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House Financial Reform Bill

This sort of thing will end up doing little to help the average citizen, and much to hurt business and taxpayers. It is a classic example of how meddling "requires" more meddling. The federal government should let companies fail without throwing any money into them. The feds should aggressively prosecute interstate fraud and other like crimes. Other than that, they should mostly stay out of the way of business.

The more limitations, regulations, incentives, and disincentives that we have, the move convoluted the system, the more discouraging things are to the average small investor or businessperson. Lawyers and accountants and lobbyists benefit. But what about innovators and producers?


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Meddling Begets More Meddling

Now the MSM is reporting that certain experts and authorities are calling for limiting the size of financial institutions. As long as a monopoly isn't being formed, I have no problem with financial institutions getting bigger and bigger. It can be convenient for someone to be able to handle most of their banking, credit, lending, investing, and insurance needs in the same place.

Of course, the reason some people are calling for limits is 1) bailouts and 2) propping up parts of the economy with a house of cards. Let's do neither. Let the market work.

I'm a member of more than one credit union, myself. Through merging with other credit unions and growing larger, they have been able to better serve me.

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More on the California Divide

The Los Angeles Times, analyzing a poll they did with USC, notes certain divides in California, though a general agreement on pessimism. Cathleen Decker reports.
One always presumes a fair amount of communal thought in a state, even one this large. But apart from a shared disdain for the governor and the Legislature, there is hardly anything communal anymore in California politics.
I've said it here many times before, and I’ll say it again – the state needs to be split up.
"There are dozens of different Californias -- hundreds, demographically -- and every single one of those Californias thinks the rest of them are wrong about everything," said Dan Schnur, head of the Jesse M. Unruh Institute of Politics at USC, whose College of Letters, Arts and Sciences co-sponsored the poll with The Times.
Actually, the paper goes on to detail a noticeable split between the coastal area and in the inland area in various demographic and idealogical indicators.

I maintain that a if San Francisco and Los Angeles County, and the coastal counties between them, and perhaps a couple of others in the Bay Area were to split off from the rest of California, the remainder of California would be better off - either staying together, as one, or further dividing, perhaps with the areas being annexed to neighboring states. (Those states would not only gain some fine resources, but they wouldn't have their Senatorial representation diluted if the number of states remained at fifty, and they would have a larger House of Representatives presence.

Will it happen? Not without a miracle. Most likely, we're just going to continue to see California kill itself financially, and the would-be social engineers on the Left grow increasingly bitter as the rest of us fight to keep them from dragging the state too far into the cultural dump.

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Henhouse Repairs Ordered by the Fox

Something is wrong with this headline from David Morgan's Reuters article:
U.S. Labor Group Unveils Plan to Tackle Joblessness
You know how to really tackle joblessness? 1. Encourage people to work; 2) Let the marketplace create jobs.

Usually, Big Labor does plenty that works against those two things.
The head of the largest U.S. labor federation urged President Barack Obama on Tuesday to use the $700 billion Wall Street bailout fund to help cash-starved small businesses as a way to stem rising joblessness.
So – take money from taxpayers and hand it out to businesses? I have a better idea. Let people, including business owners, keep more of the money they earn instead of sending it to D.C. as taxes, and we'll use that money to create jobs. One-time payouts by the government do not create lasting jobs.
In a preview of labor's contribution to Obama's December jobs summit, AFL-CIO President Richard Trumka said money from the Troubled Asset Relief Program could be lent directly to small- and medium-sized businesses at commercial rates.
"Lent". Like the money that was "lent" to pay off the autoworker unions via GM?
The AFL-CIO jobs plan also calls for extended unemployment benefits, food assistance and healthcare for the unemployed, more money for infrastructure projects and state and local governments, and job creation aimed at distressed communities.
Ah, yes. Pay people not to work using money from people who do work, and throw money at failing neighborhoods.
Rising unemployment poses a political danger to Obama as his fellow Democrats in Congress approach the 2010 election with voters increasingly dissatisfied with incumbents.
I'm surprised they don’t make it simpler and call for a "Jobs Corps", where people are "employed" in a government job that involves watching their own stuff, in which they simply issued a regular "paycheck", and thus those people are no longer "unemployed". Problem solved!
"If small businesses can get credit, they will create jobs. And we need jobs now," Trumka said in a speech to the Economic Policy Institute, a left-leaning Washington think tank.
If small business can do more of what they want to do with their own resources, and keep more of their own resources to begin with, they will add jobs as the market creates them. But that would mean that the Big Labor leaders wouldn't have as much power, so we can’t have that.
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California Constitutional Convention - Another Voice

Patrick Collins, director of the Claremont Institute's Golden State Center for State and Local Government, responded to a recent Los Angeles Times editorial by making the case that a California constitutional convention isn't likely to work. You can read it here.
Californians should not mistake a widely shared dislike of our political situation with shared agreement on what constitutes the common good.
I have written about this already. Just click on my California tag below. I agree that a convention isn't going to work. We need to split the state.

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Extension of Tax Credit for Homebuying

Once again, I am punished by my government for having bought my house when I did. Hey, on top of being punished for giving up my old car and buying a new one, I'm part of spreading the wealth.
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Nanny State Policy Doomed to Fail?

The Rand Corp says that the Los Angeles City Council's vote restricting fast food establishments in "south central" Los Angeles is unlikely to curb obesity rates. Jerry Hirsch of the Los Angeles Times brings us the update on this, which I wrote about here and here.
The study was based on InfoUSA business data and a survey of 1,480 Los Angeles County residents. It was funded by the National Institutes of Health, with no financial support from the fast-food industry, Sturm said.

Contrary to "conventional wisdom," the density of fast-food chain restaurants per capita is actually less in South Los Angeles than in other parts of the city, said Sturm, a Rand senior economist.
Uh oh! Now the companies are going to get sued for not being there!
They found that the far wealthier West Los Angeles has 29 fast-food chain establishments, 14 small food stores and 10 large supermarkets per 100,000 residents. South Los Angeles, by comparison, has 19 fast-food chain restaurants, 58 small food stores and three large grocery stores.

The authors said those data were at odds with "media reports about an over-concentration of fast-food establishments" in South Los Angeles.
Imagine that.
Among those reports, the study cited a chart that accompanied a July 30, 2008, story in The Times. The chart said fast-food establishments represented 45% of all restaurants in South Los Angeles. That was a higher percentage than in any other section of the city.
But what that means is that there are not as many establishments in general. This is not surprising, given crime, lack of spending, and the fact that the population density is higher in South Cental.
Councilman Bernard C. Parks, whose 8th District includes part of the area where the moratorium is in force, took exception to the Rand report.
He's not one to let facts get in his way.
However, the study found no difference in fruit and vegetable consumption between residents of South Los Angeles and people in other areas. Likewise, there was no difference in the proportion of people who participate in 300 minutes of exercise or more per week.

Residents of both West and South Los Angeles tend to eat out about 3.5 times a week, though South Los Angeles residents are more likely to obtain food from a food cart or truck rather than a sit-down restaurant, the study said. South Los Angeles residents also were likely to watch more television.
Radio reports are also citing convenience stores.

Like I said in my previous messages – let the free market work.
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California’s $493B, 3.8M Job Hit

California regulations are costing 493,000,000,000 dollars and 3,800,000 jobs, according to this interesting entry from Jan Norman that I found on her Orange County Register blog.
That’s an average of $134,122 per California business, $13,801 per household and $4,685 per resident each year.
Scary.
The study parallels a 2005 federal report on business regulations commissioned by the Office of Advocacy within the U.S. Small Business Administration.That report concluded that federal regulations cost $7,647 per employee for businesses with fewer than 20 employees.

This state report is based on data used by Forbes magazine’s annual ranking of state for business friendliness. It does not single out specific regulations that drive up costs.
I'm sure there are plenty of people who have counters to this. But if you've ever tried to start or move a business to California - especially one that employs others, you'll be able to decide for yourself.
Among the California conclusions:

The total cost ($493 billion) is almost 5 times the state’s general fund budget and a third of the state’s gross product.

The 3.8 million jobs lost equals 1/10th of California’s population. California has about 14 million jobs, down 1 million from the peak in July 2007.

The total cost breakdown is $266.5 billion in direct costs of various regulations, $210.5 billion lost labor income and $16 billion in business taxes the state would get without the regulations
Beautiful.
One producer of construction aggregates in the state, Vulcan Materials, testified in an Assembly Jobs Committee hearing in June that it 'is not uncommon for the permitting process to involve millions of dollars and in some cases to take as long as 10 years to secure the necessary permits, many of which address duplicative regulatory aspects.'
You can read the entire report here. I don’t know if it takes into account local regulations, too.
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The Bigger Picture in California

Three pieces in the Los Angeles Times show why California is in trouble. Shane Goldmacher has an article on the latest tax increases.
While Californians are still feeling the sting of income and sales tax hikes signed into law earlier this year, now comes news that state tax authorities plan to take a little more from their pockets.

For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change.
Great.

Meanwhile, columnist George Skelton enthuses about yet another group that claims to have the answers.
The bipartisan reform group California Forward has proposed a modest, reasonable and doable set of significant changes in how state and local governments operate.
We'll see.
There's no denying the problems: gridlock, perpetually late budgets, chronic deficits, IOUs, Sacramento raids on local coffers...
Don't forget high taxes and an environment hostile to business.
But these are some steps recommended unanimously by the California Forward's Leadership Council after 18 months of mulling:

Lower the Herculean hurdle for legislative passage of a state budget from a two-thirds majority to a simple majority. But retain the two-thirds requirement for tax increases.
Not sure how that would work. Sound like it would mean more borrowing, which necessitates more taxes.
For fiscal conservatives and anyone with common sense, require that unexpected spikes in tax revenue be spent only for one-time purposes, not to enhance programs in perpetuity.
This is toothless. The "one time" purpose every year could be "budget deficit", right?
Require the sponsor of any new spending proposal, whether in the Legislature or at the ballot box, to identify the funding source.
Good.
Budget for two years, rather than one, and regularly monitor the spending plan to watch for red ink.
Good.
Set clear goals for each program. If they're not met, change or chuck the program.
Good.
Prohibit the Legislature from raising taxes on a majority vote and calling them "fees."
Good.
Provide local governments with more control over their own fates by barring the state from raiding property taxes and other revenue.
Good.
Permit cities, counties and school districts to unite in some common endeavor, such as gang suppression, and pay for it with a tax increase passed by a simple majority of voters. Now it would require a two-thirds vote.
Keep the two-thirds requirement. Otherwise, we're screwed.
Relax term limits while reducing the overall time a person could spend in the Legislature.
Get rid of term limits.

Well, I’m not too impressed. I’ll say it again: 1) Split the state. 2) Make the legislature unicameral; reduce the number of legislators if possible. 3) Make the legislature a part-time "citizen" legislature.

Finally, there's this commentary from Ethan Rarick, director of the Robert T. Matsui Center for Politics and Public Service at UC Berkeley. He knocks Nevada's ads calling on California businesses to come to Nevada to escape taxation and regulations.
Relatively few businesses, once they're formed, pick up and move across state lines. Over the last several years, the nonpartisan Public Policy Institute of California has done exhaustive research trying to measure precisely how many jobs California has lost because of such moves, while also measuring the offsetting number we have gained from businesses moving into the state. The conclusion? The impact is tiny. The researchers found that the average annual job loss was only .06% of California's total employment. Just to be clear, that's not 6%; it's six one-hundredths of 1%.
The fact is, businesses are moving out, and how many are moving here from other states?. Others are choosing to expand or start up elsewhere instead of California. That study doesn't deal with business that would have added jobs in California, but didn't because of the business climate in California. Also, individuals who are good workers and citizens and entrepreneurs - people who produce more revenue for the system than they take - are leaving and being replaced by welfare/subsidy-dependent people.
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Nevada Seeks California Businesses

The Nevada Development Authority is running ads on TV, radio, and in print encouraging California businesses to relocate.  They rightly point out that California is an expensive and overly regulated business climate.  Alana Semuels has the article in the Los Angeles Times.
California has battled such negative perceptions for years. But its huge consumer base, great weather and dynamic entrepreneurial culture have kept many businesses anchored here. Still, in a tough economy when companies are looking to slash costs, some industry leaders fear poachers will be more successful this time around.

...

The Nevada campaign touts the fact that the Silver State has no corporate or personal income tax, no inventory tax, and lower workers' compensation costs. A light-industrial facility that costs $405,478 a year to operate in Las Vegas would cost $625,774 to operate in Los Angeles County, according to the Nevada Development Authority.
I'm sure the Leftists of California would sooner seek to "solve" this problem by imploring the federal government to impose California-style taxation and regulation nationwide than they would reform California government.

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House Plan Boosts Taxes on Rich to 20-Year High

That's the AP headline.  But don't worry - this won't mean that the "rich" have less money to invest in your business, or less money to hire you or give you a raise, or less money to spend on the products or services you provide, or less money to give to your favorite charity.

Oh wait.  Yes, they will have less money do to those things.  Oh well.
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CA Losing Manufacturing Jobs Due to Regulations: Report

Alana Semuels of the Los Angeles Times has the article.
Two months ago, more than 300 people were employed at the site making engine parts for trucks and heavy machinery for Gregg Industries, which is owned by Neenah Enterprises Inc. in Wisconsin.

But a settlement with the South Coast Air Quality Management District required Gregg to spend $5 million on factory improvements, so the company decided instead to leave the state. Company spokesman Adan Ortega Jr. said Gregg didn't want to make the payment in the difficult economic climate.

Gregg is part of the parade of companies marching out of California. The state lost 79,000 manufacturing jobs between 2003 and 2007, while seven other states with a meaningful percentage of U.S. manufacturing gained 62,000, according to a report scheduled to be released today by the Milken Institute.
What is causing this?
The report blames the state's onerous regulations and high taxes in particular for pushing businesses elsewhere.
But isn't the whole country losing manufacturing jobs?
The state is shedding manufacturing jobs at a faster pace than the nation as a whole, the report said. Though many jobs left the country in the 2002 recession, states such as Arizona, Nevada and Oregon saw an increase in manufacturing employment in 2003.
It isn't just the number and restrictiveness of the regulations.
Part of the problem, Wong said, is that regulations change so often in California that it's difficult for companies to plan. The state enacted an average of 15 changes in labor law each year from 1992 to 2002, four times more than state legislatures averaged nationwide.
It's hard enough to hit the target.  Hitting it while it is moving is that much more difficult.
California also often requires projects to be approved in many different jurisdictions, so that a plan vetted by the state could be sidetracked by the county, Wong said.
It's one thing after another.  In California, in addition to the usual federal, state, and local (County and City) laws, codes, and regulations, there are many for various special districts and commissioners such as the aforementioned AQMD, the Water Quality Control Board, the Coastal Commission, and so forth.
California GDP grew last year despite the global financial crisis, said Brian McGowan, the state's deputy secretary for economic development and commerce. And green-energy jobs in the state have grown at a rate 10 times faster than total job growth since 2005.
You mean taxpayer supported or taxpayer subsidized jobs?  Those don't count.
To evaluate a state's business climate, he said, companies should focus on workforce skill, availability of capital and overall quality of life, rather than just on taxes and regulatory costs.
Well, yes, and when they see the land prices, artificial water and energy shortages, crime rates, graffiti, and the third-world unskilled, uneducated workforce with an entitlement mentality, they are further encouraged to leave or to expand elsewhere instead of here.
To prevent more departures, the study recommends creating incentives for innovation, assisting companies in obtaining capital, investing in workforce development and establishing an office to streamline the regulatory process.
The last one is the key.  The other suggestions are likely to involve more government control and more centralized planning, which is the problem in the first place.  Enough with the convolution system of rewards and punishment.  Let property ownership and free enterprise work.
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Obama Does His Best to Feed End Time Fears

A financial system overhaul?  Life is sounding more and more like Left Behind every day.  Just for the record - I do expect that Jesus Christ will return and life as we know it will end, but whether that's happening soon after an any-day-now Rapture with the world going to hell under a powerful antichrist world leader, or whether that is happening thousands of years from now under different circumstances - I'm not convinced either way.  (What I am sure of is that we're never guaranteed another day - follow Christ and be prepared to die today or to live to a ripe old age.)  But when I read today's headlines, it is like I'm reading bad rewrite of The Late, Great Planet Earth.  Associated Press writers Jim Kuhnhenn And Martin Crutsinger bring us the story on Obama's plans to "help" the market.
The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system and would also create a new consumer protection agency to guard against credit and other abuses that played a big role in the current crisis.
Great – just what we need.  We need more power to be centralized at the federal level.

So the feds are going to fight "credit abuses" and mortgage problems.  What does that mean?  Making sure that people aren't given credit or mortgages that they can’t afford?  Okay, good.

But then what will happen?  Fewer "poor" people, and thereby a "disproportionate" percentage of minorities, will be getting lines of credit or mortgages.  Obama and others who think his way will see that as a problem.

So what will that mean?  It will mean Obama will be "forced" to help out those people being denied their "dreams".

That will mean the rest of us, through our taxes, will have to be on the hook to provide those people lines of credit and mortgages, and when they default, we're going to have to eat the costs.
  Write it down.  This is how it will work out.  How is that different than what is going on now?  Well, it won't be a "voluntary" reaction by Congress and companies any more.  It will be a matter of policy, course, and law.
Lawrence Summers, head of the president's National Economic Council, said that those who believed this power should not reside with the Fed had the responsibility to make the case for some other agency.
Wrong!  Wrong wrong wrong!  It is up to you to show where the Constitution permits this, and why it is necessary.  You aren't allowed by the Constitution to just make up new government agencies to do new things.
The creation of the new consumer agency is aimed at guarding against the kinds of lending abuses which resulted in many Americans being saddled with far more mortgage debt than they could handle.
It is up to the customer to find out what they are buying.  As long as the lender didn't lie to the borrower, the government should stay out of it.
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These Cuts Will Hurt the Poor, Sick, Elderly, and Kids!

That's the refrain being heard all over the place as news commentators, special interest groups, socialist politicians, and government employee unions bemoan reductions in planned increases, or sometimes actual cuts, to government budgets.  It's happening at the state level, at the local level, and in school districts.

"Don’t balance the budget on their backs!" is one of the favored slogans.

Well, if someone is a financially self-sufficient, healthy, vibrant adult, how many government services are they going to be using?  Answer: a lot fewer than a poor, sick kid or elderly person.

That's because, despite the ability of private charity and other systems of voluntary funding, the government has stepped in and created programs that encourage dependency by these people on – ta da – continuing and growing those programs.  People gradually feel entitled.  They are entitled to what they want and to get it on "someone else's" dime.  If they say "we pay taxes, too", call them on it and say, "Fine.  How about we exempt you from all taxes as long as you don't use a taxpayer-supported medical facility, school, or assistance program."  The point should be made when they don't embrace the idea.  Only someone who is paying more in taxes than they are getting back in services would jump at that deal.

The "rich" are already taxed enough, especially here in California.  Yes, they have more money - mostly because they have earned it through voluntary actions, including hard work, careful investment, tough decisions, and personal sacrifices.  Why should they be forced to give up even more of their money to upgrade the lifestyle of people they don't know?

It is not the proper role of government to make sure we are comfortable and happy and want for nothing.
  It is not there to right every wrong.  It is the role of government to protect our rights from those who would or do violate those rights against our consent – as it is able.  Since the government relies on us for funding, and we have less money right now, the government must work with less money and should be focusing on necessities, and not on wealth redistribution.

I support private charity - family, friends, congregations and other organizations - tending to the needs of those who are having trouble.  Plus, allowing the people to keep more of their own money by not taking it in taxes allows them to put the money to better use, likely providing more ability to be charitable, or to pay more people more money for providing a good or service, which means more and better jobs.

Some form of taxation seems to be necessary to fund the basic, constitutional functions of government.  But we've moved way beyond that.  Superfluous taxes, even if they are imposed only on "the rich", are going to eventually hurt others.  Perhaps we should be saying, "New or higher taxes will hurt the poor, the sick, the elderly, and kids!"  Because the truly rich will still be able to afford the good life in some amount.  They won't be struggling to pay their mortgage.  But they may have to lay off someone, who will then struggle to pay their bills.

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Pointless Polls and California

All polls are not created, conducted, and reported equal.  Some are actually pointless to report to the general public - they only help people planning political campaigns.  Check out this classic Playful Walrus installment.

Even when we actually vote, elected officials either don't get the message, or pretend they don't.  That's going on right now in the wake of our latest statewide vote in California.  Our representatives are not telling the truth about what the vote meant when we strongly rejected the ballot measures dealing with the state budget.

We were not confused.
We were not tired of voting.
We were not saying that we didn't want to be bothered with budget matters.


The truth is, we were saying that we're tired of tax increases, and we don't want to feed the beast anymore.  Our state government has grown much faster than our population.  Our budget has grown much faster than inflation and population.  It is unsustainable.

We don't want more or higher taxes. Sure, this contradicts the fact that we elect big spenders.  But in part, that is due to the way districts are drawn, and that districts full of illegal aliens and others who don't vote may have a tenth of the voters of a conservative district.  So while there are more big-spending legislators than fiscally restrained ones, I'd wager (if I was a betting man) that the total number of votes for all of the fiscally restrained legislators combined is higher than for the socialists.

Regardless, the state California is out of money.  The people don't have any more to give.  It is time to cut.

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