Cutting Only 9% of Spending is “Explosive”? Guess it Depends on What You’re Cutting.

Scott Walker is certainly making a name for himself over in Wisconsin.  The new governor previously dazzled with a plan to rein in the Democratic political machine public sector unions, and now he has proposed an “explosive” new plan to cut spending.  Wherein “explosive” is defined as a cut of only 9% out of a single category.  Talk about your shifting goalposts.

The problem is, Scott Walker has proposed cutting money from education.  $900 million to be exact, which sure sounds like a lot, until you realize that it represents only a small fraction of total spending, and that total spending is far too high anyway.  But predictably, the calls for “Cut Spending Now!” have turned into “Anything But That!”  A plan to cut a piddling 9% off of a single category in a state that expects budget deficits of $3.6 billion in the coming years is anything but explosive.  Unless it’s a sacred cow being slaughtered, I suppose.

Then again, it is worth noting how little effect education spending has had over the years.  In this almost-famous Cato Institute graph, we see that ridiculously massive growth in federal education spending has translated to stagnation and regression in student performance.  Granted, this is federal, and not state, spending, and education is an issue properly left to the states.  But it would be foolish to think that these data are wholly inapplicable based on who is writing the check.  Observe:

It appears as though our country’s public education strategy is “throw enough shit at the wall and some of it will stick.”  Unfortunately, it doesn’t look like anything is sticking.  If you dig deeper, you soon find out how the public education system is being used as a jobs program for the politically favored, with layer upon layer of useless administration drawing crazy salaries and unearned pensions.  (Is it any wonder it’s all unionized?)

In the end, I am not sure if this is one more power play by Scott Walker to dismantle the “New Tammany Hall” that is the organized public sector, but I do not care.  It is a move that makes fiscal sense, educational sense, and moral sense.

A Word from Wisconsin, and My Fundamental Problem with Unions

By now, all of my readers are likely to be apprised of the situation in Wisconsin, vis-a-vis public sector unions.  If not, the brief story is that new governor Scott Walker and the newly Republican state congress are attempting to pass a law outlawing collective bargaining rights for certain public sector workers, except over limited wage increases.  Naturally, this has led to much hissing, spitting, and general venomousness. 

Because when I want a raise at work, the first thing I do is march on the Capitol…

Everyone knows that we are out of money.  Wisconsin is trying to plug a $3+ billion budget shortfall.  And everyone knows that the public sector unions are a huge part of the problem.  They are institutionalized corruption.  First, they collect dues from their members, then they funnel those dues to politicians, then once said politicians are elected, they receive overly generous and completely unsustainable benefits packages, leading to more dues collected, and so on. 

That’s why teachers’ union members cannot be fired, even if they have sex with children; that’s also why police union members cannot be fired, even when they drive drunk and beat their wives; that’s also why so-called public safety officers have run up seven-figure legal bills defending civil suits over their abuse of citizens – with no consequences. 

But really, it’s all about a “living wage.”  Yeah…that’s the ticket.  (And for no good reason, the Wisconsin bill excludes the police!)

Much has been made about the nature of public sector unions, as opposed to their private sector brethren, but I don’t see it.  Yes, I understand how electing the people you are going to “negotiate” with for your next pay raise is the very definition of a conflict of interest, but that obscures the fundamental problem.  In my opinion, there is very little difference.

The reason why I find so little difference between public sector and private sector unions is because neither one operates outside the aegis of the government.  Sure, one group gets their overinflated paychecks signed by the state comptroller, and the other group gets their overinflated paychecks signed by a corporate officer, but both groups’ paychecks got overinflated in the same way.

The union labor movement, public and private, has been amazingly thorough in ensconcing themselves in the highest levels of the power elite.  And that is exactly why unions are not viable without specific governmental intervention.  For example, a majority of states still don’t have right-to-work laws, and thus they allow unions to force membership on anyone unfortunate enough to get a job in a union shop, whether they want to join or not.  In this context, it is simply silly to assume that private sector unions are any different than public sector unions.  After all, the coercion carries the force of law whether you work for the state or not. 

Is there any doubt that Detroit would be better off without such labor laws choking off the auto industry’s competitiveness?  Of course there is no doubt – but the private sector unions have Michigan’s government in a stranglehold, and they are not about to loosen up.  Neither is this some David vs. Goliath fight.  For all the talk about the Chamber of Commerce’s influence on the 2010 elections, the labor movement would prefer you not to know that, when it comes to spending on government lobbying and electioneering, unions are the “big dog,” and it doesn’t matter whether they are public or private.

And the labor movement doesn’t just influence elections – the people they elect often pass laws perpetuating the union’s influence far beyond election day.  And they have been hard at work increasing the labor movement’s scope, to the point of absurdity.  For example, did you know that in the highly publicized “labor” battle between millionaires and billionaires NFL players and team owners, federal labor law forced the taxpayers to pick up the bill for this mediation, simply because these overprivileged millionaires belonged to a union?  I can think of better uses for my tax dollars, thank you.

Did you know that the government can label a company a “sweatshop” for being non-union and thus prevent it from working on county projects?  And to give you an indication of the fairness of the process involved, consider this gem of a quote from your friendly local legislator:

“(Union organizers) would not be sitting there if something wasn’t going on,” Councilman James R. Ellenbogen, D-Banksville, said in announcing his support to an audience filled with union activists and company employees. “This is not a court of law, but I’m a working guy and I believe what they say.”

So slander is totally fine, just as long as you’re “a working guy”?  You can call one of the few remaining steel companies in the United States a sweatshop simply because “something’s got to be going on”?  And then you have the temerity to wonder why there aren’t any sizeable steel companies in the United States anymore?

Of course, none of this changes the overarching principle.  It does not matter whether your union represents government workers or not.  Your union exists because of the government.  Remove the intervention and you’ve removed the problem.

Then again, that is not an acceptable solution to the labor movement – they like their special privileges, thank you very much.  But it would be far more fair to those who are currently on the outside looking in.

A History Lesson from New Amsterdam

I happen to be reading a comprehensive American history at the moment (Conceived in Liberty, by Murray Rothbard), and because of my personal heritage, I was drawn to the history of Dutch rule in North America, specifically in what we now call the “middle colonies” of New York, New Jersey, and Delaware.  New York, formerly New Amsterdam, was foremost among them.

Dutch-American history is generally not taught, in favor of Anglo-American history, and with good reason.  New Amsterdam, Fort Orange, Fort Good Hope, Breukelen (Brooklyn), New Amstel, and other Dutch settlements were short-lived and poorly-run, and as Americans we owe far more of our national character to our British ancestors.

However, this does not mean we cannot learn anything from our Dutch forebears.  Contrary to the liberality that we normally associate with Holland, and which liberality was totally accurate to describe the “Republicans” of 17th century north Holland (now The Netherlands), the North American colonies under Dutch control were settled mainly by elements of the rigid, theocratic “Orange Party,” centered in the southern provinces (now Belgium), and allied closely with the Calvinist church.  As a result, these settlements were anything but free.  It is my contention that this ensured their quick demise.

So why was it that the Dutch settlements were so relatively thinly populated, as compared to English settlements in Massachusetts Bay, Plymouth, and Virginia?  Frankly, it was high-handed autocratic rule – a kleptocracy.  Beginning with Peter Minuit, followed by Willem Kiefft, and culminating in the governorship of Peter Stuyvesant, Dutch rule was immediately and obviously contrary to the interests of the Dutch settlers. 

Thus, although it is taught that the Dutch colonies were “conquered” by the English sometime around the second Anglo-Dutch War (1664 or so), it turns out that the Dutch were never conquered at all.  They preferred to accept English rule in return for treaty promises of freedom of religion, retention of prior property rights, freedom of trade, freedom of immigration, freedom from conscription, and a guarantee against billeting of soldiers in their homes.  New Amsterdam, over the strenuous objections of kleptocrat Peter Stuyvesant, simply surrendered.

So what does this have to do with us?  Well, for one, it gives us some indication of how to build an unhealthy, vulnerable society, against which the populace will be inclined to revolt.  After the removal of former governor Kiefft due to citizen objections to his high-handedness, Stuyvesant was installed and proceeded to do more of the same.  However, and I’m quoting Rothbard here:

…Stuyvesant elaborated a sophisticated refinement.  After enmeshing the economy in a network of restrictions and prohibitions, Stuyvesant in return for heavy fees sold exemptions from these regulations.  In short, Stuyvesant saw that the key to walth for a government ruler is to create the opportunity for monopoly privilege (for example, by outlawing and regulating productive activities) and then to sell these privileges for what the traffic can bear.”

Sound like anything familiar?  How about unions, especially those in the public sector?  President Obama got labor union support for PPACA, bought and paid for through exemptions for unions – for example, the Cadillac tax.  Bush and Obama both wooed the labor vote (and perhaps more importantly, the labor money) by basically handing over GM to the unions, despite well-established precedent of creditor priority.  And every state that does not have a right to work law “outlaws and regulates productive activities” by forcing union labor on the populace.  Federal laws require the use of union labor, to the detriment of those willing to do the work without special privilege.

In any case, the evidence supports the idea that the modern union is absolutely not a vehicle for moderating disputes between powerful corporations and their workers.  It is merely a vehicle for extraction of political privilege. 

Of course, I will not go so far as to accuse our politicians of graft (Stuyvesant was forcibly retired, but he managed to amass a vast fortune that kept him comfortable until his death), but the basic point is less wealth than it is power.  Our political parties, both Democrat and Republican, have long understood – as did Peter Stuyvesant – that the best way to create an artificial constituency is to place restrictions on everyone, and then grant freedom to the chosen.  In this way, the chosen will always support you, and the restricted will always look for ways of becoming one of the chosen.

(Note to those who have been wondering why I haven’t posted in a while.  I’m not giving up; I’ve just been very busy.  Keep checking back!)

I beat the Wall Street Journal to the punch! More on the China trade war

It seems as though the Wall Street Journal editorialists have been reading my blog.  (Okay, that’s far-fetched, but allow me to crow for a moment.)

Regular readers of my blog will recall that on January 4, I posted something called “Made in America (or some such place…).”  In summary, I wondered why the locale of final assembly was not only important to certain special-interest groups like unions, but also why the trade-balance accounting did not take into account the total value-added in other locales when labor and expertise are split among countries.  Take a look at this excerpt from my post:

First, the job priorities of the “buy America” crowd are simplistic and counterproductive.  [A]ssembly jobs are more demeaning, lower paid, less fulfilling, and more dangerous than the jobs that replace them when they are outsourced.  Take Apple’s iPhone for instance.  Which jobs would you rather choose from?  In America you might design computer chips, manage the supply chain, write software, analyze data, render product designs, engineer phone parts, and audit the company.  In China, you get to screw the phone together and …well, that’s it really.

Second, and the greater point, is that it highlights the economic stupidity of the mercantilist view of the trade balance.  Remember that, in the ultimate trade balance tally, those aforementioned iPhones are being “imported” into the United States.  But what’s the relative value-add?  When you could train monkeys to screw these phones together, the total value of the assembly work is justifiably only a tiny percentage of the value of the phone.  And why would we choose to pay more for so little value? 

…

So when it comes to our manufactured products, we should be asking more pertinent questions than whether it is ”made” here.  Where is the expertise?  Where is the value-add?  Where is the heart and soul of the product?  It is not in the assembly, and I cannot fathom why we should want it to be.

Since the WSJ has gotten into the act, we now have hard stats, and as it turns out the “tiny percentage” of value-added from screwing the iPhone together makes up roughly 3.5% of the total value of the phone.  Compare what I posted (one week earlier!) to this editorial from the Wall Street Journal, called “The $6.50 Trade War.”

To the extent that protectionists present Chinese exporters as a threat to U.S. prosperity despite the more pressing problems America faces, the argument over China’s exchange-rate policy is a distraction the economy can’t afford.

How much of a distraction is suggested by a paper out last month from the Asian Development Bank Institute. Economists Yuqing Xing and Neal Detert examined the supply chain of the iPhone to reach a surprising conclusion: Technically, the iPhone contributes to America’s trade deficit with China.

The basic explanation is that data on bilateral trade are calculated assuming that the entire value of a traded good is created in the exporting country. If that ever made sense, it certainly doesn’t in a global economy marked by increasingly complex supply chains.

In the case of the iPhone, Messrs. Xing and Detert note that the device was invented in America by an American company, Apple. The components are manufactured, either inside or out of China, by companies based in several other countries. The only part of the process that is unambiguously “Chinese” is the final assembly—a process that, in the estimation of Messrs. Xing and Detert, adds only $6.50 to the $178.96 wholesale value of an iPhone.

Yet that entire $178.96 value ends up attributed to China in official trade statistics. As a consequence, the iPhone contributed nearly $1 billion to China’s bilateral trade surplus with America in 2008, and nearly $2 billion in 2009, the authors conclude. If the trade data had been based solely on the $6.50 cost of assembling each unit, the iPhone would have added only $34 million and $73 million in those years to China’s surplus.

Thank you to the Wall Street Journal for fleshing out my point, and for making it so much clearer by using the same example that I did in the iPhone.  I’m also glad they were able to cite hard statistics, since it makes the point that much more effective when you’re able to quickly compare a $2 billion “trade deficit” with the actual number of $73 million.  Now we know that the trade balance statistics that are so relied upon as meaningful indicators by the “buy America” crowd are inflated by as much as 96%!

So thanks again, WSJ, and keep reading The Solution is the Problem.

Made in America (or some such place…)

Despite the fact that xenophobia coupled to defunct economics is the driving force behind the “buy America” or “made in America” movement, it has no shortage of followers.  The idea, of course, being that employing millions of people here to screw stuff together and then charging more for the end product is somehow better than moving those people to skilled jobs, outsourcing the mindless work, and then enjoying the higher standard of living that comes with cheaper products.  After all, why bother with a high standard of living when it means that people who dropped out of high school don’t get the opportunity to make $70 per hour sweeping floors for the union?

And beyond that, the whole economic concept is backward.  We ship these jobs overseas so that we don’t have to do them; what we import we import because we can.  The idea of the “trade balance” as an indication of the relative economic power of a country is so outdated that it belongs more in mercantilist 17th century Spain than modern America.  I know it is difficult to put the concept to rest because of the visceral reaction many people have to its nationalist implications, but it is so far beyond good sense that it constantly surprises me how so many people think it important.  In no place is this sense of importance greater than in automobile manufacturing.

I suppose, then, that I should be less than surprised that MSN is offering up yet another article about it, entitled “Do You Really Drive an American Car?”  I’d rather not split hairs about what makes a car “American” (which bafflingly includes Canada but not Mexico, or Central America, or South America), but I do think it’s important to point out the fact that the lines are so completely blurred these days that the idea of an “American” car is about as fluid as Washington’s definition of “fiscal responsbility.”  That hasn’t stopped some people from drawing lines:

What most people see as “American” cars, the UAW does not. It bans Hondas, Toyotas, Volkswagens and all other foreign-branded cars from union property, as well as those cars from Detroit’s Big Three automakers for which final assembly occurs outside U.S. borders…

Okay, so nothing that is foreign branded is allowed.  What about the Honda Accord, with 80% American-sourced parts, built in Alabama or Ohio?  Even MSN has noted that it seems like that’s more American than the Corvette, with only 75% American parts, albeit assembled in Kentucky.  And of course, the ostensibly American Buick Regal is built in Germany with 21% American-sourced parts.  When compared with the stated cause of the “buy America” crowd, it is inane to write off the Honda.  Its production involves many thousands more American jobs than the other cars.  And the idea that the money “goes back to the headquarters” is similarly ridiculous; it’s a public company.  If you want Honda to be a domestic manufacturer, buy the stock.

But domestic branding is only part of the equation.  It has to be screwed together here too, for some inexplicable reason.  A domestic-branded car, like the Lincoln MKZ, which is assembled in Hermosillo, Mexico, is also not considered “domestic,” and thus excluded from UAW parking lots.  But what if all of the parts were sourced in the U.S. but it was screwed together in Tijuana?  How is that worse than having all the parts for a domestic-branded automobile made in China but screwing the car together in Flint?  What is it about assembly jobs that makes them sacrosanct?

Obviously, the answer should be “nothing.”  But the fact that auto assembly jobs are so fiercely protected reveals two very important truths.

First, the job priorities of the “buy America” crowd are simplistic and counterproductive.  Auto assembly jobs are more demeaning, lower paid, less fulfilling, and more dangerous than the jobs that replace them when they are outsourced.  Take Apple’s iPhone for instance.  Which jobs would you rather choose from?  In America you might design computer chips, manage the supply chain, write software, analyze data, render product designs, engineer phone parts, and audit the company.  In China, you get to screw the phone together and …well, that’s it really.

Second, and the greater point, is that it highlights the economic stupidity of the mercantilist view of the trade balance.  Remember that, in the ultimate trade balance tally, those aforementioned iPhones are being “imported” into the United States.  But what’s the relative value-add?  When you could train monkeys to screw these phones together, the total value of the assembly work is justifiably only a tiny percentage of the value of the phone.  And why would we choose to pay more for so little value? 

What really goes into the products doesn’t necessarily go into the trade balance accounting.  By way of further example, one of America’s greatest manufacturing strengths is in the semiconductor sector.  AMD exports 87% of its products; Qualcomm ships out 94%.  What comes back to America is what cheap foreign labor put into a box and glued together.  However, that final product is invariably more expensive, given that most consumers don’t find bare computer chips to be all that useful.  Meaning the trade balance is skewed.  This seems to be a lesser point to everyone but macroeconomists and union bosses.

So when it comes to our manufactured products, we should be asking more pertinent questions than whether it is “made” here.  Where is the expertise?  Where is the value-add?  Where is the heart and soul of the product?  It is not in the assembly, and I cannot fathom why we should want it to be.

I don’t often hope for government funds to go to waste, but in this case…

…I’ll make an exception.  According to the Star Tribune, my hometown of Minneapolis has just won a $900,000 federal grant to study the feasibility of streetcar service in Minneapolis:

A jubilant Mayor R.T. Rybak announced Tuesday that Minneapolis has secured a $900,000 federal grant to begin a final study about how it might return commercial streetcar service to the city.

Meanwhile, Dakota County is to get a similar grant of $1.18 million to its rail authority to look at transit options for Robert Street between St. Paul and Rosemount.

In Minneapolis’ case, the Federal Transit Administration grant will help finance a $1.2 million study. It will compare potential streetcar service on Nicollet and Central Avenues with the alternative of beefed-up bus service. The city plans to match the grant with $300,000 reserved from an early streetcar feasibility study.

My desperate appeal to the powers-that-be: please, for the love of God, waste these funds.  Make this a study that takes 5 more years than originally planned.  Please go over budget.  Make your personnel costs astronomical. 

Why?  Perhaps we can build up enough public resentment that the project dies with a whimper.  There’s an off chance that the study will be so shoddily done that it is ignored.  There is a glimmer of hope that the study is never completed in the first place.

Minneapolis tore up its streetcar lines in the 1950s because they realized that the mode of transportation was outdated.  Fast forward 60 more years, and guess what?  It’s still outdated.  There is no point in slowing down traffic behind big, inefficient, noisy, costly, and undependable technology that no one really wants except the politicians who dole out the juicy union contracts to build it.  On what planet does addressing 21st century traffic issues with 19th century technology make sense?

On the bright side, it might make for some fun new slogans for the Minneapolis tourism board.  “Minneapolis: We Know Obselescence!”  Or, “Minneapolis: Rejecting Progress Since 2010!”  Maybe, “Minneapolis: Come See What Your Grandparents Laughed At!”  It’ll be tourism gold, I tell ya.

So please, waste my money.  Waste it with impunity.  Take advantage, this might be the only time I ask.

More poetic justice courtesy of health care “reform”

Over at Reason, Peter Suderman reports, in an article called Labor Union Health Fund Drops Children’s Health Coverage, Blames Obamacare: 

How do you know when your fancy new progressive health law ain’t working so well? Even health funds run by big labor unions blame decisions to drop kids’ coverage on the law’s new health insurance burdens:

“One of the largest union-administered health-insurance funds in New York is dropping coverage for the children of more than 30,000 low-wage home attendants, union officials said. The union blamed financial problems it said were caused by the state’s health department and new national health-insurance requirements.

The fund is administered by 1199 SEIU United Healthcare Workers East, an affiliate of the Service Employees International Union….The fund informed its members late last month that their dependents will no longer be covered as of Jan. 1, 2011. Currently about 6,000 children are covered by the benefit fund, some until age 23.” [emphasis added]

Of course, everyone loves free health care until they have to pay for free health care.  Pardon the pun, but it looks like this labor union will be getting a taste of its own medicine.

“Economic Treason,” and other such nonsense.

From the AFL-CIO’s blog comes this missive from union boss Richard Trumka:

When U.S. corporations sit on more than $800 billion without creating jobs, when banks hoard more than $1 trillion in profits without lending to small businesses and consumers, and when health insurance companies with tens of billions in profits demand huge premium increases, there are only two words to describe such greed:

“Economic treason!”

For further reference, I got this quote from a Forbes article by Rich Karlgaard, worth reading more for its statistics than its ominous anecdotes.  But rather than take an explicitly political tack here, I’d like to examine the underlying economic and legal fallacies of Trumka’s statement.  In a nutshell, he does not understand the nature of corporations, he fails to see clear cause and effect relationships, and his sense of entitlement is egregious.

First, it seems clear that Trumka misunderstands the nature of the corporate entity.  When he implies that corporations have a duty to use their resources to further employment, he assumes that corporations are merely vehicles for paycheck delivery.  In reality, a corporation is a legal fiction that serves only to limit liability for owners; in other words, corporations are associations of people who own resources, and in a free country, those people may freely decide what to do with those resources in order to maximize their return. 

Just as I have no obligation to give a balancing portion of my salary to someone who doesn’t make as much as I do, the people who own corporations have no obligation to simply hand out their resources in ways that will not produce positive returns on investment.  And while employees of the corporation derive very real benefits from the working relationship, the central issue is not whether everyone gets to feed at the trough, but whether the owners believe that a positive return on a given action is likely.  In other words, Trumka assumes that corporations exist for the benefit of laborers.  They do not.  They never have.

Secondly, Trumka completely misunderstands the cause and effect relationship.  He states the facts, but he gives no indication of why they are the way they are.  For example, he decries the fact that businesses are sitting on $800 billion in cash (according to Forbes, it’s more like $1.8 trillion), but he gives no indication of why they choose to do so, preferring instead to imply that said businesses are doing so either out spite, out of ignorance, or simply because they can.  Of course, it’s not that simple. 

Among the reasons why businesses are hoarding cash at the moment include the “regime uncertainty” that is implicated whenever rule changes emanate from Washington, and as far as rule changes go, 2009-2010 has been cataclysmic.  Why spend money now when you have no idea what’s around the corner?  Saving money for a rainy day (or a hostile administration) is just good sense.  Another reason businesses might be sitting on cash has to do with the cost-effects of the aforementioned rule changes.  When Washington mandates that everyone acquire health insurance, perhaps it is not unreasonable to think that the entities which are the primary buyers of individual health insurance might want to have some reserve in case costs rise.  And costs are rising. 

And remember that health care is not the only cost.  Tighter federal regulations of bank credit will tend to decrease said credit’s availability, which will tend to force businesses to seek alternate sources of funding for operations and expansion, which would lead to both businesses saving cash and banks experiencing reduced lending volume.  These sorts of causal chains are not particularly difficult to analyze, but they seem quite out of the question for Trumka.  Whether that indicates limited cognitive abilities or a peculiarly demagogic bent, or both, will be a question left for other members of the punditocracy.

Finally, the sense of entitlement implied in Trumka’s statement is stunning.  By implying that it is economic treason to follow the rules of free exchange rather than pander the immediate conveniences of union members, Trumka has made it clear that he believes the world revolves around him, and that he will harbor no opposition to his union-centric view of the universe.  He clearly needs a modern-day Copernicus to gently let him know that the earth, in fact, still revolves around the sun – not Richard Trumka.

Sadly, this kind of grossly uninformed bloviation is what we have come to expect from unions.

Chicago and Baghdad: Sister cities for the age of profligacy

An interesting article from Dennis Byrne in today’s Chicago Tribune asks whether Chicago is ready for democracy, which echoes eerily the punditocracy’s take on Iraq.  He’s on to something though.  Chicago has never really been a representative government, having suffered through years of mobsters, union thugs, and political machines (and occasionally all three at once).  Not to mention more than 40 years of Daleys.  Speaking of Daley:

Why hasn’t he endorsed an heir apparent? Why didn’t he groom anyone for the job?

The absence of a clear line of succession has some people worried about the return of Council Wars and “Beirut on the Lake,” the consequences of the ugly brawl for the orb and scepter of Daley’s father, Richard J.

What is this, the Grand Duchy of Daley?

Well, I suppose that’s a good question.  Chicago has found itself unwilling and unable to elect anyone not named Daley since the first George Bush was in office.  This despite the fact that Chicago, and indeed the entire state of Illinois, is bankrupt almost beyond comprehension. 

Although he is currently facing an approval rating of roughly 35%, Daley managed to rake in more than 70% of the vote in his last few elections.  And one certainly wouldn’t view his low approval numbers as fatal to another campaign, given the ruthless efficiency with which the machine organizes. 

How does one become so untouchably popular?  Byrne has an idea:

Not a few people see value in Daley’s “strong leadership,” for bringing the city together, for ending (or at least submerging) the racial and ethnic hostilities that have historically divided this city. It has almost become a cliche in recent days: Daley held the city together by bringing everyone “in.”

Uh-huh. If he is to receive credit for the sea change, it wasn’t that he just opened up his City Hall office for every faction and said, “Take a seat at the table.” He did it by giving them stuff.

…Stuff that, when you add it all up, costs money, lots of it. To the tune of an estimated budget deficit of $655 million next year.

The result of corruption, like the Daley administration, is massive problems that get kicked down to the next generation, but when the bill comes due, where will the city turn?  Here’s a brief summary of Chicago’s seemingly intractable problems:

All this kumbaya has virtually sunk this city, and whoever inherits this mess has some serious cutting to do. Cutting that will have to be balanced racially, ethnically, geographically and, pray tell, by sexual preference. The problems line up to the horizon: gang warfare; sinking credit ratings; the remainder of a 10-year labor contract that Daley gave to major city unions in 2007; other out-of-control employee costs; tax increment financing boondoggles; Block 37; ill-considered, overly ambitious and underfunded capital projects; three-person garbage trucks.

What’s the moral of the Daley story?  Simply this: if you want to remove corruption from the government, remove power from those who govern.  Chicago is not a responsive democracy, and it’s not a city that has any institutional respect for the rule of law, preferring instead to rely on strongmen more in the mold of Latin American caudillos than the founding fathers.  Because of that, the city’s imperial overlord, along with his corrupt cronies, have been able to abscond with the municipal wealth for decades.  The situation is sad, but not unexpected. 

After all, it has happened before.  In Iraq.

You can’t make this stuff up. Plus, more on the green jobs scam.

Today’s dose of high comedy comes to you from the master comedian himself, Jesse Jackson.  Apparently, his 14 miles per gallon Escalade was stolen while he was at a “green jobs” rally in Detroit.  Honestly, it doesn’t get much better than that.  But where should we start?

Perhaps we could point out that Jackson’s explanation for the rally included this missive:

…Ending the subsidies that make dirty fuels artificially cheap can spark a shift in infrastructure development, create more jobs and allow America to become more self-sufficient.

1) Non-punitive taxes do not equal “subsidies.”  2) Since he’s clearly unclear on the subsidy concept, it is perhaps lost on him that he’s being driven around in a car made by GM, the ongoing recipient of some of the largest subsidies in American history.  3) Self-sufficiency and a high standard of living do not go hand in hand.  It’s the basic concept of division of labor, and it has been true throughout human history.  I, for one, have no interest in being dirt poor and “self-sufficient” when the gains in wealth and culture from peaceful trade are easily available.  4)  Placing punitive taxes on petroleum products would kill off the rest of the union jobs being pushed for at a UAW rally!

The level of hypocrisy would be mind-boggling if it were anyone else besides Jesse Jackson.

But wait, there’s more.  Let’s tackle the concept of “green jobs.”  A study by Spanish economics professor Gabriel Calzada Alvarez of Universidad Juan Carlos in Madrid showed that promotion of green jobs actually results in destruction of jobs on a net basis.  Are ten so-called “green jobs” worth between 22 and 69 extra people in the unemployment line?  According to Investors’ Business Daily:

A Spanish economics professor said attempts by his country to create a green economy would fail. Now a Spanish government report confirms his findings, blunting claims that the professor’s report was biased.

The professor, Gabriel Calzada Alvarez of Juan Carlos University in Madrid, produced a 41-page study last year on the European experiment of going full bore on the conservation front. He found that “the Spanish/EU-style ‘green jobs’ agenda now being promoted in the U.S. in fact destroys jobs.”

For every green job created by the Spanish government, Alvarez found that 2.2 jobs were destroyed elsewhere in the economy because resources were directed politically and not rationally, as in a market economy. …

…his results have been backed up by Carlo Stagnaro and Luciano Lavecchia, a couple of researchers from the Italian think tank Istituto Bruno Leoni.They found that in Italy, the losses were worse than they were in Spain: Each green job cost 6.9 jobs in the industrial sector and 4.8 jobs across the entire economy.

Naturally, Jesse Jackson has  no qualms about resources being directed politically, since he and his ilk have no marketable skills whatsoever and must resort instead to intimidation, shakedowns, and the spoils system for their living.

And apparently Jesse Jackson lives well if he’s being driven around in Escalades.  Which makes the theft all the sweeter.  Poetic justice is a beautiful thing.

Follow Up:  Apparently I am late to this party.  The inimitable Reason Magazine has debunked the “Green Jobs Delusion” in some detail previously, including citing the same study from Spain.  See for reference:

Ronald Bailey’s “The Green Jobs Delusion”,  “Green Jobs Destroy Good Jobs”,  the treatment of California’s green jobs boondoggle at “Red Ink and Green Jobs”, and the reporting on the Spanish solar power bubble at “Mr. President Please Think of Spain – The Iberian Solar Power Bust”.