Competition For Government Contracts Isn't Competition

Someone of the liberal persuasion (I really dislike the fact that, in the U.S., those who advocate Big Government are called "liberals") made a fallacious argument on this blog that "demand" from the state is equal to consumer demand. In reply, I made the point that $1 in government spending has a lesser "net value" than $1 in consumer spending because, in order for the state to spend a Dollar, it has to pay someone to seize it from the taxpayer, pay someone to circulate it through the bureaucracy, pay someone to track it as it circulates through the bureaucracy, pay someone to decide how to spend it, pay someone to place an order, and so on. A friend of mine added that the process of government price discovery is inefficient because the state doesn't necessarily have an incentive to make wise procurement decisions.

Expanding on my buddy's point, John Aziz of Azizonomics makes the case that competition for government contracts isn't competition at all. Says John:

Under a model where private contractors compete for government cash, this (competition) is impossible because contractors are essentially bidding for a state-backed monopoly. State bureaucrats determining which contractor will get the money is not competition; there is no market mechanism, there are no consumer preferences. Contractors are just bidding for handouts from the taxpayers’ purse based on the preferences of economic planners. Consumers cannot take their custom elsewhere, because the custom is involuntarily coming out of their taxation.

Case in point: SC taxpayers were billed an additional several million for the construction of the James Island Connector to have the 3 mile-long concrete bridge painted. Painting the bridge provided no engineering or aesthetic value (it actually provided negative aesthetic value, as you can clearly see in the photo I posted), but the state, representing the taxpayers of SC, agreed to pay a contractor to have it done.

Consumer spending involves the market forces of competition and supply and demand. Government spending does not.

Mainstream Media Actually Report Truth About Unemployment Rate?

It appears the MSM are finally waking up to the fact that the unemployment numbers we're fed from the Government are fudged to appear less awful.

The New York Times (of all papers) published a piece about the unreliability of the seasonal adjustment of the July jobs report. The author of the article mistakenly contributed the statistical distortion to "economic turbulence" that has "disrupted the calibration" of the seasonal adjustments, but at least he reported the existence of bad data. And it appears that even market-cheering CNBC has bucked the trend and started reporting the truth about the economy: Better four years late than never, cnbc.com finally published an article about the U-6 unemployment rate, which includes the millions who work McJobs because they can't find better employment, as well as the "marginally attached". Of course, the reported numbers still don't reflect the true unemployment situation, as the Bureau of Lies and Subterfuge's methodology is bunk. But still. What's the weather like in Hell right now?

Buried Headlines: August 2, 2012

For four years now the financial media have been surprised by the depths of this economic depression. According to Google, the word "unexpectedly" appears 223,000 times on cnbc.com. Dollars to donuts the majority of instances in which that word was used has been since 2007.

US Factory Orders "Unexpectedly" Fall Again

In other news:

Government Motors Profits Tumble 41%

Jobless Claims Increase

Gas Prices Post Rare, Steep Rise In July

Latest Market Glitch Shows Trading "Out of Control"

IRS Pays Out Billions In Fraudulent Refunds

International Data On Living Standards Show U.S. Should Not Emulate Europe

Buried Headlines: August 1, 2012

Having lived in Atlanta for several years, I can attest to its traffic problems. Metro Atlanta is consistently ranked among the metropolitan areas with the highest average commute time. Nonetheless, Georgia voters overwhelmingly rejected yesterday a proposed $7.2 billion transportation plan that would have focused on Metro Atlanta's traffic woes. That may sound crazy. But here's the thing: Other than intra-city highways, why should an onion farmer in Vidalia have to pay for transportation projects in a major metropolitan area a couple hundred miles away? Specifically, why should he have to pay for public transportation projects he won't use? This is the fundamental problem with funding infrastructure projects at the state and federal level: The people who pay for the infrastructure aren't necessarily the people who benefit from it.

GA Voters Reject $7.2 BILLION Transportation Tax

In other news:

Federal Deficit Highest Since 1940s

Economic Confidence Declines To Lowest Level Since January

Networks Practically Silent On GDP In 2012 Despite Its Decline

Senator Bulldog Boxer Hints Carbon Tax Could Be Part Of Larger Budget Deal

Tax Dollars At Play: $30 Million In Unreported GSA Bonuses

Facebook Shares, 44% Below IPO, Continue To Fall

2012 Chevrolet Volt Becomes Centerpiece Of Taxpayer-Funded "Smart Community"

Investing Legend Louis Bacon Quits, Cites "Caustic Political environment And Anti-Business Administration"

Li(e)bor: The Cartel Emerges

Yes, Federal Workers Are Overpaid

Obama Lies About Top Earners' Importance To The Economy

Hit hard by this economic depression, I'm the polar opposite of wealthy. As such, I have no vested interest in defending high-earners. However, this is an economics blog, and I have to call out the Community Organizer for outright lying about the importance of high-earners to the economy. In his speeches devoted to class warfare, including the one at the Roanoke firehouse in which he infamously stated that "if you’ve got a business -- you didn’t build that", Obama has repeatedly inferred that the "wealthiest Americans", who he claims are the ones who benefit most from "tax cuts for the wealthy" (they're not, as the wealthiest Americans earn their money through capital gains, not wages), don't contribute the most to the economy. In fact, he's actually made the claim that they contribute least.

These are Obama's exact words from a speech given from the East Room on July 9, 2012:

By the way, these tax cuts for the wealthiest Americans are also the tax cuts that are least likely to promote growth.  

Least likely to promote growth? This is an bold-faced lie.

The earners of the top income tax bracket are members of the "2%", a block of professionals and small business owners who outnumber Occupy Wall Street's arch nemesis, the dreaded "1%" (which in reality should be called the "99 and 9/10%"), 100 to 1. This income group provides jobs, but, in terms of contributing to the economy, its most important characteristic is its spending. No income group spends more. Therefore, no income group is more important to the growth of our economy, which is 70% consumer spending.

You lie, Mr. Obama.

Director Of The Richmond Fed Is A Lawyer

Other than having blown bubbles that popped and plunged the world into two economic depressions and several smaller recessions, another reason to loathe the Fed is that it's empowered to enforce the Community Reinvestment Act, a notorious piece of legislation that also contributed to the 2008 financial meltdown. Few people realize that, because the Fed enforces the CRA, the boards of directors of the regional Fed banks include seats for minority community "liaisons" (who apparently aren't even required to have experience in finance).

Working one of the McJobs I've held during this depression, I had the pleasure of meeting one of these community liaisons, an accomplished attorney my hometown of Charleston, SC by the name of Wilbur Johnson. In addition to being all-around nice guy, Mr. Johnson has a reputation of being good to the local black community, which is all well and good. But that in no way makes him qualified to be Director of The Federal Reserve Bank of Richmond. Or does it?

Buried Headlines: July 30, 2012

Take that, Ezra Klein! The Washington Compost columnist and Obama sycophant recently published an article claiming that Obamacare would only raise taxes by .5% of GDP, which would mean an increase of a "paltry" $75 billion. Well, the CBO just released a study which estimated the increase to be $1 trillion. ONE TRILLION, Mr. Klein.

CBO: Obamacare Levies $1 Trillion In New Taxes

Obamacare Penalty Regressive, Will Cost Most Uninsured At Least $1,000 Annually

In other news:

Postal Service Set To Default Payment On Financial Woes

Looming Postal Service Default Shakes Mailers' Confidence

Moody's: "The ECB Can Do No More Than Buy Time"

Why The ECB May Have A Credibility Problem

Nicaragua Canal Feasibility Study Underway

ECOMINOES FLASHBACK:  A Real-Life Galt’s Gulch...In Honduras?

Millions Flee California Because Of Progressive Tax System

California: The GDP, Budgetary Woes, And Resistance To Austerity Of A PIIGS Nation 

US Launches Global Washer Trade War

VIDEO: Shooting Victim To Congress: 2nd Amendment Protects Us From YOU

The recent massacre in Aurora, CO reminded me of shooting victim Suzanna Gratia Hupp's testimony before Congress in which the doctor related in the context of a gun control hearing the tragic tale of her inability to stop the slaying of her parents right before her eyes due to a Texas gun law. From the TheConstitutionMan:

On October 16, 1991, Hennard drove his 1987 Ford Ranger pickup truck through the front window of a Luby's Cafeteria at 1705 East Central Texas Expressway in Killeen, yelled "This is what Bell County has done to me!", then opened fire on the restaurant's patrons and staff with a Glock 17 pistol and later a Ruger P89. About 80 people were in the restaurant at the time. He stalked, shot, and killed 23 people and wounded another 20 before committing suicide. During the shooting, he approached Suzanna Gratia Hupp and her parents. Hupp had actually brought a handgun to the Luby's Cafeteria that day, but had left it in her vehicle due to the laws in force at the time, forbidding citizens from carrying firearms. According to her later testimony in favor of Missouri's HB-1720 bill[1] and in general, after she realized that her firearm was not in her purse, but "a hundred feet away in [her] car", her father charged at Hennard in an attempt to subdue him, only to be gunned down; a short time later, her mother was also shot and killed. (Hupp later expressed regret for abiding by the law in question by leaving her firearm in her car, rather than keeping it on her person.) One patron, Tommy Vaughn, threw himself through a plate-glass window to allow others to escape. Hennard allowed a mother and her four-year-old child to leave. He reloaded several times and still had ammunition remaining when he committed suicide by shooting himself in the head after being cornered and wounded by police.

Suzanna concluded her heart-wrenching testimony with the following words:

Just one final statement. I've been sitting here getting more and more fed up with all of this talk about these pieces of machinery have no legitimate sporting purpose. No legitimate hunting purpose. People, that is NOT the point of the Second Amendment. The Second Amendment is not about duck hunting. And I know I'm not going to make very many friends saying this, but it's about our right--all of our rights--to protect ourselves from all of you guys up there.

Whether or not you've seen the video, it's well worth watching.

Buried Headlines: July 29, 2012

Despite the country narrowly escaping economy and jobs-killing Cap and Trade legislation during the first leg down of the economic depression (what were Pelosi & Co. thinking introducing that bill in the middle of that?), the imperial federal government is still shutting coal-fired generators across the land. Inflation already tearing at your meager Obama era wage? Just wait until the price of electricity necessarily skyrockets.

Record Number Of Coal-Fired Generators To Be Shut Down This Year

ECOMINOES FLASHBACK: Massive Blackout: Obama's Stimulus Did Little For Infrastructure

The Fed's incessant liquidity pumping has turned this economic depression into a period of depflation, and the true inflationary effects of Bernanke's CTRL+P policies haven't even been fully realized yet. If this country ever escapes this depression, it will then face another crisis: runaway inflation. Much of the money the Fed "printed" has been kept out of broad circulation. If the economy finally gets going and the new currency starts moving around, we're going to see inflation in this country like we've never seen. Additionally, the "shadow banking" instruments that the Fed relied on to sop up liquidity are deteriorating.

Bring On The Inflation After The Depression: Money Supply At $10 Trillion

In other news:

GM Ramps Up Risky Subprime Auto Loans To *Drive* Sales

Scalia: Guns May Further Regulated

DHS Gears Up For Civil Unrest Prior To Presidential Elections

ECOMINOES FLASHBACK:  Social Unrest When The "2nd" Recession Hits?
 
ECOMINOES FLASHBACK: Gun Control Futile: Supply Will ALWAYS Meet Demand

September: Crunchtime For Europe And Germany

Apple Officials Said To Consider Stake In Twitter