Category Archives: Government Issues

the root of the problem

More on Political Polarization

More on Political Polarization

This message is written just prior to knowing the results of the 2018 mid-term election and will be posted a few months afterward. My hope was that we could vote for the individual and not along party lines. The two party-system along with the encouragement to vote a straight “party” ticket lies at the base of many of our problems.

The emphasis on the extremes in both parties by the media tends to exacerbate this issue. The fact is that the majority of representatives in both parties have views much closer to the political center. If you are a registered Democrat and your party has voted an extremist as their candidate please considerate the more moderate Republican candidate. The reverse goes for a registered Republican (in my opinion). If both candidates are extremists or support extreme agendas then consider voting Libertarian.

If we would elect candidates that have more moderate views and express an interest in working with all of their counterparts (regardless of party affiliation) for effective legislation then there is a chance we can make progress on the most important issues facing our country.

The really important issues that will determine if America has a chance to “Be Great Again” have been the subject of numerous prior postings to my blog. These are tough issues, but ones which moderate representatives should be able to enact effective legislation. The budget deficit, our massive unfunded liabilities, our broken healthcare system and funding for Social Security should top that list. What we do not need is more special interest legislation or legislation that support a particular political agenda. While topics like immigration are important, they pale in comparison to the financial ruin we are facing if we do not face up to the big money issues.

There are massive amounts of “fake” news items out there. Unfortunately, when we encounter a message which tends to support our established political view we tend to accept it blindly and even pass it along to friends without checking out the validity of the claimed “news” item. There are several facts check sites which are valuable is checking the veracity of an alarming news claim. Among then is Snopes. While using this source solely is not always the best method it is generally reliable. It is a valid starting point for researching “truth”. Conversely, if you see news that appears fake to you because it is averse to your current viewpoint consider using the same sources to determine its invalidity.

Perception tends to rule the day, regardless of the truth or the facts. What we “believe” to be true is merely perception and often not fact.

Renewable Energy

Chapter 104 Renewable Energy

Maximizing our ability to produce oil & gas just makes good economic sense, in the short term. The reason I say “short term” is that this resource is not infinite. My longer-term concern is that, as a country, we are not placing a high enough priority on developing renewable energy sources. There is no question that these most of these sources (other than hydroelectric & nuclear) will lead to higher costs for energy. Some argue that when the costs associated with the carbon footprint are added to the cost equation the increased costs for “renewables” may not be too excessive. I have hard data on this assertion.

Regardless, development of renewables is an area where the USA is not taking a leadership role. We have the ability to develop and also improve renewable technology. The issue is simply one of priorities. In that regard short term almost always trumps the longer view. There are 25 countries that produce 80% or more of their electricity with renewables and over 100 that produce more than the US which stands at 14%

It is important to take a look at what strides other countries have made regarding renewables:

List of countries by electricity production from renewable sources

From Wikipedia, the free encyclopedia

Country Year Renewables as % of total
generation
Generation, all sources
(GWh)
Total renewable
(GWh)
Hydropower
(GWh)
Wind power
(GWh)
Biomass and waste
(GWh)
Solar power
(GWh)
Geothermal
(GWh)
Wave and tidal
(GWh)
Ref
Albania 2015 100.0% 5,866 5,866 5,866
Bhutan 2015 100.0% 7,732 7,731 7,731
Ethiopia 2015 100.0% 10,341 10,337 9,577 760 0
Iceland 2015 100.0% 18,558 18,554 13,541 10 5,003
 Lesotho 2015 100.0% 600 600 600
Nepal 2015 100.0% 3,493 3,493 3,461 32
Paraguay 2015 100.0% 55,191 55,190 55,190
Congo (Kinshasa) 2015 99.8% 8,852 8,837 8,827 10
Costa Rica 2015 99.1% 10,725 10,623 7,986 1,080 179 3 1,375
 Malawi 2015 99.1% 2,120 2,100 2,100
Norway 2015 98.5% 142,381 140,240 137,306 2,515 419
 Tajikistan 2015 98.5% 16,977 16,731 16,731
 Namibia 2015 97.9% 1,519 1,487 1,487
 Zambia 2015 97.1% 13,285 12,905 12,905
Laos 2015 96.5% 11,460 11,060 11,060
Belize 2015 95.2% 248 236 236
Uruguay 2015 89.1% 13,564 12,086 8,183 2,065 1,788 50
Kenya 2015 88.2% 9,568 8,435 3,749 60 122 24 4,480
Burundi 2015 87.0% 230 200 200
 Mozambique 2015 87.0% 19,579 17,035 17,035
 Central African Republic 2015 86.2% 174 150 150
Afghanistan 2015 86.1% 1,034 890 890
 Kyrgyzstan 2015 85.8% 12,803 10,989 10,989
New Zealand 2015 80.8% 42,912 34,689 24,292 2,333 620 33 7,411
 Uganda 2015 80.8% 3,235 2,615 2,615
Austria 2015 80.0% 56,940 45,553 34,919 4,561 5,190 883 0
United States 2015 14.0% 4,097,027 572,409 249,080 190,719 77,660 39,032 15,918    

Keynes vs. Friedman

Keynes vs. Friedman

John Maynard Keynes, who died in 1946, and Milton Friedman, who died in 2006, were the most influential economists of the 20th century. As a side note Keynes was 6’ 7” & Friedman was 5’ 0” (not that their physical stature has any bearing on the validity of their theories)

Please understand that I most likely will oversimplify the theories of these genius economists. The only “C” I made in Graduate School was in macroeconomics so this area is a definite weakness for me. However, the point I hope to make will not depend entirely on my understanding.

Keynes theory was in part based on the government’s role in facilitating the country’s recovery from the Great Depression. The WPA, PWA and eight other work programs of the 30’s combined with the war effort of the early 40’s resulted in near full employment and an economic boon that fueled the post war era and established the USA as the dominant economic super power of that era. Obviously, his theory is the basis of the current Democratic Party’s economic thinking. Deficit spending can be an effective method of stimulating the economy.

What many folks tend to forget is that Keynes was a proponent of running government surpluses during good economic times. He also warned that exceeding a 75% debt to GDP ratio should be avoided and doing this would be a sign of future economic disaster. The current ratio stands at 105.53% and it is growing! Keynes would be appalled.  Can you imagine what Friedman would say?

Friedman has been the darling of Republicans. He has opposed government deficits and his theory was that the best economy would be achieved in a free market system without government inference. Only monetary policy adjustments should be used to stimulate or retard growth.

Based on these competing theories I would have assumed that the Democrats would have been primarily responsible for the debt epidemic, but it turns out I was wrong. Actually, both parties have been co-conspirators. If you would like to see the details on this I would refer you to a prior posting on this subject titled: Two party System – Summary of budget results for the Parties which was posted on 2/13/2016.

I suggest we evaluate our elected officials by what they do and not what they say. The massive build up in our debt is evidenced by the following 50-year record:

Fiscal Year  Deficit   (in billions) Debt Increase (by FY)  Deficit /GDP Events Affecting Deficit  
1970 $3 $17   0.3% Recession.
1971 $23 $27   2.0% Wage price controls.
1972 $23 $29   1.8% Stagflation.
1973 $15 $31   1.0% End of gold standard.
1974 $6 $17   0.4% Budget process created.
1975 $53 $58   3.1% First Ford budget.
1976 $74 $87   3.9% Stagflation.
1977 $54 $78   2.5% Stagflation.
1978 $59 $73   2.5% First Carter budget.
1979 $41 $55   1.5% Volcker raised rates to 20%.
1980 $74 $81   2.6% Recession. Iran oil embargo.
1981 $79 $90   2.4% Reagan tax cut.
1982 $128 $144   3.8% Reagan’s 1st budget.
1983 $208 $235   5.6% Jobless rate 10.8%.
1984 $185 $195   4.5% Increased defense spending.
1985 $212 $256   4.8%
1986 $221 $297   4.8% Tax cut.
1987 $150 $225   3.1% Market crash
1988 $155 $252   2.9% Fed raised rates.
1989 $153 $255   2.7% S&L Crisis.
1990 $221 $376   3.7% Desert Storm.
1991 $269 $432   4.3% Recession.
1992 $290 $399   4.4%  
1993 $255 $347   3.7% Clinton signed Balanced Budget Act.
1994 $203 $281   2.8% First Clinton budget.
1995 $164 $281   2.1%  
1996 $107 $251   1.3% Welfare reform.
1997 $22 $188   0.3%  
1998 ($69) $113  (0.8%) LTCM crisis.
1999 ($126) $130  (1.3%) Glass-Steagall repealed.
2000 ($236) $18  (2.3%) Surplus.
2001 ($128) $133  (1.2%) 9/11 attacks. EGTRRA.
2002 $158 $421   1.4% War on Terror.
2003 $378 $555   3.3% JGTRRA.
2004 $413 $596   3.4%  
2005 $318 $554   2.4% Katrina. Bankruptcy Act.
2006 $248 $574   1.8% Bernanke chairs Fed.
2007 $161 $501   1.1% Iraq War cost.
2008 $459 $1,017   3.1% Bank bailout. QE.
2009 $1,413 $1,632   9.8% Stimulus Act.
2010 $1,294 $1,905   8.6% Obama tax cutsACA.
2011 $1,300 $1,229   8.3% Debt crisis.
2012 $1,087 $1,276   6.7% Fiscal cliff.
2013 $679 $672   4.0% Sequester. Government shutdown
2014 $485 $1,086   2.7% Debt ceiling.
2015 $438 $327   2.4% Defense = $736.4 b.
2016 $585 $1,423   3.1% Defense = $767.3 b.
2017 $665 $672   3.4% Defense = $812.3 b.
2018 (est) $833 $1,271   4.0% Defense = $824.7 b Trump tax cut.
2019 (est) $984 $1,187   NA  Trump tax cut
2020 (est) $987 $1,198   NA Trump tax cut

Note that the estimated deficit for 2018 that was published many months ago had already been exceeded with 35 days to go in the year. At a rate of over $2 billion a day the actual 2018 deficit will exceed $900 Billion and the national debt will increase by over $1.3 trillion, approaching $22 trillion by years end.