the Polsinelli headquarters be allowed to proceed, this will be the first domino, in a long line of dominoes, to fall.
I am as close to a lassiez-faire capitalist as you will find, but I am also a traditionalist, and a purist when it comes to maintaining an historic place like the Plaza. The radio jingle mentioned at the beginning of this article notes the truly unique nature of the Plaza as America's original shopping city. Yet that is now being lost, and conformity will rule the day on the Country Club Plaza. The Plaza is truly a crown jewel of Kansas City, and yet projects like these will cause it to lose a lot of luster, and lots of tourist dollars. J.C. Nichols built a truly unique shopping community here, and to see it lose all that to a bunch of non-descript office buildings would a tragedy in Kansas City.
Monday, August 9, 2010
Paul Krugman Is the Real Flimflam Artist
One of my pet peeves is stupidity in all its forms, and today I received a particularly large dose of it in Dr. Paul Krugman's column entitled "America Goes Dark." Dr. Krugman, for those unaware, masquerades as an expert economist/economic commentator, writing for the New York Times. If Dr. Krugman were my doctor, I would have died long ago. He would have correctly diagnosed my problem, but given me the wrong prescription. When that inevitably failed, he would have prescribed more of the same, in ever increasing doses, until I finally died. He is usually correct in identifying a problem, but his prescriptions are often so preposterous that his solutions are often worse than the original problem.
In his column today, Dr Krugman correctly identifies a problem that state and local goverments are having providing some basic services. Streetlights being turned off, teachers being laid off, all a result of the recession that have depressed tax revenues and left local governments strapped for cash. Dr. Krugman's answer to this is the same as his answer to every problem: we need more and more government. Eventually, he would prescribe so much government spending, in ever increasing amounts, that the republic would eventually go bankrupt and die. So of course, he is proposing a tax increase, which he claims will leave local governments less cash strapped. As if this isn't silly enough, he claims that the politicians in Washington have only grudgingly provided a trickle of help. Huh? Let's break this down a bit.
First, Dr. Krugman assumes this is strictly a revenue problem. In part, it is. The recession of the past couple of years has clearly depressed tax receipts. But this is also a spending problem. However, in Dr. Krugman's world, the government cannot spend enough money. He also believes that the stories of vast armies of useless, paper pushing bureaucrats working for the federal government are a myth. Huh? He seriously does not believe that the federal government has a spending problem. He truly believes that the United States and should shoulder more and more debt (which will be a burden to our children and grandchildren) so that the federal government can continue living well beyond its means. Meanwhile, the national debt, at $13 trillion is approaching levels that forced the debt rating of Greece to fall to junk, and is pushing Spain and Portugal quickly in that direction.
He says you hardly see any stimulus at all because state and local governments are cutting back. Most state and local governments are also bound by balanced budget laws that force them to cut back, due to lower tax receipts. But last year, the federal government passed an $862 billion stimulus bill, by far the largest stimulus ever passed, and about 6.5% of GDP. This is hardly any stimulus? Approximately one-third of the stimulus went to state and local governments to help them preserve the status quo. That is not stimulus in any way, shape or form. Only 10% of the stimulus went to projects designed to stimulate economic growth. Isn't stimulus, by definition, suppose to increase economic growth? And yet, the economy has still lost about 3 million jobs since the passage of the stimulus. Dr. Krugman keeps telling us that the government should be spending more and more? Five quarters after the stimulus passed, and the economy is only growing 2.4%? Yes, we are finally seeing some employment gains, but we are also seeing large numbers of discouraged workers leaving the workforce. Hardly any stimulus? Or a poorly designed stimulus that had no chance to succeed?
In addition to more spending, Dr. Krugman also proposes that we should increase taxes. Name for me one legitimate economic theory that says you raise taxes during an economic recession? Lord Keynes advocated raising taxes only at times when aggregate demand was growing at an unsustainably high rate, with the excess proceeds used to pay down government debt. Keynes believed that lower taxes and increased government spending during economic recessions would increase aggregate demand. The competing economic theory, supply side, believes that by lowering taxes, particularly on producers, you would incentivize producers to produce at lower costs, and that consumers would benefit from lower costs and therefore, increase aggregate demand. But, Dr. Krugman, in all his infinite wisdom, proposes a tax increase in the face of a very weak economic recovery, which would practically guarantee a double-dip recession, depress tax receipts further due to lower demand, and spur Dr. Krugman to write further columns about the need for further, and larger, tax increases.
Another laughable point in Dr. Krugman's article is when says, "...when we give millionaires more money (through tax cuts) instead, there's a good chance that most of that money will just sit idle." Huh? Millionaires that I know did not become that way by letting their money sit idle. These people are extremely active in looking for investment opportunities that will yield high returns. In fact, many are obsessed with investment opportunities. Millionaires only let their money sit idle if they if there are no opportunities to earn a rate of return on their investment that is appropriate given the risk of the investment involved. Sit idle? Not with millionaires. Millionaires, or "the rich", have excess capital, or risk capital that they can invest in high risk investments. These are the investments in our future, such as new technologies, and new companies. If the money is sitting idle today (and I believe it is), it is because of a regulatory environment that is hostile to risk taking. Give these millionaires the regulatory environment of the Reagan years, and they would not be able to invest the risk capital fast enough.
Finally, Dr. Krugman concludes by asking how we got to this point, and what about the future. I will answer the former first. We got to this point, not so much because of anti-government rhetoric over the past 30 years (as Dr. Krugman claims in the article), but by example after example of government incompetence. What do the Post Office, Fannie Mae, Freddie Mac, Medicare and Medicaid all have in common? They are all government sponsored enterprises and all are a financial disaster. Freddie and Fannie were Ground Zero of the financial crisis that led us into our current economic environment (and were completely left out of the financial reform bill!). Medicare and Medicaid are insolvent, and Social Security is headed that way. The Post Office bleeds money every year, and last year lost nearly $4 billion. Yet Dr. Krugman would have us believe that only the Federal Government is qualified to get us out of our current mess.
Finally, what of the future? He says that well-educated populations and high-quality infrastructure are crucial elements of a growing economy. He is indeed correct. However, we also need abundant natural resources, price stability, incentives to invest, and a government that does not burden its people. He says emerging nations "are making huge efforts to upgrade their roads, their ports, their schools. Yet in America we're going backward." Emerging nations also have very low taxes, very little regulation and I am sure a host of other prickly little details that would appall Dr. Krugman and somehow escape his so-called expert economic analysis.
In a recent column, Dr. Krugman called Rep. Paul Ryan's Road Map For America "flimflam". I would say that Dr. Krugman is the real flimflam artist. He proposes solutions that are not supported by any legitimate academic theory. He blames the rich for sitting on their money, when the federal government is giving them every incentive to remain idle. He says that the federal government did not spend enough money when in fact the government had the largest stimulus package ever last year, and the package gave us far less than proper bang for our buck due to poor conception. Dr. Krugman's solutions are no solutions, but instead a prescription for disaster.
In his column today, Dr Krugman correctly identifies a problem that state and local goverments are having providing some basic services. Streetlights being turned off, teachers being laid off, all a result of the recession that have depressed tax revenues and left local governments strapped for cash. Dr. Krugman's answer to this is the same as his answer to every problem: we need more and more government. Eventually, he would prescribe so much government spending, in ever increasing amounts, that the republic would eventually go bankrupt and die. So of course, he is proposing a tax increase, which he claims will leave local governments less cash strapped. As if this isn't silly enough, he claims that the politicians in Washington have only grudgingly provided a trickle of help. Huh? Let's break this down a bit.
First, Dr. Krugman assumes this is strictly a revenue problem. In part, it is. The recession of the past couple of years has clearly depressed tax receipts. But this is also a spending problem. However, in Dr. Krugman's world, the government cannot spend enough money. He also believes that the stories of vast armies of useless, paper pushing bureaucrats working for the federal government are a myth. Huh? He seriously does not believe that the federal government has a spending problem. He truly believes that the United States and should shoulder more and more debt (which will be a burden to our children and grandchildren) so that the federal government can continue living well beyond its means. Meanwhile, the national debt, at $13 trillion is approaching levels that forced the debt rating of Greece to fall to junk, and is pushing Spain and Portugal quickly in that direction.
He says you hardly see any stimulus at all because state and local governments are cutting back. Most state and local governments are also bound by balanced budget laws that force them to cut back, due to lower tax receipts. But last year, the federal government passed an $862 billion stimulus bill, by far the largest stimulus ever passed, and about 6.5% of GDP. This is hardly any stimulus? Approximately one-third of the stimulus went to state and local governments to help them preserve the status quo. That is not stimulus in any way, shape or form. Only 10% of the stimulus went to projects designed to stimulate economic growth. Isn't stimulus, by definition, suppose to increase economic growth? And yet, the economy has still lost about 3 million jobs since the passage of the stimulus. Dr. Krugman keeps telling us that the government should be spending more and more? Five quarters after the stimulus passed, and the economy is only growing 2.4%? Yes, we are finally seeing some employment gains, but we are also seeing large numbers of discouraged workers leaving the workforce. Hardly any stimulus? Or a poorly designed stimulus that had no chance to succeed?
In addition to more spending, Dr. Krugman also proposes that we should increase taxes. Name for me one legitimate economic theory that says you raise taxes during an economic recession? Lord Keynes advocated raising taxes only at times when aggregate demand was growing at an unsustainably high rate, with the excess proceeds used to pay down government debt. Keynes believed that lower taxes and increased government spending during economic recessions would increase aggregate demand. The competing economic theory, supply side, believes that by lowering taxes, particularly on producers, you would incentivize producers to produce at lower costs, and that consumers would benefit from lower costs and therefore, increase aggregate demand. But, Dr. Krugman, in all his infinite wisdom, proposes a tax increase in the face of a very weak economic recovery, which would practically guarantee a double-dip recession, depress tax receipts further due to lower demand, and spur Dr. Krugman to write further columns about the need for further, and larger, tax increases.
Another laughable point in Dr. Krugman's article is when says, "...when we give millionaires more money (through tax cuts) instead, there's a good chance that most of that money will just sit idle." Huh? Millionaires that I know did not become that way by letting their money sit idle. These people are extremely active in looking for investment opportunities that will yield high returns. In fact, many are obsessed with investment opportunities. Millionaires only let their money sit idle if they if there are no opportunities to earn a rate of return on their investment that is appropriate given the risk of the investment involved. Sit idle? Not with millionaires. Millionaires, or "the rich", have excess capital, or risk capital that they can invest in high risk investments. These are the investments in our future, such as new technologies, and new companies. If the money is sitting idle today (and I believe it is), it is because of a regulatory environment that is hostile to risk taking. Give these millionaires the regulatory environment of the Reagan years, and they would not be able to invest the risk capital fast enough.
Finally, Dr. Krugman concludes by asking how we got to this point, and what about the future. I will answer the former first. We got to this point, not so much because of anti-government rhetoric over the past 30 years (as Dr. Krugman claims in the article), but by example after example of government incompetence. What do the Post Office, Fannie Mae, Freddie Mac, Medicare and Medicaid all have in common? They are all government sponsored enterprises and all are a financial disaster. Freddie and Fannie were Ground Zero of the financial crisis that led us into our current economic environment (and were completely left out of the financial reform bill!). Medicare and Medicaid are insolvent, and Social Security is headed that way. The Post Office bleeds money every year, and last year lost nearly $4 billion. Yet Dr. Krugman would have us believe that only the Federal Government is qualified to get us out of our current mess.
Finally, what of the future? He says that well-educated populations and high-quality infrastructure are crucial elements of a growing economy. He is indeed correct. However, we also need abundant natural resources, price stability, incentives to invest, and a government that does not burden its people. He says emerging nations "are making huge efforts to upgrade their roads, their ports, their schools. Yet in America we're going backward." Emerging nations also have very low taxes, very little regulation and I am sure a host of other prickly little details that would appall Dr. Krugman and somehow escape his so-called expert economic analysis.
In a recent column, Dr. Krugman called Rep. Paul Ryan's Road Map For America "flimflam". I would say that Dr. Krugman is the real flimflam artist. He proposes solutions that are not supported by any legitimate academic theory. He blames the rich for sitting on their money, when the federal government is giving them every incentive to remain idle. He says that the federal government did not spend enough money when in fact the government had the largest stimulus package ever last year, and the package gave us far less than proper bang for our buck due to poor conception. Dr. Krugman's solutions are no solutions, but instead a prescription for disaster.
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