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Economic History 101, Individual Vs. Government Initiative: The Great Leap Forward

The agricultural economy of the late 1950's largely resembled that of the Nationalists prior to Mao's ascension to power, characterized by peasant farmers tilling small plots on which they had some form of claim of ownership or tenancy, the latter of which dated from the time of China's last dynasty, the Qing line. All that changed in 1957 with the policy known as the Great Leap Forward, its major policy elements being the redirection of labor Read More »

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Was Joe Paterno Really That Generous?

Many of those defending Joe Paterno's legacy point to his involvement in and giving to many projects at the University. At the press conference of the Penn State University Board of Trustees on the release of the Freeh Report, Trustee Kenneth Frazier was quoted as saying, that the report found "inexcusable failures on the part of Joe Paterno and others to protect children. But I'd also say Joe Paterno did a lot of tremendous things in Read More »

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Ford and the Auto Bailout…

The visit of President Barack Obama to Detroit yesterday gave the Administration ample opportunity to crow about the Government led auto bailout of 2008. "If it was up to the Republican Party, Chrysler and General Motors would not have been here," UAW Secretary-Treasurer Dennis Williams told the crowd of thousands "If it wasn't for President Obama, we would not have the opportunity to once again build the best cars and trucks in the whole world." I should Read More »

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Obama and Motown….

President Obama apperared today in my hometown, the city of wheels, Detroit, MI. Although in the grand and beautiful state of Michigan for the Labor Day weekend, I did not venture into the Motor City to hear the President speak, instead choosing to stay in a quintessentially Michigan setting near a lake and tune into it on C-Span. What I was treated to via the helfpful public affairs channel was vintage Barack Obama at his Read More »

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AT&T and T-Mobile: Troubled Reasoning Despite Good Policy

While I applaud the decision of the Department of Justice to file suit to block the merger of AT&T and T-Mobile as a sound free-market and pro-competive decision, recent quotes from Administration officials leave us to believe that this positive and constructive move may be more of a case of a blind squirell finding a nut than any sort of visionary and sound policy posture. Moreover, in reading the reviews of this action, I Read More »

Category Archives: Public Policy

NY Times Delusion on Public Pensions

This could be alternatively titled – Assumptions Matter.

The major reason for the pension crisis in Detroit is poor assumptions, including:

1.  Rediculously high investment return assumptions for the pension funds.

2.  The delusional assumption that the industrial revolution would return circa 1909.

3.  The now reinforced imaginative assumption that one could “guarantee” defined benefit pensions regardless of how the future turned out.

The Detroit bankruptcy filing exposes the simply shameless, self promoting assumptions.

The Continuing Cluelessnes of the Obama Administration

I was unable to watch the Obama speech on jobs last night as I was on a long distance drive.  Consequently, I listened to his speech on the radio and focused on the content.

As a serial entrepreneur, having created thousands of jobs in my lifetime, engaged in another round of start-ups as well as posessing quite a hefty amount of economics education beyond my undergraduate degree in the subject, I found the impassioned speech remarkably free of content sans the intent to spread a half-trillion dollars around to people quickly (they must be people already lobbying for the cash rather than real entreprenuers) to assuage his standing in the polls.

Here is all you need to know about Mr. Obama’ plan in 5 quick bullet points.

  • Most new jobs are not only created by small businesses, it is a subset of small businesses called start-ups.
  • Start-ups take time to create from inception, to design, to planning, to funding, to government approvals.
  • For even the simplest start-ups in most locations in the US, government permitting and licenses will take about 1 year (and that is for a mere restaurant, try a factory of any type and the time grows exponentially).
  • Even if I have a concept, taken the time to design it, finished my business plan, marketed my business plan, found and arranged my financing and am ready to go today, by the time I get my government permits and licenses, most, if not all, of President Obama’s plans will have expired.
  • In other words, the plan is irrelevant to jump start real, sustainable job creation.

I could desconstruct the details of his plan point by point should one be able to actually get ahold of a copy – no one in Congress has yet received it – but it is ultimately irrelevant.  It does not even acknowledge or enable incentives to bridge the yawning gap in timing for business creation that is even created by the Goverment.  There are many other things that are wrong with this plan, but when it is so wrong on such a fundamental level and disdains reality in such arrogant fashion, there really is no reason to waste valuable time in life to analyze it any farther.

I am simply left wondering wheter the President lives on a different planet than I do, but I know the real reason for this proposal.  It is a political proposal to buffet the President’s waning popularity by attempting to box his primary opponents in.

That may be good politics, but it is just short of flashing a symbolic obscenity at the unemployed, underemployed, struggling businesses people and entrepreneurs.  The President just did a Maxine Waters, but the target was not the Tea Party, it was you.  After all, we all know what this was about – not you, not me, not the unemployed – it was about the President himself.

Detroit Continues to Retrench

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That Detroit is a troubled city surprised no one that is aware of news in the United States.

Having proudly hailed from that gritty an resilient locale, which locals now refer to as “the 313”, I am both fascinated by the city’s plight as a microcosm of failed public policy and saddened that such a symbol of American economic pre-eminence is in such a state.  Consequently, I attempt to stay abreast of Motor City events.

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