Archive for the ‘Politics’ Category

How to Win in 2012: A Short Manifesto

Many conservatives are already gearing up for the 2012 Presidential elections.  There’s lots of votes, lots of debates, and lots of news to go through until the beginnings of the election season.  If conservatives are wanting to win, and win big, in 2012, it’s time to start acting like they want to win.

I think the most important area to focus on for 2012 is the so-called “middle of the road” or “independent” voter.  The left and right has already made up their minds on issues, and this is probably so for the middle.  Yet, when candidates are presented for the general elections, there are very few times a candidate is closer to the middle than the left or the right [I would even venture to say there's fewer people in the middle than what is claimed, but that's a different blog].  Those who do not identify with a party have to choose between a Democrat and a Republican [we are going to ignore 3rd party and other peripheral candidates since they realistically have no chance of gaining voters in the middle].  The Republican candidates, however, should NOT compromise and move to the middle.  Instead, they should convince the middle that they are the better candidate.

As conservatives write their blogs, post their links, and debate their side, it’s time to put aside ridicule and name-calling.  Conservatives must use respect, facts, and logic when debating and discussing issues.  Using cuss words or other derogatory phrases or names is not going to win those we have to win.  If we keep saying “President O-Bummer” or using the f-bomb every 5th word, we cannot attract those who are neutral, undecided or disaffected.  Using rhetoric, even if you really think it’s true, may turn off people.  It’s imperative that conservatives use facts, logic, and respect when defending core beliefs.  Here’s a more professional blogger’s opinion on defending your principles:’s-resolution-for-young-conservatives/

This may be hard, but admit when other conservatives have not stick to their principles.  Yes, it’s hard to call out allies, but you have to be up front and real to people.  It upsets me when allies defend allies for doing the same exact thing that those on the left are doing.  Changing your mind is one thing, but doing it just for political gain doesn’t cut it with people.

Next, hold incumbents accountable.  Here in Texas, lots of conservatives want the current Speaker of the Texas House of Representatives voted out when the new session begins.  I have received emails and a letter asking me to sign a petition to ask the Montgomery County-area Representatives to vote for a conservative Speaker.  However, it’s very likely that the 3 Representatives will vote for incumbent Speaker Joe Strauss.  So, what will happen to the 3 Representatives come March 2012 when the Republican primary is held?  Will people challenge them or vote them out of office, or will the same people that complained so much about Speaker Strauss again forgive and forget?  I am sick and tired of voters raising heck over several issues that the incumbent voted the wrong way, but then the same voters turn around and vote for that incumbent over and over again because they are more experienced or better than the Democrat.  When will it end?  When will the voters say “ENOUGH!”?  Sure, it’s great to go to tea parties and cover your car with bumper stickers, but if you don’t get out there and hold your elected officials accountable, then what good have you done?

And after all that, we must support whoever the GOP nominee is.  It is our job as Republicans to vote for the duly-elected nominee.  If we don’t get out in the primaries and vote, we should not complain that the GOP nominee isn’t conservative enough.  It’s unclear who the GOP nominee for President will be, but whether Romney, Palin, Pawlenty, or whoever is nominated by the voters, we must get out to vote and campaign for that nominee.  We cannot be divided because the candidate wasn’t your first choice (or second choice, or third, etc.).  We must be united, because the left will be.  Some conservatives complained when the duly-elected more-conservative candidate was elected in the primaries but not supported by Republican groups.  Same when it goes the other way – we have to get behind the candidate who was chosen by the voters, even if they aren’t as conservative as we would like.  No one is perfect, and no one is completely clean.  We have to give and take.

We on the right must remain committed to ensuring our country gets back on the right path.  We can’t let minor squabbles ruin things.  Let’s stay focused on the prize: November 2012.

Not Just Tax Cuts Alone…

President Obama just signed extensions of tax rates and credits that were due to expire at the end of the year. Without the current rates extended, I believe the economy would once again return to GDP shrinking and additional jobs lost. However, this is only one part of the equation. To really get the economy moving and get the federal budget balanced, serious reforms need to be made.

First, I am a HUGE fan of Rep. Paul Ryan. Back in 2008, he introduced his Roadmap for America’s Future. In it, he proposes a number of reforms that will make Social Security and Medicare more sustainable in the long run, changes to tax structure that helps individuals keep more of their money, and modernizes health care to help those who are higher risk or uninsurable obtain coverage they need. Many economists from varying sides of political thought have analysed it, and even those who disagree with parts of it appreciate Rep. Ryan for putting out an idea instead of just “saying no.”

Next, we have to comb through government expenditures to find inefficiencies, waste, and duplication. And yes, that includes the Departments of Defense and Homeland Security. From FY 2008 to FY 2009 (2009 is still considered estimated), net expenditures increased from $2.98 trillion to $4 trillion. A large portion of this, over $700 billion, is under the header of Commerce and Housing Credit. Any idea what that is? But from FY 2009 (est) to FY 2010 (est), expenditures went down a little over $400 billion. Even with the reduction of expenditures of Commerce and Housing Credit, increased expenditures in other sectors of the government offset those reductions (source: GPO).  Although I didn’t see the level of detail I was hoping for, Congressional budget leaders need to begin looking at areas that can be cut.  And don’t let the “earmark” argument distract you.

The recent $1.2 trillion omnibus budget proposed but died in the Senate included roughly $10 billion in earmarks.  For those of you not good in math, that’s less than 1% of the whole budget.  That’s a mere drop in the bucket compared to the whole budget.

The federal expenditure budget should be constrained to BELOW inflation + GDP growth… and that includes Department of Defense and Homeland Security.  Under full GOP control (we’ll include FY 2001 – 2006), average increase in expenditures was 7% (excluding Social Security and Medicare).  Under Democrat control of Congress (FY 2007 – 2010 (est)), the average increase was 10% (excluding Social Security and Medicare).  And while they’re at it, Congress must look at selling assets that are really money pits, such as empty office space (unless it’s practical to rent it out).

And finally, we must create an economic atmosphere of stabilization and competition.  Regulations and taxes are two of many factors that either keep businesses from expanding or move operations offshore.  I’m not advocating complete revocation of federal regulations and taxation, but this country needs is sensible rules that encourage expansion and investment while protecting consumers and punishing those that break the law.  Do you think someone like Goldman Sachs really cares if they make $100 billion through unethical means but turn around and settle with the SEC for $100 million (without admitting or denying fault)?  NO! The SEC needs to put the gauntlet down and really punish those that break the law (a la death penalty).

Sorry, I Don’t Like The Gold Standard (but I’m not pro-printing)

After a discussion on Facebook as to why I am not a proponent of the gold standard, I thought it was necessary to explain how I feel here.
What is gold? Gold is a metal, a commodity, a material used in various things. It’s been sought after by man since their creation. Many advocate using gold as a means of backing a currency. Their thought is that, among other things, if there is something backing the currency, the currency holds value relative to other world currencies.
Before currency was extensively used, economies worked on a barter system. If Tom has apples, he can trade them with Harry for oranges. In today’s society, we can equate this to Richard fixing a fence in exchange for me to mow the lawn. This system could not stay efficient in that what one person’s needs and/or outputs are not always the same from day to day. Tom doesn’t always need oranges, and I can’t always mow lawns. (“They let any Tom, Dick, and Harry be President… no offense Jefferson, Nixon, and Truman”)
Currency is a means of exchange that replaced the barter system. Tom may have apples to give away, and Harry may only have oranges to give in exchange, but Tom doesn’t need oranges. Instead, the two assign a value to the goods. They use some sort of base to assign value, whether they call it dollars, yen, or euros. Or, maybe they assigned a number of apples and oranges to fractional ounces of gold.
However, using fractional ounces of gold is quite inefficient. First, the value of gold is currently set around $1400/oz, so one needs 1/1400th of an ounce for $1. It’s impractical to carry around gold wherever you go. It would need to be weighed, and purity isn’t easily assessable. The amount of time needed to weigh and purity test makes the use of gold an inefficient use as a currency. (HEY! You gave me 1/1500 of an oz instead of 1/1400 of an oz!)
Next, gold standard proponents fix the amount of paper currency to the amount of gold on hand. We will assume $1 million of gold (1000 ounces at $1000 an ounce) is on hand at the Bank of Estay for simplicity purposes. Generally, gold standards fix the amount of money associated with an ounce of gold, so we will assume $1000 per ounce. We will also assume for this example that gold and money are readily interchangeable at the Bank of Estay. On the world market, if the value of gold goes down on the world market, citizens of Estayland can purchase gold (100 oz) then subsequently sell the gold to the Bank of Estay in exchange for dollars ($100,000). This would increase the amount of money in Estayland is increased and causes inflation of 10% ($1 million to $1.1 million).

Date Oz Gold in Bank Money in System
1 1,000 $1,000,000
2 1,100 $1,100,000

Same facts as above, except if the value of gold goes up, the citizens of Estayland could exchange their paper money for gold, then sell their gold on the world market. The amount of money in Estayland is reduced. In this scenario, 10% currency deflation would occur in Estayland ($1 million to $0.9 million; we assume that, all else equal, if more money in the system causes inflation, we must also assume less money in the system causes deflation. We also assume that after the transactions, the world value of gold returns to $1000/oz due to supply/demand rebalancing due to changes in supply).

Date Oz Gold in Bank Money in System
1 1,000 $1,000,000
2 900 $900,000

If you look at the Great Depression, countries that were on a gold standard stayed in the Great Depression for much longer than countries that were not. England abandoned the gold standard in 1931, and soon after its economy was on the path of recovery. The US, however, stayed on through 1933, which started recovery in 1934. (China supposedly had a silver standard and felt no effects)
Looking at this chart, it seems to suggest that personal incomes generally rose after a country abandoned the gold standard. Of course, it doesn’t necessarily prove my point since it doesn’t consider any other policies that each country could have put in place to also help personal incomes rise.
My argument is that even without a gold standard, the US$ is backed by not only the good faith and credit of the US government, but also the goods and services produced by Americans. Currency can be anything… paper, gold, diamonds, apples, water, or a lawn mowing. The value of a currency depends on what value others put on that currency medium. If you have a limited amount of paper dollars, then the value of those dollars are high. Same is true with gold, apples, water, etc. If you’re out in the middle of the Gulf of Mexico on a stranded cruise boat, a bottle of potable water has high value. If you’re in jail, a cigarette has a lot of value. If you’re an ice salesman, you’re not going to get a lot of value selling your ice to an Eskimo. And your gold isn’t going to be worth much when you’re in the middle of a desert (or post-Katrina New Orleans) when you’re thirsty and hungry for clean water and edible food.

Let me also make sure you understand that I am not a proponent of free-printing of money. The printing of money is, all else equal, a force that causes inflation. The money supply must be kept in check to ensure that prices of goods and services are orderly. Monetizing debt is not a solution to today’s problems.

Units Currency Currency per Unit
1000 $1100 $1.10
1000 $1000 $1.00
1000 $900 $0.90

As you can see in this table, increasing the amount of currency (or personal income) in the system causes inflation, while decreasing the amount of currency causes deflation. Since units (or we can also call it GDP) stayed the same, an increased supply of dollars made the value of the dollar worth less, requiring more dollars to buy a unit.

Units Currency Currency per Unit
900 $1000 $1.11
1000 $1000 $1.00
1100 $1000 $0.91

Here, the GDP is fluctuating while the supply of currency (income) remains the same. What this table is designed to show is that if GDP falls with the amount of currency staying the same, inflation will occur since not enough units are there to fulfill demand, and deflation will occur if demand (GDP) increases since there’s too many units chasing too few dollars.
So I guess what I’m trying to say is… a dollar, an ounce of gold, or whatever you choose to use as your currency is only worth what you say it’s worth. Currency is merely a medium of exchanging an asset for an asset, and using a paper dollar is most efficient way of effecting trade. A gold standard is nothing more than a shackle that can hinder trade. Yet, the amount of money in the system must be responsibly managed. In essence, we’re probably still screwed either way.