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Detroit…a liberal failure

July 26, 2013 - Author: billykennedy

Detroit is filing for bankruptcy. The once powerful “motor city” has now been reduced to a crime ridden, broken shell of what it once was and the blame is squarely on their own shoulders. The city once had approximately 1.8 million residents and now can only boast of may-be 700,000. This decline has meant that businesses have left the city, residents have left the city and bond holders are stuck holding the bag with worthless IOUs that Detroit cannot and will not make good on. But how did they get here? What happened to this once great city that is now regulated to minimal services, broken infrastructure, devastated communities and a government that cannot bring itself to take a modicum of responsibility for this decline?

Let’s begin with the obvious. Unions. Now I’m no fan of unions and the decline of Detroit cannot be placed solely on their shoulders but they do have great deal of culpability in this outcome. In a nutshell, pensions, hourly wages, burdensome worker demands and an unwillingness to cut back at all simply helped to make the big three car companies as well as the city itself unable to sustain such lucrative worker incentives and contracts. Ford motor company, for example, has only a shell of a presence in Detroit and could no longer continue to function profitably under the unreasonable and unsustainable demands of Detroit’s unions. The public unions, teachers, police, transit et al., again refused to ever budge on their demands. They only wanted more. And the politicians in the city who are biased and willing accomplices in the spending madness, that goes along with union demands, were much too eager to help make it all happen. No responsibility. No honest appraisal of negative consequences for their actions. No willingness to govern with frugality for the health of the city. Only a devoted compact to a failed liberal ideology that is now finally come home to roost.

Secondly we have to tackle the politics of it all. It would take four articles to adequately cover the politicians from Detroit that are now currently in prison for fraud, theft, mismanagement of public funds and a score of other miscreant deeds. One word can address the politicians of Detroit. Greed. Greed and an insatiable appetite for power, at the cost of the city itself, has helped to drive this once thriving city into the ground.

An unwillingness to actually manage their finances and make the hard choices is the legacy of Detroit’s elected officials. I do not hold the citizens of the city free from their part in all of this. Their personal appetite to “get stuff” from the city, to keep re-electing charlatans, mountebanks and swindlers only goes to show that their stomachs over ruled their responsibility to the health of their own city.

These politicians, it seems, would rather be king of a heap rather than a steward over prosperity. You see, prosperity takes work, it takes sacrifice, it takes respecting the rule of law, it takes wanting to do the work to make a strong foundation. None of these traits or goals are found in Detroit’s former nor present politicians. Does that sound patently unfair? May-be but the truth hurts. And the truth of it all is that Liberal ideology in particular and the democrat party to a lesser degree is ruining cities all across this fruited plane! Detroit is simply the poster child to what happens to a city after 50 years of unchecked and unleashed liberalism running the show.

What about the race component? Well, this is a touchy subject to be sure. Yes, there has been unprecedented white flight to the suburbs. This leaves the urban city without much diversity to say the least. The tax base has fallen to a trickle with whites heading out and of course the Detroit politicians play the blame game for that. They blame people who leave the city, they blame businesses that leave the city and they blame corporations that leave the city. But why would anyone want to live in a city that boasts of one of the highest crime rates in the country, that has some of the toughest gun laws in the country that restrict law abiding citizens the right to defend themselves that has a jobless rate well over the national average and an infrastructure that has been totally neglected? Why would people want to stay in a place like that? They don’t, so they leave. Does that make them bad? No, it makes them very smart.

Until the politicians in some cities and in some cases some states (hello California) realize that they cannot treat the tax base as their personal lottery jackpot and just keep spending, spending and spending, that they cannot keep promising public unions the world while mortgaging the farm to pay for it, that electing dishonest and divisive politicians that promise you free stuff are all dangerous ingredients that lead to eventual disaster. We will be seeing more cities come to the conclusion Detroit has. Do I think that Detroit finally gets it? No! Not for a second do I believe that the people of Detroit has learned anything here. I think they are still thinking they can get their cake and can eat it too. After all, bankruptcy is simply a tool to get out from under debt while still enjoying all of your perks. Right? Ingrained arrogance and a culture of blame, I fear, keeps them from recognizing the truth. Words and phrases such as “cut back”, “live within your means”, “frugality” are all anathema to this arrogant and dare I say, self entitled culture of want. This is no time for the federal government to be “bailing out” this kind of irresponsible behavior. They have to get it right but sadly, I don’t think liberals can ever realize that with freedom and prosperity comes responsibility. A concept completely lost to the liberal mind.

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Obamanomics…Doesn’t work

February 5, 2013 - Author: billykennedy

Economics…We (the United States) have recently witnessed the use of what is known as “Keynesian Economics” by our government. In a nut shell this form or idea of economics says that for every dollar the government spends or borrows (as a share of GDP) there is a 2 to 3 dollar multiplier effect. This “multiplier effect” should, as the theory states, energize the economy and by derivation cause our GDP (Gross Domestic Product) to grow! The unfortunate reality is, just the opposite happens. Keynesian Economics fails… and it fails every time it is tried. And the Obama Administration thinks you don’t know better.

When the government spends money it is money the government did not earn but rather took from tax payers. You have heard of the phrase; redistribution of wealth? That is essentially what Keynesian Economics is all about. The government takes your money in the way of taxes collected (receipts) and spends that money by way of social programs, roads, infrastructure, the military, education etc. The problem is, with this type of policy the government believes that it can spur a sluggish economy on and create jobs by simply spending more money. The recent 800 billion dollar “stimulus” that the President signed into law was used just for that purpose. Or so it seemed. The money, a giant share of it, went directly to areas in our economy that are “non-producers”. Like it or not, firemen, teachers, government unions are not producers in our economy but rather takers. They accept the cash inflow but do not create any subsequent economic stimulus. Taking tax payer dollars that could otherwise be utilized in the private sector (where true GDP takes place) and funneled into static programs with little to no economic benefit is, in my estimation, foolish economics.

Writer Arthur Laffer in an opinion piece in the Wall Street Journal (Aug 5th 2012), showed a graph of 34 countries that had a substantial increase (stimulus) in government spending as a % of GDP from 2007-2009. He also showed, as a correlation to that spending, the change in real GDP growth during that same period. According to Keynesian Economics the more money a government spends (as the multiplier effect takes hold) the greater the GDP in terms of real growth should be. That should be reflected in these numbers but sadly, as Mr. Laffer shows, not only did this not happen, “stimulus” packages stagnate and strangle GDP. Here are a few of his examples:

Change in government spending Change in Real GDP growth
as a % of GDP 07′-09′ 06′-07′, 08′-09′

U.S. + 7.3% -8.4%
Japan +6.7% -10.5%
Germany +4.6% -11.6%
France +4.1% -7.7%
England +6.9% -11.5%
Italy +4.3% -10.5%
Canada +4.9% -7.1%
Spain +6.9% -10.4%
Mexico +5.2% -13.5%
(source: International Monetary Fund)

Governments cannot “spend” themselves out of recession. It hasn’t worked, it doesn’t work and it won’t work. You might say the “New Deal”, a Roosevelt move, during the depression sparked the economy. Actually GDP remained completely stagnant during that period until our involvement into world war 2. The New Deal, however helpful to some, did nothing to pull the country out of the depression. The war is what re-energized our economy. Japan, as another example, had a retracted economy for well over ten years as they tried and tried to “spend” themselves out of their recession. Didn’t work.

What does this mean for you and I who work at a Home Improvement Company? Quite a bit. As long as the government continues to take dollars from producers and redistribute those dollars to the non-producers companies, like Lowe’s, will continue to be slow to hire, will continue to see stock prices remain sluggish and in the aggregate will have a lack of confidence that they can start spending money on inventories, new hires, building projects etc.

Business is the engine that runs our economy…not the government. To me it is in our best interest to see capital infused into private business especially small business. Redistributive economic policies (and politics) are ideological at the core and do nothing but prolong recessive economies and impede real growth. I guess I am advocating that you and I take a long hard look at every politician who believes in this Keynesian style of economics and consider our economic health. As much as I hate to admit it they (politicians) are elected to run the country and their policies can effect our economic health…they just shouldn’t be allowed to needlessly run it into the ground.

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Conservatism…The “Right” way to go

January 14, 2013 - Author: billykennedy

Look around…it appears the world is going to hell in a hand basket and common sense has gone to the way side!  Up is down, right is wrong, good is bad and bad is good. The ship is capsizing and nobody is taking notice.  Time to start disecting where we went wrong and call it like it is.  Liberalism is killing America!  Time to start re-evaluating what is important, what is lasting and what is right.

Our country was founded upon basic conservative, Judeo-Christian principles.  These principles are being ridiculed, impuned, laughed at and made to look like archaic, pre-historic relics.  Time to discuss this wretched turn we have made along the way and see if we can find some room for robust change.

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