Bacon's Rebellion

As part of my job for the Boomer Project, I survey the media and blogs for emerging trends. One unmistakable trajectory is the increased commentary on what EMR and I would call the “end of the era of mass overconsumption.” Others have given catchier names to the phenomenon, but it all amounts to the same thing: The era of unsustainable, debt-fueled consumption in the American economy is over. In contrast to the past two recessions, consumer spending will not rebound stronger than ever. Consumers are fundamentally re-evaluating the idea that accumulating more stuff is the path to happiness.

Matt Thornhill, a principal of the Boomer Project, sees the rise of what he has labelled “responsible consumerism” and, alternatively, the “new fru” (for new frugality). Personally, I find the second term more memorable. Responsible consumerism sounds like more people reading Consumer Reports. New Fru sounds like people embracing frugality as a positive virtue, which is, in fact, what I think more and more people are doing.

As Matt elaborates the concept in a Times-Dispatch op-ed piece, “Age of Responsible Consumerism Begins,” the spreading rejection of mindless consumption will persist beyond the cyclical tightening of credit. Writes Matt:

We saw this seismic shift coming a generation away. Members of both the G.I. and Silent generations, those now ages 63 and older, led the way by reducing their own consumption of goods and services as they grew older. Their desires shifted as they reached 50 and then 60: fewer material goods, more enriching experiences. Fast on their heels comes the largest, wealthiest, and most important demographic group America has even seen. Boomers, raised in front of television sets, a target for marketers from age 5 upward, are now reaching 60 at the rate of one every eight seconds.

That’s right. The generation that put the mass into consumption is now at the stage of life where people naturally shift focus from the material to the ethereal. What’s fascinating (or worrisome, if you’re in a retail or consumer-products business) is that the impact of this shift on America’s consumption-driven economy is just beginning.

But wait, there’s more: This shift away from spending by our largest demographic group coincides with a larger societal trend toward sustainability. Consumers of all ages are thinking more about the environmental impact of their purchase behavior and consumption patterns. In a national study we conducted among all adults in late summer, before the economic meltdown, 80 percent of all consumers told us they think or act in a “green,” or environmentally responsible fashion. Green is mainstream, and here to stay. Today’s consumers want to be responsible in their consumption. They crave sustainability, not planned obsolescence. They focus increasingly on “needs” and not “wants.”

• As the retail sector shrinks, there will be fewer retail jobs — an entry point for many Virginians into the workforce.
• As retail sales shrivel, so will revenues from the sales tax. Government services that depend upon the sales tax for funding will be more fiscally challenged than services that rely upon, say, the income tax for a funding stream.
• As retail chains contract, demand for retial space in malls and shopping centers will evaporate. Vacancies will rise. Investment in retail development and re-development will plummet. That, in turn, will hurt municipalities that depend upon their commercial property tax base for revenue.

These changes are bearing down on us like a freight train. There is no wishing them away. Governance practitioners have no excuse for getting caught off guard.

In 2007, trucks paid $2.7 million in fees for permits to operate in excess of Virginia’s vehicle weight limits. But that number fell far short of the estimated $211.4 million that heavy loads did to the state’s roads that year, according to Gary Allen, head of the Virginia Transportation Research Council.

I’ve got a big backlog of stories that I hope to get to this long New Year’s weekend. Some, like this, are a bit out of date. But better late than never.

Does anybody remember the terrorist siege of Mumbai? Definitely yesterday’s news. But there’s a local angle that’s worth bringing to your attention. By way of preface, we often read criticisms of American Muslims for sitting quietly on the sidelines when radical Islamists commit terrorist acts. Well, I think it’s worth noting that a league of Virginia Muslims — many of whom are South Asians — has spoken out in the strongest possible terms.

From Dr. Imad Damaj, president of the Muslim Coalition for Public Affairs:

It is with an utmost sadness and shock that we received the news of the terrorists’ attacks in India in the eve of Thanksgiving.

The Virginia Muslim Coalition for Public Affairs strongly condemns and denounces these criminal acts and expresses its sincere words of comfort and feelings of sympathy and sadness for the loss of all innocent lives in India.

We extend our heartfelt condolences to all the families of the victims and in particular to the family of our fellow Virginian, Rabbi Gavriel Holtzberg and his wife.

Regardless of who was involved, the people who carried these attacks out are people with no sense of humanity or morality. They can claim the Religion of Islam as their creed, but their actions go against the fundamental spirit of Islam, which promotes a culture of life and humanity, not bloodshed and violence.

Bravo.

Further thoughts on MainStream Media’s culpability vis a vis Collapse of the global financial house of cards:

The previous post (IT is MainStream Media’s FAULT) engendered a number of useful observations concerning financial Collapse and the role of the Media:

REID ON THE RIGHT TRACK

At 6:37 AM on 30 December, Reid Greenum put his finger on a key issue: Greed.

He is right to rail against individual greed, but there are two kinds of greed.

The individual moral shortcoming that Reid is concerned about AND

The systemic, institutionalized (small ‘eye’) greed that is a key to the ‘success’ of Agencies, Enterprises and Institutions in the Friedman-Flat-Earth economy. Robert Reich documents this form of greed in Supercapitalism.

Organizational greed could be controlled by enlightened citizens through Agencies but at the current time this systemic problem is the more important of the twin manifestations of greed.

That is because it impacts almost every one of the Planet’s 6.3 billion citizens and because it is seen as a virtue by Business-As-Usual and Politics-As-Usual advocates – especially Consumption-Uber-Ales, pseudo-conservatives.

While systemic greed could be contained by enlightened Agency action, individual greed is genetically hardwired into humans. That is because what we now call ‘greed’ served humans well in most Hunter / Gather and Early Agrarian Societies.

On the other hand, the greed proclivities lead to unsustainable consequences in an Urban society – Mass OverConsumption and dysfunctional human settlement patterns. In a Driven-to-a-Frenzy-by-Technology Urban Society, there are too many choices; too many opportunities to do something “because I can.” This dire circumstance is often are mistaken for ‘freedom.’

That is why greed of both sorts must be controlled in the context of functional human settlement patterns. It flourishes in disaggregated and dysfunctional settlement patterns. More on that in a moment.

The flip side of both kinds of greed is ignorance. That is because even the most greedy individual or Organization will constrain their proclivities and desires if they know they will suffer more than they will benefit. Note the current course of consumer confidence and consumer spending…

This is where MainStream Media comes in. The Enterprises that control MainStream Media benefit from citizen ignorance. If citizens and Organizations fail to understand the cumulative consequence of their actions they will continue to over-spend, over-barrow and in other ways feed Enterprise greed.

BUT WHAT OF HUMAN SETTLEMENT PATTERNS?

If one does not understand human settlement patterns, they will not comprehend why the pattern and distribution of human activities is a key issue with respect to economic Collapse.

Saying dysfunctional human settlement patterns is not in play with respect to financial Collapse is like saying gravity had no role in killing Uncle Pete when he fell down three flights of stairs last News Years Eve. One can blame the rotten banister and too much moonshine, however, but for gravity, Uncle Pete would be alive this New Years Eve.

Saying dysfunctional human settlement patterns is not in play with respect to financial Collapse is like saying electro-magnetic fields do not effect radio reception. But for electro-magnetic fields there would be no radio.

In fact one way to come to understand the economic, social and physical impact of human settlement patterns is to understand gravitational forces and magnetic fields via celestial mechanics and physics.

The first 350 pages in the first Volume of The Shape of the Future detail why human settlement pattern has controlling impact on the economic, social and physical well being of citizens.

THE ROLE OF SETTLEMENT PATTERNS IS SUPPORTING ETHICAL BEHAVIOR

Reid is also correct about “ethics” playing a key role in economic Collapse. But it is not just the “family” that has fallen apart and is not providing an ethical rudder.

Back to human settlement patterns. It takes a Dooryard, Cluster, Neighborhood, Village and Community to engender and support ethical behavior. The more complex the society, the more important each of the organic components of human settlement become.

For a snapshot of what has happened to ‘family,’ see definition of Household in GLOSSARY as to why EMR stopped using the word “family” as in Single Household Attached Dwelling.

As Reid points out, ethics is important. That is not clear with respect to “religion.” There are a lot of citizens going to places of worship – on several different days a week – but few who practice their beliefs in the market or on the highways.

OTHER COMMENTS

Several other observations following the IT IS MainStream Media’s FAULT post deserve a note:

Larry Gross at 3:57 PM on 30 December:

Larry is right on with respect to the federal income tax mortgage deduction!

When Larry finally gets around to reading The Shape of the Future he will see that the mortgage deduction is high on the list of damaging subsidies driving dysfunctional human settlement patterns.

The last time EMR looked, something like 90 of benefit of the deduction went to top 20 percent of the Ziggurat. EMR has no problem with well considered Agency help for those in need of shelter assistance but those are the wrong folks to help. In fact they are the only one who do not need help.

There is absolutely no justification for the subsidy other than Business-As-Usual and driving Mass OverConsumption.

Larry will not admit it but this is another major cause of putting The Size Wrong House In The Wrong Location.

Larry Gross, 8:54 AM on 29 Dec:

It is not just citizens READING the wrong stuff. MainStream Media has other outlets besides material that is “read.”

It is hearing and seeing the wrong stuff and reading, hearing and seeing it over and over again – all slanted to encourage consumption and Mass OverConsumption.

NovaMiddleMan, 9:49 AM on 29 Dec:

NMM said… (“In quotes”)

“MSM is not relevant anymore.”

Some may wish that were true but if so, why are billions spent on advertising?

And if MainStream Media goes away tomorrow, where would citizens get any information? From self-serving, dysfunctional Agencies without geographic legitimacy? From Institutions funded by those who want to drive their own agenda? From the other Enterprises that do not even pretend to provide useful information? From Alternative Media? From Anti-media?

Achieving a sustainable trajectory for civilization requires that new “citizen media” take over the abandoned Fourth Estate before there is no source of information. See THE ESTATES MATRIX.

“People say other people read the wrong stuff because you can pick whatever “news” you want”

Now, there is an important statement! Reading only what one wants to believe is worse than reading what MainStream Media presents as ‘balanced’ – if that is possible.

“‘News’ anymore is just another wing of politics.”

No, it is not just Agency babble (aka, politics) but also and even more important Enterprise babble and Institution babble.

At 3:07 PM on 29 Dec MIGHTYBIGMEDIA provides a nice summary.

And in the meantime WaPo has concluded today (31 December) a “balanced” three part series on the crash of AIG and credit default swaps (CDSs). This follows up on their coverage of collateralized debt obligations (CDOs) on 16 December and the three part series on The Housing Bubble in June.

Again, WaPo did
not get to the root causes. They tut-tut over the wreckage and have nice photos of the scape goats.

Interestingly, on 28 December the front page of the Business section of WaPo ran a great graphic showing how responsible, conservative, saving citizens have had no place to “invest” for a decade. Nothing but the ups and downs of gambling venues.

And to this day, there is nothing to encourage conservative citizens to save, or reward those who have saved.

Happy New Year.

EMR

I like to think that it takes a certain minimum IQ to be a BR Blogger. Discussing land use, patterns of human settlement, the woes of Virginia’s Republicans and Tri-O-G requires a certain amount of wit. Or does it?

Let’s find out.

In the spirit of the season, here is a simple Christmas quiz to see how much you really know about the holiday. Here goes (No Cheating!):

(1) Name all of Santa’s reindeers.

(2) What does the “nog” in “egg nog” mean?

(3) What is a “Tannebaum?”

(4) What was the name of the angel who announced the birth?

(5) What were the gifts the Three Wise Men brought? (extra credit for correct spelling.)

(6) On the 12th day of Christmas what was the gift?

(7) Who wrote, “Yes Virginia, There is a Santa Claus?”

(8) What was the nose on Frosty the Snowman made of?

(9) What is a Yule?

(10) Who were the stars in the movie “White Christmas?”

Good luck, Merry Christmas and Happy Holidays!

Peter Galuszka

TRILO-G Chapter 15 – Learning From Delmarva – spells out what can be learned about THE USE AND MANAGEMENT OF LAND from the small Urban Support Region that occupies the DelMarVa Peninsula between the Chesapeake Bay and the Atlantic Ocean.

Following completion of Chapter 15, the prospect of contemporary economic and social changed dramatically. (See Introduction to Vol II, BRIDGES about books never being ‘completed.’) Urban Support Regions have existed since the emergence of New Urban Regions following World War II – but they may not exist for much longer.

What Happened?

By the start of the fourth quarter of 2008 it was clear that the shelter bubble had burst in the US of A and in other nation-states that allowed Autonomobile driven (aka, autocentric) human settlement patterns to become dominant. See THE PROBLEM WITH CARS.

The ‘housing bubble’ had actually been deflating for two years and many – including the Chairman of the Fed – thought (prayed) that it was just another “adjustment” in the “natural business cycle.”

But no! The ill-conceived strategy to ‘solve’ the Affordable and Accessible Housing Crisis by driving up ‘home ownership’ Collapsed.

Pumping billions of dollars into the shelter market (and in the process funding and exacerbating the Helter Skelter Crisis and the Mobility and Access Crisis) was never a good idea. Freddie, and Fannie’s tragically failed speculation scheme put hundreds of thousands of Wrong Size Houses in the Wrong Locations and when this became obvious to all, the house of cards (aka, house(es) with bad loans) Collapsed.

Fannie and Freddie’s Collapse exposed shockingly shoddy lending and banking practices – and criminally negligent Agency oversight – that resulted in lending the wrong amounts of money to the wrong borrowers.

Much more important, the shoddy practices resulted in lending the wrong amount of money secured by the Wrong Size Dwelling in the Wrong Location. If it were just a bad loan to a poor risk, someone would buy the property when the defaulted. Massive numbers of bad loans on badly located properties lead to Collapse.

The shelter tragedy is:

• Personal for those who were bilked
• A just reward for those who will go to jail for fraud, and
• Completely avoidable but for the those who claim to be guided by the ‘free market’ but ignored the re real market and failed to come to an understanding of human settlement patterns and the forces that drive dysfunctional settlement patterns.

There is tragic irony because:

• During the run up to Collapse, sane professionals had evolved a “Location Efficient Mortgage” strategy. LEM is driven by ‘smart growth’ advocates but is based on the most intelligent lessons – as opposed the greatest short-term pay out – of 75 years of housing policy experience.

• The market demonstrates that most citizens prefer non-Autonomobile dominated settlement patterns.

• New Urbanism has provided life size working models of places at the Alpha Cluster-scale and Alpha Neighborhood-scale that work. The market is responding to these places. All New Urbanists need to do is to learn about Critical Mass, Balance, real Regionalism and the need for a comprehensive Conceptual Framework.

• Since at least 1973, intelligent voices have been predicting exactly what happened – although most had no idea of the massive scale of Financial Enterprise greed and fraud. The last 35 years of predictions were based on warnings first articulated in the early 1920s.

As time passes the over-inflation of Wrong Size Dwellings in the Wrong Location – scatteration of urban land uses and dysfunctional human settlement patterns – drive more and more mortgages under water and the pain spreads. See 23 December report from Nat Ass of Realtors.

The ill-conceived shelter strategy and the shoddy lending and banking practices exposed the gross negligence of Agency regulators and Enterprise ‘valuation’ and underwriting services which allowed and facilitated the proliferation of collateralized debt obligation ‘securities’ and other Ponzi schemes – classic and freshly conceived – to deflate the entire Global financial structure.

These events exposed the frailty of an economic system primarily driven by consumer consumption without regard to finite physical limits of resources and the importance of settlement patterns.

When consumers are not happy and safe – aka, scared – they do not buy.

They do not by new Autonomobiles and the Autonomobile industry has to be bailed out. They do not buy things they do not really need and the retail and service sectors go down. Even “developers” want a bailout. The dropping oil prices are a barometer of “trust” and the cumulative result of individuals balancing Need and Desire (See Chapter 23).

For reasons spelled out in THE ESTATES MATRIX few believe what they read in MainStream Media. Soon they will not believe advertising of any kind and the source of revenue to provide information to citizens will disappear.

As noted in GENERATIONAL GENERALIZATION:

The emerging reality is Collapse of the Mass OverConsumption ‘civilization’ that has been driven by those at the top of the Ziggurat who are wasting Natural Capital to:

• Pay the total cost of a ‘driven-to-frenzy-by-technology’ society, and

• Subsidize the full cost of dysfunctional settlement patterns.

So what does this have to do with Urban Support Regions?

As Chapter 15 points out there is a great deal to be learned about the USE AND MANAGEMENT OF LAND – or rather the misuse and mismanagement of land – from Urban Support Regions. The Urban Support Regions have proven to be a bellwether and some of the most damaging aspects of dysfunctional human settlement patterns – scattered urban land uses and the proliferation of short grass pollution – are clearly demonstrated.

The bottom line is that Urban Support Regions depend economically, socially and physically on interRegional transfers of wealth, goods and services that are dependent on long-distance, high-energy consumption activities:

• Second homes
• Tourism
• Climate / topography delimited Recreation
• Colleges and Universities in Communities in the Countryside
• Export of food and fiber
• Export of energy and raw materials

The cost of everything that involves energy will go up, and up – unless no one has money to buy the good or services – see the gas price at the pump this week.

Exporting energy will be very costly because the energy will have to be ‘green.’ If the energy is converted to electricity there is line loss; and coal is heavy; and… there is no escape, PERIOD

Enjoying a cappuccino on a front porch along Talbot Street (‘main street’ in Saint Michaels, MD – a special place in DelMarVA that exists to support second homes and tourism), EMR noted trucks delivering building supplies from the Cores of the three primary New Urban Regions that make DelMarVa an Urban Support Region. (They are, of course, Washington-Baltimore NUR, Philadelphia NUR and Hampton Roads NUR. New York NUR and Richmond NUR also contribute, but not as much.)

Having three potential sources of doors and windows is “competition” in a Friedman Flat Earth economy. It is “unsustainable inefficiency” in a finite resource economy with high energy costs.

Where to from here?

There are three possible directions for all or parts of Urban Support Regions:

One. They may become small New Urban Regions through intelligent use of import replacement to reduce the Critical Mass necessary to support their Balanced Communities.

Two. The may becom
e SubRegions of the dominate NUR – Expand Philadelphia NUR down the DelMarVa Peninsula or expand the ties to Hampton Roads NUR through the bridge-tunnel or span the Chesapeake Bay to the Washington-Baltimore NUR. With high energy / transport costs for Autonomobility (and for trucks) one can easily figure out the probabilities.

Three. De-urbanize. Vast parts of Urban Support Regions will go the way of the proposed Buffalo Commons.

How to decide which way to go is sketched out in THE USE AND MANAGEMENT OF LAND. A Window on the process is provided by the discussion of MegaRegions – the expansion of the Los Angles NUR to Las Vegas and emergence of three ‘new’ MegaRegions based on the Denver NUR, the Salt Lake NUR, and parts of the Southern Rocky Mountain Urban Support Region morphing into a “New Mexico” Mega Region. See Chapter 13.

(Note: References to other part of TRILO-G are left in this post to indicate where additional resources can be found when TRILO-G is completed.)

EMR

Chesapeake City officials say it would cost $300 million to replace the aged Jordan Bridge across the South Branch of the Elizabeth River.

Fellow BR bloggers.

I don’t know if you’ve seen the new Bacons Rebellion -E-Zine which seems to be little more than a marketing effort for privatization of government. Only one former Zine writer is on the list — the rest are PR flaks or “anonymous” state workers, which is a cute gimmick.

However, I have tried to pull up some of my old stories from the zine and I can’t. Can you? Could it be that the new operators have erased all of our work from servers into the dustbin of history? All those hundreds of hours of work and dozens upon dozens of columns all gone?

If so, this is truly awful.

Let me know if you can pull up your pieces. If you can’t I think we need to start a campaign with Jim Bacon to fix this.

Peter Galuszka

On Salom.com, Michael Lind excoriates Southern states for leading the attempt to “kill” the North’s auto industry by opposing the multibillion-dollar bailout of the Big Three (or should we now call them the Midsized Three?) automakers in Detroit. He accuses Southern states, led by “Neo-Confederate” elites, of engaging in beggar-thy-neighbor economic development policies to advance the interests of their own foreign-owned automobile manufacturing interests.

He finds this “race to the bottom” economic development strategy to be “shocking” and a threat to national prosperity.

Today the division is no longer between slave and free states, or agrarian and industrial states, but between two models of industrial society — the Northern model, based on adequate public service funding and taxation and unionization, and the Southern model, based on low-tax, low-service government and low-wage, non-unionized, easily exploited labor. If the industrial North and the industrial South compete for global capital investment, then the industrial South is likely to prevail, because Northern advantages in the form of a skilled workforce and superior public services are unlikely to overcome the South’s advantages of low wages and low taxes and state and local tax subsidies. The result, sooner or later, will be the Southernization of the North and Midwest, as states in the historic middle-class core of the U.S. are forced by economic pressure to emulate the arrangements of Alabama and Mississippi and Texas.

The alternative to the Southernization of the U.S. is the Americanization of the South — a process that was not completed by Reconstruction and the New Deal and the Civil Rights era, which can be thought of as the Second Reconstruction. The non-Southern states, through their representatives in Congress and the executive branch, and with the help of enlightened Southerners, need to use the power of the federal government to put a stop to the Southern conservative race-to-the-bottom strategy once and for all.

Lind brushes up against the truth in one regard, although he really doesn’t understand the meaning of it: Southern states do subsidize economic development projects, and such beggar-thy-neighbor competition is indeed harmful, insofar as it undermines the state/local tax base. To a large degree, the states of the old Confederacy concentrate resources on corporate and industrial recruitment, an outmoded economic development model. But the solution isn’t unionism and government. The path to prosperity and higher living standards in a globally competitive economy is through productivity and innovation, achieved through the development, recruitment and retention of human capital (Economy 4.0 in Bacon’s Rebellion parlance).

Lind’s prescription of achieving industrial prosperity led by unionism and government is tragically wrong-headed. The states that have tried it, like Michigan, are sliding down the economic drain pipe.

Lind is obtuse on so many levels that it is hard to know where to begin. Let me try.

First, he seems oblivious to the fact that opposing multibillion-dollar subsidies with no accountability is not a long-term solution to the woes of the Northern automobile industry; subsidies are no more than a license to pick the pockets of taxpayers nationally and will accomplish nothing more than delay the painful but necessary restructuring of a failing industry. Furthermore, Lind evinces no awareness that Southern employees of automobile manufacturers might legitimately resent subsidizing unionized competitors that countenance unproductive work practices and support health care benefits for workers and retirees that are not only more generous than those of Southern auto workers but more generous that those of just about anyone in the country — excluding, possibly, federal employees and members of Congress.

Secondly, Lind makes appalling generalizations about the political economy of economic development in the South. The industrial recruitment approach to economic development doesn’t emanation from “conservatives” or “neo-Confederates.” It reflects the conviction of both Democrats and Republicans and politicians of all races that the creation of jobs and expansion of the tax base is a worthy object of public investment. That philosophy has its flaws, as I have enumerated on this blog. But it has nothing to do with “conservatism,” nor even the South — just look at the tax breaks handed out by New York City in years past to prevent the flight of its leading corporations.

Thirdly, Lind ignores the extent to which many Southern metropolises have pushed beyond the industrial-recruitment economic development paradigm by focusing on entrepreneurial growth. Northern Virginia, Austin, Atlanta, Charlotte and the Research Triangle are the best examples. Sadly, not a single one of the unionized/big government cities of the Midwest have reinvented themselves to the same degree.

Fourthly, as for the “race to the bottom,” decaying Midwestern and Northeastern states are far better illustrations of that phenomenon than even Mississippi or Alabama. Although progress is measured in incremental gains over decades, Southern states are slowly but surely closing the wage gap between themselves and the rest of the country. The states that have adopted Lind’s paradigm have squandered their lead despite enormous advantages, including a better educated populace, the presence of corporate headquarters and major industry clusters, world-class universities and massively endowed not-for-profit institutions that underwrite community initiatives.

Lind seems totally unaware that he is defending a failed governance model: the idea that taxes don’t matter, that corruption doesn’t matter, that productivity-stifling work rules don’t matter, that higher levels of state/local public spending miraculously inure to the benefit of the general good and not to the benefit of politically powerful constituencies. He would use the coercive power of the federal government to impose an antiquated and ruinous philosophy upon the entire nation. I don’t think he will find too many “enlightened southerners” willing to go along.

Virginians need to be concerned about what the federal government will do to screw up the economy – like Hoover and FDR did. Bad ideas come from both sides of the aisles and in and out of state. This is a critique of some wrong-headed ones coming out of our Commonwealth. I’m sure there are many more here and across the country.

The federal government is supposed to regulate commerce – set standards – for commerce across state lines. It isn’t the federal government’s job to provide “a helping hand to businesses in need.” States can do as they please. But, it isn’t in the Constitution for the U.S. Congress “to create solutions that will both help industry stay afloat and protect taxpayer investment.”

See James Madison’s notes on the Constitutional Convention and the Federalist papers for original intent. See 20th Century Federal Court (including SCOTUS) decisions for contempt of intent and writing legislation from the bench.

Furthermore, it’s just bad business. Legislators will make presumptions like this one for the Automobile industry; “the most important piece of any recovery package to be considered by Congress is that the company in question be required to provide a viable restructuring plan. This plan must clearly demonstrate how a business would return to profitability in the long term.”

As if members of Congress will recognize which plans are viable. How can the Congress, which is incapable of running its own budgets in the black, know which plan demonstrates long term profitability? Who are these automotive industry experts serving as Congressional representatives and senators? What justifies any presumption of competence about what is best for business among politicians of every stripe?

Congress should stay out of the business of picking winners and losers in business – and dumping money on them. Even if Congress requires ‘a plan’ before they start throwing money.
Yet, elected politicians think “Another option that should be considered, either prior to or in conjunction with federal loans, is a program of private financing with federal guarantees. There is no doubt that shaky credit markets have adversely impacted the availability of credit, particularly for firms that are struggling for survival. However, Congress can create a program whereby the federal government provides insurance on private investment for businesses in need. This insurance would be funded by the participants with a modest FDIC-like fee and would cover up to 50 percent of the losses of new investment in the case of a default. Such a program would help to unlock large amounts of private financing, while simultaneously protecting taxpayers.”

Huh? How does paying 50 per cent of losses help taxpayers? That is the Fannie Mae and Freddie Mac model of putting full faith and guarantee of the U.S. treasury behind bad loans. This is precisely what started the financial bubble. It’s bursting created a financial crisis. So, let’s do it all over again for another industry. Sheer genius.

Finally, another way to throw money is through tax policy. Like, “Legislation allowing a $10,000 tax deduction on the purchase of a new car would certainly benefit the auto industry. So too would a bill that allows the deduction of the state and local sales taxes on new car purchases from federal income tax. Initiatives like these can easily be extended beyond the auto industry to help any number of ailing businesses, with little or no taxpayer exposure.”

This is way to get bigger campaign contributions from car dealerships and automotive suppliers. And it is a crock for tax policy. Only people who pay $10k in taxes could benefit. Ah, these are the same people who can give significant tax contributions.

If over half of Virginia’s families earn under $52k a year ( 2004: median family of four), they don’t pay $10k in federal taxes. So, the lower financial half of Virginia gets little to nothing. Thanks, Congress.

And, can the taxpayer use the $10k deduction to buy a Toyota? Consider that Toyota and one of the Big 3 U.S. manufacturers both sold about 9 million cars last year. Toyota made billions in profits and the Big 3 firm made billions in losses. Increased sales may not go to the companies with the structural problems in their business model, nor may they help. It’s feel good politics for telling voters you gave them a $10k knock off the price of a new car.

The better tax policy is to just cut corporate taxes. To the bone. How much could that help a GM with over $60 billion in liabilities?

Cut income taxes. That capital will create jobs for people who will buy cars. Cut spending so the Fed borrows less – and there is more money to loan in the economy.

What are these “any number of other ailing businesses who will get tax breaks from the Feds?” This is how the tax code grew to thousands of pages. Special deals for special interests. How political –politics as usual. How anti-Constitutional. What an open door to more corruption in government.

The good news is that the legislation introduced for these ideas will die under other party chairmanship of committees – unless there are the right Liberal co-sponsors.

Sound economic policy isn’t so complicated. Spend less than you take in. Cut the sham corporate taxes. Cut individual taxes.

Good governance isn’t so difficult to understand. Don’t use the Federal treasury as an un-Constitutional piggy bank. Don’t give pork to special interests.

If one believes that “without a doubt, the federal government has a duty to assist in the country’s economic recovery,” then the answer is to not be such a big part of the problem. No bail outs. No buying votes and support for behavior modification. No backing up bad loans. No selective tax reductions for special interests.

It’s one of Jim’s topics, I know, but this post from a former Richmond Times-Dispatch employee, lays out the topic in sobering detail. Snip:

So here’s the thing: here’s why they’re even trying to keep the RTD going, despite its inevitable funeral, despite that it’s dead already and they keep kicking the corpse around: because they have to. As bad as the situation is, the paper is still bringing in revenue — just not a profit. Online advertising is nowhere near replacing the revenue that print advertising brings in. Sure, they’ll keep reducing the staff as circulation drops lower and lower; they’ll redesign the look not to make a better product, but to cut page count, and thereby newsprint costs. They’ll save money where they can, but revenue will continue to fall . . . because the core product, the newspaper, has been replaced by news on television and the Internet.

The RTD may or may not be dead — that’s sometimes very hard to tell. But I take responsibility for taking part in its demise, because I am a former subscriber.

Little did I know that, as a Richmond.com columnist, I might also be part of the effort to keep the print paper alive:

That’s why the purchase of Richmond.com was considered a sound investment: a massive increase of page views and potentially an increase of ad revenue.

Happy to be of service. But there’s more than a grain of truth here. many locals I know read Richmond.com. The RTD? Eh, not so much. If they subscribe at all, it’s more from a sense of habit than a need for information. And that habit is an increasingly easy one to kick.

Where will the impetus for Fundamental Change in Virginia come from? One source is concern about climate change, and the resulting push to conserve energy. Another is the price of gasoline, which, though temporarily depressed, will shoot back up again as soon as the economy recovers. To those two, we can add a third: the age wave.

We all know our society is aging. While we can make intelligent guesses about energy prices and climate change, we can predict with near certainty that the inexorable advance of Baby Boomers into their 70s and 80s will swamp America’s existing institutions. Yet, as acutely aware as we are of the age wave’s ramifications wave for Social Security, Medicare and Medicaid, we have given little thought to its implications for transportation and land use.

It’s inevitable: As Boomers get older, their cognitive processes will decline, their reaction times will slow, and increasing numbers they will be unable to drive. Unless technology reaches the point where drivers can punch a destination into a dashboard, turn over the driving to a computer and lean back to enjoy the ride, Virginia will find itself with unprecedented numbers of old Boomers living in social isolation, unable to care for themselves.