Fed To Take Propaganda To The Schoolroom: Will Teach Grade 8-12 Students About Constitutionality Of… The Fed


Back in September we noted a peculiar RFP by the Fed which sought to become a secret ‘big brother’ to the social media world, and to “monitor billions of conversations and generate text analytics based on predefined criteria.” The Fed’s desired product should be able to “determine the sentiment of a speaker or writer with respect to some topic or document”…
“The solution must be able to gather data from the primary social media platforms – Facebook, Twitter, Blogs, Forums and YouTube. It should also be able to aggregate data from various media outlets such as: CNN, WSJ, Factiva etc.” Most importantly, the “Listening Platform” should be able to “Handle crisis situations, Continuously monitor conversations, and Identify and reach out to key bloggers and influencers.” While it is unclear just how successful the Fed has been in eavesdropping on various critical blogs, and divining “sentiment”, it now appears that the propaganda masters at the Office of Central Planning have decided to go for young American minds while they are still pliable. It appears that as part of its reenactment of Goebbels “economic education” curriculum, the Fed will now directly appeal to K 8-12 student, in which it will elucidate on the premise of “Constitutionality of a Central Bank.” You know – just in case said young (and soon to be very unemployed) minds get ideas that heaven forbid, the master bank running the US is not exactly constitutional – you know, that whole thing between Andrew Jackson and the Second Bank of the United States…

And in case one is wondering what dogmatic propaganda their children will be filled with, here is the course outline.

Lesson Description

The Constitution of the United States outlines the basic principles of the U.S. government. This lesson focuses on the express and implied powers of Congress and the power of the Supreme Court to decide whether a law is unconstitutional. In this lesson, students learn about McCulloch v. Maryland, a case decided in 1819 over (1) whether the state of Maryland had the right to tax the Second Bank of the United States and (2) whether Congress had violated the Constitution in establishing the Bank. Students also review the expressed powers of Congress identified in the Constitution and analyze how Congress implements the necessary and proper (elastic) clause to enact its expressed powers. Finally, students use their knowledge of McCulloch v. Maryland and the necessary and proper clause to consider the constitutionality of the Federal Reserve System.


Expressed powers
Federal Reserve Act
Fiat money
Implied powers
Necessary and proper (elastic) clause
Value of money [ZH: lol]


Students will:
  • define expressed powers, implied powers, precedent, fiat money, the Federal Reserve Act, the necessary and proper (elastic) clause, and the value of money;
  • cite examples of the expressed powers granted to Congress in Article 1, Section 8 of the Constitution;
  • explain the meaning of the necessary and proper (elastic) clause;
  • explain the significance of the McCulloch vs. Maryland Supreme Court case; and
  • give examples of the implied powers necessary to implement various expressed powers.

Yet the oddest thing about the lesson plan is visual #4. It speaks for itself:

The US Education Bubble


The US Education Bubble

In the world of finance, there is always talk of bubbles – mortgage bubbles, tech stock bubbles, junk bond bubbles. But bubbles don’t develop only in financial markets. In recent years, there’s been another one quietly inflating, not capturing the attention of most observers.

It’s an education bubble – just not the one of student debt that has graced the pages of the New York Times and so many other publications in recent months.

The problem is not that we are overeducating ourselves as many would have you believe. Rather, it’s that we are spending a fortune to undereducate ourselves.

The United States has always been a very educated country. But it is becoming less and less so, especially in the areas that matter to our individual and collective economic futures. Our undereducation begins with a stubbornly high dropout rate among secondary education students. About a quarter of those who begin high school don’t finish.

In an educational system where graduation from high school at a minimum level often means no grasp of mathematics beyond basic arithmetic, no training in basic personal finance, and no marketable professional skills, this is an obvious problem We can and should do more to prepare high school graduates for the world they now live in.

The big problems aren’t rooted in high school education, however, but with the decisions we as a nation are making in the education we get beyond the compulsory level.

Of those students who do make it through high school, 30% will not go on to any further education. That means 70% enroll immediately in a two- or four-year degree program, a major increase from the about 49% three decades ago. Despite rising college entry rates, we are not graduating any additional college students. That’s largely because among those who immediately enroll in college post high school, some 40% are not expected to get their degrees within six years.

The result: our overall college-educated cohort has flatlined over the past 30 years. The number of American citizens aged 25-34 who have attained a college education – including either a two- or four-year degree program – is exactly the same as the percentage among 55-64-year-olds, at 41%. (The US is also the only developed nation where a higher percentage of 55- to 64-year-olds than 25- to 34-year-olds has graduated from high school.)

Thirty years ago that 41% figure led the world in college grads; now we’re 16th and trending lower.

Many have suggested that it’s because we have a less than stellar college education system. But nothing could be further from the truth. While it has some problems for sure, the US remains a leader in post-secondary educational quality. One need look no further than the increasing number of foreign students pursuing advanced degrees in the US. For the 2009-10 school year, about 690,000 non-US citizens were enrolled at colleges in the US – the highest level in the world and up 26% from a decade ago.

Not only are foreigners attending our schools in record numbers, they are far more apt to pursue high-level degrees than US students. Foreign students constitute 2.5% of bachelor’s degree students, 10% of graduate students, and 33% of doctoral candidates.

Despite a top-notch educational system in the US, we’re failing to take full advantage of the opportunities it provides. But the bad news doesn’t end there.

In the 21st century, intellectual capital is what truly differentiates in the job market and what helps a country grow its economy. Investments in biosciences, computers and electronics, engineering, and other growing high-tech industries have been the major differentiator in recent decades. In order to be competitive in those fields, however, a nation must invest in so-called “STEM” studies (Science, Technology, Engineering, and Math).

During the latter half of the 20th century, as more and more US high-schoolers opted to at least start college and were able to afford to go, their choice of academic pursuits have tended away from STEM subjects and toward the less-rigorous liberal arts.

When fewer students attended college and even fewer jobs required technical skills, private employers, and especially government, could soak up the overflow, putting people to work provided they had a degree, any degree… for a while. English literature, sociology, psychology, communications, fine arts, gender studies, and the like were majors that led, inadvertently, to nontechnical jobs – the blue-collar work of an information economy, marketing, and business, and of course to teaching the increasing numbers of new college students.

However, more careers than ever now require technical skills. Economic growth has slowed and unemployment rates have spiked, making employers much pickier about qualifications to hire. Plus, boomers have chosen or been forced to work longer in those professorships and other jobs.

There is now a glut of liberal arts majors. A classic bubble, born of unrealistic expectations that the investment of a hundred grand (or more) must result in a cascade of job offers. Or at least one.

It’s not happening. A study from Georgetown University listed the five college majors with the highest unemployment rates (crossed against popularity): clinical psychology, 19.5%; miscellaneous fine arts, 16.2%; United States history, 15.1%; library science, 15.0%; and military technologies and educational psychology are tied at 10.9%.

Unemployment rates for STEM subjects? Astrophysics/astronomy, just about 0%; geological and geophysics engineering, 0% as well; physical science, 2.5%; geosciences, 3.2%; and math/computer science, 3.5%.

STEM jobs also pay more. The list of the 20 highest mid-career median salaries, by college degree, features no careers from the liberal arts. Instead, according to a survey from PayScale.com, at the top we find: petroleum engineering, $155,000/yr.; chemical engineering, $109,000; electrical engineering, $103,000; material science & engineering, $103,000; aerospace engineering, $102,000; physics, $101,000; applied mathematics, $98,600; computer engineering, $101,000; and nuclear engineering, $97,800.

Liberal arts degrees provide few prospects for graduates. Yet the bubble continues to inflate.

In 2009, 1,601,368 bachelor’s degrees were conferred in the US, a 30% increase from 2000, which should be a good thing. But of these, a large plurality, 590,678, or 36.9%, was awarded in one or another of the liberal arts. That’s higher than 2000’s 36.1%.

Moreover, the next most popular major was business, with 347,985 degrees, or 21.7% of the total (up from 20.7% in 2000). And it was followed by health professions at 120,488 (7.5% vs. 6.5% in 2000); and education at 101,708 (6.4% vs. 8.8% in 2000). The business bulge would be okay if students were trained in how to start their own businesses. But it’s more likely that they dream of a lavish Wall Street job, one few will ever attain. In fact, that PayScale survey listed business as only the 59th best-paying college degree.

At the other end, these are the bachelor’s degrees earned in STEM subjects, as a percentage of 2009’s total, compared with 2000: engineering, 6.4% (down from 8.8%); biological and biomedical sciences , 5.0% (down from 5.1%); computer and information sciences, 2.4% (down from 3.1%); physical sciences and science technologies, 1.4% (down from 1.5%); and at bottom, math and statistics, 1.0% (up from 0.9%).

Americans don’t get it. Foreigners studying here do. True, the highest concentration of foreigners is the 21% in business and management. After that, though, comes engineering at 18%, nearly triple the level of US students; physical and life sciences (9%), and math and computer science (9%).

More than one in three foreign students at US colleges are entering these fields. Compare that to to fewer than one in six US collegians. Fine and applied arts, English, and humanities collectively account for only 12% of the foreigners’ total.

There are any number of reasons for the emergence of the US’s liberal-arts bubble. One is easy money. Students have been encouraged to attend college by the availability of loans, both governmental and private sector, and the disproportionate wealth of their baby boomer parents’ generation.

In addition, many companies began requiring a degree – any degree – for entry-level jobs that could adequately be filled by a bright high-schooler.

Institutions of higher learning bear some measure of blame as well. Liberal arts programs are much more profitable than hard sciences – professor salaries are lower as their non-academic options are lower, less equipment is required, and of course, recruiting is easier.

Other factors might include the stigmatization of “nerds” who take on more challenging studies; the lack of quality math and science education in secondary schools (where are they going to get great teachers when there’s so much money to be made with the relevant degrees elsewhere?); and the widespread misperception that any college degree will punch one’s ticket to an easier life.

As more philosophy B.A.s wait tables, it’d be nice if we could wave a magic wand that populated high school science and math classes with teachers who inspire students and students who want to be inspired. But, alas, this a generational bubble.

Lacking that, high school counselors should begin warning students of the perils of spending four years pursuing an interest for which there is no market and advising their charges where the real opportunities lie.

Would-be liberal arts majors must face the reality that one of their few hopes for a future job is to teach the same subject to the next generation, and that competition for the few such specialized positions is going to be intense.

Furthermore, there remains a wide gap between males and females with regard to math and science. Since three females are now attending college for every two males, this is a vast untapped resource. If females currently are discouraged from becoming interested in STEM subjects from an early age, as much research indicates, that’s reversible. If they can actively be guided toward those fields, that’s doable, too.

The US has led the planet in scientific research and technological innovation for a long time. But that is changing. Other nations, especially in the developing world, are minting new scientists and engineers faster than we are. Without major changes to our cultural attitude towards math and science, and some pretty serious changes to the educational system to support it, we risk becoming second-class citizens in a techno-society that we largely invented.

Thomas Jefferson Quote On Money And Banking

Thomas Jefferson’s Top 10 Quotes On Money And Banking

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

“I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” –Thomas Jefferson to John Taylor, 1816.

“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs.” –Thomas Jefferson to Thomas Cooper, 1814.

“The art and mystery of banks… is established on the principle that ‘private debts are a public blessing.’ That the evidences of those private debts, called bank notes, become active capital, and aliment the whole commerce, manufactures, and agriculture of the United States. Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on.”

“The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment…These jugglers were at the feet of government. For it was not, any confidence in their frothy bubbles, but the lack of all other money, which induced…people to take their paper” — Thomas Jefferson, October 1815 letter to (former) Treasury Secretary, Albert Gallatin.

“I own it to be my opinion, that good will arise from the destruction of our credit. I see nothing else which can restrain our disposition to luxury, and to the change of those manners which alone can preserve republican government. As it is impossible to prevent credit, the best way would be to cure its ill effects by giving an instantaneous recovery to the creditor. This would be reducing purchases on credit to purchases for ready money. A man would then see a prison painted on everything he wished, but had not ready money to pay for.” –Thomas Jefferson to Archibald Stuart, 1786.

“If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air… We are warranted, then, in affirming that this parody on the principle of ‘a public debt being a public blessing,’ and its mutation into the blessing of private instead of public debts, is as ridiculous as the original principle itself. In both cases, the truth is, that capital may be produced by industry, and accumulated by economy; but jugglers only will propose to create it by legerdemain tricks with paper.” –Thomas Jefferson to John W. Eppes, 1813.

“The Bank of the United States is one of the most deadly hostilities existing, against the principles and form of our Constitution. An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?” –Thomas Jefferson to Albert Gallatin, 1803.

Regulating Banking Institutions

“The principle of rotation… in the body of [bank] directors… breaks in upon the espirit de corps so apt to prevail in permanent bodies; it gives a chance for the public eye penetrating into the sanctuary of those proceedings and practices, which the avarice of the directors may introduce for their personal emolument, and which the resentments of excluded directors, or the honesty of those duly admitted, might betray to the public; and it gives an opportunity at the end of the year, or at other periods, of correcting a choice, which on trial, proves to have been unfortunate.” –Thomas Jefferson to Albert Gallatin, 1803.

Paper Speculation

“A spirit… of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped.” –Thomas Jefferson to William Carmichael, 1791.

“Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, which has laid up our ships at the wharves as too slow instruments of profit, and has even disarmed the hand of the tailor of his needle and thimble. They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation.” –Thomas Jefferson to Gouverneur Morris, 1791.

Government Shutdowns, Budget Cuts and the Land of Morons

Is this going to please the “tea party”? Cutting an entire 1% from the budget, that is extreme. I mean we will have this 14+ trillion dollar national debt paid off in no time! What retards fall for this dog and pony show? I’ve had multiple people talk to me about it as though it’s really major or “a step in the right direction”, it’s laughable. The government has to finance nearly 400billion dollars per month in new debt and these idiots think cutting 60billion matters?

It doesn’t matter, it’s not a step in the right direction it is a huge ruse so that the “tea party” candidates can tell the voters “see we did as promised we fought hard and cut spending” and sadly that will be good enough for most of them.

Let’s look at the cuts though, put them in easy to relate to terms.

Say you have a credit card with an unlimited credit limit. and you go out and take on 50,000 dollars in new debt every year, you are living large for years on end until your financial advisor steps in and says “look you really need to cut back you will never be able to pay all of this back” so do you say “well I’ll live within my means now”? No, instead you decide that instead of taking on 50,000 in new debt next year you will only take on 49,500! Problem solved, you cut your spending all right.

That is literally how absurd these cuts are, and when you look at them in relation to the big picture it becomes mind blowing, not just how minute to non existent the cuts are, but how dumb the people are who think it’s even noteworthy. Taken the above example if you were going from taking on 50,000 dollars in new debt per year to 49,500 would you consider this a feat worth bragging about as though you had really accomplished something? Or would you not even mention it because it’s so absurd and would make you look like an even bigger failure?

Some Thoughts To Consider About Higher Education

by DC

School begins for many this week, and there are some hard truths about higher education that few wish to explore, let alone acknowledge.

1. Not everyone should go to college. Getting a higher education can be a marvelous experience, but it’s just not for everyone.

I know of no country that attempts to educate everyone at this level. College was originally designed for students who are at least a standard deviation in academic aptitude above the mean. That eliminates all but about 16 percent of the population, and then a lot of those folks are wasting their time and money at a university.

John is a brighter than average high school student, but is not at the top of his class. He is good with his hands and understands how things work. His parents send him to college to become a lawyer.

He is in the bottom 20 percent of his law class. He graduates with an immense debt load and is considered to be a poor lawyer. He doesn’t get much respect.

Suppose instead that John goes to a trade school to become a repairman. He is in the top 20 percent of this group. John the Repairman is highly respected. He has almost no debt, and he makes more money than John the Lawyer.

As an added bonus, society is in need of good repair persons, but we have no need for more bad lawyers.

2. Getting a college degree doesn’t mean that you know anything. Modern universities don’t require that students be knowledgeable to graduate. This sounds odd and administrators and teachers would claim that it is not true, but ask a simple question: What does a student need to know from a university to be allowed to graduate?

The answer is “nothing.”

Students are required to complete a number of tasks. There is a long list of requirements. If they check each one off, they graduate. Students will work hard for grades; they will not necessarily work hard to know something. Modern schools have disassociated the two. Students memorize material, regurgitate it on an exam, and go their way.

Many students graduate knowing next to nothing. Don’t take my word for it. I have been challenging my colleagues to test their students for years. I would love to be wrong on this, but …

3. Grades don’t reflect reality. There are entire areas of universities that give an automatic A to everyone unless they do poorly, and then they are given an A-minus. Much of this results from the improper use of student evaluations of teaching. Having students rate teachers is not a bad idea in itself, but it has evolved into a counter-productive travesty.

Imagine that at your workplace, several times every year, people you associate with are asked to fill out a questionnaire about you. They will remain anonymous and can say anything they wish. Management admits that it doesn’t know what the surveys actually measure, but you will be denied merit pay, and perhaps even fired if your scores are low.

That in a nutshell is how universities use student evaluations.

Critics, and some supporters, maintain that the only reason that this system is maintained is administrative sloth and student crowd control.

Universities are essentially demanding that professors be well-liked by their students or they will be punished. Students are students because they don’t know what they should know. The bottom line is that the evaluation system has resulted in grade inflation and a corresponding reduction in what students actually know.

Research over the last 10 years from all across the U.S. has consistently shown that teachers who get higher student evaluations produce students who tend to do more poorly in subsequent classes.

4. Like the housing market bubble, we may be approaching an education bubble. Paying a lot for an education makes sense if the returns are greater, but the cost of education is rising faster than the benefits. This has serious implications, which I will address in a forthcoming column.

Does War Benefit The Economy?

As in the last post the following transpired between myself and another member of a forum.  The topic was this article entitled “USA has two options to save its economy: declare default or trigger off war”

I post the following because it is a common belief even among educated people who should know better.  That war somehow benefits an economy and the citizenry.  No doubt some well connected benefit immensely (cough cheney cough)  However when paying for a war the government has 2 options, raise taxes or print money both of which steal from the pocket of the citizen.  When someone steals money from you this can NEVER benefit you.

So my initial response to the article was this.

“I disagree, there are no options to save the economy.

I don’t see how the US economy was helped whatsoever by the mid east wars, the only thing that prolonged the inevitable is lowering interest rates to 0 and flooding the economy with money and cheap credit to unqualified people. This is already in the process of unwinding and another war will have no effect. We are already fighting too so I fail to see how adding 1-2 more zones will improve our economic conditions by any beneficial way to the average American. Sure GDP will go up because government spending is included in GDP, but it goes up at the pure expense of the people through devaluing their currency as well as inevitably increasing taxation (as if the latter is possible)

Starting a war will not increase meaningful US manufacturing, create jobs, lower personal and government debt, cut spending which are all things we desperately need.

War IS the health of the state, but when the state wins they win at the expense of the populace.”

So a few posts later someone commented.

“A war in the style of Iraq,drains an economy, they simply dont want to “win”. To Win a war, the people need to be subjugated and in fear, the Iraqis are neither,and havent been since the Invasion. The Iraq war is MEANT to drain the US economy, and to cause fear in the US to gain control, thats it! However a limited conventional war with China.Or Russia would be economically beneficial, as larger, more numerous items,(Tanks, planes, ships,rifles knives GI socks,etc.) would be needed to reequip the military.The US casualties , for the entire “War on Terror” is under 5500 dead and around 40k wounded(this includes 1100 who died in theater, but not combat) compare that to the Normandy campaign with 29k,dead and 210,000 wounded or MIA, or the 50000 lost in Vietnam in roughly the same time frame, it pales in comparison, IMHO the US population has no real stomach for those losses irregardless of their fate.”

I replied

“Explain how war (government spending) in any form or fashion is beneficial to an economy?

Just look at the trillions printed to keep the charade going for the last 2 years, it hasn’t even bought us a month of prosperity. Interest rates are already at 0, they can’t afford to bring them up since they can’t afford Tbill rates going higher, it would also collapse the housing market.”

His reply

“If you go to war with your creditor,the debt vanishes.”

To which I said

“How would that help our economy?

Only a portion of our debt is with China. Plus we are totally dependent as an economy on not only cheap imported goods (to hide inflation for one thing) but also for them to use that money to finance our empire. So pissing off your creditor is usually not a good idea short or long term.”

So then he kinda backpeddles/changes the subject

“How else do you think they will get rid of it? **As I clearly said from the first post, I don’t think they can get rid of it** it accomplishes population reduction and consumption, they will fight, it is planned.Its also a bit more than “pissing of your creditor” even in a conventional Sino-US war the casualties would be in the tens of millions.If it went nuclear, close to a billion.”

My final response, which has gone unanswered so far

“I’m asking how it will help our economy, as in create jobs, create manufacturing that is a benefit to society.

You seem to be arguing that starting a war with China our largest creditor will erase a couple trillion from the debt and help our economic crisis.  I just fail to see how.  Even if it erased our current 13 trillion official debt, we still have over 100 trillion dollars of unfunded liabilities!  Even if we kicked major ass in a war we would be back to this 13 trillion dollars in less than a decade, it only took 10 years to go from 4 to 14 trillion.  It took 200 years to go from 0-4.

While fighting this war we will run up into the many trillions of dollars since undoubtedly there would be a draft and our military would have to double in size, where do you propose we raise this 2-5 trillion?  From the people who are unemployed and heavily indebted?  Or from the myriad of other countries who love our imperialism throughout the world and are only waiting to be asked to lend a helping hand?

China has us by the gonads and it would be the biggest mistake in history to start a war with them.  It’s like starting a war with your banker and supplier, you have no money, materials or food how long do you think the fight would last?”


Americans Are Devoid Of Economic Knowledge

I am continually blown away by the raw ignorance of the American public.  I don’t know what is worse, those that have been brainwashed into either rampant israel first neo cons, radical outright marxists, or the ones who have no desire to even attempt to learn anything of importance and just watch american idol or whatever other garbage happens to be on TV.

I spend a lot of time perusing the internet and in so doing come across such ignorance unfortunately on a regular basis. So I am starting a new series of sorts where I post the stupidity here and also my refutation thereof.

I start today with an economics story posted at ANU News. The ABC story in summary was this

“By Ed Smith’s math, the CEO of Walmart earns more in an hour than his employees will earn in a year. Alderman: Walmart CEO earns more in 1 hour than workers earn in a year. Smith, an alderman in Chicago, presented posters at a city council meeting showing that Walmart CEO Michael Duke’s $35 million salary, when converted to an hourly wage, worked out to $16,826.92. By comparison, at a Walmart store planned for the Windy City’s Pullman neighborhood, new employees to be paid $8.75 an hour would gross $13,650 a year.”

Now I know I promised never to defend Wal-Mart again once they back Obama’s health plan and I’m sticking to it, rather I’m refuting some basic economic misinformation I routinely come across.

So after reading the full marxist propaganda laden story I posted this to the ANU site.

“Wow a hit piece on Wal-Mart by jew run ABC news. How utterly surprising.

Let’s see why would the jews hate Wal-Mart, could it be because they are defiantly anti union! So with that in mind why in hell would ANU run this garbage?

Does anyone force people to work at Wal-Mart? Why don’t the employees work towards becoming CEO’s? Also as far as CEO pay goes Duke is one of the lower paid especially considering the size of his company his annual salary is not 35million as the article claims but rather 1.2 million. After stock options and bonuses his total compensation for 2009 was just under 20 million still far lower than many other CEO’s.”


So then a brainiac “Scott Banks” chimes in

“ANU ran this “garbage” to show how well treason pays. If Mr. Duke could import 13 cent an hour Chinks as easily as he imports cheap Chinese crap there would be no Americans at all working at Walmart, just like there are no Americans manufacturing anything in America anymore. Thanks in part to traitors like Mike Duke.”

So I reply

“I’d love to hear your explanation how Duke has anything to do with driving businesses from our land.

Let’s assign blame where blame is due.

First if the jewish run central bank hadn’t debased our currency by 95% we would be a far wealthier nation and could afford to buy higher quality goods.

Second, politicians to pay for the massive debts incurred by runaway spending tax the most productive in a society and drive them to more business friendly places.

Third, marxist controlled labor unions have driven up the wages to an unsustainable level that makes American labor not be competitive with the rest of the world. So let’s recap, first you have a jewish run central bank who debases the money so that companies must pay their employees far more year over year because inflation is robbing them, second companies must pay their employees more because the government is robbing them, and third marxist labor unions are further exacerbating the problem by driving up the wages. Think about it if you had 0 inflation, no taxes and everything around you fell in price by 40% you could make 20-30k a year and live a comfortable life. But because of the aforementioned things you need to make closer to 100k to live the same lifestyle. You eliminate those problems and you will return to a world where factories can afford to remain here because they can pay US workers a fair price, and the worker in turn isn’t robbed through inflation nor taxation.

Which of course is the problem. People look at the symptoms “oh America doesn’t produce anything anymore” “this guy is a traitor blah blah blah”yet fail to go any deeper to address the problem. Wake up before posting anymore of this marxist crap.”

So Scott Banks responds

“Blinded by Limbaugh neo-con horsecrap you fail to see that the solution is, and always was, protectionism. I’ll explain it to you Thomas. America is like a family farm circa 1880. The homesteaders work all year chopping wood, growing crops, canning jam, spinning yarn, making candles and raising animals. When the family’s needs for all of the above items have been met for the year the surplus is loaded into wagons and taken into town and sold. The cash is either banked or used to buy things the farmers cannot produce themselves. If the farm does not produce product in adequate quantities to sustain the family, let alone produce a surplus, the family must go into town and borrow money(or spend their savings)to buy the supplies they need to make up the difference for the year. That is how America as a nation is functioning right now. It cannot last. You go ahead and spew all the neocon globalist garbage you want about high wages, bad unions and competing with the Chinese. The fact of the matter is if America doesn’t start producing products in quantities sufficient to meet the needs of it’s citizens, America is going to go broke. Look at the charts for GDP, corporate debt, national debt, household debt. In 1975 America’s GDP produced it’s last trade surplus. From 1975 onward America’s various debts took off into outer space. That is no coincidence. Like I showed, you either produce or borrow. The end of your foolishness is at hand Thomas. You’re almost there and when you cross the finish line you can thank gutter rat traitors like Mike Duke and the Walton family for that.”

And here is my latest reply.

“First, I run the website truthinourtime.com and I challenge you to find any shred of evidence to back up your claim that I am a “neo con limbaugh listening globalist”

Second, you don’t seem to see the big picture that being WHY are goods cheaper to produce in China? I provided you with 3 of the big reasons why the US is not competitive in the global manufacturing market place.

Not only that but I provided a solution, kick out the jewish central bankers, kick out the marxist (jewish) programs in washington and kick out the marxist labor unions. Overnight you could lower wages because goods would be cheaper (due to the reasons I provided in the post above)

Now how in the hell does that translate to you as being “globalist” or “neo conservative”?

BTW feel free to email me personally at [email protected] or stop by the website as I am in the process of turning our exchange into a post. “

Now Scotts is a very common argument (especially the ad hominem attacks when out of ammo) That protectionism, not abolishing the jewish run central banks which has devalued our currency 95% in a century, a marxist run government that through all hidden permits, fees and taxes robs the citizenry to the tune of 40-80% per year, or the labor unions that drive up the costs of goods for everyone.

Surely those things don’t matter all we have to do is to put an import tariff on the chinese crap so that we all pay higher prices.  Of course protectionists don’t say anything about how our expensive goods will help us export any more goods.

As I pointed out to Scott and would like to reiterate. The problem isn’t that nothing is made here and our trade deficit is off the charts. That is a symptom. The problem is that we CAN’T produce anything competitively on the global market place.  It’s like looking at someone and saying “damnit get out and win this marathon, why can’t you win you bum?”  The problem isn’t that they aren’t training but rather they have a broken leg and can’t run competitively until it is fixed and putting a brace on the leg (protectionism) is a very short term fix at best and still won’t make the runner or the economy competitive.

So let’s go.

Why? Why is it that our labor costs are so much higher than that of China? Is it because they only pay pennies per day and we can’t compete with that? Wrong you looking in the wrong place. Why do we have to pay workers 30k a year when in China they only make 5k?

Imagine you are an employee at a factory and make 20 dollars per hour here in the US. Now of this 20 dollars, the government through withholding SS, Medicare and Medicaid is going to take roughly 40% (employers have to match the 7% for SS so the total is 14% not 7%) So now you are left making in reality 12. Well guess what inflation is running at say a modest 5% annually so that’s like making 11.40 an hour instead of 20%.

Well you say $11.40 is still way more than a Chinese factory worker makes and you are correct which is why stuff is made there and not here. Let’s look at your money once you get your paycheck.

Assuming you work 80 hours every 2 weeks your paychecks will be around 913. So how do people spend their paychecks. Well everyone has a cellphone and 20% of the bill is just tax, 30% of every gallon of gas is tax, you pay probably 1% of the total value of your home per year in property tax, there are literally countless other minor taxes on everything you use and “own”.

Now let’s go shopping, and consider the store. Say Wal-Mart, now Wal-Mart has always worked on extremely small margin only a couple percent in many cases. So everything you purchase is subject to 7% sales tax but sadly it doesn’t end there. The store itself has to pay it’s workers a higher wage than normal to compensate for all the taxes and regulations they have t pay and jump through as well as to retain employees. Can you fathom what the property taxes are on a Wal-Mart? I find it sickening in the highest degree that the government literally makes more money % wise from a store such as Wal-Mart for doing absolutely nothing, even though Wal-Mart does 100% of the work from start to finish. Talk about a parasite.

This is just a very small scale example of the ways in which you are taxed but more importantly are taxed in hidden ways, such as the amount a store has to raise it’s price on an item because of the income tax they themselves pay as well as the myriad of taxes and regulations imposed on businesses.

So you see the reason why we can’t compete globally is because we are taxed into oblivion, not just directly, but in hidden sinister ways that most people don’t even realize. How much cheaper would that computer be if HP didn’t have to pay a team of lawyers to interpret different regulations, or pay taxes? According to the Fair Tax book (I am against any form of tax) the embedded tax in goods is 40%. So things would fall in price by roughly 40% if the government got the hell out of the way.

So prices would drop 40% directly, then you would no longer personally be taxed at say 50% of your income, inflation would be 0 and you wouldn’t have to pay 7% sales tax. Now don’t go and think that 200 dollar grocery tab reduced to say 40 bucks is going to make you richer because you make that much every couple days. Wages will also fall in relation to prices but percentage wise but your standard of living will rise.

For example now you make $11.40 (20) but grocery’s cost $200 so after the government dies, over time the bill goes from 200 to 40 but your wages will probably fall from $20 down to say $8 but you only really made 11 bucks anyway and groceries were still $200.

So let’s return to your factory now your boss only has to pay you 8 bucks an hour for you to be able to live the same lifestyle your currently enjoy. So they can hire twice the amount of employee’s (say bye to double digit unemployment) and or sell their goods at a 60% discount. Now this is beginning to bring it inline with the rest of the world.  It’s starting to make the American worker competitive again and rebuilding our evaporating manufacturing sector.

Now granted these are just rough examples since it’s 11pm and I’m tired mainly, but hopefully I have made you think about why things are the way they are and why in our current situation we CANNOT compete globally in the manufacturing sector.

Forgotten Facts of American Labor History

Just about everything that people think they know about labor unions and wage rates is wrong.

The standard tale that practically every student hears over the course of his education is that before the emergence of labor unions, American workers were terribly exploited and their wages were consistently falling. The improvement in labor’s condition was due entirely or at least in large part to labor unionism and favorable federal legislation. In the absence of these, it is widely assumed, people would still be working 80-hour weeks and children would still be working in mines.

This oft-heard tale is, however, almost entirely false, and those parts of it that are true (the low standard of living that people enjoyed in the nineteenth century, for example) are true for reasons other than those alleged by pro-union historians, who see in them only confirmation of their prejudices against the market economy.

As late as the 1920s, labor law in America was based on the following considerations.

Freedom of contract and association were essential principles. A laborer was perfectly free to reject any offer of compensation that an employer might make to him, and an employer was likewise entitled to reject any offer made by a laborer. An employee was free to withhold his labor services if unsatisfied with his employer’s terms; likewise, a group of laborers jointly exercising this individual right were permitted to do so. No one, however, was allowed to prevent individuals who wished to work from exercising their right to do so.

Strikers — like anyone else — were forbidden to interfere with consumers’ right to shop where they liked. And strikes could not obstruct suppliers from making deliveries, since to do so would again violate the rights of others. Finally, since the employer’s plant was private property, the employer had the absolute right to decide who would be permitted to enter, and complete strangers who wished to enter for the purpose of agitating his employees could be lawfully excluded altogether.

This common-sense legal approach to labor unionism began to give way with the Norris-La Guardia Act, signed by Herbert Hoover in 1932. The legislation made “yellow dog” contracts — in which an employee could be required to promise to refrain from union activity as a condition of employment — unenforceable in the courts. The Act also exempted labor unions from prosecution under the Sherman Antitrust Act. Although the Sherman Act should certainly have been (and still should be) repealed, if there were ever an institution guilty of “restraint of trade” it was labor unions, which not only withheld their own labor but which also used intimidation and force to keep down non-union competition. They would henceforth be exempt from behavior that the law deemed criminal in any other context.

The Act also prohibited the federal courts from issuing injunctions against labor unions in some cases and seriously crippled their ability to do so in others. Subsequent Supreme Court decisions made clear that the Act in effect shielded unions from prosecution for activities they may have engaged in during labor disputes. The injunction had been used to put a stop to union violence and property destruction when local authorities seemed unwilling or unable to protect life and property. Unions hated them.

As labor historian Morgan Reynolds explains, “An injunction temporarily restrained union actions pending a trial and this explains the intense union campaign against its use in labor disputes because once violence-ridden strikes were enjoined for a few days, they were difficult to revive, reorganize, and rekindle.”

It is one of the many myths of American labor history that the courts issued injunctions frequently and indiscriminately. Labor economist Sylvester Petro undertook a thorough study of the period from 1880 to 1932 and found injunctions to be exceedingly rare: federal injunctions were issued in not even one percent of all work stoppages, while state injunctions were issued in less than two percent of all work stoppages. And these few injunctions were issued not to thwart labor union activity per se but to put a stop to violence against persons and property. Now even this protection of the employer’s rights — yes, employers have rights, too — would henceforth be absent.

The New Deal added the National Labor Relations Act of 1935, more commonly known as the Wagner Act, to the mix. It had once been the case that a worker who did not wish to join a union or pay its dues refrained from joining and was not obligated to pay dues. Thanks to the Wagner Act, that individual freedom disappeared. From then on, if a majority of workers in a given bargaining unit chose to unionize, then that union represented all the workers and could require them either to join or at least to pay dues.

The usual defense of such coercion is that since the Wagner Act called for a single certified bargaining agent to represent all workers in a given bargaining unit, it was only fair that all such workers be required to contribute something to the union. After all, it is argued, since all workers gain from the union’s activities on their behalf, it would be wrong for them not to contribute toward union expenses. This objection overlooks the real problem, which is the idea of having an exclusive bargaining agent in the first place.

If unions were content to bargain solely on behalf of their own members, then there would be no problem of non-members getting union benefits for free. If individuals were allowed to represent themselves and to enter into contracts with their employers on their own terms, those who wished to remain non-union would not be “free riding” on the benefits bestowed by labor unions, since the union would simply not bargain on their behalf. But federal labor law no longer guarantees workers this freedom.

(As a result of the Taft-Hartley Act of 1947 — which labor historians detest despite the mildness of its provisions, which did little to overturn settled labor law — states have the right to pass “right-to-work” laws, which prohibit unions from attempting to force union membership and dues on workers as the price for keeping their jobs.)

Once officially designated by a majority of workers as the exclusive bargaining agent for all workers, the union is never required to stand for re-election. Even after all the workers who originally voted for the union have died or retired, the union is simply assumed to have the support of a majority of workers. The new slate of workers has no say in the matter at all.

The Wagner Act also forced employers to bargain “in good faith” with unions that were established by a majority of workers. Whether an employer had complied with the vague instruction to bargain “in good faith” would be determined by the all-powerful National Labor Relations Board.

Moreover, the Wagner Act also interfered with employers’ freedom of speech by making it an “unfair labor practice” to attempt to influence their employees’ decision whether to unionize or not. Employers were required to permit union organizers — that is, total strangers — who did not work for them to use company property for the purpose of persuading employees to unionize.

Furthermore, the Wagner Act gave labor unions a degree of legal insulation afforded to no other group in society. The Act made labor unions immune to claims of vicarious responsibility. In plain English, that means that labor unions are not legally responsible for any violence their members might commit, even if union officials themselves order the violence.

All of these legislative measures made it much easier for labor unions to accomplish their goals. In order to fulfill their stated purpose of increasing the wages of their members, labor unions must restrict an employer’s access to alternative sources of labor. That is to say, nonunion workers who wish to seek employment on the terms offered by an employer whose firm is unionized must be prevented from doing so. Harvard University’s Edward Chamberlin once described the unique legal status that labor unions had been granted:

If A is bargaining with B over the sale of his house, and if A were given the privileges of a modern labor union, he would be able (1) to conspire with all other owners of houses not to make any alternative offer to B, using violence or the threat of violence if necessary to prevent them, (2) to deprive B himself of access to any alternative offers, (3) to surround the house of B and cut off all deliveries, including food (except by parcel post), (4) to stop all movement from B’s house, so that if he were for instance a doctor he could not sell his services and make a living, and (5) to institute a boycott of B’s business. All of these privileges, if he were capable of carrying them out, would no doubt strengthen A’s position. But they would not be regarded by anyone as part of “bargaining” — unless A were a labor union.

No wonder Nobel Laureate F.A. Hayek once said, “We have now reached a state where [unions] have become uniquely privileged institutions to which the general rules of law do not apply.”

In practice, during strikes the police have typically stood aside and done nothing in the face of union intimidation and even violence against non-union workers or those who simply wish to continue working. (This is one reason that the court injunction was so often sought in the past against violent strikes.) By means of this kind of coercion, labor unions are able to deprive employers of labor if they do not accede to union demands.

As Henry George wrote in the nineteenth century, “Those who tell you of trades unions bent on raising wages by moral suasion alone are like those who would tell you of tigers that live on oranges.” The result of union activity, therefore, is to reduce the number of jobs in an industry and to raise the money wages of union labor, while at the same time relegating many workers, driven out of this line of work by the decreased quantity of labor demanded there, to other lines of work, whose money wages must decrease as a result of the greater supply of workers now forced to compete for them.

The net result is that the gains to certain workers are more than offset by the disabilities inflicted upon other workers. When union activity reduces the number of people who can be profitably employed in skilled trades, it correspondingly increases the number of skilled laborers who are forced to find work in fields that are well below their level of competence. The outcome of this displacement of skilled labor is no different from a situation in which laborers never possessed these skills in the first place. If union privilege prevents some workers from putting their skills to their proper use, the effect is the same as if they had never gone to the trouble to acquire them at all. Thus society produces below its potential, and wealth that would otherwise have been created never sees the light of day.

The ways in which labor unionism impoverishes society are legion, from the distortions in the labor market described above to union work rules that discourage efficiency and innovation. The damage that unions have inflicted on the economy in recent American history is actually far greater than anyone might guess. In a study published jointly in late 2002 by the National Legal and Policy Center and the John M. Olin Institute for Employment Practice and Policy, economists Richard Vedder and Lowell Gallaway of Ohio University calculated that labor unions have cost the American economy a whopping $50 trillion over the past 50 years alone.

That is not a misprint. “The deadweight economic losses are not one-shot impacts on the economy,” the study explains. “What our simulations reveal is the powerful effect of the compounding over more than half a century of what appears at first to be small annual effects.” Not surprisingly, the study did find that unionized labor earned wages 15 percent higher than those of their nonunion counterparts, but it also found that wages in general suffered dramatically as a result of an economy that is 30 to 40 percent smaller than it would have been in the absence of labor unionism.

Although labor unionism has actually made working people worse off, however, the usual argument for labor unionism and government legislation on behalf of labor is that in the absence of these things, employers will pay their workers unconscionably low wages.

Economist George Reisman proposes a useful thought experiment to the contrary. Suppose you own a car in New York City but eventually decide that the hassle involved in finding and paying for parking is simply too great, and you would like to get rid of the car for that reason. Suppose, further, that you have grown so frustrated with owning a car in the city that you would be willing to sell it for one dollar. Does that mean that you will in fact have to sell it for one dollar? Of course not. Given the great many potential buyers of your car, they will outbid each other. If a potential buyer offered you only one dollar, you would certainly turn him down even if, in a state of complete despair, you would have been willing to sell it at that amount. This person, because of his low bid, will miss out on the opportunity to own the car altogether since his rivals will simply outbid him.

Exactly the same process takes place in the labor market. The California State University’s Charles Baird explains:

This idea, that workers without unions will inherently have a disadvantage in bargaining power relative to employers, is the basis for most individuals’ support of unionism and is picked up again in the Wagner Act. But that disadvantage is a hoary myth. A worker’s bargaining power depends on the worker’s alternatives. If a worker either works for Employer A or does not work (i.e., if Employer A is a monopsonist), the worker has little bargaining power. If the worker has several employment alternatives, he has strong bargaining power. There may have been instances of monopsony or oligopsony in the 19th century, but… they were short-lived. Monopsony has not been a significant factor in the American labor market since the introduction and widespread use of the automobile.

The empirical evidence simply does not bear out the conventional wisdom regarding unions. If employers were really in a position to impose whatever wage rate they wished, then why in the decades prior to large-scale labor unionism did wages not diminish to near zero? (In fact, as we shall see below, real wages skyrocketed in the decades before modern labor law took shape.) For that matter, why did skilled workers earn more than unskilled workers? If firms were really in a position to tell workers to take or leave whatever pathetic wage they might choose to offer, why would they have felt a need to pay skilled workers more than unskilled workers? Why not just pay them both the same pittance?

The case for labor unionism does possess a superficial plausibility, but it is in fact entirely fallacious. Real wages rise not because of union activity but because of the process that George Reisman describes in his productivity theory of wages (which I describe here). In short, business investment in machinery increases the productivity of labor and therefore the output that the economy is capable of producing, and this greater supply puts downward pressure on prices.

As Reisman explains, “It is the productivity of labor that determines the supply of consumers’ goods relative to the supply of labor, and thus the prices of consumers’ goods relative to wage rates.” This phenomenon is not always easy to see in an inflationary economy such as ours, in which prices of most goods seem to go up consistently. But the point remains: prices become lower than they would otherwise be, and all real incomes (wages included) increase.

This is why taxes on business and capital are so foolish and counterproductive. Such taxes hamper business investment, which is precisely what raises our standard of living. The vast bulk of high school teachers and college professors spend their time condemning the wickedness of businessmen and the wealthy, and describe taxation as a righteous method for redistributing the supposedly ill-gotten gains of the wealthy to the oppressed poor. To put it kindly, such people have not the faintest idea of how wealth is created, and their envy-driven policy proposals inevitably make society poorer than it would otherwise be.

The vast bulk of the existing scholarship on American labor history is essentially unreadable. It takes for granted all the economic myths of unionism, the essential righteousness of the union cause, and the moral perversity of anyone who would dare to oppose it. Major incidents in the history of American unionism, as with the Haymarket incident of 1886 and the Homestead Strike of 1892, are often misleadingly described in order to conform to the ideological demands of this one-dimensional morality play.

Labor historians and activists would doubtless be at a loss to explain why, at a time when unionism was numerically negligible (a whopping three percent of the American labor force was unionized by 1900) and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860–1890, and another 37 percent from 1890 to 1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe. Most of them seem to cope with these inconvenient facts by neglecting to mention them at all.

Labor economist W.H. Hutt referred to the Norris-La Guardia and Wagner Acts in 1973 as “economic blunders of the first magnitude.” Economists Vedder and Gallaway find that New Deal labor legislation played a significant role in aggravating the unemployment problem. Both theory and history reveal the same conclusion: a society that genuinely wishes to become wealthier, to enjoy more leisure time, and to live longer will simply repeal all taxation on business and capital. That would do more for the material well-being of American workers than did all the storied episodes of labor’s “struggle” — labor historians’ favorite word — put together.

Reprinted from Mises.org.