Creating Jobs

Political policies to create jobs is about economic incentives. Here I present two ideas to help create jobs, neither of which will cost a dime in additional tax expenditures.

As a preface, the President and Congress are currently yammering about creating jobs. This concern is long overdue. In my view, any time we have significant unemployment, policies to facilitate the creation of jobs should be a top issue in national politics. That President Obama waited until he was 3 years into office to get serious about this issue is a disgrace. Lest you think I'm just another Obama-basher, I have just as many complaints about Bush Jr. before him. But, I don't merely want to complain, so without further ado, here are my recommendations:

#1. Permanently eliminate or dramatically reduce the corporate repatriation tax.

#2. Have the Securities and Exchange Commission (SEC) change the age-old definition of fiduciary responsibility for publicly-held corporations to put domestic employees on an equal footing with shareholders.

Explanations:

1. Economists estimate there are over a trillion dollars in profits held overseas by U.S. corporations. If every billion dollars brought home eventually resulted in 1,000 new jobs, a trillion dollars brought home would result in 1,000,000 new jobs. If every billion resulted in 10,000 new jobs, it would result in 10,000,000 new jobs. So this is not a trivial suggestion; It would have a large, beneficial impact on our national economy. I say eventually, though, because it takes months for companies to gear up new projects, and a given company can only manage a certain number of new projects at a time.

Most of our overseas profits are held by only a few dozen of our largest companies. If they bring that money back into the United States, it is currently, and normally, taxed at a 35% rate. That's an extremely powerful incentive for these companies to keep that money overseas. Eliminating or dramatically reducing that tax increases their incentive to bring that fortune back into the U.S.

What does this have to do with creating jobs? Well, what do companies do with profits? For the most part, they reinvest them, in a perpetual effort to increase their profits, but job creation depends on how the companies invest those profits: there are both job-creating investments and job-neutral investments. The same is true for how individuals invest, although most people only think about job-neutral investments.

If you take some of your retirements funds (or your pension plan managers do this for you) and purchase some stocks in an established company, that's a job-neutral investment. You and someone else are trading shares of that company's stock. That's a valuable function in society, but it doesn't create jobs. If, however, you  were to invest in a start-up company, or start your own company, that creates jobs. If you start your own company and succeed in it, then you've created at least one job, even if you don't hire anyone else.

There are quite a few job-neutral investments available to corporations if they repatriate their overseas profits, the same as with domestic profits, such as repurchasing shares of their own stock to try to increase their stock prices or issuing stock dividends to directly reward investors.

The corporate repatriation tax has been in effect for many years, with an occasional tax "holiday" that resulted in bringing overseas profits home in big lumps. Some opponents of eliminating or reducing this tax point out that when the holidays have occurred in the past (the last one in 2004), companies put most of that money into job-neutral investments, not job-creating ones. Of course they did! Because they can only manage a certain number of new projects at a time, they invest what they need in those projects, creating jobs, and they invest the rest as wisely as possible. For example, if they repurchase stock now, they are later able to reissue that stock to raise cash when they're ready to start or expand new projects.

The previous paragraph highlights why it would be beneficial to make this change permanent, rather than have unreliable, once-in-a-while tax holidays. It would create stability in those cash flows, allowing corporations to make reliable plans further out into the future, and that is a critical factor to any company considering hiring new employees. In addition, if the change is not permanent, then the remaining tax creates incentives for companies to permanently move jobs overseas, the opposite effect from what we need.

As far as eliminating vs. dramatically reducing, some of the CEO's of the companies holding that trillion dollars overseas have indicated they would have sufficient incentive to bring the money home if the tax rate was lowered to 5% or less, as opposed to eliminating it. I have no strong objection to that, so why do I suggest eliminating the tax? Because permanently eliminating the tax would maximize the incentives to bring the money home, and keep it working here to create jobs on a steady basis. 

It is more than interesting that the United States is almost the only nation in the world to tax repatriated corporate profits. Why did a previous short-sighted Congress create this tax? They obviously thought it would raise revenue. They were wrong. Companies simply hold those profits overseas and wait for the next tax holiday and invest those funds overseas in the meantime. Also obviously, other nations see this tax for what it really is: a counter-productive drain on the national economy. 

2. As long as we've had public-stock companies, the managers of those companies have been legally required to make their decisions in such a way as to maximize benefits to the stockholders. This didn't always result in moving jobs overseas because international shipping and communication used to be far more expensive and far less reliable. However, in the last half-century or so, both shipping and communication have become much less expensive and highly reliable. When this is combined with placing stockholder interest as the exclusive top-priority of corporate managers, of course they've been moving jobs overseas where labor is cheaper: They're legally required to do so if it increases their profitability!

We can permanently reverse this trend with one simple adjustment that won't cost any taxes: Have the Securities and Exchange Commission (SEC) change the age-old definition of fiduciary responsibility for publicly-held corporations to put domestic employees on an equal footing with shareholders. 

This change won't stop all American jobs from ending up in other countries, but it will protect many of them, and will eventually result in many jobs coming back to the United States from overseas. When the needs of domestic employees are given equal consideration to those of shareholders, an existing factory will only be relocated when that factory is completely unsustainable where it is. In that case, the local factory has to be shut down no matter what. The company could, under those conditions, still build a replacement factory in another country, if that's feasible. But no U.S.-based factory would ever again be relocated to another country just to increase profits when that factory could be sustained where it is at marginal profits.

Happy 235th Birthday to U.S.!

It was 235 years ago today that the Continental Congress passed the Declaration of Independence, and it was eventually signed by 56 of our Founding Traitors.

We usually refer to them (and a few other notables from that period) as our "Founding Fathers", but at that time, they were legally subjects of the British crown. Declaring independence made them traitors. Today we don't think of them that way because the colonists won the War for Independence, but if they had lost, they'd probably be remembered mostly as traitors who failed at rebellion.

I appreciate our freedom and history as much as anyone, and would sacrifice my life for our nation as quickly as anyone today, but I've often wondered what my opinions and actions would have been during that time. Holding rule-of-law in high regard, I may have been a Royalist, as were many colonists at the time.

I've also wondered more than once how the signers of the Declaration would fit into our current labels of liberal vs. conservative. It's my perception that our current conservatives are generally strong Constitutionalists, based on principles such as the fact that we owe our continued freedom and prosperity largely to that set of laws. It's also my perception that our current liberals generally don't care to adhere to the rule-of-law principle in that they're willing to forsake rule-of-law for expediency in attaining their political goals, despite how dangerous that path is even to their own interests. (I think many liberals are principled in the aspect that they want to do good, but are short-sighted when they endorse a simple current-majority-rules approach.)

Our Founding Fathers valued liberty highly enough to risk their lives in rebellion, so rule-of-law wasn't paramount if that rule was tyrannical. Yet they had a legal precedent of sorts in the English civil war from a century past, and a major purpose of the Declaration of Independence was to explain their carefully-reasoned justification for the rebellion. By their written testimonies and by the fact that they were pitting 13 small colonies against one of the strongest militaries in the world (they were not only risking their lives, but with little assurance of success), it seems clear that they were acting on principles.

These and other reasons lead me to think that a large majority of our Founding Fathers would have been somewhere in the middle between our current liberals and conservatives.

As a modern-day patriot, it bothers me not to know with certainty which side I would have ended up on, but there are just too many what-ifs for me to figure that out. What I can figure out, happily, like most of our Founders, is that I can give thanks to Divine Providence for creating a nation with a degree of freedom that is awesome in its historical context, and has directly blessed me, my family, and all my fellow-citizens.

So, as a grateful beneficiary of their sacrifices, I wish a very happy birthday to all of U.S.

May we as a nation become ever-more deserving of our freedoms, and much better at helping those who still yearn for the liberty we hold so dear.

Microsoft Acquires France

News Flash: Microsoft has just announced it will acquire the national government of France as a wholly-owned subsidiary.

In a historic move, Microsoft Corporation (NASDAQ: MSFT) has announced that it will take advantage of the recent weakening of the Euro against the dollar to purchase the national government of France. This represents the first time a sovereign nation has been acquired by a corporation. Microsoft's strategic objective in this friendly takeover is to reduce it's own exposure to European anti-trust liability, while increasing the anti-trust scrutiny of Google. The primary benefit to France is anticipated to be free upgrades from Windows Server standard edition to the enterprise edition, free competitive upgrades from Oracle to SQL Server, and a five-year discount on Microsoft Premier and Consulting Services.

President Sarkozy explained in a press conference with Microsoft CEO Steve Ballmer that current French legislators at the national level will become employees of Microsoft and receive a free Windows Phone 7, while retaining their French vacation and retirement benefits. Local elected officials will be unaffected, and citizens of France will reportedly be offered discounts on new purchases of X-Box consoles. The French Foreign Legion will now be known as the Microsoft-French Foreign Legion, and will begin a three-year plan to switch from military activities to I.T. consulting.

Microsoft stock declined slightly on the news, despite record profits in all departments. Wall Street analysts have been cool on the deal, noting that the French divested the last of their colonies several decades ago, dramatically reducing the wholesale value of France. During a question-and-answer session, Ballmer denied that plans had ever existed to offer French colonies their independence in exchange for an agreement to use Windows operating systems exclusively. Vanuatu President Iolu Abil, vacationing in France at the time, said that he had not been approached by Microsoft, but that their island nation was open to being acquired by Microsoft or to hosting a self-contained Data Center.

There was no explanation for recent sightings of French reconnaissance aircraft over Mountain View, California, where Google's headquarters are located, or for a squadron of French Mirage jet fighters with air-to-ground missiles moving their base to an area of a Boeing compound just outside Seattle.

Google executives, ensconced in private meetings with German officials, could not be reached for comment.

Birther Bother

Since even before Obama was elected President, some people fussed that he might not be a U.S. citizen, raising the birth certificate issue, while Obama's supporters belittled their concern. Then he won the election, and the issue heated up. Eventually, a certificate of live birth was released for Obama. A certificate of live birth, however, is not the same thing as a birth certificate. Some cried that a certificate of live birth wasn't good enough to prove Obama's citizenship. Obama's supporters insisted that it was good enough. Nothing came of the ruckus, and the noise eventually died down, even if the issue never went completely away.

Recently, Donald Trump has raised the issue again on a popular talk show, and Obama supporters have gotten defensive again. Trump later provided what he called his birth certificate to the media as proof that he is a U.S. citizen. Except that what he actually provided was a certificate of live birth. That's where the funniest part comes in: Some Obama supporters then howled that Trump's certificate of live birth was insufficient proof. (In so doing, they weakened their own argument in favor of Obama.) Trump quickly came up with his actual birth certificate. So far, President Obama hasn't.

What's my position? The same as it always has been: I believe in rule-of-law, and that we should enforce the requirement that a person must be a U.S. citizen to be President. Seems to me like a certificate of live birth is adequate proof, so that's good enough for me unless someone proves otherwise. So, I'm satisfied that Obama is a natural born American, and entitled to be President on that count.

It does still puzzle me, however, why he won't authorize the release of his actual birth certificate. I used to suspect it must have something on it that he might find embarrassing, so a while back I looked up an example copy of Hawaiian birth certificates, and I didn't see anything that could justify much embarrassment. Because I believe a certificate of live birth should normally be adequate, I don't care much about the issue, other than it's entertainment value.

Since the actual birth certificate wasn't released, however, there are people who have spent a lot of effort investigating to try to determine his citizenship based on other facts. While I'm not concerned about the issue of citizenship, I am concerned about some of the issues run into by investigators. They have apparently been actively opposed, with someone paying lawyers to fight the release of information like the following:

Passport files
University of Chicago Law School scholarly articles
Harvard Law Review articles
Harvard Law School records
Columbia University records
Columbia University senior thesis, "Soviet Nuclear Disarmament"
Occidental College records, including financial aid that he may have received
Punahou School records, where Mr. Obama attended from the fifth grade until he finished high school
Noelani Elementary School records
Complete files and schedules of his years as an Illinois state senator from 1997 to 2004
Obama's client list from during his time in private practice with the Chicago law firm of Davis-Miner
Illinois State Bar Association records
Baptism records
Obama/Dunham marriage license
Obama/Dunham divorce documents
Soetoro/Dunham marriage license
Soetero/Dunham Adoption records

For someone who promised unprecedented openness, we find unprecedented hiding instead. This bothers me. I'm curious. Most people seeking the limelight would be happily inclined to release such records, and running for President is clearly seeking the limelight.

President Obama is a pretty bright guy. Surely he knows that most, if not all, of this information will become public sooner or later, and much more like it. So I keep asking myself... why doesn't he release such information himself? Why pay people to fight its release?

If anyone has any rational explanations and can express them calmly, I'd love to hear them.

Presidential Candidates for 2012

There are generally two strategies in voting for a presidential candidate for a party:
1. Who can beat the opposing candidate?
2. Who do we want to be the president?

The first concern often relegates the second concern to a footnote, and sometimes results in choosing the strongest campaigner rather than the person who would be the best president.

In 2012, President Obama will almost certainly be the Democratic candidate for president. The 3rd-party candidates aren't likely to be significant in any way. That leaves the Republican candidate as the next big choice.

I suggest that the campaign ability of the Republican candidate won't matter a great deal, because I think President Obama will win or lose based primarily on how the economy is doing. If the economy is doing well, Obama is likely to win no matter who the Republican candidate is. If the economy is doing poorly, Obama is likely to lose no matter who the Republican candidate is. If the economy is muddling along, then it might be closely contested and the campaigning skills of the Republican candidate might be important, but I project that our economy will be doing quite poorly in the months leading up to the next election a year and a half from now. The long-term economic factors are headed in that direction, and has too much momentum to turn around before then.

If I'm right, then Republicans (and Independents who vote in Republican primaries) should focus their attention on which candidates would make the best president, because no matter who it is, that person is likely to become the next president rather than a footnote in history.

My favorite for the Republican candidacy at this point? Mike Huckabee. Not because he used to be a preacher, which is irrelevant in my view. The leading reasons I prefer Huckabee are because he's knowledgeable on both domestic and foreign issues, I agree with his big-picture positions (the ones I'm aware of), he has a little more humility than most presidential candidates, he's optimistic, he knows how to build consensuses well enough to manage large organizations such as the State of Arkansas, he has personal integrity, and he's cordial even with his opponents. Does he have flaws and past failures? Sure -- but as long as we're electing humans, that will be the case, and I think Huckabee's flaws are less serious and less numerous than most other contenders. So I hope Republicans and Independents give him serious consideration.

One last thought, just for Democrats who live in States with open primaries (anyone can vote in any party's primary). You don't need to vote in the Democratic primary, because no one is going to beat Obama in the primary anyway. So you could vote in the Republican primary and try to vote for whoever you think Obama could beat most easily in the general election. Well, I'd like to ask you to consider the reasoning I provided above, because we may have a Republican president next time no matter who it is. So if you vote in the Republican primary next year, don't vote for who you think would be most likely to lose, vote for whoever you would like as president the most. Or at least the person you would hate the least! And right now I hope that's Huckabee.

If you're interested, here's Huck's latest book: A Simple Government: Twelve Things We Really Need from Washington (and a Trillion That We Don't!)

Limited Government vs. Free Enterprise

A lot of folks, including many tea party activists, say they're for limited government and free enterprise. I'm not.

If by "government" you specifically mean civil government, then okay, I'm for limited civil government. There are other forms of government, such as self-government and family government, that enter into the picture of human governance, but I'll stick with civil government in this post, since that's what most folks mean when they refer to "the government." Overall, I'm for balanced human governance.

If you consider "free" enterprise as completely unrestrained enterprise, then I'm against it. There are countless examples of how we're all better off due to some limits on enterprise, such as not allowing companies to put sawdust in milk (yep, that really happened, on purpose, to make the milk thicker), not allowing companies to impose sweatshop conditions on workers, and not allowing companies to discriminate against employees or customers based on skin color.

So, I'm for limited civil government and limited enterprise. However, there's a big, huge, colossal difference: Regarding civil government, we do best when we are cautious in what powers we grant to it; and regarding enterprise, we do best when we're cautious in what constraints we impose on it.

Give the civil government too much power, and we will all be its slaves. Impose too many severe restrictions on private business, and we will all be paupers.

The First National Thanksgiving

Shortly after Congress approved the First Amendment in 1789 to send to the states for ratification, President George Washington issued the first National Thanksgiving Proclamation:

“Whereas both Houses of Congress have by their joint Committee requested me 'to recommend to the People of the United States a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many signal favors of Almighty God, especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness;'

Now, therefore, I do recommend and assign Thursday, the TWENTY-SIXTH DAY of NOVEMBER next, to be devoted by the People of these United States to the service of that great and glorious Being, who is the beneficent Author of all the good that was, that is, or that will be;

That we may then all unite in rendering unto Him our sincere and humble thanks...for the peaceable and rational manner in which we have been enabled to establish constitutions of government...particularly the national one now lately instituted, for the civil and religious liberty with which we are blessed...to promote the knowledge and practice of true religion and virtue.”

Something Nice

Can I say something nice about President Obama? Quite a few things, and here's a good example: In a speech in Indonesia, he said, "I have made it clear that America is not and never will be at war with Islam. ... Those who want to build must not cede ground to terrorists who seek to destroy." Amen.

QE2 and 2012

Federal government intervention hasn't solved all our economic problems yet, so it's time to try the same things again, obviously. Without a gold standard or something similar, the Federal Reserve has the ability to create money, and put more of it into circulation. They claim this is to improve the economy. Interestingly, they expanded the money supply by 2.45 trillion dollars from Sept 2008 to June 2010 (the biggest expansion in history), and as you may have noticed, it didn't improve the economy. So now they're planning "QE2" to expand it by another 800 billion dollars (600B fiat and 200B from TARP funds) from now until mid-2011. It will have an impact, primarily by further enriching the biggest banks, who are at the front-end of the expansion, but it won't benefit the economy in accordance with their stated goals.

This makes it clear, once again, that these high-level leaders (Obama; Bernanke, chairman of the Federal Reserve; Timothy Geithner, Secretary of the Treasury; et al.) don't exercise common sense and appear to be too ignorant for their posts. They're guessing! Worse, they're gambling with trillions of dollars of our money. Bernanke just recently said that QE2's 800 billion dollar expansion is an "experiment."

Expand the money supply to stimulate the economy? Really? Consider this quote and see if it doesn't make more sense than our exalted leaders... "A lesson that was taught by classical economists that remains true: there is no ideal supply of money in a society. Any quantity of money will do, so long as the quality of the money is sound. Prices adjust based on the existing money supply. New quantities of money injected into society confer no social benefit. If production rises and the money supply remains stable, the purchasing power of the money will rise. If production falls while the supply of money remains stable, the purchasing power of money will fall." End the Fed, Ron Paul, page 203

Obama, Bernanke, and Geithner seem to have no concept that the money supply has quality, let alone that their actions are harming its quality. But whether I like it or not, QE2 is here. If, as I suspect, QE2 makes things worse in the long run, then Obama probably won't be reelected in 2012, because the economy will still be struggling. By then, a majority of voters will know or suspect that Obama and his czars' efforts to control the economy were guesses all along, and they guessed wrong. And instead of making things better, they made things far worse.

In 2012, the Democrats will almost certainly field Obama again, and no independent or 3rd party candidate is likely to win, so if we're to change presidential administrations, it will have to come from electing whoever wins the Republican primary. So let's not blow this deal.

I don't know who to recommend yet, but I know who not to recommend: Sarah Palin. Why? Lack of sufficient experience and knowledge. She's added to her knowledge since her vice-presidential candidacy, and can add more, plus she is an electric speaker (with polarizing charges - pun intended), and her experience is greater than Obama's was before he became President, but her experience is still not enough. I want a President with a lot more experience and a lot better understanding of economics than either Obama or Palin. Surely we can find someone better out of 310 million people. And while it is essential to have a candidate who understands the importance of a constitutionally-limited civil government, of financial responsibility, and of free-market economics, is it too much to hope that such a candidate could be more congenial than polarizing?

Surf Shelf

I just recently got a Surf Shelf, and it's great. It easily mounts on the control board of a treadmill or exercise bike and will hold your laptop while you walk, run, or pedal. It's $40, but it lets you work or play while you exercise.

Oh, and it works for books and magazines, too.

http://www.surfshelf.com

All The King's Men and All the King's Horses

The catastrophe in the Gulf of Mexico is not only an environmental catastrophe, it's an economic catastrophe for that region of the United States.

I know they've been consulting an army of experts, but I still don't understand why this has been going on so long. I'm reminded of a story I heard long ago about a tractor-trailer that the driver tried to get under a bridge that was too low. Traffic was snarled for hours as they tried using tow trucks and other means to pull it out, all to no avail. All the experts were stumped, until a little boy who had been in one of the cars that got stuck in traffic and was now in the group on onlookers said, "Why don't you just let some air out of the tires?" Problem solved.

Maybe there's something I'm missing, but it seems to me like all the solutions I've heard about involve experts trying sophisticated techniques of some kind or another, when a brute-force attack would be a better approach.

Instead of focusing all efforts such things as trying to calculate just the right density and adhesive qualities of slurry to pump into the well head, why not build a huge concrete dome with more than enough mass to counter the oil pressure, tow it out to sea and sink it over the well head?

Yes, I'm aware of the box idea they tried that failed. That was too small, with too little mass, because that wasn't an attempt to stop the leak, that was an attempt to cap it with an outlet that would still allow them to pipe up the oil to the surface. Forget all that. Just smother the thing.

The Greatest Ice Hockey Goal of All Time?

I thought I had posted a link to this clip here before, but I wanted to watch it again, and discovered it wasn't here after all. So I hunted it up and I'm posting it anyway, even though it's 3 1/2 years old now. Maybe someone else will see it here who's never seen it before, and wow, is it worth watching.

This is Alex Ovechkin playing for the Washington Capitals, against the Phoenix Coyotes in November 2006. The announcers are Coyotes' announcers, and one of the says during several replays from different angles, "...we can't see this enough. I mean, we can, because it's against the Phoenix Coyotes, but that is something spectacular."

Alex the Great, on his back, rolling over, moving away from the goal, which he can't see but knows about where it is, three opponents between him and the goal, only one hand on his stick, next-to-impossible absolutely-minimum angle left to get a shot in, but...



Link for when it gets copied into Facebook (on accounta FB hasn't been copying embeds): http://www.youtube.com/watch?v=vzbmI6-YSnQ.

What a shot!