How Do You Judge Economic Performance?

What is the right way to judge someone's economic performance? Consider the following scenarios:

A new CEO takes control of a company which is laying off workers, whose sales and profitability is dropping and whose stock price is way down. Three years later they are hiring slowly, sales and profitability are growing slowly, and the stock price has increased 50%. Is the CEO doing a good job because things are much better? Or is he doing a lousy job because the company is still worse off than a few years before the CEO took over?

A new governor takes over a U.S. state. The state is losing jobs fast, GDP is dropping, and the deficit is high. Three years later jobs are growing slowly and GDP is up 2-3%/year, but the deficit is still high. Is the governor doing a good job because things are much better? Or is he doing a lousy job because the state still isn't doing as well as a few years before the governor took over?

A new president takes over. The country is losing 750,000 jobs per month, GDP is dropping fast, the Dow is at 8,000, and the deficit is very high. There is a real possibility of complete financial collapse. Three years later the economy is adding 100,000-200,000 jobs a month, GDP is up 2-3% a year, and the Dow is around 12,000 but the deficit is still very high. The financial industry is now very profitable and in no immediate danger of collapse. Is the president doing a good job because things are much better? Or a lousy job because the country isn't doing as well as a few years before he took over?

Of course, there is such a president. His last name is Obama.

Taxes are Theft -- Not!!!!

Many conservatives believe that taxes are theft, particularly progressive taxes on the wealthy, because taxes are taken by force. They feel that if someone earned a lot of money that money is theirs and the government has no business taking it. This makes sense, until you realize that nobody ever got rich alone. No one. Ever.

To see this, consider an entrepreneur who has a great idea, builds a factory, produces the product, sells it all over the world and makes billions. They created the wealth, right? It's theirs, right? Why should the government get a piece?

Well, our entrepreneur used the roads to deliver product to his customers, and we all paid for the roads.

Our entrepreneur was protected from theft, vandalism, and fire by police and fire fighters that we all paid for.

Our entrepreneur need educated staff, and most of the staff hired were educated in public schools we all paid for.

Our entrepreneur undoubtedly used the internet for advertising, organizing, etc. The research that led to the internet was paid for by everyone.

This could go on for a long time, but you get the idea.

Our entrepreneur did great work and deserves a big chunk of money, but that product would never have succeeded without the infrastructure and services we all paid for. That's why it is moral and just to require our entrepreneur to pay taxes so the next entrepreneur will have roads, police protection, an educated workforce, and the other infrastructure and services we all pay for.

Thanks to Elizabeth Warren for articulating this line of reasoning.

Class Warfare!!!!

President Obama had the gall to ask Americans earning over $1 million a year to pay the same tax rate as the middle class!!! Rep. Paul Fryem' immediately called it what it is: class warfare. Soon, bodies will be bleeding in the street! Imagine the horrible effects of hedge fund managers and Wall Street tycoons paying the same tax rate as firemen, engineers, and -- gasp -- teachers!!! Soon heart rending stories like these will fill the newspapers:

-- I. M. Rich was forced to sell his French castle today, a victim of class warfare. He's left with only a Chateau in France, ten mansions in the states, and a few odds and ends in Italy. "My wife will be devastated," Mr. Rich said, pushing through tears, "we spent several days there only five years ago."

-- Hedge fund manager Dewey Cheetem, now paying the same tax rate as his gardener and secretary, was forced to let go of one of his three Rolls Royces -- but managed to keep the rest of his 20 luxury automobiles, thank goodness. "Obama is a heartless ogre," Mr. Cheetum exclaimed, "the red one was my favorite, but it had to go."

-- Thousands of families, struggling to get by on barely seven figure incomes, are cutting back. One wealthy wife was observed wearing the same $20,000 gown to two completely different events!! People have shifted from private jets to the ghastly grime of mere first class. The horror!!

Not content with these body blows to the poor, defenseless, fabulously wealthy, Obama is also going after the 3.9% tax break the richest (and therefor best) Americans have enjoyed for the last decade. While we need the revenue to balance the budget, there is a better way. A tax of only 50% on the income of the poorest half of all Americans would generate the same revenue.

It's important to remember that the Ottoman Empire did not tax the rich at all! All taxes were payed by the peasants and shop keepers. America has a $15 trillion debt to pay off, wouldn't it be better if the rich were exempt from the onerous burden of paying a share of this debt, wouldn't it be better if the 'little people' took responsibility?

Obama Waxes Osama

You are reading this because I've seen the Right try to pretend Obama, along with the SEALs, doesn't deserve the bulk of the credit for killing Osama bin Laden. They claim 'Bush era policies' should get the credit. However, it's no accident Obama did in two years what Bush failed to do in seven. Consider:
1. For most of his time in office, Bush focused attention and resources on Iraq, where bin Laden wasn't. For example, Bush publicly expressed disinterest in Osama as early as 2002 and disbanded the CIA bin Laden unit in 2005.
2. Since taking office, Obama has focused attention and resources on Afghanistan and Pakistan, where bin Laden was. For example, he tripled US troops in Afghanistan and vastly increased drone strikes in Pakistan.
3. Shortly after the inauguration, Obama ordered the CIA to make killing bin Laden their absolute number one, top priority in the war on al Qaeda.
4. As a result, they found Osama, President Barack Hussein Obama ordered forces under his command to kill him, and they did.

It's Time for a No-Fly Zone in Libya

It has taken me quite some time, but I now believe that we should enforce a no-fly zone in Libya, ideally as part of a NATO or UN operation, but speed is probably more important than allies.

The huge wave of non-violent pro-freedom and democracy protests sweeping the Arab world is potentially a major strategic victory for America. First, the protesters may succeed in establishing democracies in many, if not most, Arab countries, a big plus for the U.S. Second, the protesters have handed al Qaeda a strategic defeat. After all, 15 years of violence never toppled a single corrupt Arab government, and non-violent protest took out two in a few months.

Unfortunately, there is a way to defeat large popular non-violent uprisings: massive deadly force. In Egypt public and (no doubt) private pressure from America helped prevent this, but we have no such influence in Libya and Gaddafi has taken this approach with a vengeance. If Gaddafi succeeds in crushing the protesters, other Arab dictators will know exactly how to stay in power. If Gaddafi falls, Arab dictators will have little choice but to bow to the aspirations of their people.

The question, of course, is how to help the protesters. The answer, of course, is to listen to them. They are quite clear on one point: they don't want boots on the ground. British special forces inserted into Libya were arrested by the protestors and sent home. On the other hand, voices within the protest movement are increasingly of one mind: take Gaddafi's air force out of the equation.

This is something we can do, and we are probably preparing. Aircraft carriers have been sent to the region. Reconnoissance planes are flying off the coast. Warships are gathering for potential 'humanitarian missions.' Allies are being consulted. NATO is meeting. UN resolutions are being drafted. Unfortunately, international consensus takes time and speed is of the essence.

In the last few days the government has driven protesters from two cities. Gaddafi's firepower is beginning to overwhelm the opposition. Establishing a no-fly zone is an act of war, which is always risky, but taking down Gaddafi's air force will certainly help, a lot, and with a bit of luck putting America's unmatched firepower in the service of the protest could trigger a government collapse. With a third corrupt Arab dictatorship down, the winds of freedom and democracy could well sweep the Arab world with little additional effort from, but lots of benefit to, America and the rest of the world.

What you can do: go to http://www.whitehouse.gov/contact or call 202-456-1111 and make your voice heard.

When is 51,000 more than 250,000?

Lately, the pundits at FOX have been telling us Wisconsin teachers are overpaid. These teachers have an average salary of $51,000, $75,000 if you include benefits; and the FOX folks tell us this is a lot of money. Too much. Although the teachers have agreed to a 7% cut overall to help with a $3.6 billion deficit over two years, the FOX pundits say this is not enough; the teachers must give up collective bargaining and take bigger cuts.

Rewind to the debate last year over ending the Bush tax cuts on income over $250,000. These same FOX pundits told us $250,000 was not that much money, hardly enough to pay a mortgage and send the kids to college! It was way too much to ask for a 3.9% tax tax increase on income over $250,000 to deal with a federal deficit of $1,400 billion.

So when is 51,000 (or 75,000) more than 250,000, 3.9 more than 7, and 3.6 billion more than 1,400 billion? When you are a FOX pundit!

Egypt thought

Hundreds of thousands of Egyptian non-violent protestors calling for freedom and democracy have driven their dictator of 30 years, Muhammad Hosni Sayyid Mubarak, from power. A few months ago, nobody thought anything like this could happen.

The Egyptian protests have succeeded, so far, because the army refused to mow them down. Whenever a repressive government loses the will to butcher large numbers of its citizens, that government's days are numbered. The interesting question is "Why?" In part, of course, the military just didn't want to. In part, the officers weren't sure the conscripts who actually carry the guns would follow orders to kill thousands of their compatriots. Also, to our credit, America may have played a role.

About one third of the Egyptian military budget comes from the U.S. treasury. In addition, the Egyptian military uses American hardware. American weapons are very good, but their functioning depends on supplies and spare parts from America. If that supply chain is cut, the weapons quickly become useless. This is what happened to Iran after 1979. When Iraq invaded Iran the U.S. sided with Iraq, cut the supply lines to Iranian American-made weapons, and major Iranian weapon systems quickly became useless.

Fast forward to Egypt the last few weeks. Obama and Clinton, in public, made it crystal clear that America expected the parties involved, including the Egyptian army, to remain non-violent. I don't know, but wouldn't be surprised, if there was also some private communication with the Egyptian government and military. I think the Egyptian military was probably told, in no uncertain terms, that if the started shooting protestors the flow of American dollars and spare parts would stop.

Today is the Egyptian's day. They toppled Mubarak. I think we helped a bit. It was the right thing to do.