Why European Socialism is Failing, despite Austerity Measures

Yesterday, Francois Hollande defeated Nicholas Sarcosy in what can only be described as a big Left turn for French politics.  The narrative being pushed by the main stream media and by socialists is that austerity measures have not worked, and most European countries are mired in double dip recessions.  The left is trying to argue that these "right wing" austerity measures have failed, and that only a return to the European Socialism will fix what is ailing these countries.

The problem with this thinking is simply untrue.  The first is that the austerity measures are to any degree "right-wing."  If right wing is defined as any departure from the central planning models that have dominated European politics for the last two decades, then yes these austerity measures are right wing.  The reality is that "conservative" in the US and conservative among European socialist countries means two different things. And finally just austerity measures are not the only thing that needs to be done.

What is really happening is that Europe is reaping what they have sown.  This is what happens when two or three generations have lived in such a cradle to grave social democracy.  They have a whole generation of people who think they are entitled to a free ride after doing so little.

What is worse is that the social democracies of Europe have reached the tipping point on taxation.  Countries such as the UK, France, Spain, Italy, etc, have tax rates that are close to 50% and that does not even count the 17% minimum VAT tax on everything bought in Europe (Some Countries VAT Taxes are higher).  Austerity will not work, because it is not addressing the real cause of the real problems in Europe, that taxes on  businesses are so high that they cannot generate enough capital to invest or to hire new workers.  High VAT and income taxes take away disposable income from consumers who might otherwise spend their extra cash on goods and services.

The only way for Europe to solve their financial problems, is to cut back on social programs and cut taxes.  The problem is that when the population is not willing to buy into what is wrong, and demand services that a country can no longer afford, that country is ripe for financial ruin.

Why Obama's policies have not worked.

All of the left must be scratching their heads.  Most of them have been taught in the academic world that the Keynesian economic theory is the correct one.  What their liberal professors did not tell them was that Keynesian economics has never worked.  They were told that their hero, FDR pulled the US out of the Great Depression with is New Deal economic policies.  Shoot, I was taught that growing up in High School history.   However two UCLA professors (hardly a bastion of conservative thought) did a study and have concluded that his Keynesian policies did not work but lengthened the Great Depression by SEVEN YEARS. (click HERE to read more about this).  President Carter and his central planning policies led to something not thought possible in the Keynesian theory: Stagflation--a stagnant economy coupled with high inflation).

Flash forward to 2008.  The economy starts to tank, and the man in the White House and his party are blamed.  Should they be?  Well I say to some degree yes.  Because of loose monetary policy coupled with out of control spending that were at least to some degree contributing factors.  However these policies were not and should not be considered free market policies.  Obama sweeps into office under perfect economic and political conditions and starts a new round of Keynesian policies that would never and will never work.

:Lets look at the stimulus package that was passed when Obama first took office.  His $787 billion (an unheard of amount of money), we were told, would keep unemployment down.  In fact we were promised that the so called stimulus would keep the unemployment rate below 8%.  Unemployment went up past 10% for a time and has not dropped below 8.9% since (the rate is at 9.1% now).  As the rate continued to skyrocket the left wing Keynesian economists just shrugged their shoulders and blamed Bush, saying the economy Obama inherited was much worse than originally thought.

What should have been reported by the main stream press was that this stimulus had no way of working, and there is one simple reason, the stimulus money was spent on crap, and not on things that would stimulate the conomy. Take a look at recovery.gov.  They have a pie chart break down of what was spent.  There is so much in there that I don't have time to write it all here, but it is obvious that these yahoos in the Obama administration had no clue as to how to stimulate the economy.  Take a look at the breakdown of where the money was spent.  The only thing that translates to job growth was the money spent on infrastructure.  Considering all of this stuff was temporary, those jobs would eventually disappear.  A bunch of the money was spent on retraining of workers.  Great, retrain people, but if there is no one to hire them, then where are they going to work when they are retrained.

The only way to really stimulate the economy is by stimulating the private sector.  Somewhere around 70% of jobs in the US (still looking for confirmation of this statistic) are private sector jobs.  Consider the fact that if the private sector is stimulated, and the economy starts moving again, companies will pay more taxes (due to increased profits), people will pay more income tax (because more people will be working), and consumers will buy more products leading to more tax revenue.  It really is simple, but the left just can't see this.  They believe that profits are evil and that government bureaucrats can make these decisions better than the hard working Americans.

History has shown that these policies don't work, but it does not stop the central planners from continuing to try.  We must stop them.

Hello....is this thing on?

I quote President Barack Obama from what he said yesterday.

"It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."

I have to ask, did he keep a straight face when he said this? Yes President Bush left a deficit, when he left office. This is a fact that cannot be disputed. But President Obama came in and TRIPLED the deficit. T-R-I-P-L-E-D it. Now he says that adding more to the debt could weaken the economy? But he wants a universal health care plan that according to current estimates will cost 1.3 trillion over 10 years. And given the fact that Medicare has cost roughly 9 times more than originally estimated, this monster could easily cost 10 trillion dollars. And there are rumblings from congress that another "stimulus" package is needed. MORE DEBT.

Does Obama really mean what he said here? He keeps spending more and more money and the debt is so huge that it is practically unfathomable.

I actually agree with his statement, but how can can he say it with a straight face? His policies have set up this house of cards to fall. The dollar is weak and there is nothing being done to strengthen it. Inflation is coming. There is so much money sitting out there not being spent, that when it is, the economy could overheat causing massive inflation. If (in my opinion it is a matter of when) this happens say goodbye to the minuscule growth that is happening right now, and this depression (yes I think it is a depression) will worsen.

I think I have seen this movie before.

The Phoenix Arizona Tea Party Protest

I took the opportunity to go to my first (but probably not last) protest in my life. It was a fun experience. I took my 5 year old, Jessica with me, conning her into going with the promise of a train ride (light rail). We drove to the light rail station in Mesa and then took the train downtown and then walked about a mile to the State Capital building, where the protest was. Jessica was a trooper and had no trouble with the walk until the last 500 yards or so when she got tired. There were several people on the train doing the same thing. Taking the train was a good idea as we did not have to fight any traffic or have to search for parking.

The protest was probably one of the calmest protests that I have ever seen(of course the only ones I have seen until yesterday were on TV). People from all walks of life, and all ethnic groups were there holding up signs and chanting as the speakers (most of which were from KFYI) revved up the crowd. I estimated there had to be between 4 to 7 thousand people at this protest, and the Arizona Republic said that there was about 5 thousand people there.
The only complaint that I had was that I was not really able to hear what was being said. The PA system set up was not that great nor did it do much good if you were very far from where the speakers were. Critics of the tea party protests said that these protests were not spontaneous grass-roots organizations, but were GOP organized protests. If it was the GOP that organized them, then they did a very poor job with logistics. But it was not. I did not really care to hear what was said since i consider myself pretty well informed and new that since this was a grass roots protest that at least at this point there would not have been a whole lot said that would have been truly profound.

What I hope is that this is the beginning of something, that the silent majority has been stirred from a deep slumber. The move away from a constitutional republic really began long ago (FDR's New Deal was the beginning), and so many of us have for so long sat by while our freedoms have been slowly eroded and our free market system has been attacked and damaged from people within our own government. We can no longer sit by and say we are too busy to do anything about what is happening to our government. Not only do we need to wake up, but we need to wake up our friends and neighbors.

Often I think people look at me and wonder why I am so politically minded and passionate about these things. I am passionate about these things because the political system is the mechanism by which our rights and freedoms are maintained. It is the Constitution and that protects all of us and allows us to worship God according to the dictates of our conscience.
But the Constitution is under assault. There are those at the head of our government now, who believe that the Constitution is a flawed document and that because of that our country is hoplessly flawed and is in need of radical change. They are using the cover of an economic crisis to enact these changes to remake America. The changes that are being proposed will limit freedom in the name of fairness. Instead of liberty, we will have a soft tyranny.
I am passionate because I grew up loving this country. The American dream was available to all. I have people in my very family who have made their fortune because they took a risk and were rewarded for their hard work, timing and work ethic. I am passionate because I fear that what I see coming from those in power will disable the engines of prosperity that have made this country the greatest on Earth.

All of us need to be passionate about this country or we will be lulled to sleep; And when we wake up, the America we once loved will be no more.

Redistribution of Wealth and "Fairness"

The Obama campaign has repeatedly said that their tax plan is "fair" and that the rich needs to pay more. They contend that the tax policies of the Bush Administration has helped to expand the gap between the rich and the poor, and they essentally need to pay their fair share. The implication is that the middle class pays a disproportionate amount of federal income tax. Lets examine this premise.

According to the National Taxpayers Union, in 2006 the top 10% of wage earners in the USA, (who make over 100,000 per year and up pay 70.79 % of the federal income taxes. Furthermore, if you look back, according to the same website in 1999, the same top 10% paid 66.45%. So the so-called rich are paying a higher percentage of federal income tax than ever before.

There are two facts that must be said. To cut taxes across the board is to give the rich a bigger tax break than the middle class. If you cut taxes by 5% across the board, the rich get a bigger tax break. Why? because they pay so much more in taxes. Take for example a person whose taxable income is $500,000 per year, at 35% they pay $175,000. Take a person who's taxable income is $50,000, at 25%(Which is the tax bracket for this income group)they will pay $12,500. So if the government lowers tax rates across the board by 5%. They person making 50K will now pay 10,000 in federal taxes. The 500K income earner will pay $150,000. The rich person's tax break will be more than the middle class earner's tax bill. Both income earners recieved the percentage of a tax break, but the "rich" person's tax bill goes down by a much higher dollar amount.

Barack Obama wants to redistribute wealth. He said as much to Joe the Plumber. He said that "if you spread the wealth around, it is good for everyone." One the one hand to many, this might sound good. They might think, "Yeah, stick it to those greedy bastards." But one has to understand the consequences of puntative taxes. The fact of capitalism is that the "rich" employ the rest of us. Whether it is a huge corporation like Haliburton or Microsoft, or a small business owner who employs 15-20 people, lower and middle class Americans are employed by people like this. If the government under an Obama administration decides to raise taxes on Corporations and small business owners, these new taxes will drag the economy down. Any company, large or small, is in business to make money, not to employ people. If profits are not there, the company will cease to exist. A company that has its taxes raised, will have to cut jobs to keep its profit margins or risk its ability to compete.

The last thing this country needs, with the economy in its current state, are tax and economic policies that will hurt and push the economy into a deep recession or worse.

Oh, how I wish that Mitt Romney were the man at the top of the GOP ticket. A brilliant economic mind was thrown under the party bus by single issue voters.