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America’s Business is Jobs, Not College

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Many of us are guilty. I am, too. You, probably.

In high school (and after) we mocked the kids who took shop. The “greasers” who got credit for wrenching on cars or welding or making cabinets. It was the 1980s and shop, along with home economics, became an elective in most schools.

Until the 80s, some practical life skill class was a requirement at most American public and parochial high schools. Only prep schools let students slide. But in the 1980s—perhaps influenced by the satire book “The Official Preppy Handbook,” schools across the socio-economic spectrum dropped shop from the mandatory list. Some dropped it altogether. At that point, kids who signed up for shop were signing up for blue collar work. They were hand-raisers for the mockers.

Cultural contempt for people who do actual work only increased in the three decades since shop became a dirty word. Movies, television, novels, comedians make fun of the people who build their homes, build and repair their cars, program their computers. put out their fires, fix their leaky toilets, and paint their walls. The smirking class scoffs at guys who take a shower at the end of their workdays.

At the same time, American culture has all but made a 4-year college degree mandatory. From Presidents of the United States to high school principals, the people we’re told to respect show little or no respect for the vast majority whose highest education ended in a prom. Yet, from the President on down, we depend far more on those who know how to make things than on those who “stare at their feet and think great thoughts,” as legendary Ohio State football coach Woody Hayes once said.

The Post-Dispatch points out, there’s no incentive for schools produce great workers:

Public schools, meanwhile, are judged by test scores and the percent of students they send to college. Guidance counselors aren’t likely to push young people toward the plant gates.

Today, America has a glut of college-educated pizza deliverers and a shortage of forty-dollar-an-hour machinists and electricians. The St. Louis Post-Dispatch highlights the shortage of skilled labor in St. Louis:

Factories around St. Louis can find plenty of people for grunt jobs — lifting boxes, sorting parts and such. They have a much tough[er] time finding hands-on machinists, computer numerical control, or CNC, machine operators, toolmakers, industrial electricians, multi-skilled maintenance mechanics and other jobs that require math talent and a couple of years of schooling.

A recent national survey of association members found that 90 percent have moderate or serious trouble finding qualified employees.

So, jobs paying $20, $25 and sometimes $40 an hour are going unfilled.

If you think the skilled-labor shortage is an argument for open borders, you’d be very wrong. Skilled workers in Central America, Asia, Africa, and the Middle East lead decent lives in their countries. Unless driven out by war or cartel violence, skilled workers don’t migrate illegally into the US–grunt workers do, the kind of workers America already finds in abundance.

A lot of those grunt workers are recent college graduates. CareerBuilder.com found in a 2014 study that 51 percent of college graduates are working in jobs that don’t require degrees. ZeroHedge.com found one (click here for full story):

Andrea Ledesma, 28, says her parents owned a house and were raising kids by her age. Not so for her.

Ledesma graduated from college four years ago. After moving through a series of jobs, she now earns $18,000 making pizza at Classic Slice in Milwaukee, shares a two-bedroom apartment with her boyfriend and has $33,000 in student debt.

“That’s not at all how life is now, that’s not something that people strive for and it’s not something that is even attainable, and I thought it would be at this point,” Ledesma said.

Her mother Cheryl Romanowski, 55, was making about $10,000 a year at her age working at a bank without a college education. In today’s dollars, that income would be equal to roughly $19,500. Romanowski said she envies the choices that her daughter has in life, but she acknowledged that her daughter has it harder than her. “I think the opportunities have just been fading away,” she said.

Had Andrea opted for machine shop class instead of college, she’d now have 8 years of seniority as a machinist earning somewhere between $60,000 and $80,000 a year. It’s unlikely she will find a job that requires her degree that will make up for the 8 years she lost in college and dead-end jobs.

While it’s true that the aggregate of those with college degrees earns more than the aggregate of those without, that statistic is deceiving. The college-educated number skews high because of ridiculously high salaries of a few. Skilled laborers without degrees are huddled together in a narrower range of salaries. In other words, the gap between a senior machinist and a Fortune 1000 CEO is way bigger than the gap between the machinist and the liberal arts major who sells pizzas.

Further, the college-educated pool includes all levels of education: doctors, lawyers, PhDs, etc. It’s not just those with a 4-year degree and no more. Plus, we don’t need as many Ph.D. historians as we need skilled machinists and electricians. The Department of Labor says only about 1/3 of American jobs require any education beyond high school.

So where do we go from here?

I think America’s attitude about real work is about to change. Donald Trump won on the strength of people who work for a living. To a large extent, so did Eric Greitens here in Missouri. So the people in power owe a big debt to the people who shower after work. Meanwhile, a growing number college-educated young people—the key demographic for advertisers and entertainment producers—can’t afford the products advertised on TV and Facebook. (Products made by people who took shop.) Smart marketers and television writers will soon realize that the actual key demographic in America is young skilled workers, not just young people in general.

As the leftist hysteria over 2016’s election quiets down (and it will), expect to see growing respect and appreciation for the people who work in blue-collar jobs. As college tuition continues to rise faster than inflation and faster than healthcare costs, expect taxpayers to demand that Congress slam the brakes on higher education spending. Some of that money will go to pay the debt, but some tax money can be returned to the states to expand shop classes.

Making America great again requires that America make things again—things that last longer than a pizza or an Old Fashioned cocktail. The jobs that Trump has promised need people who can lift a load and do the math. As one employer told the Post-Dispatch:

He’s picked new high school graduates, hoping to train them, but often found they lack basic skills. “It’s basically all math and hard labor. I have had kids that make the effort, but they don’t have the brain power.”

Calvin Coolidge said, “the business of America is business.” That was almost 100 years ago. Today, the business of America is jobs.

Let’s get to work.

If Donald Trump Scares You, You Should See a Depression

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Guest post by Lee Presser.

America’s fiscal year is October 1 to September 30.  With two month left in FY16, the U.S. Treasury has already paid creditors $380,925,428,211.67 in interest costs.  (That’s $381 Billion)  http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

The average interest rate was just over 2%http://www.treasurydirect.gov/govt/rates/pd/avg/2016/2016_07.htm

 It is expected that the last two month’s of this fiscal year, interest costs will increase another $45 to $66 Billion.  The total FY16 interest cost may be between $426 and $447 Billion. 

 In FY11, the Treasury paid creditors a record $454,393,280,417.03.  (That’s $454 Billion) 

 With the debt at $19.4 Trillion (that’s 19,400 billions of dollars) what do you suppose the interest costs to the Treasury will be when the annual interest rate returns to normal?  (Normal would be 4% to 6%)

 In fiscal year 2015, the federal budget was $3.8 trillion.  Of that amount only $1.11 Trillion was spent on what budgeters call discretionary items; food and agriculture, transportation, social security & unemployment & labor, science, energy & environment, international affairs, housing & community, veteran’s benefits, Medicare & health, education, government, and military. 

 The other $2.69 Trillion was spent on interest and what budgeters call mandatory items; spending on programs that are required by existing law.  Medicare and Social Security are the two largest mandatory spending programs.  They are about 40 percent of the federal budget.  Agriculture, Defense, Education, and Veterans Affairs, also require mandatory spending. 

 As interest costs increase, either discretionary spending decreases or the annual deficit increases.  Mandatory spending is unaffected unless Congress changes the law.  Those mandatory checks always go out. 

 So, when interest goes from $426 Billion per year to $600 Billion per year, $174 Billion in programs that serve you and your neighbors must be cut.  Or, Congress can increase the money supply to continue paying for the programs, which, as you would expect, will lower the purchasing power of your paycheck. 

 Of course, we could vote in new leadership and change the trajectory of government expenditures.  But, for most of you, that’s way too scary. 

Don’t Make These Simple Mistakes About Debt

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Our present crisis is  the result of:

  • Too much borrowing
  • Too much spending
  • Too much government control
  • Too much taxing

Those who argue that America needs to borrow, spend, regulate, and tax more are simply wrong, wrong, wrong.  Their argument is absurd  on its face.

The way to increase revenue to government is to increase the economic activity of the people.  You do that by giving the people maximum control over their destinies.  They will pursue their dreams. In the process, they will fund a responsible and constrained government.

When the government borrows money, it determines for you how you will spend your future earnings.  That, too, is wrong.  Morally wrong.  Make them stop.

Write and tweet your senator and representative today.  Tell them “Stop spending my future. Balance the budget. #tcot”

NOTE:  Welcome to  Nice Deb, whom I met at Smart Girl Summit this weekend.  Please read her blog every day.

80 Percent of Americans Read This Blog Every Day

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I’ll be honest with you: I’ve lied.

Usually out of desperation. I’ve lied to those closest to me—those most willing to forgive the thing I lied about. 

I’ve also told the truth to my own detriment.  In the long run, the latter works best. In fact, telling the truth works best in the short run, too.

So maybe Obama’s desperate. Maybe he knows that the debt ceiling debate is the beginning of the unraveling of Americum Sovieticum, his life-long dream. In desperation, then, he’s simply making stuff up.

How do I know Obama’s lying?

obama_big_lie-505x378The last time 80 percent of America agreed on something, the question was whether or not to get baby Jessica McClure out of the well. So when I hear that 80 percent of Americans support something, I assume it involves human life.

But somewhere, somehow, Barack Obama has found data revealing that 80 percent of Americans want—demand—a tax increase.

For the life of me, I cannot find these people.

I can find this Rasmussen poll indicating that 55 percent oppose a tax increase as part of a debt ceiling package.

I can also find a Gallup poll that finds only 32 percent would agree to tax increases as part of a deal.

Maybe the President saw this Quinnipiac University poll – with a questioned designed to elicit a particular response.  The question enticed 62 percent of 2,311 registered voters to accept some taxes on the wealthiest Americans. 

So, perhaps, Obama merely took that 62 and round up to the nearest . . . 80?

But there’s also the media defensive panic.

When conservative presidents are caught lying or being morons, conservatives tend to admit, well, maybe he shouldn’t have said “mission accomplished.” 

When leftists find their leftist president being a deceitful dolt, they obfuscate.  Huffington Post, New York Times—all the usual suspects—have scrubbed their sites of references to the President’s lie. (At least, my searches found nothing.  Then, again, I try to not to spend too much time on those sites.)

Instead, the left talks about this being the time to bring taxes into the equation.

Two people who get it . . . clearly:  Mark Steyn and Charles Krauthammer. 

Steyn, as usual, picks apart the stupid in “No Bargaining With Obluffer.”

Krauthammer destroys Obama’s credibility by pointing to Obama’s long and recent history of demanding more debt at any cost.

How about last December, when he ignored his own debt commission’s recommendations? How about February, when he presented a budget that increases debt by $10 trillion over the next decade? How about April, when he sought a debt-ceiling increase with zero debt reduction attached?

All of a sudden he’s a born-again budget balancer prepared to bravely take on his own party by making deep cuts in entitlements. Really? Name one.

So I lied again.  Eighty percent of Americans don’t read Hennessy’s View every day.  Not yet, anyway.

Simply Staggering

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DRUDGE REPORT 2011® The federal budget deficit in the month of February 2011 exceeds the deficit for all of 2007 by 40 percent.

Simply staggering.

Yet Senate Democrats refuse to cut more than a paltry $6 billion. They refuse because they seem bent on collapsing the American system – the economy, the government, and the people themselves.

But at least the Obama administration stands by with its arms folded as gasoline prices skyrocket at the their fastest pace in history.

(h/t Drudge Report)

4 Ways Government Can Help Create Shared Value

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Last week I wrote about Creating Shared Value. In that post, I pointed to a Harvard Business Review article by Michael Porter and Mark Kramer. If you haven’t read both my post and the Michael Porter piece, please do so now.  I’ll wait.

Now that you’re up to date, let me add the Tea Party angle to this. 

Though Porter did not dwell on government’s role in Creating Shared Value (CSV), he did point out that government must reform for CSV to succeed.  Here are a few of the Tea Party reforms necessary if Porter’s (and Whole Foods CEO John Mackey’s) vision is to succeed:

Stop Vilifying Business:  Both parties fail to defend business when business is unfairly attacked.  Instead, politicians tend to jump on the populist bandwagon, piling on companies and industries. One example:  the regulation of cable television in the early 1990s.  Responding to false claims that cable companies were gouging customers, Congress stepped in and imposed regulations that caused cable rates to increase faster and customer satisfaction to tumble. 

Stop Picking Winners:  General Motors, Chrysler, Bank of America, Citigroup, and dozens of other banks and businesses should have failed.  Only illegal and inappropriate government interference in the market saved these companies, transferring financial responsibility from the owners to the tax payers.  Regardless of future performance, our economy is worse off than it would have been had government stayed out of the mess.  Moreover, innovation and ideas that might have improved the world and increased sustainability are lost because government’s clunky hand manipulated the markets.

Stop Creating Entitlements: Welfare reform gave us a few years of federal budget surplus. With Barack Obama’s historical and dangerous deficits, the last thing we needed was a new entitlement. But Obama and the 111th Congress gave us just that with health control.  John Mackey of Whole Foods pointed out a system that many employers offer that reduces healthcare costs and makes good insurance affordable for everyone.  Were affordable health insurance Obama’s actual goal, he would have embraced the high deductible solution. Instead, he outlawed it.  Government must eliminate all entitlements, not make new ones, if CSV is to succeed.

Reform the Tax Code:  Most of the our favorite tax breaks—designed to change behavior—will go away in order to pay off massive deficits brought about by entitlements and political handouts.  It’s time, then, to flatten out the tax code.  That means establishing in a tax-free income level (say $20,000), and a tax rate (say 18 percent).  The new 1040 looks like this:

Income:________ – $20,000 = _____________ * 0.18 = Tax Due ______________

 

Creating Shared Value is a business strategy.  Fully embraced, it offers the possibility of remarkable growth for companies, communities, and economies.  It rejects the notion of trade-offs, like clean air or full employment. Instead, it means clean air because of  full employment.

Companies can reach CSV only if government gets out of their way.  And if companies get out of their own ways.  But Michael Porter has advanced a strong argument for the later.  Now it’s time for the Tea Party to encourage government to do its part.

How else can government help advance Creating Shared Value by reducing its size, scope, and cost?  Leave your thoughts below in the comments.

Jay Nixon Putting Party Ahead of Missouri? *UPDATE*

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Last week, the Illinois legislature passed a massive income tax increase on individuals and businesses.  Overall, it represents about a 67 percent income tax increase.

In response, neighboring states of Wisconsin and Indiana have wisely mounted massive campaigns to suck businesses and people out of Illinois.  Even New Jersey’s fabulous governor, Chris Christie, plans to fish the Land o’ Lincoln for some business transplants.

One state bordering Illinois has been notoriously silent.  Missouri Governor Jay Nixon has done nothing to steal business and residents away from Illinois.

Is Nixon being lazy?  Or is he just being a good Democrat?

While we’re at it, why isn’t St. Louis Mayor Francis Slay beating the bushes on the East Side?  The city needs business and people desperately, but Slay has been as silent as Nixon.

Look, people, I realize that we have a lot of friends in Illinois.  My wife is from GC.  Most of her family lives in Madison County.  But businesses and workers are going to flee to the state.  Illinois dropped from the 23rd best tax state to the 36th in one step.  With Democrats in charge of the legislature and the governorship, this increase is only the beginning.  Illinois taxes will rise until the people in Illinois elect tax cutting budget hawks.

In the meantime, Jay Nixon has an obligation to put Missouri’s economy ahead of Democrat party loyalties.  Missouri needs to follow the leads of Indiana, Wisconsin, and New Jersey by campaigning for fleeing Illinois businesses and people.

*UPDATE* Over on United for Missouri, Emily Iles explains the extraordinary dangers to Illinois’ economy this tax hike poses.

Ideas Have Consequences—Even Stupid Ones

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When Barack Obama became president in January 2009, he began a campaign to weaken America. I’m not talking about military cuts; I’m speaking of America’s stature.  Barack Obama famously refused to acknowledge American Exceptionalism in 2009. He bowed to kings and princes, then denied doing so, then bowed again and again. His White House has driven down the dollar. Timothy Geithner, Obama’s Secretary of the Treasury, warns that the world economy must “rebalance” with less reliance on America.

Barack Obama is short-selling America.

The results of a US President talking down his own country are stark.  America is losing prestige, and the office of our president loses prestige right along with the rest of us. 

Asian Embarrassment

In the last week, Barack Obama got a taste of the new, devalued USA.  In South Korea and Japan, Obama was no longer treated as first among equals, but us the kid at the far end of the table.  Having trashed America’s swagger and replaced it with a lilting prance, Obama learned that it’s not so fun to be a relatively young leader of relatively young nation whose prestige has taken a major blow.

From a Wall Street Journal editorial, we see just how far the USA has fallen under Obama’s presidency:

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week’s G-20 meeting in Seoul? We can’t think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

For Obama, now, there is nowhere to turn.  American voters have rejected his domestic policy. His base has turned against his handling of Afghanistan. The world leaders, seeing him as weak, are planning world economic policy more or less over Obama’s head.

Stagflation

But there’s more. Obama’s economic policies promise to do two things: 1) perpetuate high unemployment and 2) increase inflation.  In fact, the Fed’s stated policy, which Obama defended twice in Asia last week, is to use Demand-Pull inflation to grow the US economy. 

We’ve seen this before.  In 1978 to 1982, America suffered a malaise brought about by bone-headed economic policies from a president who believed America had gotten too big for its breeches.  Jimmy Carter’s policies produced high unemployment, flat growth, and runaway inflation.  The term for this economic condition is “stagflation.”

True, Bernanke is a Bush appointee and the Fed is independent from the White House.  But Treasury Secretary Geithner and President Obama are full participants in an economic policy that threatens to revisit the disastrous years of 1978 through 1982.  Being unemployed, underemployed, or underpaid is bad enough. When the cost of necessary goods and services rise quickly, things get worse fast for the economically challenged.  And signs of stagflation are everywhere.

Alan Reynolds of the Cato Institute wrote in a WSJ op-ed that several inflationary signals surfaced in October:

Producer prices rose at an annual rate of 5.5% in September and 4.8% in August. The broad price index for GDP rose at an annual rate of 2.3% in the third quarter, up from 1.9% in the second quarter and 1% in the first.

For ordinary folks trying to make ends meet, the prospect of inflation is frightening.  Already the weak dollar has driven up the price of gasoline and food—the two things we all need to survive.  The two things the government omits from its consumer price index.  In the past week, gasoline prices in the St. Louis area jumped $0.25 overnight. 

The Next Congress

There is little the 112th Congress can do to repair the economic damage, but it can lay the foundation for the next president and the 113th Congress. I encourage all members of the next Congress to follow Arthur Laffer’s prescription of extending the Bush tax cuts, repealing Obamacare, eliminating incentives for idleness, and push free trade.