FIXING THE ECONOMY

The WSJ recently published an article by Jeffry Sparshott, "Want to Fix the U.S. Economy?  Start With the Broken Political System."*  Reading the entire particle is highly recommended.  The article contains some quotes  by Harvard Prof. Michael Porter and his colleagues.  Referenced below is the entire 70 page article by Porter and colleagues.**

“The political system is obstructing our economy,” said Michael Porter, a professor and co-author of a new report on U.S. competitiveness in the global economy.
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“Overall, we believe that dysfunction in America’s political system has now become the single most important problem facing America,” Mr. Porter and fellow faculty members Jan Rivkin, Mihir Desai and Manjari Raman wrote.  The Sparshott article also contains a number of figures, one of which is shown below demonstarting the decreease in productivity  over the last 60 yrs.

The political problem is caused by the American voters repeatedly voting for gridlock.  When they do throw out some of the rascals, they seem to be replaced by people even worse.   An example is the Tea Party.  I was impressed in the early days of the Tea Party how many of the adherents had been unemployed for a long time.  I can understand that they felt that the government had failed them so who needs it.  I sympathize with such people, but it is hurting America.

What’s the solution?  ... For example, the White House and lawmakers from both parties have long called for an overhaul of the corporate tax code but there hasn’t been any progress. The report also highlights “distortions and abuses” in the international trading system, lagging infrastructure investment, burdensome regulations and an unsustainable federal budget as areas demanding attention.*

But not everything is bleak/  As the WSJ by Sparshott article concedes and  quotes:

To be sure, the outlook isn’t entirely bleak. Messrs. Porter and Rivkin said businesses are taking a more active role in local communities again while local and regional initiatives have been taking the lead on workforce training and infrastructure development.*
“And we have got enormous strengths for which any other country would kill,” Mr. Rivkin said, citing entrepreneurship, innovation, capital markets and management skills. “We’ve got strengths on which we can build, weaknesses we can fix.”*

American business is to be complemented for the remarkable recovery from the Great Recession, a near death financial collapse, where one political party has refused to let the government help; yet complain that the recovery is so slow..

* http://blogs.wsj.com/economics/2016/09/15/want-to-fix-the-u-s-economy-start-with-the-broken-political-system/?mod=djemRTE_h
** http://www.hbs.edu/competitiveness/Documents/problems-unsolved-and-a-nation-divided.pdf

LEAST ACTIVE CONGRESS EVER - 2014

The news media is fond of pointing out that this last congress was the least active in passing bills in history when the year before was the least active on record at the time.  What they seem to be missing is that this is exactly what the Tea Party and some other conservatives want.  They want an inactive Federal government.  The voting public seems to agree as they elected even more of them.

It has taken Executive Orders by the President to keep the government moving.

THE BREADBASKET OF EUROPE IS NOW A BASKET CASE

The title of this piece, that regards Ukraine,* is not original with me, but I couldn't resist using it.  But I am getting increasingly upset with certain politicians who insist on undermining our President in foreign relations.  Prominent, of course, is senile John McCain who seemingly never saw a war he didn't like; however, when pressed by Charley Rose as to what should be done over the Soviet, I mean Russian, occupation of the Crimea said that the first thing he would do is to freeze the foreign assets and visas of the Russian oligarchs, something that Secretary John Kerry has mentioned as a possibility.

I'm also disappointed in Lindsey Graham, Senator of South Carolina, for his comments making fun of the President in a serious international incident, as, at times, he has shown some statesmanship.  Supposedly the reason he is doing this is because of his Tea Party challenge in his reelection bid.  Unfortunately, this puts his reelection ahead of his country.  He seems to think that we should have bombarded the leader of Syria even after the promise of getting rid of the poisonous gases.  Unfortunately, there are no good solutions in Syria as if  Assad is overthrown the real civil war will begin with the likelihood that the country will become a conservative Muslim state like Iran.   As awful as the situation is in Syria, perhaps the best state is a status quo.

At the age of 82, I do remember some things in the lead up to WW-II, and the Russian occupation of the Crimea to "protect" the Ukrainian citizens of Russian heritage reminds me a lot of the Nazi occupation of the Sudetenland** to protect citizens of German heritage at the very beginning of WW-II.  I don't recall any news about threats to the Russian speaking peoples anywhere in Ukraine.  And Putin does seem to be trying to generate an excuse for more occupation of Ukraine by having some of his soldiers shoot over the heads of some Ukrainian troops:
But not every scene was so calm. Video showed more than 100 unarmed Ukrainian troops trying Tuesday morning to return to Belbek air base north of Sevastopol, only to have Russian forces fire warning shots over their heads.***

As the situation in Ukraine is still in flux, I have little more to say at this time.

History of Ukraine:

Crimea has had a long and complex history but more recently for more than 300 yrs it was a part of Turkey, then in 1783 became a part of Russia, more or less, and then of the Soviet Union.  Mysteriously, Kruschov gave the Crimea to Ukraine in 1954.  Speculation is that he was drunk at the time.  Crimea has spent little time as an independent nation though it was called the Autonomous Republic of  Crimea.  It became recognized as a part of Ukraine by Russia in 1997.  (http://en.wikipedia.org/wiki/History_of_Crimea).

Eastern Ukraine has been largely Russian since late in the 17th century.  In 1991, 75% of ethnic Russian said they no longer identified themselves as Russian and 55% voted for Ukrainian independence.  Many Russian speaking Ukrainians bemoan the fact that Russian is not an accepted official language of Ukraine. (http://en.wikipedia.org/wiki/Russians_in_Ukraine)

Western Ukraine likewise has a complicated history and was a part of Poland most of the time for several hundred years which ended in 1939.  After WW-II, Ukraine became the Ukrainian Soviet Socialist Republic with some independence from the Soviet Union.  West Ukraine is largely west looking.  Though the country is largely of the Eastern Orthodox religion, around 4 million Roman Catholics are present, mainly in western Ukraine. (http://en.wikipedia.org/wiki/Western_Ukraine; http://en.wikipedia.org/wiki/History_of_Ukraine)

* http://www.infoplease.com/askeds/bread-basket-europe.html
** http://en.wikipedia.org/wiki/German_occupation_of_Czechoslovakia
*** http://www.cnn.com/2014/03/04/world/europe/ukraine-russia-tensions/

IS IT REALLY STARTING?

I have long wondered why the American electorate has been so docile under the present economic climate. Where are the demonstrations? In past downturns more mild than the present, there have been marches on Washington, D.C., particularly by farmers driving tractors into the Reflecting Pond and the like.

Seemingly a revolution of sorts was started by the so-called Tea Party group. I have found that group rather surprising in that many of the early members were unemployed; yet, their cry against the government was that it was too large and running up too great Federal deficits. They have had a lot of success in electing like-minded people to congress. Certainly the size of the Federal deficits is scary, but I have to wonder if they misread the electorate? It seems to me that a lot of the new people elected to congress were actually elected with expectations that they would do something about the job situation* rather than to try to cut down the size of government. Not much has been done so far, and I wouldn't be surprised if many of the Tea Party congressmen are returned to their private lives in the 2012 election. I'm also surprised by Tea Partiers willingness to eliminate such programs as Social Security and Medicare as many of the members are middle aged and not wealthy.

The Tea Party has been followed by the Occupy Wall Street (OWS) movement that is mainly objecting to economic inequality of incomes, high unemployment, the huge wages of those on Wall Street and the lack of any prosecutions of those responsible for the economic fiasco we have been undergoing since late in 2007, and the influence of corporations on the government.** One other message stood out to me in that many seemed to want their student loans to be forgiven. This has not been done although President Obama has lowered the percentage of income to 10% of discretionary income that must be devoted to paying off the student loans and reduced the number of years to 20 from 25 until the residual of the loan is forgiven (http://www.washingtonpost.com/blogs/44/post/obama-administration-announces-plan-to-ease-student-loan-burdens/2011/10/25/gIQAGbKrGM_blog.html). By an large, however, it appears to me that the OWS is still in a disorganized state although it has expanded across the country and even abroad. So the movement has struck a cord that seems to have considerable staying power. So far as I know, OWS is not yet backing certain candidates for election to congress with the possible exception of Elizabeth Warren. Whether this movement can get organized to have any real affect, remains to be seen.

* Also see: http://stopcontinentaldrift.blogspot.com/2011/01/whatever-happened-to-jobs-jobs-jobs.html

** http://en.wikipedia.org/wiki/Occupy_Wall_Street. Perhaps the most significant influence came with the Supreme Court ruling that companies are people. The Chairman of the Board therefore can give not only his own donations, but also donations from the company no matter what the employees or the stockholders might think.

NOT JOBS; IT IS DEFEATING OBAMA THAT IS IMPORTANT

The minority leader of the Senate, Mitch McConnell, said in July on Fox News that the number one goal of the Republican Party is to have President Obama defeated in the 2012 election.* He has said this more than once. For example, he said something to the same effect in October on 2010 in an interview with the National Journal. * Note the number one goal is not to increase employment or to get the economy running again but to defeat Obama. So he is willing to let the U.S. unemployment and economic picture limp along until after the next election when, if all goes according to plan, President Obama will be defeated. Well, isn't that nice? Such an attitude might backfire. If the employment picture remains grim up to the next election, I suspect that many of the Tea Partiers will be sent home. The electorate expected more of them than to protect or, better, increase the fortunes of the wealthy.

Republicans carry this myth that by firing government employees and government contractors, you increase employment. Huh? By firing people you increase employment? Well, the idea is that you will more than make up for this loss by increases in private industry. Um, perhaps, but it won't happen right away, and I don't know of any examples. In fact, we just went through the FAA fiasco where 4,000 government workers and more than 70,000 contract workers were laid off because of disputes over the unionization of the FAA. They were going to let this situation go until September, but a deluge of criticism caused the Senate to work out a temporary bridge to September to reemploy those laid off. Republicans probably didn't care about the government workers, but those 70,000 plus contract workers got notice.

Republicans also take on faith that increasing taxes will add to unemployment and decrease the well being of the economy. They point to Pres. Reagan's tax cut, but ignore Reagan's increasing of taxes too several times that made up for about half the revenue lost in the tax cuts. Even Reagan became alarmed at the size of his budget deficits (He never came close to balancing the Federal budget.). Then, of course, Pres. G.H.W. Bush raised taxes and Pres. Clinton raised taxes again and employment as well as the economy flourished in the 1990s, though Republicans squealed that these tax increases would ruin the economy. Then Pres. G.W. Bush lowered taxes, and the economy went into the toilet. Where's the proof that increasing taxes adds to unemployment? The evidence over the last 20 years points to the contrary.

*http://www.examiner.com/political-buzz-in-national/mitch-mcconnell-r-ky-maintains-gop-s-priority-is-defeating-obama-2012