Thursday, April 29, 2010

SB 1070 Arizona and Illegal Immigration


Senate Bill 1070 was passed by the Arizona House and Senate and signed by Governor Brewer, drawing both criticism and praise within the state.

Police officers will be made responsible for checking immigration status as well as given the power to stop people who might be illegal immigrants to check their papers. In the hands of a repressive police force, this law is dangerous.

On a practical level, I don't think the cops are interested in repressing or hassling anybody and that they now have plenty to do managing public safety concerns. The role of local police in our society has been to maintain order.

In order to maintain order, several criteria must be enforced:

• Traffic safety

• Immediate violence prevention

• Investigations into violence

• Enforcing court orders

This maintains continuity and consequences and preserves the fabric of our society.

The attitudes that created this law, will not be solved by this law. Let us think about Mexico and the Cartels for a while. There are a few facts on this that should be noted:

• Increasing violence in Mexico against police and Federales

• Rival factions in Mexico are competing for a market share of the USA drug trade

• The Cartels are reported to have $$$$$

• Is the Mexican government in danger of falling?

• the last Mexican election was quite close, with the populist candidate losing

• Recession has caused Mexicans to return to Mexico from USA, losing income

• Mexico produces about 450,000 more people a year than they have jobs for.

• The USA as population outlet for Mexico has slowed down due to higher unemployment in the USA

• High unemployment or underemployment rates in Mexico

• The USA has a law giving citizenship to anyone born here

• Arizona/Mexico is part of an ancient migration route

• Hispanics settled in what is now Arizona during the 1500s

• Anglos settled in what is now Arizona mostly after 1850

Recent history needs to be reviewed:

• During the subprime boom, Developers and Builders dominated Arizona politically

• Large numbers of undocumented workers were hired by developers and builders

• Mexicans heard about the good jobs available and headed to the USA

• Cultural change caused by the influx of Hispanic workers upset some residents

• Existing medical and educational services are used by undocumented workers

• Resentment over undocumented workers rose as unemployment grew

• Violence from Mexico appears to be spilling over into the USA

• An Arizona rancher was killed on his own land, apparently by a trespasser from Mexico

• Drug cartels in Mexico continue to feed the demand for drugs in the USA

• Illegal immigrant apprehensions are down in Arizona as jobs became scarce

• Federal action on illegal immigration has been fragmented and ineffective

• Some politicians are asking for militarization of the USA/Mexico border

Is illegal immigration a public safety issue? The immigrants have criminals among them, like any other human group. The drug cartel violence, drop houses and coyotes give the Mexican nationals a bad reputation, but the reality is that most illegal immigrants are peaceful people trying to find work, have children in the USA and build a better life for themselves and their families. Many of them send money to Mexico in support of impoverished relatives. Some of them ask for medical help and they all send their children to school. These human needs cost money to fulfill and the state of Arizona is bankrupt. Don't wait for the government of Mexico to offer to help pay for these services their citizens are receiving while in the USA: no money has ever been sent to pay for these services or needs, although the money the illegals send home to Mexico is certainly welcome.

So we have a situation where the impoverished come to the USA to work, their presence utilizes state services, but no sovereign entity is picking up the extra cost. Therein lies the resentment. Mexico and the USA should refund the cost of these services to Arizona and the other states taking care of undocumented immigrants. WE NEED THE MONEY.

As for SB 1070, I regret the perceived need for such a law on the part of lawmakers. Law enforcement should be able to concentrate on public safety issues. It is increasingly obvious that immigration reform is needed on the federal level, whether or not special interests oppose action. This election year politicians are finally talking reform.

It is about time!

Friday, April 23, 2010

Responsible Capitalism

Responsible Capitalism

Are we capable of responsible capitalism? A definition of terms is in order. Responsible capitalism is defined as capitalism performed in such a way as to perpetuate the system as a whole as well as create profit for the individual. Reliance on short term thinking is a sign of decadence and eventual decline if the future is not considered when making present profits.

In the vernacular, "I got mine!" The carnival atmosphere of the Boom has now given way to sober reflection of how to cope with the aftermath of overproduction and subsequent surplus in the housing market. Derivatives are now known to be gambling but how the taxpayer ended up paying for losses incurred is beyond comprehension.

I have not read the new financial regulation legislation. It does look as if investigations for fraud are just beginning. The raters will now be rated and schemers will keep company with Madoff. Do the regulators and the appraisers really work for the lenders? This cozy relationship needs to be dismantled, distanced, anything to remove them from such proximity.

So the scheme unravels to begin with easy money pumped into the system from the government. Developers seize on this opportunity to get loans to build houses that were then sold to people who previously could not get credit. Since credit standards were apparently nonexistent why not charge more for the units and get more money on return? All they had to do was find an appraiser who would raise the appraisal on demand in order to facilitate more profit per unit.

This was a good deal for everybody, the developer, the builder, the broker.....These became the fodder of the subprime mortgage derivatives. Empty calories were these 'investments' touted to be good returns for investors, but were actually just failing vehicles for hedge funds to bet against. Who was not surprised when these derivatives failed?

But to forge ahead, we must plan for the future. We have Ponzi schemes and now we have Subprime schemes, both of which will be run by outlaws. At least we can now identify the scams. I can't help but wonder what the next scam will be. We can all pray for some morality to continue this economic system.

Profits expectations remain too high, with incredible luxury demanded, not just a comfortable living expected. In this world of excess human population, every rich man can be viewed as having the portions of many. I think some luxury is deserved for work, but not deserved for social manipulation resulting in profit, like the subprime scandal that morphed into an insurance scam betting on failure. So they created a scam and hit it big for a while. Clawbacks are hell. How about rebating the money cities, counties and states lost in the housing market crash instead of paying off foreign bankers and irresponsible moneylenders and brokers? The boom debt needs to be paid off. Who owes whom? Let the courts decide.

Friday, April 09, 2010



As with any problem solving set, the solution can only be achieved by a structured approach. Begin with the definition of the problem:

The state of Arizona is obligated to pay out more than the revenue amount.

Various approaches to solving this problem have been forwarded:

Spending must stay as is so we must raise the amount of revenue.
a. raise taxes
b. increase business activity and thus revenue through taxes
c. sell off assets
d. increase debt by borrowing to spend

Spending can be cut back and less revenue will be needed
entitlements take large part of revenue
constitutional amendment needed to change entitlements
cutbacks in discretionary programs
cutbacks in police and fire
cut salaries/pay

A new budget can be formed from scratch, using ‘necessary services’ as criteria earmarked for funding.
a. freedom to fund what is needed.
b. if default is declared, contracts are voided.
c. after basic needs like water, police, fire, sanitation are funded, then discretionary
spending for the remainder of the funds, if any.

The first two approaches have been melded and used. The net result was a continuing budget deficit and heavier debt load. The Constitution of Arizona is now a parody, as the debt load exceeds the stated limit. Permanent overrides are now discussed, yet nothing can be done about the mandated spending.

Bankruptcy. What will be paid first with cash? Police? Probably.
Will it ruin our credit rating? Should we worry about that? Didn’t somebody sign an agreement that our interest rates on borrowed money would go up if our credit rating slips?

Instead of wasting time trying to make taxpayers pay for what is forbidden to fund in the constitution of the state of Arizona, why not focus efforts on another referendum? How about a referendum to amend the referendum/initiative laws that requires a sunset clause of no more than 5 years of financial obligation with a specific project stated, instead of the current version of pure permanent entitlement, with no strings on the funds. A change in the law could also sunset all existing permanent entitlements.

Before voting anything budgetary, think does this add to entitlements, does this raise what we are obligated to pay out? Amending the constitution to allow for tax money to go to private religious schools will increase the educational obligation where none exists today. Not a good move. We can’t afford it and it is against the constitution. We can’t put teaching religions at the tax trough. Isn’t it against the Federal Constitution?

You can’t afford to pass legislation that increases spending. If this tax increase does not pass, more cuts must be made. A recent article in a local paper said that not passing this tax increase will result in the loss of x number jobs. This would not be necessary if all took a pay cut to allow for fellow workers to share in what funding there is. It used to be a game to see who would get the raise, it’s now not a game to actually have to cut back because the money is not there. The boom is over, the money and equity is gone and too many workers were hired then for to be paid now with the current revenue. It will work if they all take a pay cut. This will cut down on benefits costs. Should everyone’s taxes be raised in order to furnish high benefits for city workers?

Debt loads must be defined and prioritized. Water must be paid, because it is a source of revenue and a necessity. Default must be discussed.

Departments must be defined and prioritized into
a. nice to have
b. could survive without
c. necessary

Retaining those departments that bring in revenue might not be the cheapest in the long run, if ultimate social costs rise. Tax collectors never lose their jobs, I guess. It is still not obvious to me how paying more license fees, taxes and mandated insurance frees up more money to purchase inventory or spend on the open economy. Higher taxes and government fees take money out of circulation, leaving less to be spent elsewhere. The tendency of the Tucson solution set is towards higher taxes in the city, which will drive buyers elsewhere. The least mobile will be the hardest hit by higher city taxes. The net result might be less revenue. Businesses might leave Arizona if taxes go up.

As a finale, you have a huge job to do. I suggest that the bodies meet without all the hangers on. Meet among yourselves and discuss this budgetary problem the state is facing. Exclude the lobbyists, special interests, department heads and others with skin in the game. You have a huge responsibility and it is yours to handle alone.