Her name is Gina Rinehart:
Now, the Australian mining heiress, worth $19 billion and earlier this year thought to be the world’s richest woman, has sparked another controversy in her latest column in Australian Resources and Investment magazine. (Yes, I am a registered reader online.) Rinehart rails against class warfare and says the non-rich should stop attacking the rich and go to work.
“There is no monopoly on becoming a millionaire,” she writes. “If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself – spend less time drinking, or smoking and socializing and more time working.”
I don’t disagree with these sentiments at all. Rather, where I have a problem is with things like this:
Union bosses are fuming that the government has approved a scheme to allow mining magnate Gina Rinehart to bring in 1700 overseas guest workers for her Pilbara iron ore project, without making proper attempts to find local workers first.
Immigration Minister Chris Bowen told the National Press Club today that the government had approved the first Enterprise Migration Agreement – which allows “mega” resource projects to negotiate temporary migration needs up-front – and that it would be for Mrs Rinehart’s $9.5 billion Roy Hill project in Western Australia.
The part of Mrs Rinehart’s speech that drew the widespread criticism was: “The evidence is inarguable that Australia is becoming too expensive and too uncompetitive to do export-oriented business.
“Africans want to work, and its workers are willing to work for less than $2 per day. Such statistics make me worry for this country’s future.”
It’s one thing to say that people should work harder; it’s another thing to advocate and enact policies that negate the effects of hard work. In this instance, Mrs. Rinehart wants to expand the Australian labor pool to include impoverished Africans. The mere expansion of the labor pool drives down wages generally, but when said labor pool includes extremely marginal labor like this, it drives down wages quite a bit.
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What Mrs. Rinehart faces is the corporatist’s conundrum. She espouses socially productive views (her advice to work harder and take care of one’s self is good advice, especially when you add getting a basic education and not getting pregnant out of wedlock to the mix), but she pursues socially destructive policies. She doesn’t really believe in hard work or freedom; what she really believes in is having slave labor, or its cheapest alternative. That’s why she imports African workers, and that’s why she tries to shame her country men into working harder. Ultimately, her policy is to encourage materialism (“if you want to be a millionaire…”), which should expand the labor pool (more people working more jobs) while simultaneously encouraging the free movement of labor, also expanding the labor pool. The net effect of both of these policies is to drive down her labor costs. What’s sickening is how she dresses this personal greed as patriotism.
One lesson that conservatives should take from this is that it is a foolish idea to link conservative principles (hard work, taking proper care of oneself) with political policies that are harmful to one’s fellow countrymen. If Mrs. Rinehart had told her fellow citizens to work harder and then offered them 1700 decently paying jobs, her message might have been received a little bit better. But when she told them to work harder and then offered 1700 jobs to Africans to work at slave wages, well, the resulting controversy could hardly have been avoided.
It calls to mind what God says in Malachi 3:5 (“And I will come near you for judgment… Against those who exploit wage earners…”). Conservatives often want to condemn the poor for being lazy, but often neglect to condemn employers who constantly try to exploit their workers. The reality of the matter is this: Employers ought to do what is best for their employees, and pay them fairly (and before anyone accuses me of being a Socialist, no I don’t think ensuring that employees are paid fairly requires government intervention). Employees ought to be honest and work hard. And these two messages ought to go hand-in-hand. And until conservatives start demanding that employers treat employees fairly, conservatives will likely fins that their call for people to “work harder” will go unheeded.
Under Herman Cain’s 9-9-9 tax reform plan, 84% of U.S. households would pay more than they do under current tax policies, according to a report released Tuesday by a nonpartisan research group.
First off, there’s a word missing here. It would be more accurate to say that more households would pay more direct taxes under Cain’s plan. People already pay plenty of indirect taxes now; Cain’s plan would simply make people face their costs head-on. Also, this plan appears to eliminate one-time taxes like the estate tax, which is a good thing.
Second, it’s a good idea for more people to foot more of the tax bill. One way to increase government accountability is to make sure everyone has skin in the game. Fiscal prudence will become more of a national concern if most citizens’ tax bills go up.
Under the current system, most of the lowest income households end up owing no federal income tax. That’s because their incomes are so low that they’re exempt, or because their tax liability is canceled out by the standard deduction and tax breaks, such as the Earned Income Tax Credit.
The Cain plan doesn’t exempt very low incomes from taxation. And while it would eliminate the payroll tax, which is the heaviest tax for low-income families, that tax relief would be offset for many by the elimination of the EITC and other tax breaks they qualify for now.
From what I gather, the lowest earners wouldn’t pay that much more. Employee-side payroll contributions are already 7.6% of income; bumping it up to 9% is not going to be that huge a difference. Actually, factoring in employer-side matching for Medicare withholdings, employee withholdings are already effectively at a 9% income tax. Thus, the only poor see their tax burden increase is by the elimination of tax credits. I don’t have enough information at this time to determine how much of an increase the lowest quartile of income-earners would see their tax burden rise by. However, since the lowest quartile of earners take a decent amount of government benefits, I don’t really have a problem with the government charging for them.
But the majority of the highest income households would get a tax cut. For instance, 95% of those with more than $1 million in income would receive an average tax cut of $487,300.
These people would then spend their newfound riches more efficiently than the government, which is a plus in my book. At any rate, I don’t get caught up in this class warfare because I just don’t care. I don’t think the wealthy are inherently more or less deserving of their wealth than others.
Under Cain, capital gains — a notable source of income for the wealthiest Americans — would be tax-free. He would also preserve the charitable deduction. And taxing all non-capital gains income at 9% would amount to a considerable break from today’s top rate of 35%.
At the very least, the tax code should not disincentivize investing, since investing is a key to wealth and economic growth. Better yet, the tax code should encourage people to invest and save (if I recall correctly, the capital gains tax applies to savings where the interest earned exceeds $50).
Cain’s plan has been criticized by those on the left, who say it would hurt the poor, and those on the right, who worry a new national sales tax is an invitation for the government to raise taxes over time.
I’m not a fan of wealth redistribution, so I view taxes as payment for services. If poor people want the government to do something for them, they should pay for it. And since the government does many things for poor people, poor people should rightly expect to either a) actually pay something or b) pay a closer approximation to the cost of the benefits they receive.
As for conservatives, I share their concerns about new taxes. If you give the government an inch, it will take that as a sign to increase taxes. I would suggest that the introduction of a new type of tax (e.g. consumption tax) be accompanied by the elimination of a tax of similar scope and coverage (in terms of revenue). While simplification is good, I don’t think Cain’s proposal simplifies things enough. Also, I don’t think that his proposal is going to survive once the class warfare aspects of politicking start up in earnest during the upcoming election cycle.
That’s the title of my latest at the Center for a Stateless Society.
America’s politicians, by habit, frequently call upon the populace to eschew “class warfare,” by which they are generally understood to mean war between the rich and the poor.
Left unsaid, but becoming increasingly clear even to those who generally take little interest in matters political, is the fact that every operation of government is, by definition, an exercise in “class warfare” — a raid by a political class whose very survival depends on its continued ability to loot your wallet, your wealth, your work.
Like everyone else, the political class has to eat.
Unlike everyone else, the political class proposes to eat us.
Click here to read the whole thing.
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This preliminary study started with a blog post I did several months ago entitled “New Jersey, the Sorry State”, a deep dive into Bureau of Labor Statistics data showing that my state is hardly generating employment outside the government sector.
The blame for this sorry state of affairs I heaped on NJ’s political culture, which is high-taxing, heavily-regulating, pro-union, anti-business and Democrat-dominated. As the power of Democrats, the self-proclaimed friends of the working man, has risen in this state, fewer working men have actually had work.
One of my readers suggested extending the work to all states. A daunting prospect, but I have made a start — back to BLS data for 51 deep dives. This time I’m looking longer term, with data from 1990 to the present.
To try to get to grips with party politics in all states through time, I researched affiliations of the governor and two senators and the plurality of the House of Representatives delegations and the state senate and legislatures for each year since 1990, using wikipedia and such other sources as I could find. No doubt there are some errors at this stage, particularly in identifying the leanings of state legislatures 15 or more years ago. These errors are minor; it’s unlikely that I could mistake Idaho for a blue state or Washington for a red state, for example.
Those two next door neighbors bracket my best ranking of the 50 states + DC by political complexion, from most Democrat to most Republican:
>> bluest: WA DC WV MA AR NJ CA MD IL HI DE
>> next: NY VT IA WI RI MI OR CT ME NC
>> middle: NM MN MT LA COPA NH ND IN TN
>> next: SD VA MS NV AL MO NE KS OK FL
>> reddest: KY OH AZ SC WY AK GA UT TX ID
Next best alternative ranking is so similar:
>> bluest: DC WA WV MA AR MD CA HI NJ DE VT
>> next: IL RI NY MI OR CT IA WI LA NM
>> middle: NC ME MN ND MT IN PA VA NV CO
>> next: TN AL SD GA NH KY MS MO FL NE
>> reddest: AZ KS OH TX OK AK SC WY UT ID
Let me point out a few things by way of caveats and highlight a few preliminary conclusions.
Conclusion 1: Government is not just New Jersey’s growth industry; it’s a growth industry in most states, Democrat or Republican. In fact, it is only in a handful of blue states and territories that government employment has been static or falling: MA, MI, NY, DC, and RI.
Conclusion 2: The predominant pattern in the last ten years has been for employment in goods-producing industry to be declining, in service-providing business to be growing somewhat, and in government to be growing fastest of the three. That pattern is seen in 37 states: AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, IL, IN, IA, KS, KY, MD, MS, MO, NE, NV, NH, NJ, NC, OH, OK, OR, PA, SD, TN, TX, UT, VT, VA, WA, WV, and WI; in MI it was declining but less than other employment. So at bottom, government is growing at the expense of goods production. In the limit, this places fiscal drag on the economy, which reinforces the original trend and makes it worse. That is our New Jersey experience.
Conclusion 3: The states that have experienced the greatest declines in employment in goods-producing industry are (worst first): RI, MI, NJ, CT, NY, NC, OH, ME, MA, and PA. Mostly northeastern/midwestern, mostly unionized, and mostly Democrat.
Conclusion 4: The states that have experienced the best performance in growing employment in goods-producing industry are (worst first): NE, CO, NM, SD, ID, MT, UT, WY, NV, ND. Near runners-up were TX, AZ, and OK. Mostly western, mostly right-to-work, and mostly Republican.
Conclusion 5: Only in Wyoming is employment growth in goods-producing industry positive and higher than either services or government.
Caveat: A Democrat is not the same wherever you go, nor is a Republican. A Maine Republican is a very different animal than a Texas or Wyoming Republican; in fact, some say it is a RINO. A Mississippi Democrat in 2009 is not ever the same as a Massachusetts Democrat, nor a Mississippi Democrat of twenty years ago.
Caveat, speaking of Massachusetts: In connection with the special election there on 1/19/2010, I and many others have taken to calling the Bay State “the bluest of all blue states.” This is incorrect. It yields to the blueness of the Washingtons (state & district) and West Virginia.
Caveat: Employment in goods-producing industry is not a holy grail and need not be the object of all economic policy. If someone leaves a job in the declining textile industry in North Carolina, retrains as a radiological technician and get a better job in that field, no one argues that either that person or the state of North Carolina are worse off. The problem is when employment in the goods-producing sector as a whole is in total headlong decline. That means industry is giving up on a place. That means industry prefers to take its chances with the Chinese Communist than the Michigan Democrats.
Caveat: Productivity has improved in goods producing industry, meaning fewer workers are needed to do the same or greater work. I know. That’s wonderful. But that productivity itself should incentivize capital to come into a place and employ workers who have worked themselves out of their jobs. If it’s not enough, other things are wrong, and the benefit of their productivity is not for workers to share. Politicians must ask the question, what else is needed to attract industry? Republicans ask that question; Democrats ask instead what other self-defeating social costs and regulations they can impose on job-creating enterprise.
Here’s one final caveat, and it is important. I don’t know which way the causation runs. I am not sure whether the growth states of the West are Republican because they are prosperous, or prosperous because they are Republican. I am more certain that employment grows in right-to-work states because it can, without restriction; that’s just economic common sense. Capital goes where it is well treated.
This much is clear. The employment restrictions and the class struggle nonsense offered by those friends of the working man, the Democrats, isn’t offering the working man in the post-industrial Northeast and Midwest any tangible economic return on his long-term political investment.
I say if you want to work, go R. If you want to stand on the unemployment line complaining about the Man, go D.
Two interesting quotes caught my eye in a recent Andy Smith note:
“We cannot stop terrorism or defeat the ideologies of violent extremism when hundreds of millions of young people see a future with no jobs, no hope, and no way ever to catch up to the developed world” Hillary Clinton, Remarks to the Center for Global Development at the Peterson Institute for International Economics
For a moment there I thought she was talking about the US – “when millions of young Americans see a future with no jobs, no hope, and no way ever to catch up to the Baby Boomers”. Generational class warfare anyone?
“could seriously disrupt bond markets if it triggered concerns about creditworthiness or inflation because of concerns with government incentives to inflate debt away” Bank for International Settlements in invitation to top central bankers and financiers for a meeting in Basel
This doesn’t need any further comment for readers of this blog, suffice to say I find it interesting that the BIS acknowledges that inflating debt away is an option.
PS – unfortunately Andy Smith’s stuff is not publically released, because I rank him as the top precious metals analyst.
Goldman Sachs (GS) gangbangers are engaged in public service, or more appropriately pillaging, as fast as possible even while the victims are getting increasingly shrill in their protests. No means no and the gangbangers are not being respectful. Bankers, financiers, hedge fund managers and others are being exterminated under suspicious circumstances. Even senior gangbangers have issued guidelines for Goldman Sachs (GS) employees congregations in public.
You cannot make this stuff up. So, in the culture of Goldman Sachs (GS), if their employees start getting exterminated then how will it affect the stock and how can the situation be played for profit?
TENSENESS IN THE OFFICE
The Goldman Sachs (GS) gangbanger’s public pillaging is being increasingly revealed and the hundreds of millions, even billions, of people they have stolen from and wronged are getting rightfully upset. This is bound to create some tenseness and nervousness around the gangbanger’s hideout. Bloomberg’s Alice Schroeder, author of The Snowball: Warren Buffett and the Business of Life, reports:
The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank. … Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs …
The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.
My the tangled web that Goldman Sachs (GS) gangbangers weave.
Lloyd Blankfein, Chief Gangbanger for Goldman Sachs (GS) and whose wife does not like to wait in line at charity events, proclaimed that Goldman Sachs (GS) was ‘doing God’s work’. Interestingly, CNBC reported, Lloyd Blankfein “added that he understood, however, that people were angry with bankers’ actions: “I know I could slit my wrists and people would cheer.”
As the Huffington Post reported:
L’Osservatore Romano is reporting that Goldman Sachs is indeed Doing God’s work, and His Former Holiness Joseph Ratzinger has confirmed the unsolicited hostile takeover. Writing under his pen name Benedict XVI, Ratzinger verified that total control of the popular religion has been transferred to Goldman Sachs and His New Holiness Lloyd Blankfein.
But seriously, the Bible has many examples from Elijah with the chariots of fire to Daniel in the lion’s den of those who did God’s work being protected. And what type of work did Jesus do? Mark records:
And they come to Jerusalem: and Jesus went into the temple, and began to cast out them that sold and bought in the temple, and overthrew the tables of the moneychangers
But instead of relying on God’s protection the Business Insider has reported, “all Goldman Sachs employees received earlier this month. They were told not to organize small [12 maximum] parties even if no firm money goes to pay for them.”
So during the holidays remember to keep that Christmas spirit.
WAGING OF WAR
During the Panic of 1873 many investment houses went bankrupt. Tensions got so heated the United States Army was deployed to New York City to protect the bankers.
When the rich wage war its the poor who die in Afghanistan but when the cake eating poor wage war its the rich who died in France. This time around the Goldman Sachs (GS) gangbangers are going to want security provided by highly trained troops, or former troops, whose parent’s pensions have been stolen and whose best friends have died in their arms in foreign lands.
A few days ago I was talking with a friend who had just returned from an overseas war deployment with the United States Navy. I jokingly recounted how the armed forces protected the bankers in 1873 and asked him ‘What would you do if ordered to protect the bankers?’ He jokingly replied to the effect, ‘I would go, stand between the angry crowd and the banker and when the time was right I would grab the bankers and throw them to the crowd.’
EXTERMINATED VAMPIRE SQUIDS
I can understand why the leading gangbangers at Goldman Sachs (GS) are getting nervous as the number of parasitic vampire squids that have been exterminated keeps growing. Andrei Kozlov, Russian central banker, was riddled with bullets. Dead hedge fund managers include Seth Tobias, Oleg Zhukovsky, Rene-Thierry Magon de la Villehuchet, Michael Klein, Peter Wuffli and Kirk Wright.
The list goes on. It includes David Kellerman, Freddie Mac CFO and even James MacDonald the CEO of the Rockefeller family offices. I suppose we should wish their famlies the best; except for New York tax attorney William Parente. Whoever he angered worked corruption of blood and his wife and two children were also murdered. There are many more examples.
Goldman Sachs (GS) is primarily a service business and dependent upon the individuals who receive an average bonus of about $700,000 from a total pot of $16.7B. When a company’s workforce is so universally hated and have wronged so many millions, even billions, of people there is a possibility that retribution will be taken. If retribution is taken then how could that affect earnings and how could the company benefit from the unfortunate circumstances?
Wall Street is full of sociopaths and you cannot grow a conscience if you do not have one. Unfortunately, for this exercise we will have to analyze like the Goldman Sachs (GS) gangbangers; with the lack of a moral compass.
Key-man insurance can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the individual specified on the policy. The policy’s term usually does not extend beyond the period of the key person’s usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity.
Not only is there a very real threat to Goldman Sachs (GS) gangbangers from the outside, evidenced by the weapons permits and limitations on sizes of gatherings, but there is a potential conflict of interest from the inside. Sure, if Goldman Sachs (GS) gangbangers were to start targeting their own employees to benefit from key-man insurance it would be illegal and they should be prevented from receiving proceeds because of killer and slayer statutes.
But perhaps the gangbangers will get their vassal politicians to create ex-post facto legislation to provide immunity. As CNET reported:
A federal judge in San Francisco has tossed out a slew of lawsuits filed against AT&T and other telecommunications companies alleged to have illegally opened their networks to the National Security Agency.
U.S. District Judge Vaughn Walker on Wednesday ruled that, thanks to a 2008 federal law retroactively immunizing those companies, approximately 46 lawsuits brought by civil liberties groups and class action lawyers will be dismissed.
Which employees should the upper brass target? If you have spent the last 5-15 years putting in 80-100 hour weeks then how much would you sell your health for? An even better question may be how much would your boss sell your health for? Why should they share profits with you?
The Goldman Sachs gangbangers are among the largest hordes of parasitic vampire squids on the planet. The absence of their aggressive theft would increase the standard of living for millions even billions of humans. As a peacemaker who believes that force should never be used aggressively against innocent people or their legitimately acquired property I would prefer to starve the vampire squids I am opposed to and not be an instrument of extermination. It is unfortunate that the parasitic Goldman Sachs Gang has been and is so aggressive that their host victims may feel they have no other choice than to act in self defense by gunning for Goldman Sachs gangbangers.
Through the use of key-man insurance and ex post facto legislation to provide immunity for illegal behavior the Goldman Sachs Gang can tremendously increase the gang’s profitability and the bonus share for the senior partners. If the gang’s leaders do happen to find themselves in an uncomfortable situation then they will likely be bailed out, if possible. Nevertheless, I would not tamper with such a filthy instrument either way.
DISCLOSURES: Long physical gold but neither long nor short with GS and neither long nor short (except for being a US citizen) on any GS employees.
The community organizers’ struggle is one of class warfare. As Saul Alinsky wrote, “A People’s Organization is the banding together of large numbers of men and women to fight for those rights which insure a decent way of life…A People’s Organization is dedicated to an eternal war. It is a war against poverty, misery, delinquency, disease, injustice, hopelessness, despair, and unhappiness.”
Interestingly enough, the very system that defeats the conditions that Saul laments is capitalism. It has improved the lot of many, leading to higher living standards and a more moral economy than any to come before it. Yet it is this very philosophy that these groups decry – one which is also ironically their lifeblood.
As a WSJ editorial notes, ACORN is “a union-backed, multimillion-dollar outfit that uses intimidation and other tactics to push for higher minimum wage mandates and to trash Wal-Mart and other non-union companies…its organizers are best understood as shock troops for the AFL-CIO and even the Democratic Party.” Indeed, much of the steering committee for HCAN (Health Care for America NOW), a good proxy for the socialist movement is tied in one way or another to labor, labor which would not exist without capitalism.
Without capitalism (the antithesis of the socialism they relish), the jobs that it creates, the living standards it furnishes and the varying degrees of wealth that it naturally leads to, these comrades would have nothing to fight against.
Without capitalists to build businesses, there would be no jobs save for those provided by the state, and no labor unions. Living conditions would be miserable. The poorest would only dream of televisions, cars, cell phones and computers, not to mention cheap generic drugs, food, clothing and running water. FDR’s “Second Bill of Rights” would not have been conceived of because these so-called “rights” (if they had developed at all) would have been reserved solely for kings and queens, not middle class Americans.
The community organizers use the fruits of capitalism to fund themselves. Many of these groups are taxpayer-subsidized. Donors also consist of private charities and fat cats like George Soros. All government funds come out of the pocket of the taxpayer, who earns his income from his work, work attributable to the market. Others such as private foundations and “Soros-ites” use their own funds, again earned from their labor in the (nominally) free market to bankroll these radicals.
The socialist groups use instruments created by capitalism to propagandize. They use the computer to disseminate information (I grant that R&D for the internet was partially attributable to government, but practically all of the applications were created by the private sector), signs, t-shirts and other merchandise all produced by private enterprises to advertise and lastly books put to market by private publishers and sellers to spread their message.
Read “I, Pencil” and tell me that the tools the organizers use are attributable to anything other than the spontaneous order of capitalism.
The aforementioned groups all fight to kill capitalism, but without capitalism they would not have their natural enemy. Without capitalism they would not have a conception of what “decent” living standards were. Without capitalism they would not have jobs besides being agents of the state (which admittedly they might prefer), let alone their precious unions. Without capitalism they would not have the means to mass propagandize. Without capitalism these parasitic groups would perish. But instead they feast on the fruits of capitalism, drinking the sweet nectars of which the productive members of society are responsible.
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