Vermont: The Hapless Blue State

Vermont, fresh off the news that the state’s idea of fixing its legacy of opposition to business and economic growth is to pay people to stay there, now has at its disposal other states’ models for economic growth that actually seem to work.

And maybe those models correlate to the political leanings of the individual states.  In a recent CNBC article, they built a chart that shows one-year change in employment (in aggregate and by industry), and the Trump vote margin.  In what can only be a surprise to Vermont’s political leadership, states with low or negative Trump margins (meaning they didn’t vote for Trump) tend to show weaker job growth compared to the states that voted for Trump.

Now a host of reasons exist for why and how jobs get created, and correlation does not equal causation, but when you see some consistent patterns, it just might be an indication that something is consistently wrong with the direction Vermont’s been going in, for decades, in terms of its economy.

Overall, Vermont is at the worst part of the 4 quadrants.  The voting results are obvious, but the economic gains in total job growth are almost the worst in the country.  Only one or two states have worse economic results, but Vermont is in there, vying for the lead in the worst of the worst.

Vermont leads the way! To an economic backwater.

But if you look at specific industries, Vermont does manage to become the leader.  The last place leader, mind you, but the leader.  To wit:  Manufacturing – Vermont, in dead last.

Best of the worst!

Construction:  Nearly the worst.  But don’t worry, Vermont is striving to lead the way in negative job growth in this category!

We’re constructing the worst economy in the country. In that, we’re #1!

But take heart, taxpayers.  There’s some good news for Vermonters amidst all the bad.  Government jobs are increasing!

Nowhere to go but up for taxpayer-supported jobs!

And if you’re interested in a high-paying, lucrative career waiting tables or manning chair lifts at the ski resorts, the sky’s the limit!

Vermont almost leads the way in tip-related employment.

This is the type of data that Vermont’s Department of Labor carries, but doesn’t publicize much, other than the unemployment number as a stand-alone.  Why?  Because Vermont’s unemployment rate is low, primarily due to Vermont’s decreasing labor participation rate, a rate that’s ticked up a bit in the last year or two.  But it went on a steep dive from 2009-2016, which seems to inexplicably coincide with a prior administration’s term.  It’s almost as if incentives were put in place for a specific number of years that encouraged people to drop out of the labor force, and now those incentives are gone.

It may be that the state doesn’t need to pay people to participate in Vermont’s economy.  It could be that, absent the 8-year overhang of higher taxes, a higher regulatory burden, and a demonization of the profit motive, Vermont’s animal spirits rise again.

Now if Vermonters could only keep the politicians from trying to help them, maybe there is a path forward, out of the economic quagmire.

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Bernie Sanders: Too Big And Failed

A couple of weeks back, Communism’s own Bernie Sanders took time out of his failed presidential bid to sit down with Jake Tapper on CNN,

Watch out! Highly efficient business model coming in hot!

because a lack of more pressing political dumpster fires meant CNN had a slot to fill that day.

As part of that interview, Bernie took the opportunity to note that Amazon is getting “too big”, which means, as usual, that Bernie is still obsessed over size:

Sen. Bernie Sanders thinks Amazon has gotten so large that it requires closer scrutiny of its “power and influence.”

On CNN’s “State of the Union” on Sunday, the anchor Jake Tapper asked Sanders whether Amazon had gotten too big.

“Yeah, I do, I do,” said Sanders, the independent senator from Vermont who ran as a Democratic presidential candidate in 2016.

“This is an issue that has got to be looked at,” he added. “What we are seeing all over this country is the decline in retail. We’re seeing this incredibly large company getting involved in almost every area of commerce. And I think it is important to take a look at the power and influence that Amazon has.”

Funny, Bernie seems to have no problems at all hawking his dog-eared revolutionary garbage on Amazon, so he can make a buck on it.  One can only assume Bernie takes his evil, capitalistic profits from his Amazon sales and spends them at the local retail shops near any one of his three houses.  Or donates his earnings to charity.  “Charity” being the secret code name of the lake house he and his wife bought.

As a rule of thumb, when politicians start talking about things getting “too big”, they are never, ever, talking about government spending.  To that, they are helplessly unaccountable.  Then, it’s only a question of how much more additional spending, and what it’s being spent on, that drives their support.

For example, in 2008, Bernie had harsh words for those who opposed stimulus spending, or as others might call it, vote buying with taxpayer dollars and borrowed money:

It is extremely disappointing that President Bush and most of the Senate Republicans are playing political games with our economy and the needs of the American people. This economic stimulus package provides a tax rebate not only to working families and their kids, but to millions of seniors on Social Security and disabled veterans. It also increases funding for home heating assistance and other important programs.

So, even though Sanders has recently voted against Trump’s budget, historically, Bernie has been quite happy to determine what industries are OK to be too big to fail, and which ones aren’t.  In other words, he believes it’s his job to pick the winners and losers in the economy, as long as it benefits him politically.  Which is why he supported bailing out the auto industry, instead of calling it too big to fail, because there are automobile unions, you see, and where there’s a union, there’s Bernie, hawking his vote so he can stay in office and tell us all what’s too big to fail, or not.  In Bernie’s words:

The problem is if you don’t act in the midst of a growing recession what does it mean to create a situation where millions of more people

An example of the Detroit Renaissance, courtesy of union bailouts.  Changes from 2008-2013.  Photo courtesy: https://ijr.com/2014/06/145906-watch-city-detroit-fall-apart-eyes/

become unemployed and that could spread and I have serious concerns about that I think it would be a terrible idea to add millions more to the unemployment rolls.

By this thinking, we should borrow trillions to pay people to dig holes and fill them back in, so the unemployment rolls would remain low.

But let’s get back to Amazon, and Bernie’s consistent misunderstanding of economics.  In his words:

“When you have companies like Amazon that have extraordinary power, when you have companies like Facebook that to a significant degree control discourse, am I concerned about monopoly power? Absolutely,” he told the news outlet. “We need to have the kind of discussion that Congress has not had yet.”

Yet Bernie is quite fine with socialized medicine, which does, in fact, monopolize power over one of the most important services people consume in their lifetimes.  Bernie’s quite happy with a monopoly in that situation. Why does he have a problem with a company that sells everything from toothbrushes to tacos, but not one that will decide whether or not you get a heart bypass?

Because Bernie is fine with the aggregation of power, as long as it’s in a centralized government, that he himself is a participant in.  That kind of size, Bernie is in love with.  It means more houses for him, more control over Americans’ lives, and more self-justification for what Bernie indulges himself in, daily, in terms of aggrandizing power – his innate selfishness, and desire to control what he himself never could have earned out in the real world.

 

Squeals On Wheels

Recently, a small part of the Trump administration’s budget proposal generated a series of high-pitched squeals across the United States.  Said squeals which could mostly be found in such squeal-oriented places like Facebook, Twitter, and college campuses, where squeals propagate like hippies at a free lunch buffet, and where economic reality enjoys a permanent holiday.

And the root cause for the squealing?  A complete misunderstanding of the federal budget and how some non-profits are funded .  But the squeals of anguish were not rallies to the cause of federalism.  No.  Instead, they were cries of outrage that Trump was cutting the Meals on Wheels program.  A program that relies, so heavily, on government grants.

 

Oh, wait.  It doesn’t.  It’s 3% of their budget (page 18).

And…..it’s 3 percent.

As Reason has noted, the issue is much less about the individual programs that receive grants.  What Meals on Wheels does is a fantastic example of what local effort, and local control, can do to positively impact lives, and help people who need just a little bit of help, a meal, and even a wellness check, when no one is doing that for them.  It’s the vehicle that spends billions per year on administering and doling out dollars that is the source of the issue, and ultimately some level of corruption – the Community Development Block Grant Program.

What’s the result of lading a trough filled with pork in front of politicians eager to buy votes?  The quick appearance of dollar-guzzling politicians, seeing an opportunity to buy something (votes) with someone else’s money (yours and generations of unborn saddled with federal debt):

You don’t need to look far in the past to see this sort of corruption taking place. In June, the Department of Housing and Urban Development (HUD) sent a scathing letter to the Mayor of Honolulu Hawaii, calling on the city to return nearly $8 million in CDBG funds that it gave to Opportunities and Resources Inc. (ORI), a nonprofit redevelopment organization in central Oahu. The Aloha Gardens Wellness Center and Camp Pineapple 808 both were projects developed by ORI with federally issued CDBG money meant to serve elderly and disabled persons, but since completion, the projects haven’t exactly been used for their advertised purpose.

The HUD report claims ORI had been marketing the centers to the public as venues for weddings, parties, banquets, fundraisers, corporate retreats, conferences and family reunions. The city also lent ORI nearly $1.2 million in CDBG funds between 1989 and 1995, which it decided to forgive back in 2010. HUD found that this decision was made by city employees who were running for elected office while receiving campaign donations from ORI representatives.  The report states:

“ORI has maintained significant support over many years by the direct involvement of high ranking City and State officials…The direct involvement of the officials’ appears to have placed pressure on staff resulting in the City ignoring regulatory violations in favor of completing the project and satisfying ORI’s requests.”

In other words, the funding becomes the driving policy directive, not the service that the funding might itself provide.  The funding model subverts the local control because the dollars are critical to a political outcome, less so in addressing a local need.

Local control, and local accountability for dollars spent, should be the watchwords.  But because the federal government throws billions around, annually, in thousands of programs, it would be extremely difficult to say no to those funds if you’re sitting in a small municipal office, wondering how you’re going to affect some local change.  Which then creates the puppet strings that federal agencies, and ultimately politicians, use to buy votes, and influence voters.  Once the city or state becomes hooked on the federal dollars, they can no longer say no to them – and are adversely affected when funding for those programs becomes a political football.

The accretion of these programs, in the federal budget, is what has given rise to the outsized spending and record deficits seen during the last 8 years.  This growth isn’t directly attributable to one administration, but the Obama administration stomped down hard on entitlement spending, then tried to laughably claim that it reduced deficits – record deficits the administration itself had set in the years preceding its final year.

The result was a doubling of national debt in 8 years, a doubling of the debt that took over 200 years to first accumulate.  We have had 4 years of trillion-dollar deficits.  The first year the government started spending over a trillion dollars per year was 1987.  30 years later, we have deficits bigger than the total annual spend in 1987.  Today we’re borrowing more to fund an annual deficit than our total spend was 30 years ago.

I’m noticing a trend here.

 

Hey, what’s a trillion in borrowing, amongst friends?

The historical record doesn’t show any sign of slowing down in spending, which means a further erosion of local control, leave alone any kind of spending efficacy metric that would allow for decision-making regarding the growth or reduction of spending on a program.  Once a program is established, whether or not it’s doing something good or bad (if you can even quantify those outcomes), it will never, ever go away.  It’s too late now.

And any call to reduce spending is met with the squeals.  The self-agonized cries of those who believe, fervently, that it’s up to the federal government to fix local problems, address local needs, through taxation.  Which is, in a way, a tithe of the conscience – that one is off the hook to get off the couch on a Sunday to help someone else, because the government is doing it for them, through their income taxes.

Or, more to the point, through the taxes of those filthy, evil rich people.  The same people who pay 97% of all income taxes collected.  Which will never, ever be enough to pay for the programs that help politicians get elected, to grow the spending of government again next year.  When politicians have a credit card with a $1.5 trillion dollar limit on it, what’s their incentive to not spend more than we have?  For them, the downside to spending less is not getting re-elected.

Until those political incentives change, you’ll continue to see the growth in federal outlays, and a continuing reduction in incomes relative to that spending growth, as the weight of spending and borrowing drags the economy into a perpetually smaller cycle of growth.  It’s already happening.

Trump’s budget, while flawed (like every budget before his), is actually looking to address an issue around federalism, which is:  Why do you need a federal government to sink its controlling claws into a local effort to help those in need?  Why not just cut the check to your local charity of choice and avoid the federal middleman?

Why give more control to someone else over your own choices?  Hopefully the answer to that isn’t “Because then I don’t have to think about it”.

 

 

 

 

 

 

Leviathan Shrugged

pacific-rim-kaiju-otachi-more

Hmmm – I wonder what a boat filled with taxpayers tastes like?

As Americans set course on a journey that would net them two presidential candidates who are the least liked in what appears to be all of history, one or two or thirty things come to mind, regarding the general irrelevance of which party wins the presidency.  Let’s start at the top.

It does not matter who the next president is:  Federal spending will continue to grow faster than the pace of inflation, or population growth, GDP growth (even with federal spending as one of its components), or the growth of my 401k.  Just taking the last 25 years or so, what is reliably and consistently growing, so much so that if it were an investment option, people would be buying it like cakes that are really hot?

Spending.  Spending is king.

fed-spend-and-gdp

“But wait!” gasps the Keynesian.  “Federal spending is needed during recessions to jump-start the economy, and reduce unemployment”.

Sure – but those dollars spent come from somewhere, in the form of taxes and borrowing, and when that happens, those dollars aren’t available for capital spending, investment, savings, etc, all of which actually creates jobs in the private sector.  It doesn’t have the net effect of taking dollars from the private sector to spend them via the public sector, which gains nothing, other than votes for office and an increase in the debt and deficit.

Unemployment increases and decreases independent of expenditures - not because of them.

Unemployment increases and decreases independent of expenditures – not because of them.

The reality is that the unemployment rate is more closely tied to the dwindling labor force participation rate than it is to federal spending – which runs counter to the standard Democrat response to any kind of recession, consisting of mostly “let’s spend even more money than usual under the guise of helping”.

spend-unemp-and-lbr-force

Participation rate goes down at roughly the same pace as unemployment, independent of increases in federal spending.

In fact, if you go back to 2000, the labor force starts dropping dramatically when, exactly?  Let me check – ah, that’s right, as soon as Barack Obama assumed the presidency.  That drop in participation accounts for nearly all the unemployment reductions since the recession started.

Recovery 2009 never looked so good! Thanks Biden!

Recovery 2009 never looked so good! Thanks Biden!

But it does, of course, get worse.  If you look at unfilled job vacancies, going back to 2001 – we still have (slightly) fewer unfilled vacancies as of 2015 as we did in 2001 or so.  Yet federal spending doubled during that time.  If you use vacancies – jobs available – as a barometer of growth, we’ve doubled federal spending for no net gain in available jobs.

unfilled-gigs-and-spend

All of which is just another reason why the person occupying the White House can speak to different policies, preferences, and budget priorities, but every year, spending goes up.  The deficits, once deemed unpatriotic due to their size by Obama, yet doubled under his presidency, and the subsequent debt, are just choices being pushed onto future generations.

Or, better stated – a reduction of choices, for them.  Because they will be footing the bill for what we spend now, and they didn’t even get a chance to vote on the lesser of two evils, whoever you might end up choosing to vote for on Election Day.  The less they have to spend, the less free they are, to make their own choices.  We are choosing for them.

In other words, Leviathan, in the form of the federal government, doesn’t care who wins.  Leviathan will continue to feed off the labor of the citizens (those still working, anyway), and the borrowed future earnings of those not even born yet.  The only way to kill this beast is to starve it, and no modern president, or presidential candidate, seems interested in taking that one sane step forward.