Tag Archives: economics

More Government Interference

Posted on by
1

…and more overreach by one branch of government.  James Bovard had this in a recent Wall Street Journal piece.

In 1989, the [Equal Employment Opportunity Commission] sued Carolina Freight Carrier Corp of Hollywood, FL, for refusing to hire as a truck driver a Hispanic man who had multiple arrests and had served 18 months in prison for larceny.  The EEOC argued that the only legitimate qualification for the job was the ability to operate a tractor trailer.

US District Judge Jose Alejandro Gonzalez Jr, in ruling against the agency, said: “EEOC’s position that minorities should be held to lower standards is an insult to millions of honest Hispanics. Obviously a rule refusing honest employment to convicted applicants is going to have a disparate impact upon thieves.”

Despite this crystalline ruling of long standing, the EEOC is persisting.

Last April, the agency unveiled its “Enforcement Guidance on the Consideration of arrest and Conviction Records in Employment Decisions,” declaring that “criminal record exclusions have a disparate impact based on race and national origin.”

Thus,

If a background check discloses a criminal offense, the EEOC expects a company to do an…”individualized assessment” that will somehow prove that it has a “business necessity” not to hire the ex-offender (or that his offense disqualifies him for a specific job).  Former EEOC General Counsel Donald Livingston, in testimony in December to the US Commission on Civil Rights, warned that employers could be considered guilty of “race discrimination if they choose law abiding applicants over applicants with criminal convictions” unless they conduct a comprehensive analysis of the ex-offender’s recent life history.

Just one more example of this administration’s disregard for the other two branches of our Federal government.  And of our individual liberties.

PRC Cyberwar

Posted on by
Reply

Here’s an example of the People’s Republic of China’s war on us, here in cyberspace, described in BusinessWeek.

In 2011, [Dell SecureWorks Director of Malware Research, Joe] Stewart turned his sights on China. “I thought I’d have this figured out in two months,” he says.  Two years later, trying to identify Chinese malware and develop countermeasures is pretty much all he does.
…
Malware from China has inundated the Internet, targeting Fortune 500 companies, tech startups, government agencies, news organizations, embassies, universities, law firms, and anything else with intellectual property to protect.  A recently prepared secret intelligence assessment described this month in the Washington Post found that the US is the target of a massive and prolonged computer espionage campaign from China that threatens the US economy.  With the possible exceptions of the US Department of Defense and a handful of three-letter agencies, the victims are outmatched by an enemy with vast resources and a long head start.
…
Stewart tracks about 24,000 Internet domains, which he says Chinese spies have rented or hacked for the purpose of espionage. … He catalogs the malware he finds into categories, which usually correspond to particular hacking teams in China.  He says around 10 teams have deployed 300 malware groups, double the count of 10 months ago. “There is a tremendous amount of manpower being thrown at this from their side,” he says.

The intel assessment to which the BusinessWeek article referred was summarized here.

The National Intelligence Estimate identifies China as the country most aggressively seeking to penetrate the computer systems of American businesses and institutions to gain access to data that could be used for economic gain.

The report, which represents the consensus view of the U.S. intelligence community, describes a wide range of sectors that have been the focus of hacking over the past five years, including energy, finance, information technology, aerospace and automotives, according to the individuals familiar with the report, who spoke on the condition of anonymity about the classified document. The assessment does not quantify the financial impact of the espionage, but outside experts have estimated it in the tens of billions of dollars.

An example of the cascade effects of China’s war, from that intel summary:

In 2011, when Chinese hackers attacked network security company RSA Security, the technology stolen was used to penetrate military-industrial targets.  Shortly after, the networks of defense contracting giant Lockheed Martin, which used RSA security tokens, were penetrated by Chinese hackers.

There are a couple of questions remaining in this cynic’s mind.  One concerns the apparent ease with which Stewart and his Indian follow-on tracked down this Chinese hacker (an effort described in the BusinessWeek article).  I have to wonder whether the “hacker” was a honeypot and how well the two trackers covered their own tracks—or whether they left their employers exposed.

The other flows from that first question.  Assuming no honeypot, it seems apparent that the hacker was discovered because he was careless, and not because our guys were better at the cyber combat.  Is the US helplessly bringing a jackknife to a combined arms assault?  Is that why our government’s efforts to protect us—and to counter and retaliate—are so infantile?  And the latter so timid:

[T]he Obama administration is seeking ways to counter the online theft of trade secrets, according to officials.  Analysts have said that the administration’s options include formal protests, the expulsion of diplomatic personnel, the imposition of travel and visa restrictions, and complaints to the World Trade Organization.

Pleas and chit-chat, nothing serious.

How did we get so helplessly far behind?  Our government (not just the present administration) has had no understanding at all of the threat posed.  A former government official said,

The problem with foreign cyber-­espionage is not that it is an existential threat, but that it is invisible, and invisibility promotes inaction.

Understanding how our weapons work so they can be neutralized, knowing where and how to plant malware to shut down our financial, transportation, and energy infrastructure—and having the malware to plant—threatens our sovereignty.  That it’s “invisible” is simply an aspect of any war: camouflage and stealth.  The government has first to understand that we’re in a war with the Chinese for our independence; then the fact of invisibility for the Chinese combatants will be understood for what it is—just a technique for advancing their attacks.

Poverty and Welfare

Posted on by
Reply

The connection isn’t only moral.  It’s economic, also, as new research is showing.

Richard Vedder, an economics professor at Ohio University says that our exploding welfare state has led to an American poverty rate of 14%—these welfare programs actually are

creating a dependency on government, which is unhealthy both for the individuals involved and their children, and also for the broader society[.]

Specifically, Department of Labor statistics show four programs in particular contribute to  Americans’ increasing dependence on government.

  • Food stamps, or The Supplemental Nutrition Assistance Program, as it’s now known.  Nearly 30 million more Americans receive them than in the year 2000.
  • Social Security Disability: 3 million Americans  received payments in 1990—today it’s 8.6 million.
  • Pell grants: 3.9 million students were awarded them in 2000.  Today it’s 9.7 million, even though  nearly half of graduates work in jobs that require no degree.
  • And extended unemployment benefits: 26 weeks had been the standard—today it’s 52 weeks or more for many [and during the Panic of 2008 and ensuing Obama Recovery, it’s run as long as 99 weeks].

This isn’t just academic theorizing, though.  Doug McKelway, in his article at the above link, talked, among others, to a sandwich shop owner in Maryland:

Kyle Murphy…described how anecdotal evidence he sees as an employer jibes with Vedder’s assessment.  He often sees new hires quit to seek government benefits.

“The people who know how to use the system best get the most out of it.  It’s not necessarily the people who need the assistance the most,” he said.  Murphy has seen many of his employees quit jobs, then claim they were fired to obtain unemployment benefits.

Vedder concludes,

We have had nearly four decades with growing incomes, rising standard of living for the majority, yet the poor have grown in number even as a proportion of the population.  So some of these policies are not working.

I’m more cynical: since they create a captive collection of voters for the hander-outers in government, maybe they are working.  Never mind that the outcome puts our republic at risk.

Return of Taxation without Representation

Posted on by
Reply

As John Smith writes at BIZPAC Review,

Aggressive prosecuting [of regulation violations] is the newest form of taxation, a money tree for government.

This is only part of the problem, though (eliding the legitimacy of the regulations).  The regulations themselves exist as a form of taxation in the fees they require, and the regulations and their fee structures are enacted by appointed, functionally anonymous bureaucrats, not by our elected representatives.

Regulatory costs extant prior to Obamacare, combined with Obamacare’s regulatory fees, will cost Americans in the aggregate $1.8 trillion per year just to comply.  HHS’ regulatory requirements alone cost $184 billion/year.  A couple of others picked at random:

Environmental Protection Agency: $353 billion per year Department of Transportation: $64 billion per year Federal Communications Commission: $142 billion per year

Much of these costs, to be sure, are costs of compliance, and not payments to the Federal government.  But much of these costs are.  Think about the uses you, or private enterprise, have for that money if it were left in your pockets and cash registers.

Look also at the “negotiated” settlements between the SEC and its victim banks.  One example: in 2011 the SEC browbeat Citibank into a $285 million settlement (the money would have come to the government, not to reimbursement of any putative victims) over its involvement in mortgage debt securitization and sale (the practice of which has never been found to be criminal or otherwise illegal).  The deal the SEC forced Citi to take was so egregious that US District Judge Jed Rakoff, who had to approve the deal for it to take effect, rejected it out of hand, ruling that

the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest.

Rakoff founded his ruling in his rejection of a long-standing technique the SEC had been using to…cajole…such settlements: allowing its victims to say they didn’t do the deed, but they’ll pay up anyway.  Absent guilt, what’s the basis of the penalty?  Rakoff didn’t think there was any.  He’s just one judge, taking on one Federal agency, though.  And the SEC isn’t done demanding collections without guilt.

 

H/t The Spirit of Enterprise

Fact Checking the Fact Checker

Posted on by
Reply

The AP has a series of “fact checks” on President Barack Obama’s Tuesday State of the Union claims.  Here’s one of particular interest to me.

OBAMA: “After years of grueling recession, our businesses have created over 6 million new jobs.”
THE FACTS: That’s in the ballpark, as far as it goes.  But Obama starts his count not when he took office, but from the point in his first term when job losses were the highest.  In doing so, he ignores the 5 million or so jobs that were lost on his watch, up to that point.
Private sector jobs have grown by 6.1 million since February 2010.  But since he became president, the gain is a more modest 1.9 million.
And when losses in public sector employment are added to the mix, his overall jobs record is a gain of 1.2 million.

As the checker says, that’s true enough “as far as it goes.”  I wrote just last fall about what our jobs numbers should have been had certain events come to pass as Obama promised they would under his policies.

He promised in 2009 a 5.5% unemployment rate by now.  How many new jobs would have been created had we actually reached his promised number?  In December 2009…the civilian labor force was 153,059,000, of which 137,792,000 Americans were employed, a 10% unemployment rate….

In September 2012…the civilian labor force was larger, at 155,063,000….  There were some 142,974,000 Americans actually employed—that increase of 5,000,000 of which Obama is so proud.

However, a 5.5% unemployment rate corresponds, if my 1st grade arithmetic serves me well, to 94.5% of the civilian labor force actually employed: 146,535,000 Americans.  …there are some 3,561,000 Americans that should be employed but aren’t—because Obama’s proudly proclaimed policies have come up short, and we aren’t anywhere near 5.5% unemployment.

Let’s look at this another way.  ….  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office….  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by [2011].

There’s more to it (and the links there) even than that, though.  Under Obama’s policies, our labor force participation rate has been shrinking rapidly as Americans despair of getting a job and quit looking, with its own impact on Obama’s jobs claims [emphasis in the original].

The labor force participation rate fell to 63.6% from 63.8% in October [2012].  If it had just held steady since then, the unemployment rate would be back over 8%.  Indeed, if the LFP rate was just where it was in November 2011, the unemployment rate would be 8.3%.  Some 542,000 Americans left the labor force just last month.

and

The number of long-term unemployed remains at a sky-high 40.1%, the same as in August.

The following graph tells the tale.