by | ARTICLES, BLOG, ECONOMY, EDUCATION, HYPOCRISY, NEW YORK
I was disgusted to read Jamie Dimon’s new initiative, the “New York Jobs CEO Council,” not because I oppose gainful employment for New Yorkers, but because Dimon completely gives a free pass to the New York education system with this program. He misses an opportunity – and ignores his responsibility – to help improve a clearly broken system.
Dimon spends most of his op-ed talking about “skills-based hiring and matching,” but completely ignores the elephant in the room: New York’s education system is failing our kids. He describes how, “The council will create sustained pathways for opportunities in the city, better aligning educational programs with skills that employers need as the demands of the labor market rapidly evolve. This will alleviate unemployment—filling currently open jobs through skills training and empowering communities for the jobs of the future.” Quite frankly, this is PR-speak nonsense. New Yorkers are bereft of a decent education system, which is strangled by public school unions, and exacerbated by the fact that Mayor de Blasio is abusively hostile to charter and religious schools, even though those schools consistently outperform public schools — especially among black and Hispanic students.
If Dimon really wanted to make a difference, he would blast de Blasio on the sub-standard New York education system, but instead, he’s joining forces with him. This is an embarrassment, a detriment of rank-and-file New Yorkers. You would think Dimon would be smart enough to know that he’s in bed with New York politicians and playing politics with regular New Yorkers, but perhaps he thinks he can get away with being so political just because he’s the CEO and chairman of JPMorgan Chase.
by | ARTICLES, BLOG, COVID, HYPOCRISY, MEDIA, QUICKLY NOTED
This article from the WSJ is a must-read reflecting how the media reported on the pandemic:
“Has there been in recent history a more tendentious, hysterical, data-denying and frankly disreputable exercise in misdirection than the way in which much of America’s media has covered the Covid-19 epidemic?
Perhaps we can forgive them the endless repetition of pandemic porn; the selectively culled stories of tragedy about otherwise completely healthy young people succumbing to the virus. While we know that the chances of someone under 30 being killed by Covid are very slim, we know too that news judgments have always favored the exceptional and horrific over the routine and unremarkable.
Perhaps we can even forgive them the rapidly shifting headlines—each one shouting with absolute certitude—about the basic facts of the virus and its context: its lethality and transmissibility, the merits of mask-wearing, or the effectiveness of this or that therapy. The science is evolving, and so too is the reporting.
But there are larger representations of this massive and complex story that we should mark as simply unforgivable.
First, the notion, implicit or at times explicit, in so much of the reporting, that the U.S. handling of the pandemic has been a globally unique failure. This is quickly ascribed to the ignorance and malevolence of the Clorox-injecting, quack-cure-peddling bozo in the White House.”
And this:
Even less forgivable is the naked, politically motivated selective use and manipulation of data to damage Republicans and favor Democrats. Typical of this is the steady stream of stories telling us what a great job New York and other (Democrat-controlled) Northeastern states have been doing in managing the spread of the virus, in contrast with the performance of other (Republican-led) states.”
And this:
“There are many reasons for differing rates of infection, death and economic performance, and it would be unwise at this stage to say anything about outcomes with absolute certainty.
But that is perhaps the greatest dishonesty of all: the media’s self-serving insistence that their narrow, partisan narrative of this complex and evolving phenomenon is the revealed and unchallengeable truth.”
The article is worth it to read in its entirety.
by | ARTICLES, BLOG, BUSINESS, CONSTITUTION, HYPOCRISY, RETIREMENT
Over the years, I have written numerous articles on the looming problem of funding public pensions. Many states are facing severe shortfalls and it isn’t due to the economy or the recent recession or the pandemic. The main problem is accounting gimmicks that cities and states regularly do which results in underreporting their pensions. In the private sector, if someone were to underreport a pension, they go to jail for it, but the public sector gets away with it, and the taxpayer is left holding the bag.
Here’s what’s going on. A principle of normal (accrual) accounting is that if you have incurred current expenses, they have to be reported currently. You cannot delay reporting it until a future year, even if it is not paid until a future year. You have to count their costs today. So when you accrue an expense — for instance, a legal fee — you owe that money. Even if the bill arrives after the new year and you pay it that next year, you still owe it for the current year when incurred. It is a payable – that is, a liability – as of the end of the year incurred.. This is accrual basis accounting, and it’s how pensions must be accounted for in the public sector — but they’re not. And therein lies the problem.
When an employee works for a government (or any organization) in a given year, all costs associated with that employment must be recorded as an expense for that year. Naturally, the regular pay iis an expense incurred. That’s an easy enough concept to understand. But there are other things to consider — for instance, a bonus. If you have a bonus that is not paid until the next year, it still has to be recorded in the year it was earned. Now, pensions are not paid out in the year worked or the year after, but they will be years in the future and actuaries can calculate that amount. That amount is not what is booked as an expense. What is booked as an expense is what’s paid. There’s a disconnect between the funding requirement for pensions, and those funding requirements are usually less than the cost incurred.
If that amount is two billion dollars (one billion earned now and one billion in future pension benefits) you are supposed to record two billion dollars. In other words, that liability should be factored in on the balance sheet. But what’s happening instead is that they’re merely recording the one billion earned by the employee as an expense and not accounting for future payouts. There is no measure of a pension’s accrued actuarial liabilities (the current value of earned benefits in the future). The accountants are merely recording the present expenses while underreporting the future ones.
In a given year, you might incur $100 million in future payments for employees who work. So that $100 million is the true cost. Remember that even though the money is not paid for many years, you still need to know what that cost is today, and include that amount in the budget. You cannot say you’ll ignore it and not include it because you won’t pay it for twenty years. But that is what has been happening. Suffice it to say, in the private sector, it’s very onerous. You have to pay in an amount very close to what the cost is so that the company doesn’t go bankrupt and then leave the pensions hanging. That is both right and responsible. But the morons in the public sector think that because the municipality is so powerful, it doesn’t have to do the funding requirement — and therein lies the reason why they are in trouble. They only put the amount that they pay as an expense; they don’t put the whole thing. That is fraud. So now they’re falling further behind. Even if they don’t have to fund it all, they are required to keep a balanced budget, but they don’t.
What’s even more difficult, a lot of municipalities also promised other things like future medical expenses, and those aren’t even booked. They’ll just list it as an expense when it is paid. That’s not right. You can’t promise someone a benefit and have a legal obligation for the future and then not book it on your books. And what’s worst of all is a constitutional amendment in several states that grants pension entitlement to public sector workers. In other words, once a person is working for the government and they have a defined benefit plan, they are entitled to keep it and transfer it, even if the contract runs out. They have defined it to pay the pension — not only for what they’ve earned but also include an obligation to continue that level of funding into new contracts, even those that aren’t signed on yet.
These non-standard, non-accrual forms of accounting for public pensions over the past few decades have resulted in reckless — and dare I say criminal — budgets resulting in billions and trillions of unfunded liabilities that in some places are financially insurmountable. Those that have engaged in such practices should be sued criminally for intentionally filing false sheets on their pensions.
by | ARTICLES, BLOG, ECONOMY, MEDIA
The Wall Street Journal has a feature called “Notes on the News” which is supposed to “walk you through the biggest news stories of the week.” Unfortunately, their writer, Tyler Blint-Welsh is so inept and full of bias that he misses key points in his summaries to the detriment of WSJ readers.
For instance, on July 26, while writing about federal agents being sent to US cities, he describes how federal officers have been patrolling Portland, Oregon since July 2, but utterly leaves out the fact that violence in Portland has been going on for much longer; many people and property have been injured, yet he ignores that fact in order to focus on the presence of federal authorities. He further mishandles the scenario by describing the use of force on protesters as “apparently without provocation.” However, anyone watching the videos of the circumstances can’t possibly make the assumption of apparent provocation; doing so is utterly inappropriate and dishonest. The protesters were trying to set the courthouse on fire with people in it, but he completely omits that from his analysis. He also chooses not to include the fact that the federal agents were there to protect the federal buildings that the mayor refused to protect but managed to mention that the mayor was tear-gassed by federal agents. The lopsided point-of-view is ridiculous.
Unfortunately, it doesn’t end there. Blint-Welsh also analyzes the situation with unemployment benefits which face an expiration at the end of the month, saying “that lack of progress could jeopardize the $600 weekly unemployment supplement that millions of Americans have been relying on since the pandemic triggered record numbers of jobless claims.” He further describes how the Democrats want to extend the $600 until January 2021 while noting that the Republicans want to reduce the benefit amount. However, he conveniently leaves out the fact that the reason the Republicans want to cut back payments is because a large number of recipients are paying more to stay home than if they went to work — which is hampering economic recovery. Forget about the fact that it shouldn’t be so readily available to collect because jobs are available. The extension that the Democrats want is unconscionable but he’s making it seem like the Democrat position is reasonable and that the Republicans are selfish and cold-hearted.
It’s hard to imagine that Blint-Welsh is so uninformed as to not know what’s actually going on, so the only conclusion is that he is intentionally distorting these situations. That is egregious for both the integrity of the Wall Street Journal and those who have to read his diatribes.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, NEW YORK, POLITICS
New York Governor Cuomo continues his crusade for a state bailout by claiming that New York is a “donor state” and therefore entitled to more federal funds. By this, he means that New York gives more in tax revenue to Washington than it gets back. However, the “donor state” mantra and his calculations making that claim are incorrect.
A recent article in the Wall Street Journal, “New York is No ‘Donor’ State,” did a thorough breakdown on how to calculate and account for federal funds in order to better understand the ebb and flow of dollars in and out of states. In this, it showed that New York really isn’t a donor state at all. It seems that various “donor state” claims tend to cling to a Rockefeller Institute report published in 2017 that erroneously calculated what states receive. For instance, it counted both food stamps and servicemen’s paychecks as federal subsidies when that’s clearly not the case. Likewise, it omitted the federal subsidization of municipal debt issuance and also didn’t account for the implicit socialization of their unfunded pensions and postemployment benefits. Thus, in reality, New York is one of several high-tax blue states that “are net ‘receivers’ of federal funds.” The aforementioned article is a definitely worthwhile read.
But even if the donor state claim were true to some degree, it’s still a weak argument for a bailout. Any notable imbalances occur for several reasons that Cuomo refuses to even consider. For instance, the federal tax code is very progressive and New Yorkers have high incomes. Likewise, New York receives relatively less money in the form of federal contracts and federal employee wages. This is logically caused by the fact that New York has made itself such a terrible place to do business (including sky-high costs and ridiculously burdensome regulation and taxes) that it can’t compete for these projects. Furthermore, the flow of New York taxpayer money to Washington and back has virtually nothing to do with why the New York government can’t balance its budget due to overspending. The government is not the taxpayer. The states send no money to Washington – their earners do.
In other words, it’s not that the government is being shortchanged. The state government isn’t hurt by this at all. The taxpayers of New York are the ones hurt by perennial fiscal mismanagement and it is a sham to request a bailout under the guise of being a donor state.
by | ARTICLES, BLOG, GOVERNMENT, HYPOCRISY, LAW, POTUS, TRUMP
It’s really sad that Mitt Romney went off the deep end with regard to the commuting of Roger Stone’s sentence. Trump’s timing was definitely politically stupid and over the top. However, presidential pardons and commutations are often self-serving and inexplicable. Although Roger Stone was convicted of a relatively minor infraction of lying about something that was not of major significance, even that conviction was suspect because of clearly stated bias of the lead juror that should have led to a new trial. As such, his commutation was certainly less appalling compared to other pardons sometimes involving really horrific human beings.
Therefore, it is ridiculous that Mitt Romney declared Stone’s commutation was “unprecedented, historic corruption.” This is so absolutely wrong and incompetent that it could only be attributed the most vile case of Trump Derangement Syndrome. It seems that Mitt Romney either doesn’t know his history or is flat-out ignoring the fact that Stone’s commutation is one of a long line of Presidents using their Constitutional powers of pardon to benefit friends. Gerald Ford pardoned Richard Nixon. Richard Nixon pardoned Jimmy Hoffa. Bill Clinton pardoned his brother Roger Clinton and Marc Rich, the “fugitive financier.” Clinton also commuted the sentences of 16 members of FALN, the terrorists responsible for more than 130 bombings spanning several years against the wishes of Congress. Likewise, Obama commuted the sentence of one of the FALN masterminds, Oscar Lopez Rivera, who rejected the original commutation in 1999. Surely these pale in comparison to Roger Stone? As it is, Stone remains a convicted felon because he did not receive a full presidential pardon so he is not completely off the hook.
Romney’s assertions are completely unfounded and shows that his judgement continues to be unreliable. His response was so off the charts that it should make everyone doubt the credibility of anything that he says.
by | ARTICLES, CONSTITUTION, EDUCATION, FREEDOM, GOVERNMENT, SCOTUS
There is nothing in our Constitution about the “separation of church and state.” This phrase is often wrongly used as shorthand for the Establishment clause found in the first amendment, which states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” What that plainly states is that the government will not prefer or establish one religion over another or restrict the practice of religion. Many people who use the phrase “separation of church and state” interpret it to mean the opposite, that the Constitution requires a separation of church and state. But that is simply untrue.
Thus, if the government gives money to a group, such as private schools, it cannot discriminate against a particular school just because it is religious. The recent SCOTUS decision in Espinoza v Montana case is a clear confirmation of that important understanding.
by | ARTICLES, ECONOMY, ELECTIONS, FED, GOVERNMENT, OBAMA, POLITICS, POTUS, SOCIAL SECURITY, TAXES, TRUMP
Are we past the tipping point for economic reform? I would argue that Obama’s budgets and spending accelerated the deficits beyond repair. Some people will go back to Reagan and say that the deficit and the debt ballooned during the Reagan Administration and they will blame it on his tax cuts. But what is actually true is that the tax cuts generated a large increase in revenue, and the only reason why he had deficits was that the Democrat-led Congress increased spending even over the increased revenue. The same thing happened with the Bush tax cuts which were very pro-growth; the revenue went up sharply, but spending went up even faster. But at this point the debt was still manageable.
Then you come to Obama. At the beginning of his administration, we had the deep recession -which arguably could have benefited by one year of stimulus. The concept of a stimulus is supposed to be a one-off event. In other words, you engage in big one-time expenditures to get the economy on track and then spending goes back to previous levels as the recovery occurs. The problem is that Obama didn’t put things in for just one year. He did long term things, like food stamps, teacher’s compensation, etc., knowing full well that once put into effect they could not easily be withdrawn. And it was pretty clearly his intent all along, for political reasons, to bake them into the budget. So now when we started to have a recovery, you had ballooning deficits — even with a growing economy. Then by the time Trump was elected, the locked-in recurring spending with its locked-in annual increases made the deficit – and the debt – almost impossible to rein in.
Now we have the pandemic and we have no place to go. There’s no surplus to go to the deficit. Millions of Americans are unexpectedly unemployed, which means they’re not paying into Social Security. At the same time, we see older workers who have lost their jobs choose to draw their benefits as soon as they become eligible. This will speed up the insolvency train. But then Trump did something that was very stupid (though his political motivation is clear). He said that entitlements are off the table. If entitlement reform is off the table at this point, we’re headed to bankruptcy.
We’ve been talking about the coming insolvency of the Social Security and Medicare programs for many, many years now and Congress has done nothing to stave off the inevitable. Couple that with Obama budgets, Trump’s lack of action, and the pandemic, and the deficits are even larger now. Anyone seriously looking at the situation knows that absent a major change to entitlements, the mandated annual increases, both because of cost of living adjustments and demographics, will bankrupt both programs in the next ten to fifteen years. It’s very safe to say that absent major entitlement reform, we’re basically past the tipping point.
by | ARTICLES, BLOG, COVID, ECONOMY, FREEDOM, GOVERNMENT, NEW YORK, POLITICS
I am a long-term supporter of the Manhattan Institute and participate in their events and webcasts regularly. Heather MacDonald, Steve Malanga, and Nicole Gelinas are three of my favorite people. But Michael Hendrix seriously dropped the ball as moderator of the discussion on “Planning for the City’s Reopening” several weeks ago. Given the current pandemic and civil unrest, exploring how business can reopen is a laudable topic; however, the actual discussion was immensely disappointing. He allowed it to simply ignore the real reasons for the problems the City now faces with regard to “reopening”.
For instance, during the question on how we were going to reopen the city, much of the conversation had to do with needing to do more with affordable housing, and needing more help from the city government. He of course knows that this has nothing to do with the “reopening”. The problem long preceded COVID, and doesn’t need the government to fix it. Government actions – zoning, land use, overburdening businesses and building regulations leading to ridiculously high costs – are the cause of lack of affordable housing, and without reversing those actual issues, there is no solution.
Additionally, the “racial crisis” was a significant topic. He ignored any response regarding whether this was true and/or meaningful since the City has been run by extraordinarily liberal, non-racist leaders for generations, including full representation of the minority community. Can racial bias then really be a thing in New York City? Also in every single major city in which there has been extensive looting and rioting, the cities have been in the hands of minorities and liberals for the past 50 years. Yet he as the moderator didn’t even allow for this perspective to come up.
Furthermore, there was absolutely no discussion about the rioters and looters destroying businesses; the conversation only focused on police brutality. Though police brutality may be a problem, is it really a factor in the reopening after COVID? For a panel exploring the city and businesses, it was egregious that he virtually ignored the very real problem: businesses that have been destroyed by looters and rioters are being ignored by law enforcement, making businesses hesitant to invest in reopening and insurers hesitant in providing insurance at affordable rates.
Another topic was education, but there was no mention about charter schools and how they fit into the equation of reopening, even though charter schools are the most successful educational endeavor in the city.
Likewise, another topic was insurance, which he allowed to proceed in a manner that just showed the economic ignorance of the panelists. Since the happening of a pandemic is not a quantifiable risk, it is not insurable. To insist that the government provide insurance, at a premium that can only be set politically, has many problems. What’s more, the ignorance of the position espoused – that the government should somehow make the insurers who did not provide or charge for such coverage pay for it anyway – should not have been allowed to go unanswered.
On a related note, there was talk about how the city may or may not be able to help because there is a budget crisis. But where was the mention that DeBlasio is the cause? There was already a budget crisis before the pandemic and the civil unrest, not because of it. And DeBlasio’s actions during the pandemic and protests will certainly inhibit the ability of the City to reopen.
Hendrix should have made sure that the discussion included the knowledge and competence that the people of the Manhattan Institute espouse. There is no question in my mind that Heather MacDonald, Steve Malanga, and Nicole Gelinas would have been very disappointed with the exchange.
by | ARTICLES, BLOG, BUSINESS, FREEDOM, GOVERNMENT, QUICKLY NOTED
One of my favorite topics is the Jones Act, a little-known maritime law that has a big impact shipping goods. I have written extensively on it before, so I was delighted to see the Competitive Enterprise Institute publish a paper on the topic since the Jones Act has been in place for 100 years now. Below is the Executive Summary, and then a link to the full paper. It is a must-read for understanding why the Jones Act needs to be abolished.
“The Jones Act requires any ship traveling between two U.S. points to be U.S.-manufactured, -owned, -flagged, and -crewed. This heavy-handed protectionist measure was enacted in 1920 with the stated purpose of ensuring a strong merchant marine to support America’s commerce and the nation’s preparedness for war and national emergency. A century later, the evidence is clear: The law has not only failed to accomplish any of those objectives, it has systematically undermined each of them.
Today the Jones Act mostly covers well over 30,000 tugs and barges plying America’s inland waterways, and its punitive restrictions mainly benefit railways and trucking companies.1 As for America’s once mighty oceangoing merchant marine, the law has protected it to death: Less than 100 oceangoing vessels remain in the Jones Act fleet. As of 2019, the few American shipyards that can build commercial oceangoing vessels are being kept afloat by defense contracts.
The law’s supporters argue that because its costs are difficult to quantify, it is not clear that it costs anything. This is highly misleading. The law is designed precisely to restrict the supply of domestic shipping so that American domestic ship operators and shipbuilders can charge more. Shipping rates on Jones Act routes are typically several times more expensive than rates in the competitive international market, especially in terms of cost per nautical mile traveled for a standard container. The Jones Act’s proponents are fervent supporters of “buy American” but the law favors imports over domestic commerce. It is protectionism for foreigners.
The law has also failed its national security mission. The military utility of the Jones Act fleet has faded faster than the Jones Act fleet’s dwindling numbers. Modern warfare requires transport ships that are fast and flexible, while the global maritime industry is heading in the other direction, with transport ships that are increasingly slower, bigger, and less maneuverable. As for national emergencies, every time one requires sealift, the Jones Act needs to be waived so victims can get the relief they need from ships that are actually available.
According to one study, the Jones Act is equivalent to a 64.6 percent tariff on domestic seaborne trade. For Alaska, Hawaii, and especially Puerto Rico, the impact is particularly onerous. The impact of the Jones Act on American energy is also notable, and difficult to justify in today’s world of globally dominant North American oil production and falling prices.
While repeal of the Jones Act would be ideal, at a minimum, significant reforms are long overdue.”
You can read the full analysis here.
