Saturday, 05 December 2015 05:12

Hollow Words Again

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Hollow Words Again

Editorial - Barry MacDonald

For President Obama standing before adoring followers in a stadium, and before a nation-wide T.V. audience, blowing smoke is what he thinks he needs to do. It's an everyday practice, using the same lines over and over - his acceptance speech at the Democratic National Convention was nothing special.

He paraded his list of villains and horrible deeds:

* The "avalanche of money and advertising" in campaigns.
* Republicans with "the same prescriptions they've had for the last thirty years: "Have a surplus? Try a tax cut . . ."
* "Spending trillions more on new tax breaks for the wealthy."
* Oil companies who want to "write the country's energy plan."
* "$4 billion in corporate welfare" (he's president, why didn't he stop it?).
* Banks, lenders, and Wall Street.
* Insurance companies who deny seniors the healthcare they need (better the government deny services).
* ". . . bailouts for banks . . ." (he supported bailouts in 2008 and 2009).
* "Lobbyist and special interests."
* "Washington politicians who want to decide who you can marry, or control healthcare choices that women should make for themselves."
* ". . . government is forever beholden to the highest bidder."
* "If a company releases toxic pollution into the air your children breathe, well, that's just the price of progress." (Who believes this? - nobody.)

The president mouthed conservative-sounding words about restoring American values that

. . . built the largest middle class and the strongest economy the world has ever known; the values my grandfather defended as a soldier in Patton's Army; the values that drove my grandmother to work on a bomber assembly line while he was gone.
They knew they were part of something larger - a nation that triumphed over fascism and depression; a nation where the most innovative businesses turned out the world's best products. . . . My grandparents were given the chance to go to college, buy their first home, and fulfill the basic bargain at the heart of America's story: the promise that hard work will pay off, that responsibility will be rewarded; that everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same rules - from Main Street to Wall Street to Washington D.C. . . .
I've met workers in Detroit and Toledo who feared they'd never build another American car. Today, they can't build them fast enough, because we reinvented a dying auto industry that's back on top of the world. . . .
I've worked with business leaders who are bringing jobs back to America - not because our workers make less pay, but because we make better products. Because we work harder and smarter than anyone else. I've signed trade agreements that are helping our companies sell more goods to millions of new customers - goods that are stamped with three proud words: Made in America. . . .
We insist on personal responsibility and we celebrate individual initiative. We're not entitled to success. We have to earn it. We honor the strivers, the dreamers, the risk-takers who have always been the driving force behind our free enterprise system - the greatest engine of growth and prosperity the world has ever known.

And President Obama offered goals:

. . . goals in manufacturing, energy, education, national security, and the deficit, a real achievable plan that will lead to new jobs, more opportunity, and rebuild this economy on a stronger foundation. . . .
Help me recruit 100,000 math and science teachers in the next ten years, and improve early childhood education. Help give two million workers the chance to learn skills at the community college that will lead directly to a job. Help us work with colleges and universities to cut in half the growth of tuition costs over the next ten years. . . . (How did he come up with these numbers? Why not a million math and science teachers?)
I'll use the money we're no longer spending on war to pay down our debt and put more people back to work - rebuilding roads and bridges, schools and runways. . . . (The money spent on war was borrowed money, so he is promising to borrow less - but he's just overseen four years of $1 trillion-plus deficits. Bush's largest deficit in 2008 was $500 billion.)
Yes, we will reform and strengthen Medicare for the long haul, but we'll do it by reducing the cost of healthcare - not by asking seniors to pay thousands of dollars more. . . . (He's taken $700 billion from Medicare over a decade to pay for ObamaCare; and ObamaCare will not reduce costs, according to the CBO.)
You can choose a future where we reduce our deficit without wrecking our middle class. Independent analysis shows that my plan would cut our deficits by $4 trillion. (He's never offered a credible plan to cut the deficit.)

President Obama has been in office for nearly four years; why hasn't he already accomplished these goals? He has goals but not plans to achieve them. And wasn't the $800 billions stimulus bill in 2009 supposed to have already rebuilt roads and bridges, schools and runways?

Let's look at what the president's government has been doing to turn around the auto industry and to see how he thinks the free enterprise system should work. In 2009 the Obama administration rescued General Motors with a $50 billion bailout, and dedicated more than $4 billion in subsidies for "green-car" development.

In August, 2012, the federal government owned 500,000,000 shares of GM, 26 percent of the company. The government would need to realize about $53 per share to break even on the 2009 bailout, but the stock as of August was valued at only $20.21 per share, with a loss on investment of $16.4 billion.

The government's GM stock in August is worth about 39 percent less than it was on November 17, 2010, when the company went public after bankruptcy at $33 per share. From 2010 the Dow Jones Industrial Average has risen by about 20 percent, but GM shares have lost 49 percent of their value compared to the Dow. However, GM is in not danger of going bankrupt again - as long as Barack Obama is prepared to prop up the company with taxpayer money.

GM's premier "green car" is the Chevy Volt, a plug-in hybrid. GM loses as much as $49,000 on each Volt it builds, according to industry analysts and manufacturing experts. Sandy Munro, president of Munro & Associates, a company that analyses vehicles for manufacturers globally and the U.S. Government, says:

I don't see how General Motors will ever get its money back on that vehicle. . . . It currently costs GM at least $75,000 to build the Volt, including development costs.

Dennis Virag, president of Automotive Consulting Group said GM's basic problem is that "the Volt is over-engineered and over-priced." Potential buyers are put off by the difficulties of charging the battery for hours, a process that can be speeded up by installing a $2,000 commercial-grade charger in the garage. The Volt only runs from 30 to 40 miles on electricity, then the driver must turn to gasoline. The difficulties of owning a Volt are such that dealers have to "practically give them away," according to Reuters. Some Americans pay only $5,050 to lease a Volt for two years, for a car that costs $75,000 to build.

The sticker price for the Volt is $40,000, and the buyer gets a $7,5000 federal tax credit, reducing the price to $32,500. But the average American makes less than $40,000 a year, and the average per capita income of Volt buyers is $172,000 - this cannot be a car for the average family.

In a free market the price of a car responds to the desire of people to own it. If the Volt were popular, people would line up to buy it. The price would find its proper balance: GM would make a profit, but couldn't charge too much or they would be undercut by competition. The discipline of the market would require GM to make a high quality car at a price people will pay - but GM is no longer subject to market discipline.

President Obama has grotesquely "reinvented" GM. GM isn't concerned whether they are producing a hybrid that people want: nobody wants the Volt at the price that reflects the true cost of production: the Volt would be madly expensive, so GM has to give them away.

President Obama has transformed GM from a profit-seeking manufacturer into a company dependent on government subsidies. The GM state of affairs is not an example of "the greatest engine of growth and prosperity the world has ever known," but the emergence of crony capitalism, where the government directs, the company survives, and people make do with undesirable cars. Obama has not rebuilt GM "on a stronger foundation" but has compromised its independent spirit.

Let's look at how President Obama honors "the strivers, the dreamers, the risk-takers who have always been the driving force behind our free enterprise system."

In 2009 and 2011 the famous Tennessee guitar maker, Gibson, was subjected to two raids by government agents carrying weapons and wearing SWAT gear, with employees forced out of buildings, production stopped, goods seized, and with threats of the closure of the business. The agents seized $500,000 worth of exotic wood imported from India and Madagascar. The ebony and rosewood have been used for decades to make fingerboards and are essential to the style and sound of Gibson instruments.

Gibson settled with the government so that the feds wouldn't bring criminal charges, concluding a three-year investigation. Gibson admitted some of its imports from Madagascar violated environmental laws and agreed to pay a fine of $300,000, plus $50,000 to the National Fish and Wildlife Foundation for preserving forests.

Gibson's admission of wrongdoing applied only to Madagascan wood seized in 2009, but not to the Indian wood seized in 2011. The Indian imports were not found unlawful because of inconsistencies in India's tariff classification of ebony and rosewood fingerboards.

The federal raids were prompted by suspicion that the woods had been illegally harvested and exported according to the laws of India and Madagascar. Gibson had purchased the Madagascan wood from a German supplier T.N., an established Forestry Stewardship Council, chain of custody certified supplier. Gibson had sent a representative to Madagascar in 2008 (along with the environmental group Greenpeace) to verify the status of the wood, and had relied on the reputation of the well-respected German supplier.

The government contended that Gibson had not done due diligence to gain documentation of legal forestry practice from the areas of Madagascar where the wood came. A Madagascan law allows the export of finished but not "unfinished" fingerboard blanks. One Madagascan exporter was given a dispensation from the Madagascan law, but not the one used by the German supplier. In short Gibson got caught up in a tangle of complex and confusing foreign law.

The Wall Street Journal commented on Gibson position:

Gibson's predicament, which raises concerns for musical-instrument makers and other importers of wood, illustrated the pitfalls of complying with U.S. law while dealing with middlemen in faraway countries whose legal systems can be murky.

Even a good faith effort was not enough for Gibson to evade suspicion of criminal intent.

The U.S. government was not assured of success; Gibson might very well have won its case in court. But the cost of going to trial, the length of time before resolution, and the continued confiscation of wood needed for production compelled Gibson to settle.

Gibson CEO, Henry Juszkiewicz commented:

We feel that Gibson was inappropriately targeted, and a matter that could have been addressed with a simple contact by a caring human being representing the government. Instead, the government used violent and hostile means with the full force of the U.S. Government and several armed law enforcement agencies costing the tax payer millions of dollars and putting a job-creating U.S. manufacturer at risk and at a competitive disadvantage. This shows the increasing trend on the part of government to criminalize rules and regulations and treat U.S. businesses in the same way drug dealers are treated.

President Obama's government is encumbering American producers more then ever before, making the slogan "Made in America" more precious, as American manufacturing becomes more precarious.

President Obama may uphold with words

. . . the basic bargain at the heart of America's story: the promise that hard work will pay off, that responsibility will be rewarded; that everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same rules . . .

but under his administration he chooses whom to reward and subsidize, and whom to punish, leaving every one exposed to the capricious exercise of government force.

[The information about GM and the Chevy Volt came from Erika Johnsen, Michael Reagan, Reuters News Service, and The Free Republic; and the information about Gibson's plight came from Mary Katherine Ham - thank you!] *

Read 3105 times Last modified on Saturday, 05 December 2015 11:12
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