Is there a free lunch

The federal government hands out cash either directly or indirectly through various subsidies. The government gets is money from the taxpayers and/or by creating it though the Fed. Everyone and every group gets part of this largess. Farmers get crop subsidies, the oil companies get depletion allowance, homeowners get interest deductions, businesses can deduct almost all expenses, many states allow for state income tax and property tax deductions and the list goes on. Most of these deductions are the result of lobbyist who represent different groups like real estate and the oil industry. The people elected to congress are supposed to be the lobbyist for those who are not represented by other lobbyist. Almost all of these elected officials see the government as responsible for a safety net. Programs designed for those who cannot help themselves. This could be someone who is disabled and cannot work or more commonly it is a single parent mostly moms. When it comes to the other subsidies these officials fall into two categories. The first group tries to initiate laws and regulations which will encourage business to create good paying jobs and the second wants to expand the safety net with programs like free or low cost health insurance and free college. In the past many in congress tried to limit government spending on the expanded safety net but they are a dying breed. Most in congress today see their first responsibility as offering benefits to their constituents. This has resulted in an expanded debt and many do not see this as a problem. They seem to believe in the new economic idea of Modern Monetary Theory which states that the government can create money for any justifiable cause. Some even talk about sending out $1,000 every month to all working people something called guaranteed income. Others want free education and some Medicare for all. The trend of using the federal government to provide benefits has been on the increase for almost 100 years and it will continue because those in congress have discovered that this is the way to get reelected. What will be the long term result. A quote attributed to several different people may be the answer. “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. Is our republic on the way out and we just don't know it?

Electric rates

Many people living here are not aware that in 1994 the state of Minnesota outlawed the building of any new nuclear power plants. This week the MN house passed a bill saying the state must be carbon free by 2040. This means wind and solar. Not one mention of the harm caused to the environment by the mining and disposal of the materials needed for wind and solar. This indicates that climate change is not an environmental issue but rather a political one. MN currently gets its 50% of its electric power from coal and natural gas. They have left themselves an out...something about having power companies to pay a penalty for not meeting the goals. This penalty will result in higher prices which will hurt low income people. The next step would be to subsidize low income people for utility cost reaching the final goal of redistributing the wealth. Recall when Obama said your electricity will necessarily sky rocket. Here’s one line that President Barack Obama might want to rewind: “Under my plan … electricity rates would necessarily skyrocket.” This is one of those cases where someone in Washington accidentally speaks the truth.

Interest rates

For most of the last century the Fed Funds Rate was above 5% and often far above that. Then in 2007 it started down and was less than two percent until this past year and most of that time it hovered just barely above zero. For the past 15 years people have enjoyed the benefit of almost free money. The banks could get money at less than one half percent so they could make a handy profit with 2% loans. The hay day of almost free money is over and now inflation has become the problem. In time people will adjust to the higher rates and borrowers will once again start investing. During the years of low interest rates the Fed was creating money in a process called quantitative easing (QE). Between 2007 and today the money supply increased from $5 trillion to $22 trillion and now the Fed must reduce that which adds to the inflation problem. The Fed is letting $90 billion per month roll off of its balance sheet meaning the Fed is reducing the money supply by that amount. The governments interest payments on its debt will increase from $400 billion per year to $1.2 trillion just because of higher interest rates. The good times are over and it is now time to pay the piper.

Bernie

There was a discussion on the news today about Bernie Sanders new book that lays out the evils of capitalism. Bernie is holding meetings to discuss his ideas and charging $100 to get in. While the immediate irony is apparent one panelist suggested a solution. He said that 20% of the attendees should pay $500 per ticket so the other 80% could get in free. This would be line with the tax the rich redistribution ideas that Bernie expounds.

Ego

A man reached mid life and while things on the surface seemed alright he felt deep inside that something was amiss. He read some books and talked with other men and one asked about his relationship with God. He knew when he was growing up he was close to God but over the years he sort of drifted away. This must be it he thought, so he set up plan and he likened it to redoing his house. He went home and tossed out all of his furniture, installed new flooring and painted all the walls. Then he went outside and put on new siding, windows and roofing. He installed a large new front door, opened it up and said, OK God, I'm ready, come on in. Then he waited. A week, a month, many months and nothing happened. He couldn't figure out what was wrong. Then one day while he was standing by the front door his eyes wandered across the room and settled on the door leading to the basement. He was mysteriously drawn to the door. He opened it and stepped inside and standing on the platform in the dark he felt the angers that he'd carried inside move away like smoke in the wind. He next worked his way down to the basement floor where he stopped long enough to let his inner fears float away into the darkness. As he stood there he looked across at the door leading to the coal bin. Cautiously he moved toward the door and opened it and stepped inside. There he came face to face with all of his hidden hurts. All the little disappointments that he just stuffed and they were released into dark. Then he noticed a hole in the floor near the far wall and went over. He got down on his knees and worked his way in. He got on his belly and inched his way deeper into the opening. He was now down with all the slimy worms and bugs and just in front he saw a large rock and written in the moss was the word shame. He knew then that if he overturned that rock all of his past and present shames would be exposed. He said a silent prayer, reached out and turned it over. He immediately found himself back in the basement where walls were bright, shiny and newly painted. He went up the step and into the living room and across to the big front door. He opened the door,stood there in silence and then realized that God doesn't come in through the front door of your ego but through the backdoor of your shame.

Migrant pay

The claim that immigrants lower wages is often challenged but there is evidence to support that claim. It is said that Americans will not do the jobs that migrants do, things like picking farm crops as if that were beneath them but in fact it is because the pay is too low. If crop pickers got $45 per hour many Americans would take these jobs, so in fact migrants do keep wages down. The minimum wage for farm workers in California is $15 per hour and that allows American consumers to have cheap food but some say this is at the expense of cheap labor. Bending over all day in the hot sun for $15 per hour could be called by many, slave labor. The average cost for farm produce is $3 per pound and $1 is for labor. If wages increased from $15 per hour to $45 per hour the cost of farm produce would increase from $3 per pound to $5 per pound. The average family spent $7,000 for food last year and 15% or $1,050 was for produce. That would increase to $1,750 if farm labor were $45 per hour. The average American would have to pay $700 per year or $14 per week more to pay these workers a living wage of $45 per hour. Low income people do not consume a lot of produce so the bulk of this increase would fall on middle and upper income people. Most people in this group will spend that much for coffee. The average American spends $1,100 per year at Starbucks.

Police

Violent crime in the United States peaked in 1990 at 750 per 100,000 population. It has been on the decline to 360 per 100,000 in 2015 but it has since risen to over 400. This 30 year record shows that policing has been effective but recent events have challenged police. Most departments across the country have seen an increase in resignations and early retirements. On top of that recruitment of new officers is down by 50%. The result is that many departments are lowering the requirements regarding things like education and physicals. A number of experts have concluded that the country is headed toward a perfect storm of retirements, resignations and negative narrative on cops. For most of the years since 1990 the number of officers killed in the line of duty averaged about 170 per year but in 2020 the number was 373 and in 2021 the number was 472. Last year the number declined to 323 and that was attributed to the Covid shutdown. Here is the results of a survey taken in September of 2021. 75% say police help them feel safe. 67% say police are widely trusted. 44% want more funding for unconscious bias training. 20% Support defunding police. 62% of officers say the job is more difficult today.