Thursday, August 25, 2011

Why Government Doesn't Create Jobs

If you want to know why $800 billion in government stimulus spending has created 9 percent unemployment, all you have to do is look at the windmill in Milwaukee.

The project involves a single wind turbine 154 feet tall (small by today's standard) that is supposed to supply some electricity to the Milwaukee Port Authority. The $500,000 project is being built with $400,000 in federal stimulus money and another $100,000 from the Wisconsin Focus on Energy Program. It's been several years in the making but things finally seemed ready to go last month when the city finally put the project out to bid. The winner, Kettle Renewable Enterprises, had small subcontracts of $2,000 for women-and-minority-owned firms in its $500,000 offer. However, city alderman Robert Bauman decided this wasn't enough. He vetoed the project, saying more woman-and-minority firms should have been included. "If that means losing $500,000, then we'll lose $500,000," Bauman told the press.

In a nutshell, that's why government never gets anything done. It's not the women-and-minorities part. The problem is that with government everybody has to have a say in what gets done. In the Milwaukee case, federal stimulus rules didn't require the minority subcontracting. In fact, Mayor Tom Barrett is arguing that federal rules prohibit such a mandate in this case. But what does it matter? The important thing in government is that everybody gets to have a say. The Milwaukee Board of Harbor Commissioners has to sign off on the project and their stake may involve pushing some ideology or making constituents happy.

Anyone who has ever worked in a large, bureaucratic organization knows the pattern. Getting anything approved requires going through layer upon layer of bureaucracy. Pretty soon you're in a territory where people signing off know nothing about the project but only have their own oblique interests. Days and weeks are spent in meeting after meeting, trying to get everybody on board and reach an agreement. It's a wonder anything ever gets done.

Government is just the same thing only worse because there are now more stakeholders. Now everybody gets a say. Projects collect interest groups like barnacles, most of them with no interest in the main task but hanging on to push some irrelevant agenda. That's why we have K Street and why everybody there is pushing to have more decision-making moved to Washington in order to increase their leverage.

A few years ago, New York City was trying to decide what to do with Governors Island, a beautiful mile-square piece of real estate off the southern tip of Manhattan that was dropped in the city's lap when the Coast Guard abandoned it after 200 years of federal ownership. A ten-minute ferry ride from Wall Street and dotted with century-old buildings, it would make a fantastic research park along the lines of Stanford Research Park or North Carolina's Research Triangle. When the relevant City Council committee held hearings on the master plan, however, all 12 members began by making a statement of what the project meant for their district. The first speaker, from Harlem, used his five minutes to opine that he didn't like the term "master plan" because it made him think of "masters and slaves," which had a negative association for African Americans. Things went downhill from there. Every representative reiterated that theirs was the most important district in New York City and that whatever happened on Governors Island, it better do something for their constituents. Trying to please everyone, the city has done nothing with Governors Island except hold sculpture exhibitions and outdoor composting lessons and encourage people to go out for bike rides.

It's the same at any hearing in Congress. No matter what the subject, each member gets to make a five-minute introductory speech. This is for the benefit of the television cameras back home. (The members jokingly refer to these as "talkings" rather than "hearings.") By the time the real testimony begins -- usually about an hour later -- members are taking off for other appointments. All this may work when you're investigating corruption in the food stamp program or trying to cast blame for the subprime meltdown, but for building things and getting something done -- forget about it.

Every time the federal government undertakes some simple task, it becomes an effort to reinvent the world. Last week it was revealed that a $20 million stimulus program in Seattle to weatherize homes had managed to weatherize three homes and create 14 jobs in its first year. Nothing is ever straightforward. Every city has lots of companies in the business of weatherizing homes. But the government can't just go out and hire them. It has to throw in provisions for taking people off the street for job training with special outreach for Spanish language speakers and so by the time all this is thrown into the pot, nothing gets done.

There is only way out of this bureaucratic trap -- entrepreneurship. People working in established companies say to themselves, "The hell with all this bureaucracy. I'm going to go out and do this on my own." Last month the New York Times ran a story about Gautam Adani​, an Indian entrepreneur who is providing the country with significant portions of its electricity simply by working around the government and its restrictions. "He is able to do so well partly because he is very entrepreneurial and has found the right opportunity," lamented an official in the government finance ministry. "[I]t's a symptom of a dysfunctional state. He is able to deliver something more effectively than the state."

It's the same everywhere. In The Spirit of Enterprise, his memorable history of Silicon Valley, George Gilder showed that every major company was created by employees of another company who got tired of dealing with upper management and decided to strike out on their own. The process is on-going today -- although Silicon Valley has become been dangerously enmeshed in the government's pursuit of "alternative energy." Businesses start when individuals decide to go outside the bureaucracy -- and it's those small business that still create half the new jobs in the country every year.

But the bigger the government becomes, the harder it is to go around it. With so much investment being directed out of Washington and the government controlling so much money, things eventually come to a standstill. Just as Francis Parkinson noted that large institutions usually build their monumental headquarters just as they are passing the peak of their development, so President Obama's new "Department of Jobs" will be probably mark the end of job creation in America. It will be the one last, fatal layer of bureaucracy.



The media likes scaring us, and we like it

by John Stossel

I’m embarrassed by my profession. We consumer reporters should warn you about life’s important risks, but instead, we mislead you about dubious risks.

I first started thinking about this when interviewing Ralph Nader years ago, before he stopped speaking to me. Nader worried about almost everything: Food? “It can spoil in your own refrigerator,” Chicken? “[It's] contaminated with pesticides, herbicides, fungicides.” Flying? “Inadequate maintenance.” Carpets? “Rugs are dirt collectors. And dirt collectors mean internal, indoor air pollution.” Coffee? “Caffeine is not very good for you.”

He went on and on. Just interviewing him was exhausting. Nader and interest groups like his fuel the Fear Industrial Complex: the network of activists, government bureaucrats, and trial lawyers who profit by scaring people.

The media should be skeptical of their prophesies of doom, but we rarely are.

My TV program, “20/20,” has done frightening reports on the dangers of paper shredders, soccer goals, lawn chemicals, cell phones, garage-door openers, and more. There’s always some truth behind the scares — someone got hurt, or some study somewhere found a risk. But we rarely put the danger in perspective. We give you a breathless rush of alarm over every possibility, often delivered with a throbbing rock beat.

Sometimes we don’t even get the numbers right. Remember the summer of the shark? It was nonsense. That summer the number of shark attacks was hardly different from two previous years. But in those other years we had an election to cover, or OJ was on trial. Mid-summer 2001 didn’t bring many sexy stories, so Time did a cover story on “the Summer of the Shark.”

It should have embarrassed the media into putting risks in perspective. But it didn’t.

Listening to us, you’d think our growing exposure to pesticides, food additives, and other mysterious chemicals has created America’s “cancer epidemic.” But in truth there is no cancer epidemic — cancer incidence is flat, and death rates have been falling for years. But such good news doesn’t get much play. No interest groups benefit from it.

Remember the breast-implant scare? Some lawyers and activists said silicone from breast implants caused lupus, breast cancer, and more. Connie Chung did a scare story on CBS, the FDA banned silicone implants, and soon many women were certain that their medical problems were caused by their implants.

How could they not think that? The Fear Industrial Complex told them they were being slowly poisoned. Lawyer John O’Quinn helped spread the fear and reaped the reward. He sued implant makers again and again until they paid his clients over $1 billion. Fortune called O’Quinn and his partner “lawyers from hell.” O’Quinn won’t say how much money he made off those lawsuits, but he’s now rich to have a warehouse that holds 900 valuable cars.

After the suits from O’Quinn and others bankrupted implant maker Dow Corning, and after many women were terrorized — some so much they cut their own breasts open to get the implants out — scientists started saying there’s no evidence that silicone causes autoimmune disease and cancer. Study after study failed to find a link. Sherine Gabriel, chair of the department of health sciences research at the Mayo Clinic, announced that there was “no significant difference in the occurrence of connective tissue diseases between the women who had the implants and the women who did not.”

The FDA has now re-approved silicone implants, and thousands of women are having implants inserted, implants that contain the very same silicone that was used before.

So has O’Quinn apologized for scaring women and bankrupting Dow Corning? No. Did he give the money back? Of course not. The lawyers never do. Instead, O’Quinn impugns the authors of the medical studies. “Who bought and paid for that science?” he said to me, indignantly. He told me he’s proud to sue rich businessmen.

Reporters rely on lawyers like O’Quinn, bureaucracies like the FDA, and interest groups like Nader’s to give us safety warnings and “dirt” on evil companies. We should be more skeptical. The Fear Industrial Complex has motives of its own.




Politicization of Justice Department worsens: "If you are a moderate or conservative, don’t expect to get a job with the Justice Department during the Obama administration. All 15 of the attorneys hired by the Justice Department’s Employment Litigation Section were ardent leftists -- no moderate or conservative, let alone libertarian, hires at all. Some of the hires were fresh out of law school with no real world legal experience."

Indiana lawmakers to review police-entering-home ruling: "Indiana lawmakers will take on a recent controversial ruling of the Indiana Supreme Court on Wednesday when a study committee debates whether Hoosiers have the right to physically block police from entering their homes. Richard L. Barnes was convicted of misdemeanor resisting law enforcement for shoving an officer who tried to enter his home without a warrant. The police were responding to a 911 call about a domestic disturbance. He shoved a police officer, who entered anyway, and was shocked with a stun gun and arrested. The court said Barnes had no right to resist police entry. That outraged a number of Hoosiers and lawmakers, who said the state's castle doctrine — which allows people to defend their homes — makes no exception for police."

US government balloons; private sector shrinks: "Government regulatory agencies now employ more agents and workers than McDonald's, Ford, Disney and Boeing combined, and public sector employment is booming; up by 13% since 2008, while private sector jobs are down by well over 5%, and the unemployment rate remains steady at over 9%. Regulatory agency budgets have grown by 16%, or $54 billion, during Obama’s presidency, while the private economy remains stagnant"

Snail mail to get even slower: "The U.S. Postal Service could save about $1.5 billion a year if it relaxed its two-to-three-day delivery schedules for first-class and Priority Mail deliveries by a day, according to a new study. Postal executives are seriously considering the idea and are expected to announce plans regarding delivery schedules after Labor Day, according to USPS officials. Currently the Postal Service advises customers that first-class and Priority Mail deliveries will arrive, on average, in two or three days. But relaxing the schedule by a day would cut about $336 million in premium pay for employees working overnight and Sundays to meet current delivery schedules, according to the study."

Decriminalizing drugs will save lives and money: "Like most Americans, I believe the War on Drugs is a failure and should end. Do I want children to use drugs? Of course not; not my children, not anyone’s children. Nor do I want anyone, especially children, to eat foods that are not good for them, to drive too fast, or to stand out in the cold until they come down with pneumonia. But I am not willing to use force to stop them, or throw them in jail if they persist in such behavior."

Medicare bidding process will hurt doctors, patients: "A poorly designed set of changes to Medicare announced earlier this month could have serious negative consequences as it hits home here in the Washington, D.C., area. The venture, known by the only-a-bureaucrat-could-love-it name of Competitive Bidding Program for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, has some decent ideas at its core, but serious design flaws could cause it to waste money, override doctors’ decisions and harm patients here and everywhere else in the country."

Obama’s wars on humanity: "America's a poster child failed state, defined in a recent article as follows: (1) An inability or unwillingness to protect its citizens from violence and other forms of harm. (2) Its abrogation of rule of law standards. (3) Its lawless belligerent pursuits. (4) If nominal democracies, its policy deficiencies, exposing a serious democratic deficit."


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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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