Capitalism/Free Enterprise System
The Free Enterprise economic system is not a game of ‘keep away’ played as a child. Free Enterprise is a game designed to keep the system running while making a profit. If the means to a profit eventually destroys the system, then this means is immoral to use. Morality is actually subjective as used by people and the legal system only covers a small portion of business practices. A sense of responsibility has been absent in the past, either that or a blissful ignorance or indifference to the consequences of the business model deemed to earn a profit. Ms. Bair indicated that compensation practices be linked to FDIC insurance rates, as an insurance hazard that promotes risky investments. Is it really true that investment houses funneling investors’ money into mortgage ‘products’ bet against success and collected insurance money when the mortgage ‘products’ failed while the investors they counseled lost their cash? And what about dividend payments? Are these boards and executives feathering their own nest using tax money and the capital invested by others? Many questions remain to be answered.
Of course the excesses produce regulation and restrictions. Yet they still want more derivatives and other investments that produce nothing but commissions for a few, very expensive people. These derivatives and hedges should be relegated to organized gambling in Nevada or let the Indians handle them.
Formerly known as killing the goose that lays the golden egg, this destructive behavior
must be discouraged, in favor of a less phenomenally profitable enterprise that makes a good living and keeps work going. The short term profit taking model should be analyzed carefully before implementation, as to whether the economy will be perpetuated in a healthy condition after the profit taking. Is that so much to ask on a moral level or must the government create regulation? The answer lies before us.
Now the investment banks that were intensely subsidized for a short time are hugely profitable and plan to pay themselves large sums for handling the government money. Unemployment is about 10%, social services are strained, the real estate market overbuilt and foreclosures rising. Local governments talk more taxes and insurance is in danger of becoming a mandated racket, while layoffs continue.
Can all this be blamed on the mortgage bubble? Easy money and no oversight pumped up real estate values so the securities sold by the investment banks would be worth more and they could make more mortgage ‘products’ for their clients while betting that these same securities would be worthless, collecting on insurance paid by the Feds through the ‘too big to fail’ authorization. Clients sold these ‘securities’ lost out as the foreclosure rate surfaced and the lack of loan oversight became a national scandal. Is buying insurance on something you know to be questionable or even worthless a crime? Fraud? Claw back that money.
Populism aside, people feel ripped off, gasoline prices are creeping up and the President is talking taxes on the investment bank bubble. Unbridled capitalism does become Darwinism as the available resources become controlled by a few manipulative individuals. Better yet, if these ‘new entrepreneurs’ can make up their own investment games without oversight, force the government to pick up the losses and come out of it with huge sums to divvy up, just like the train robbers of old, they think they won the game of keep away.
A brief return to the social unrest of the 20th century in the United States in my memory and knowledge of history tells me that the economy is often cause of unrest as manifested by bitter elections, corruption, recession, fewer jobs, riots and more regulation. The phenomena of bus rides past AIG mansions, rumors that Goldman Sachs people find it easier to get a firearms permit, or that GS people had swine flu shots before anyone else fan populist flames. I thank the media for publicizing the outrageous ripoffs and giant payoffs. I hope our Legislators order a full investigation of the ‘too big to fail’ authorizations. If they do not, expect them to be voted out. Difficult for incumbents in times like these.
Responsible capitalism? Is that possible? Regulated responsible capitalism? Foresight and careful decisions will perpetuate our civilization and allow free enterprise to function within a framework of sustainability in this new environment of 2010.
Monday, January 18, 2010
Saturday, January 09, 2010
Tucson City Council
Recall of City Council 2010
What do I think of the recall?
What caused the recall?
A lack of focus in Rio Nuevo contributed to public distrust. One project should be the focus until that project is completed and paid for. Squandering money on consultants resulted in a few benefiting hugely from Rio Nuevo while few jobs were created. Most of the money was skimmed off by those in the know before the job benefits actually reached the people. As for the public structures to be created with this money in Rio Nuevo, they do not exist, the money is gone and the fund encumbered for $80,000,000. We see a very few benefitting at the expense of the rest of us as the city staggers under a mountain of debt service. And there are no new museums or parade grounds for the people to enjoy.
I think an investigation and the ongoing audit will determine where the money went, what it was spent on and who got it. How about a list of people/enterprises that received Rio Nuevo money, in order of amount? This is public information. Let the audit begin when the first Rio Nuevo crew was ousted and the new regime took over.
Insular attitudes, insider mentalities, a lack of long term planning, lack of focus in Rio Nuevo, too much debt, and high unemployment have resulted in a negative public attitude. Recalls are a sign of public unrest and competition for scarce resources. The Rio Nuevo money was a rare opportunity for this community that has come to just another credit line to be obligated with nothing to show for the money. Too many people were cut out of the deal. Too much in the hands of too few. A few jobs for some very expensive people. Free land for select individuals. Rent subsidy for some and not others.
The ‘discovery’ of the $32,000,000 budget deficit just after the election left some people wondering if this information were withheld in an attempt to influence the election.
And now after all this public debt and the recession, we cannot afford more taxes and fees. With the city scrounging in our pockets for money and high unemployment rates, citizens need relief. The recall interests people because the city is insolvent and the Council raised fees and might be considering raising taxes.
What do I think of the recall?
What caused the recall?
A lack of focus in Rio Nuevo contributed to public distrust. One project should be the focus until that project is completed and paid for. Squandering money on consultants resulted in a few benefiting hugely from Rio Nuevo while few jobs were created. Most of the money was skimmed off by those in the know before the job benefits actually reached the people. As for the public structures to be created with this money in Rio Nuevo, they do not exist, the money is gone and the fund encumbered for $80,000,000. We see a very few benefitting at the expense of the rest of us as the city staggers under a mountain of debt service. And there are no new museums or parade grounds for the people to enjoy.
I think an investigation and the ongoing audit will determine where the money went, what it was spent on and who got it. How about a list of people/enterprises that received Rio Nuevo money, in order of amount? This is public information. Let the audit begin when the first Rio Nuevo crew was ousted and the new regime took over.
Insular attitudes, insider mentalities, a lack of long term planning, lack of focus in Rio Nuevo, too much debt, and high unemployment have resulted in a negative public attitude. Recalls are a sign of public unrest and competition for scarce resources. The Rio Nuevo money was a rare opportunity for this community that has come to just another credit line to be obligated with nothing to show for the money. Too many people were cut out of the deal. Too much in the hands of too few. A few jobs for some very expensive people. Free land for select individuals. Rent subsidy for some and not others.
The ‘discovery’ of the $32,000,000 budget deficit just after the election left some people wondering if this information were withheld in an attempt to influence the election.
And now after all this public debt and the recession, we cannot afford more taxes and fees. With the city scrounging in our pockets for money and high unemployment rates, citizens need relief. The recall interests people because the city is insolvent and the Council raised fees and might be considering raising taxes.
Wednesday, December 30, 2009
Tucson Budget Crisis
Year end musings on the sad budgetary state of affairs of Tucson, Arizona, USA.
Tucson had an election and I pray the council will succeed in the difficult task ahead. Some guidelines for solving the budget cutting problem should be in place before the task is attempted. Prioritizing objectives must be done.
In this analysis the special place of the responsibilities of cities must be considered first.
The city of Tucson is responsible for providing essential services. As a definition of essential must be made, I say that the following services are essential.
I. Essential
Law enforcement
Fire protection
Water and sanitation
Garbage collection
Prosecution/incarceration/courts/public defender
Records and Elections
Related Administrative
Other services are ongoing but are not essential in the short term. These must be cut back what percent?
II. Secondary (not in order of importance)
City manager
Real estate
Zoning
Rio Nuevo
Community services
MLK revitalization(no longer low income)
Housing Management
Community development
*Audit Housing Assistance
Convention Center
Director/administration
Event development
Event services
Finance
General Services
Information technology
Neighborhood resources
Parks (explore alternate way to keep open, caretaker system)
Procurement
Transportation
To continue this categorization, the following must be cut heavily or discontinued.
III. Non-Essential (not in order of importance)
Intergovernmental relations: elected officials
Development Services skeleton crew for the downturn
Budgetary Requirements environmental services
General Services architectural and Engineering
Fleet services could be cut overall by having fewer vehicles online
Internal service fund
Is golf a net economic boost for Tucson? How much does golf generate?
Human Resources
Urban Planning and Design
Non Departmental: mishmash of causes needs weeding out
Debt Service
Cutting the budgets of the secondary and non essential services is necessary. The essential services could use an administrative reorganization and review of expenses in order to shave off a percent of their budgets. They should be given further goals to meet.
Debt service is huge and the debts should be restructured to meet existing economic conditions, in order to prevent a default. I would rather pay police and fire protection than pay debt service, if the choice has to be made. If the pundits say Tucson will ruin its credit, perhaps this is a blessing in disguise, since about ¼ of the budget goes to debt service. The city cannot afford this debt load and certainly does not need more debt in any form. Look at it this way: if you count the debt for water systems, the debt service rises to $140,788,980, which is about 29% of total stated expenditures. I wish it were impossible for elected officials to create debt that lasts beyond their term. With so much of the expenditures tied up in debt service, flexibility appears to be limited to employee pay cuts and departmental expenditures in the form of cuts in services to residents.
What a plan! Raise taxes and continue the level of debt service no matter what happens to essential services? Not a good plan. Tell them to take a hike after you have cut these departments and downsized the budget, if that is still needed. We do not neglect the weak in order to pay debt service. We do not lay off Police and Fire to pay debt service.
Difficult decisions are ahead. May you all succeed in this task.
Dorothy Prater Niemi
December 2009
Tucson had an election and I pray the council will succeed in the difficult task ahead. Some guidelines for solving the budget cutting problem should be in place before the task is attempted. Prioritizing objectives must be done.
In this analysis the special place of the responsibilities of cities must be considered first.
The city of Tucson is responsible for providing essential services. As a definition of essential must be made, I say that the following services are essential.
I. Essential
Law enforcement
Fire protection
Water and sanitation
Garbage collection
Prosecution/incarceration/courts/public defender
Records and Elections
Related Administrative
Other services are ongoing but are not essential in the short term. These must be cut back what percent?
II. Secondary (not in order of importance)
City manager
Real estate
Zoning
Rio Nuevo
Community services
MLK revitalization(no longer low income)
Housing Management
Community development
*Audit Housing Assistance
Convention Center
Director/administration
Event development
Event services
Finance
General Services
Information technology
Neighborhood resources
Parks (explore alternate way to keep open, caretaker system)
Procurement
Transportation
To continue this categorization, the following must be cut heavily or discontinued.
III. Non-Essential (not in order of importance)
Intergovernmental relations: elected officials
Development Services skeleton crew for the downturn
Budgetary Requirements environmental services
General Services architectural and Engineering
Fleet services could be cut overall by having fewer vehicles online
Internal service fund
Is golf a net economic boost for Tucson? How much does golf generate?
Human Resources
Urban Planning and Design
Non Departmental: mishmash of causes needs weeding out
Debt Service
Cutting the budgets of the secondary and non essential services is necessary. The essential services could use an administrative reorganization and review of expenses in order to shave off a percent of their budgets. They should be given further goals to meet.
Debt service is huge and the debts should be restructured to meet existing economic conditions, in order to prevent a default. I would rather pay police and fire protection than pay debt service, if the choice has to be made. If the pundits say Tucson will ruin its credit, perhaps this is a blessing in disguise, since about ¼ of the budget goes to debt service. The city cannot afford this debt load and certainly does not need more debt in any form. Look at it this way: if you count the debt for water systems, the debt service rises to $140,788,980, which is about 29% of total stated expenditures. I wish it were impossible for elected officials to create debt that lasts beyond their term. With so much of the expenditures tied up in debt service, flexibility appears to be limited to employee pay cuts and departmental expenditures in the form of cuts in services to residents.
What a plan! Raise taxes and continue the level of debt service no matter what happens to essential services? Not a good plan. Tell them to take a hike after you have cut these departments and downsized the budget, if that is still needed. We do not neglect the weak in order to pay debt service. We do not lay off Police and Fire to pay debt service.
Difficult decisions are ahead. May you all succeed in this task.
Dorothy Prater Niemi
December 2009
Sunday, December 06, 2009
POLICY CHANGE TO STIMULATE ECONOMY
Federal and local entitlement programs: A long term approach
In a few years, years, the Federal budget will be all entitlements. They are now borrowing in order to fund operations and defense. Arizona is in similar shape. 2/3 of the federal budget is mandated and sunsets are nonexistent. Borrowing is rampant tying up revenue streams for years. The whole country is so tied up in debt, discretionary income is ????
Some new policies are needed:
Entitlements should be limited to X% of the total income, not income plus borrowing.
All new entitlements through legislation or initiative should have a sunset clause and an escape clause in case of a budget deficit. Flexibility is needed in budgeting.
To cut the growth of entitlements, slow population growth through tax incentives. Government subsidy of poor should not escalate with each mouth added, thus paying the poor to breed. The more well off also are breeding in record numbers, using the tax deduction to help finance it. The public schools also must accept unlimited numbers of children from any given source, which favors those with large families, while the others pay. A religious objection to population control is personal, but those who want large families should pay for it.
Suggested changes in policy:
After 1 child per person, no welfare payment raises for further children. This does not apply to food stamps, however.
After 1 child per person, no further deductions for income tax will be given by the state or federal governments and an overage must be paid for on a per capita basis.
After one child per person, any person having more than one child must pay a stipend per overage to the local school public district or arrange for private schooling subject to curriculum set by the state/federal and passage of state/federal tests.
Tax refunds to the childless.
These changes in policies would result in a slowing of population growth, which would slow the growth of other governmental costs. This would raise taxes for some, but it is those who are using the services.
Further policy changes linked:
Illegal immigration needs to be discouraged. Border security will succeed only when the economic climate does not favor hiring illegal aliens, who will work under the radar for less than the minimum wage. Perhaps the minimum wage needs to be revisited, but if population growth slows, fewer workers can demand higher wages, but only in the absence of illegal immigrant competition. Immigration policies in general need to be amended to force other countries to manage their population growth instead of relying on the USA as a population outlet.
Getting business owners out of the health insurance business and allowing them to pay what they can to workers would open opportunity. If a large business owner pays so little that their workers must apply for assistance, then possibly a stipend should be required of them, as a percentage of total profit. Reasonable compensation to the owners would be monitored in these cases.
Awareness that free enterprise will carry on under the blanket despite governments effort to control what people are paid and what these people have to buy with the money they earn. Enough already. Local trading economies will arise as will trading economies like smuggling, all of which operate without taxation or regulation. Filtering money through an administrative hierarchy in order to pay for health care makes me want to move towards cash payments that skip these people who are charging us to pay themselves to distribute this money for us. Reality check.
I still don’t get how AIG securities insurance failure milked the US government of $180,000,000,000. Did some of this $ that went to foreign banks make its way to Dubai? Prosecutors need to trail this milking and pinpoint the chain of command. What interesting news that would be. Is it true firearms permits are now more available in New York?
Like who instigated? Who set the stage? Pipeline information? Cleanup crew as recipient of riches?
We need new policy.
Suggested policy changes:
Outlaw securities, derivatives and hedging anywhere but under legalized gambling. The economy is not a toy and people depend on it.
Review economic needs within the USA before looking to export. Sell to each other and Canada and Mexico.
Free business owners from mandatory health insurance requirements
Do not force the purchase of insurance on the populace.
Link employee wages to their welfare needs to employer profits and required support payments to the state, with exemptions for subsistence business.
Ease zoning laws that discourage localized small businesses.
Ease up on taxes, regulation, licenses, fees, for all business except for public health/environmental concerns.
Fewer inspectors rather than fewer law enforcement personnel, when the government has budget shortfalls.
Policy can dictate change in oblique ways. The insistence that growth can be infinite is indicative of a lack of population curbs and the inability of production of food in the infinite is bound to coincide in a population crash, starvation of the species in the classic ecological boom and bust cycle defined by physical resources. Must we act so much like animals that we must do this to ourselves?
Subscribe to:
Posts (Atom)