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Detroit’s Suicide


There are many who blame the woes of Detroit on the decline in the auto industry, but the auto industry did not decline- it just moved.  Paul Krugman passes the decline off to the normal creative destruction of capitalist progress.  Bullshit, again.  A small businessman who used to be in Detroit explains the decline very clearly.

Don Wilkie writes in American Thinker, How Detroit Almost Killed My Business.


As mentioned earlier, when I left Detroit I had 20 employees.  But, 10 years earlier I had 5 employees.  As the business grew I had to hire more people.  As it turned out, to get one good employee, I had to hire about 8.  So to get an additional 15 people, I had to hire over ten years approximately 120 people.  This is when doing business in Detroit really started to get expensive.

When an employee left my employ, whether by quitting or being fired, they immediately went to the Unemployment Office where they were given unemployment payments.  Employers such as me went to great lengths to make sure that if someone was fired it was for a good documentable reason, in an effort to avoid having to pay for unemployment.  In practice, that didn’t matter too much.  The likelihood that the State would grant benefits was extremely high, maybe 80%.  If you protested you had to appear before a state “referee,” who was, unsurprisingly, very biased in favor of the claimant.

But as bad as unemployment costs got, they were nothing compared to Workman’s Compensation.  Here is the way the game was played:  If you were on unemployment it was understood that you were “ready, willing and able” to work. If you were on Workman’s Compensation it meant you were injured and could not work.  So, an employee always went for Unemployment benefits first and when they ran out, suddenly discovered that he was injured, usually with a bad back.  In Detroit, an employer almost never won a Comp case.

After a period of time, my insurance company put me in what was called the “Assigned Risk” pool.  What that meant in practice was that my Workman’s Compensation insurance costs doubled overnight.  Every new employee hired became a huge financial burden not in terms of wages but in terms of Unemployment and Workman’s Comp costs.

But perhaps the scariest thing that could happen to an employer was being summoned in front of the Civil Rights Commission, to face charges of “Wrongful Discharge.” Here you had to prove a negative, that you did not violate someone’s rights.  This happened to me three times.  If the Commission determined you were guilty, which were two out of three for me, the remedy was to pay all of an employee’s wages from the time he was separated from your employ to the time of the Commission’s finding.  Since the system moved very slowly, an employer could be faced with paying as much as two years’ salary.

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One does not have to travel far to find these similar problems in many other locations.  It is having a chilling effect on business start ups and employment nationwide.  Detroit just took it to a slightly more ludicrous extreme and it has been going on longer than other locations.  It is a test tube of disastrous progressive policies, economic naivete, political corruption, and the subjugation of any accountability to fears of being called racist.

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The Tools of Capitalism

George Gilder in The New Edition of Wealth and Poverty made an interesting observation that capital is the tool of capitalism like books are the tools of the intellectuals and academics.  This analogy led me to my article in American Thinker Craftsmen of Capital published on 9/29/12.  (I submitted it as Capital Craftsmen.  I like their title better.)


Capital is the tool of the capitalists.  Those who create it know far better how to deploy it than those who seek to expropriate it in the name of fairness, social justice, or whatever other rationalization the intellectuals and elites may conjure.  Just as the craftsman learned through trial and error, so does the capitalist.  Failure is part of the process.

As George Gilder so profoundly noted in his new edition of Wealth and Poverty, capitalism works best when knowledge is matched with power.  When knowledge and power are matched, we get iPhones, Apples, Microsofts, Amazons, the vaccine to eliminate cervical cancer, J.K. Rowling’s Harry Potter books, Facebooks, and Googles.  When political power is exercised without knowledge or in place of knowledge, Gilder’s definition of regulation, we end up with Solyndras, a collapsed housing market, and dozens of financial regulatory agencies that were unable to stop the worst financial collapse in eighty years.

Warren Buffett may be willing to pay more taxes, though he apparently is not willing to do so voluntarily, as Mitt Romney did.  But the critical question is not how much the wealthy are able or willing to pay, but where the capital will generate the greatest economic growth.  Capital is a tool that, in the hands of Buffett and other capitalists like him, has generated billions of dollars of wealth, jobs, and tax revenues.

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Unfortunately, thought provoking philosophers are rarely heard on the campaign trail.  Coverage is directed to emotional juveniles and political campaign as a performance art.  It does no good to complain about poll sampling and media bias.  The champion of our free market must connect philosophical truths to the masses at an emotional level.  The takes an extraordinary communicator.  It remains to be seen if Romney and Ryan are up to the task.

Wealth an Poverty was written on the eve of the Reagan Revolution, the supply side tax cuts and the 25 year economic resurgence from the stagnation of the 1970′s, from Nixon through Carter.  Gilder added 40,000 words to this edition but the core was written over thirty years ago and remains pertinent.  Gilder raises better answers by raising better questions.  I have posted several excerpts from his book on this blog and you can access them with the search feature above to the right.

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The Other Side of Government Help

From my recent post in American Thinker, What Government Really Does for My Business, 7/17/12

These are just the recent additions to decades of regulations that have chiseled away at company profits and potential for decades.  “Every snowflake pleads innocent, but it is still an avalanche.”  As bad as this economy is now,  image how much worse it would have been had this administration had its way in passing the Card Check bill and the disastrous Cap and Trade bill.

We are fully aware of the benefits of a government to provide a secure environment to grow, and the infrastructure to move our products. But those in business are also keenly aware of the ever increasing burdens inflicted on those businesses by poorly thought out, never ending, always changing regulations and mandates.  You can’t brag on the benefits without accepting responsibility for the burdens.

The greater debt is owed by the president and his leviathan government to the taxpayers and businesses who fund his endless golf outings, Michelle’s expensive vacations, and the utopian statist nightmare he has foisted on us.

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Deniers vs Skeptics

Few of us who comment on the climate debate know the science involved, but there is more to it than just the science. Claiming to be “beyond left and right” I lean towards a lot of economic thought, but one certainly would expect science to be beyond the constraints of left and right thinking. Scientists are almost by definition skeptics.

My skepticism is based on the language of the radical proponents who treat skeptics like religious heretics. They immediately claim that skeptics are all in the pockets of the carbon fuel industries, when in fact the carbon fuel interests often support the climate change crowd.  When large established industries support such causes and the regulations they spawn, they too often use them to suppress competitions or otherwise seek a market advantage.  Nor should we ignore the influence that government funds have on scientists who are paid to reach preordained conclusions.

History has plenty of dire predictions from the well credentialed that did not come true.   And while we laymen are told to listent to the experts, this usually means listening to just the experts one side wants us to hear.  Furthermore, the ‘experts’ are most often wrong in a field where the variables are infinite and the environment is unstable.  This may be more true of climatology than most other hard scientific fields.

I count myself among the skeptics.  I just do not know enough about the science to state with any certainty that man caused climate change is either true or not, or what the causes and effects of changes in carbon dioxide in the atmosphere are.

S. Fred Singer writes in The American Thinker, Climate Deniers Are Giving Us Skeptics a Bad Name, 2/129/12.


In my view, warmistas and deniers are very similar in some respects — at least their extremists are.  They have fixed ideas about climate, its change, and its cause.  They both ignore “inconvenient truths” and select data and facts that support their preconceived views.  Many of them are also quite intolerant and unwilling to discuss or debate these views — and quite willing to think the worst of their opponents.

I have concluded that we can accomplish very little with convinced warmistas and probably even less with true deniers.  So we just make our measurements, perfect our theories, publish our work, and hope that in time the truth will out.

  • “The data doesn’t matter. We’re not basing our recommendations on the data. We’re basing them on the climate models.” -Prof. Chris Folland, Hadley Centre for Climate Prediction and Research
  • “The models are convenient fictions that provide something very useful.” -Dr David Frame, Climate modeler, Oxford University
  • “It doesn’t matter what is true, it only matters what people believe is true.” -Paul Watson, Co-founder of Greenpeace
  • “Unless we announce disasters no one will listen.” -Sir John Houghton, First chairman of the IPCC
  • “No matter if the science of global warming is all phony … climate change provides the greatest opportunity to bring about justice and equality in the world.” -Christine Stewart, former Canadian Minister of the Environment
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With Friends Like These….

Three recent instances of anti- Israeli stances have come from administration officials in a very short period of time.

First Hillary Clinton overreacted to an orthodox effort to separate the seating of men and women on Israeli buses. The effort was thwarted by Israel’s own courts.

From The Telegraph  Israel furious at Hillary Clinton’s concern for democracy in country, 12/6/11:

“We fail to see why this is a matter of such importance for the US Secretary of State. Does she deal with the same urgency to the social problems in states other than Israel?

“There is capital punishment in America, this is not the practice in Israel. America’s hard-line Mormons practice polygamy. Which of us is like Iran? We could make many more comparisons which would point out just how ridiculous her criticisms are.”

From Commentary Clinton’s Anti-Israel Broadside Misreads Both Democracy and the Facts by Evelyn Gordon 12/5/11:

In the Obama administration’s latest salvo against Israel (see here and herefor previous rounds), Secretary of State Hillary Clinton reportedly accused Israel of behaving like undemocratic regimes, even comparing it directly to Iran.

This is so outrageous it shouldn’t need refuting. But since the secretary of state is clearly confused about what distinguishes democracies from non-democracies, allow me to help: Democracies, like non-democracies, consist of human beings, and human beings everywhere sometimes produce bad ideas. But unlike non-democracies, democracies have numerous self-correcting mechanisms to keep such bad ideas in check. And nothing better proves this than the very examples she cited.

Take, for instance, the segregated buses. Some years ago, a few extremist ultra-Orthodox communities decided that buses should be segregated, with men sitting in front and women in back. Shockingly, the public bus company serving these communities complied. Like Clinton, I find this outrageous, as did most Israelis when they learned of it. But here’s the part of the story Clinton didn’t tell:

Israel’s vibrant free press reported on the issue, creating a public outcry. The issue was taken up by Israel’s democratically elected government. Ordinary individuals joined with some of Israel’s numerous civil-society organizations to petition Israel’s independent High Court of Justice, which unsurprisingly ruled the segregation illegal. Now, civil-society activists are monitoring the ruling’s enforcement.  The verdict so far, as per one activist’s account in Haaretz last month: Some ultra-Orthodox passengers are palpably hostile, but women can sit in the front of the bus without suffering harassment.

In short, the self-correcting mechanisms of Israel’s democracy worked exactly the way they were supposed to: Instead of receiving official sanction, as it does in, say, Saudi Arabia, gender segregation was legally quashed.

Leon Panetta earned a rebuke from the Anti -Defamation League (ADL) in ADL ‘Deeply Troubled’ at Speech by Defense Secretary Panetta that Puts Onus on Israel:

The president has taken important steps to express U.S. understanding of the challenges facing Israel, notably in his September speech to the U.N. General Assembly, and in work to forestall Palestinian statehood efforts at the U.N.  Secretary Panetta’s unjustified attempt to place the onus on Israel to overcome these forces is a step backward in that effort at precisely the wrong time.

Finally U.S. Ambassador Howard Gutman placed blame for anti-Semitism in Europe on Israel’s shoulders.  In the Jerusalem Post Scary US views 12/5/11:

Just two days before Panetta made his disturbing comments, US Ambassador to Belgium Howard Gutman, the son of a Polish Holocaust survivor, basically blamed Israel for Muslim anti-Semitism in Europe.

Thankfully the White House later distanced itself from Gutman’s speech, made to aconference held by the European Jewish Union. Nevertheless, Gutman had carefully thought out what he said in advance. This was no slip.

First, he noted the “significant anger” and “yes, perhaps hatred and indeed sometimes an all too growing intimidation and violence directed at Jews generally as a result of the continuing tensions between Israel and the Palestinian territories and other Arab neighbors in the Middle East.”

But instead of denouncing Muslims who attack European Jews because Israel stubbornly insists on defending itself in, say, Operation Cast Lead – a military incursion into the Hamas-controlled Gaza Strip to stop rockets and mortar shells fired at Israeli civilians – Gutman attempted to understand these outbursts of violence as a legitimate reaction and, therefore, fundamentally different from “traditional” forms of anti-Semitism.

Just as Jews such as Gutman’s father were not responsible for the sort of anti-Semitism directed at them during the Holocaust, so, too, is it unfair to point to Israeli policies as triggering Muslim violence against European Jews.

And finally from Commentary Has Obama Destroyed the Alliance? By Jonathan Tobin, 12/6/11:

It’s been a difficult week for Israel. A trifecta of attacks on the foundation of the ties between the United States and the Jewish state in the past few days have exposed the ambivalent feelings of top Obama administration officials. If you add together recent statements by Secretary of Defense Leon Panetta,Secretary of State Hillary Clinton andU.S. Ambassador to Belgium Howard Gutman, it’s hard to blame Caroline Glick for claiming that “under Obama, the U.S. is no longer Israel’s ally.”

But it’s worthwhile pointing out that despite these ominous signals and the failure of the administration’s promises to stop Iran’s nuclear program, Obama is still operating under constraints that will make it difficult for him to further weaken the bonds that unite Israel and the United States. The offensive words uttered by Panetta, Clinton and Gutman, as well as previous actions by Obama, point more to their frustration with a situation in which they know they cannot teach Israel’s government the rough lesson they believe it deserves than anything else.

HKO comments:

Read the articles in full and the various links.  As Alan Derschowitz so eloquently explained, the difference between genuine criticism of Israel and anti-Semitism is when you expect Israel to act in a way that you would never expect another country to behave.

With friends like these…….