How Foolish Are We to Stand for Government Motors?

Wayne Root, who ran for VP on the Libertarian ticket points out that every time the government tries to run something, it's driven bankrupt or nearly so: Social Security, Medicare, Amtrak, education (large and mushrooming budgets yielding insignificant improvement). And now it's going to attempt to, with our tax dollars, run GM, allowing large amounts of car costs to go into union pockets instead of into increasing the quality of its vehicle parts and assembly. And we, like sheep, continue in our Obama-induced stupor and say okay to Government Motors. Here's Root's argument, which is an excerpt from his forthcoming book: The Conscience of a Libertarian.

Government Can't Run a Brothel
By Wayne Allyn Root

So we've just put government in control of General Motors? Well that should solve the problem. The same people that have run the American economy into the ground now think they can run an auto company. Has anyone thought this through? Government loses money at virtually everything it does and touches. Virtually every level of government operates at a loss (deficit). Government can't spell, let alone achieve, profitability at anything. Government is the most disastrous and inept failure at everything it does of any organization in the world. It only survives its colossal mismanagement of everything by raising taxes and therefore confiscating more money from the private sector- filled with people who are competent and do know how to run a business and achieve profitability. In other words, government only survives by confiscating money from smart people in the private sector to pay for its mismanagement, waste, corruption and nonstop failure and losses.

Government runs Social Security. It is fast approaching bankruptcy. Government runs Medicare. It is fast approaching bankruptcy. Government runs education. Education runs through tens of billions of dollars each year and yet somehow manages to produce worse results virtually every year (and always demands more as a reward for utter failure). When government took over education, America's children were ranked among the best in the world. Today our children's educational record is among the worst in the industrialized world.

Government took over Amtrak in the same way it took over GM, promising a quick return to profitability. Amtrak bleeds losses every year for the U.S. taxpayer. In 1970 when Amtrak was founded, $300 million was approved by Congress to run it. The government predicted profitability within 5 years. That was 39 years and over $30 billion dollars in losses ago!

Government is promising (again) a quick return to profitability. Yet these are the same government bureaucrats who have produced a deficit of $1.75 trillion per YEAR. These same government bureaucrats have produced a national debt of somewhere between $60 trillion and $100 trillion (depending on how many years out you predict the responsibilities of Social Security and Medicare). Our national debt is now larger than world GDP (every dollar created in the world each year). You actually think these same people (with the track record above) can takeover GM and turn a company that loses billions per year into a profitable company in a short period of time? We've now put the world's most inept and corrupt bureaucrats in charge of GM, and we expect improvement?

But here's the clincher. In my adopted home state of Nevada, prostitution is legal (and always profitable). It is impossible to lose money in the world's oldest profession. The most profitable brothel ever was the infamous Mustang Ranch. The owner earned so many tens of millions of dollars, that he grew fabulously wealthy. But he “forgot” to pay his taxes. He was indicted for tax evasion, escaped to Brazil, and is still today a fugitive from justice. The U.S. government took over the Mustang Ranch. The most successful and profitable brothel in America went bankrupt in one year under government management. That ladies and gentleman, no matter how you feel about brothels, tells you all you need to know about the ability of government to run a business.

One more “small problem” with the government's plans for GM. They are keeping unions in charge. Virtually nothing has changed. The same unions that destroyed GM with bloated salaries, pensions and healthcare for life go on running the workforce (with a few small changes for “show”). Yet the government is also demanding that GM change strategy and focus on building small cars with green technology. Those same smaller cars are the least profitable that can be built. There is very little profit per car. The big gas guzzling cars and trucks actually had the highest profit margin. Yet even these big trucks and SUV's could not pay for the bloated union compensation plan that destroyed GM and Chrysler. Now we have the worst of all worlds- companies run by Obama and his minions- all people with ZERO business experience- demanding that we keep paying unaffordable union wages, while we build small cars with lower profit margins. Are you starting to understand why our country is $100 trillion in national debt? Our country is run by people who couldn't run a lemonade stand. The only thing that Obama and his hand-picked executives are capable of doing successfully is fining or arresting the lemonade stand owner for not getting the proper government licenses.

The moral of the story? Nevada is a state where the constitution bans income taxes and politicians (we limit the time politicians can meet and serve), but welcomes guns in the hands of law-abiding citizens. We have common sense in plentiful supply. Here's my common sense tip of the day: If the federal government can't run a brothel, they certainly can't run GM. The same people responsible for massive deficit and debt, losses, waste and mismanagement on the federal level as far as the eye can see, should not be put in charge of any company. We are in deep trouble.

Government Waste, Yet Again

Will we never learn? Because government is so unaccountable for its use of money, so incapable of policing whether our taxpayer dollars are spent properly, our tax dollars nearly always buy far less than what we could get if we rather than the government decided how to spend it.

This latest example is reported in the current (May 4) issue of Time magazine.

"In an April 21 report to Congress, the special inspector general overseeing the government's $700 billion financial bailout offered some grim news and a stern warning. Neil Barofsky said he had begun 'almost 20 preliminary and full criminal investigations' into allegations of fraudulent use of bailout funds. He urged the government to revamp the bailout rules so it can better track spending. According to Barofsky, the bailout's Public-Private Investment Partnership program, in particular, is 'inherently vulnerable to fraud, waste and abuse.'"

Obama Exaggerates Expert Consensus

President Obama claims broad expert agreement with his economic and global warming plans.

Unfortunately, it's untrue. First, let's look at Obama's stimulus plan:

From the Cato Institute's Fiscal Reality Center:

President Obama says that "economists from across the political spectrum agree" on the need for massive government spending to stimulate the economy.

In fact, hundreds of leading economists disagree including Nobel laureates and other prominent scholars. They have all signed the statement that appears in the Cato Institute's ad in the New York Times and in other national publications.

With regard to the need to spend massively to stop global warming, Obama has appointed only true believers to his science, environment, and energy committees. Yet hundreds of leading climate scientists dissent from the so-called consensus. Indeed, the International Conference of Climate Change to be held this March "calls attention to new research that contradicts claims that the moderate warming during the 20th century was primarily man-made and is a crisis." Speakers will include dozens of eminent scientists including Richard Lindzen .the Alfred P Sloan Professor of Meteorology at MIT, Willie Soon, physicist at the Solar and Stellar Physics Division of the Harvard-Smithsonian Center for Astrophysics, and Lord Christopher Monckton, chief policy advisor to Britain's Science and Public Policy Institute and former advisor to Prime Minister Margaret Thatcher.

Sure, "economists (and scientists) from across the political spectrum" support Obama's policies but Obama carefully avoids saying whether it's 1 or 1,000 right-of-center experts. Could Obama be taking word-parsing lessons from Bill Clinton? Is IS Is.

Obama's Stimulus Spending Won't Stimulate Much

In Wednesday's, New York Times, University of Chicago economics professor Casey Mulligan argues that Obama's stimulus package in fact will create few new jobs.

For example, one of Obama's priority spending areas is health care. But there already is near full employment in health care. The U.S. has to import nurses from countries such as the Philippines to meet the current need. Indeed, health care is the one field that has increased employment during every month of the current recession. Spending more taxpayer money on health care will mainly just move health care workers from one employer to another--or result in importing more health care workers. It won't, as Obama promises, create many new jobs

Even in Obama-priority fields in which many jobs have been lost in the recession, for example, infrastructure construction, few jobs will be created by the Obama spending spree. Mulligan points out that many, although certainly not all, the workers laid off from residential construction have already picked up work in commercial construction. Too, much construction work is done by illegal immigrants, for whom Obama has promised to create a path to citizenship within his first 100 days in office. So, ironically, the largest stimulative effect of Obama's infrastructure spending may be to create jobs for illegal immigrants.

Mulligan additionally points out that while the large majority of the recession's job losses have been to men, Obama's economists report that half the jobs Obama will create will be aimed at women (and minorities.) So, many of those unemployed men will remain jobless. That is yet another reason why Obama's stimulus plan will not provide as many new jobs as he promises.

Of course, even more problematic is this question: "Where will the trillion dollars to pay for the unprecedentedly massive (and dubious) spending come from? "It will come from the taxpayers, who if instead, were allowed to keep their money would spend much of it on products and services, which would create real, new, enduring jobs. And of course, the Obama spending spree will also be funded by the tax dollars from successful businesses, which if instead were allowed to keep their money, would use much of it to expand their businesses and hire more people.

Sure, the Obama Spending Spree will yield a short-term boost in the economy by taking taxpayer money to create some (temporary) jobs, prop up badly run banks and car manufacturers, invest in private-sector-rejected alternative energy and other schemes, and bail out people who bought more home or took on more credit card debt than they could comfortably afford. But long term, that won't stimulate the economy. It will kill it.

It's only human to be tempted to bail out the most failing people and businesses but as every triage medic in the battlefield knows, you'll save more lives by using the limited resources to help those most likely to recover, not those who scream the loudest.

That means allowing successful people and businesses to keep their money, not have the government forcibly take it from them to give to the unsuccessful. Real, sustainable, enduring growth comes not from tax increases but from tax cuts.

Why Obamanomics Will Fail

This letter was forwarded to me by Jeffrie Givens, a regular reader of this blog. 

I do not know if the letter is real or not but it explains, better than I have on this blog, why Obama's economic spending and taxation plan is likely to make matters worse, much worse.

To All My Valued Employees:

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges.

However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.

Of course, as your employer, I am forbidden to tell you how to think politically- it is against the law to discriminate based on political affiliation, race, creed, religion, etc. Yes, the elections are now over, but as Americans, we still have a powerful voice through letter writing, placing phone calls to Congress, and volunteering our time & effort for causes near & dear to us. After all, they were elected to represent you. Please do (or not do) whatever you think will serve your interests and the interests of the country the best.

However, let me tell you some little tidbits of fact which might help you decide what is in your best interest.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You've seen my big home at last year’s Christmas party. I'm sure all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don't see is the back story:

I started this company 12 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you. My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business – hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom's for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn't look like it was birthed in the 70's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the
office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, shit, and breathe this company every minute of the day.

There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden -- the nice house, the Mercedes, the vacations... you never realize the back story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.
Yes, business ownership has is benefits but the price I've paid is steep and not without wounds.

Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why: I am being taxed to death and the government thinks I don't pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you'd quit and you wouldn't work here. I mean, why should you? That's nuts.

Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don't understand ... to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the mud of America is the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this?

It's quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem anymore.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

While tax cuts to 95% of America sounds great on paper, don't forget the back story: If there is no job, there is no income to tax. A tax cut on zero dollars is zero.

So, when you make your decision whether to support or fight against the President Obama’s tax & economic plans, ask yourself, who understands the economics of business ownership and who doesn't? Whose policies will endanger your job?

Answer those questions and you should know who might be the one capable of saving your job. While the media wants to tell you "It's the economy stupid" I'm telling you it isn't.

If you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me in the South Caribbean sitting on a beach, retired, and with no employees to worry about.

Signed,
Your Boss