The Political Post

Economics, Labor, Capital, Recession and Blame

2013-04-23T20:31:00.000-07:00

With an economic collapse followed by years of economic weakness, there is, of course, much discussion surrounding the idea of blame. Who is at fault, and what did they do to create the mess in which we, as an economic society, find ourselves?

Before one can assign blame, one must understand the environment in which all actions take place. That environment is - and will be for as long as scarcity exists - one that is inextricably linked to economic theory, thought and calculation. Economic calculation is a means of making decisions for allocation of resources (eg, time, effort, money, lumber, knowledge, etc.). Economic thought is a means of determining and understanding economic theory, which is, itself, a means for explaining the outcomes of economic calculations individually and in aggregate.

Such economic calculations are constantly occurring, and are occurring in every decision that is made. When one decides to buy shoes, they have carried out a rational calculation regarding the worth of the shoes versus the worth of the scarce resources that are given up to obtain them. In fact, even when one buys items without regard for price, they are acting rationally and have made the calculation that the act of weighing the cost and benefit is, itself, not worth the effort of doing so; so an economic decision has been made, not based on the scarcity of money, but the scarcity of time, energy and effort.

Various factors influence the outcomes of these calculations and decisions, and, at times, can be countless and unknown. A person's decision not to buy a pair of shoes in New York City might be, unknown to them, influenced by an electrical fire in Taiwan that happened to cause a shut down of the production line that makes the shoe (which happens to be the newest, most desirable hit pair of shoes at the time) more expensive. The decision-maker had no knowledge (and likely never will) of the fire. But the pertinent portion of that knowledge was conveyed to him through a higher price. The price system, therefore, is among the most important factors - and is really itself just an efficient combination of potentially countless factors - in making economic decisions (and the price is not always monetary; the same concept holds for the decision to study or work out). A price is a measure of relative value of one currency, good, service, effort, etc. versus another currency, good, service, effort, etc.

Just like with shoes, price is a major factor in both sides of decisions regarding labor and capital. A worker will decline to expend (sell) their effort, energy and knowledge if the price offered by a potential employer (buyer) is not enough for them to value the pay over the various benefits of not working. The same holds true for the other side of the transaction. It also holds for capital. If an investor calculates his expected return relative to the risk to be insufficient, that capital will go elsewhere. Capital will not invested in hiring workers or any other means of production if the return on that production falls below the desired return, given the risk involved. This holds for decisions to invest in a company as whole, as well as the individual decisions that said company continuously makes, whether it be hiring, buying trucks, or building a warehouse.

So, what about our current problems? Many people are out of work, and people want to work. The truth is, people don't want to work. They want the fruits of that work. That is, they want the wealth it brings. If one could get the same return sitting on the beach as they would going to their job, many would choose the beach. This is why, so often, people strive to obtain a job doing something they love (like flying) and would do in their spare time regardless of wealth.

Because we can't, generally, accumulate wealth by sitting on the beach people seek work, because they understand that working is the most effective way to accumulate the desired wealth. Many are without the work they seek, and the price system is a gold mine of knowledge regarding why this is so. Simply, there are many factors that make the price of hiring a given worker rise above the level at which a given employer values the work enough to pay the price. And, remember, this price is subjective. So the level at which a certain price is too high is a spectrum, rather than a single point. That is, one employer, for various reasons, may get enough value to make it worth hiring a widget maker at a given price while their competitor might not. This can be caused by differing costs elsewhere in the production process, different thresholds for risk and reward, or a number of other factors.

The employer (just like the buyer of a pair of shoes) is always seeking the lowest cost to benefit ratio in purchasing labor. On the other hand, the worker is always seeking the the very same, except the cost and benefit are reversed. Both employer and worker compete against fellow employers and workers respectively.

As mentions, the price, relative to the value of the labor dictates whether a decision is made to hire. The price, to the employer, includes more than what is directly paid to the worker. Every worker hired has a tax imposed (up to a certain level) of about 15%. This effectively raises the price of every worker by 15%. It is hard to calculate how many people are priced out of a job by that 15%, but it is safe to assume that there is a number and that it is not insignificant. And this is but one cost associated with hiring.

Others are priced out of jobs by legal minimum prices (wages) and by varying levels of de facto minimums. The minimum wage creates situations in which people become unemployable, and thus unable to develop on the job skills. While it may be a relatively small number of people, it is a real number and they are the most vulnerable. The de facto minimums arise out of programs aimed at preventing poverty. With the various benefits provided, one might choose, correctly, to limit the level and type of work they are willing to do because the risk of not doing it has been so heavily mitigated, and the marginal value of certain levels and types of work has been minimized to such a degree that it is not worth doing. How many people are priced out of work by various minimums? Hard to say. But the number is likely significant. And the decisions involved in not working or not hiring are made economically and rationally and based on various influencing factors. The governmental factors mentioned can logically be understood to lessen the value of both working and hiring and, therefore, hamper the degree to which both occur.

Further impediments to growth in hiring relate to stifling of competition. The costs discussed do that to a large degree. But then there are various regulations and requirement imposed in every area of the economy that, whether aimed at helping customers, workers, etc., have the effect of helping the largest competitors most of all. Mitt Romney, during his campaign for president, said he didn't think that you should be able to start a bank in your garage - that is, he felt certain regulations should exist to prevent individuals, companies, etc. from operating a bank. This protects established banks from competition. It gives them a more permanent and defensible seat in the banking world, and allows them the opportunity to operate in ways that they otherwise couldn't. And this is a giant gift directly from government. And it is a giant blow to start-ups, competition, growth and hiring.

All of these issues discussed (and others, like the amount of credit being funneled to the government, rather than productive investments through treasury bonds) are governmental creations that have clear causal links to the current weak growth and weak employment levels.

Many of these issues can, to a degree and in an environment of stronger economic prosperity, be overcome. But they are, no doubt, greatly hampering our recovery.

But what are we recovering from? Why did the economy crash, and who is to blame?

The answer lies in the market for credit. Credit is what drives much of the economy. It allows a person or business to borrow money, invest it, and create a return that is greater than the cost. So investments are made when the profit goes above and beyond the expense (the interest). Before economy crashed, the price (interest rate) of credit was very low. So people, businesses and governments, rationally, utilized it heavily and investment grew, so the prices of the various things in which this money was invested grew. The price was low, because the bank, created by government, with the sole control over the creation of new credit, the Federal Reserve, kept it's rate low to increase the flow of credit. Eventually (as becomes necessary when the supply of money creates rapidly rising prices throughout the economy) this interest rate began to rise. Investments (like homes and their derivatives) became less appealing due to the change in the price of the capital used to make the investments. That is, the risk reward began to swing toward risk. Because of this, the prices of those investments fell as demand fell. Making matters worse, the higher cost of money meant that much of the debt became impossible to service, as the price increased beyond the return on the investment it funded. And with all the credit that had been issued, much of which was now bad debt that could not be repaid (with collateral that is worth less than the debt) the house of cards collapsed. On the bright side, this should have allowed for the rebuilding of a sturdy frame where the house once was. Instead, as the collapse cascaded down, the weak base of cards was already being rebuilt to prop up investments that had proven to be bad. So, instead of the bad debt clearing and the economy being rebuilt we have the same malinvestment being propped up by new debt that was supposed to fix the economy, but instead has been funneled, largely, in to government. Making matters worse, since the rates are so low the risk/return ratio of investments in productive investments, especially in a weak economy, is just not as appealing to many investors as higher paying but risky derivatives as well as government bonds which are thought to be nearly risk free.

So who or what is to blame for the economic recession and following weakness?

The blame does not lie with corporations or small businesses, it does not lie with welfare recipients or the poor, it does not lie with the Koch brothers or the environmentalists, it does not lie with AARP or any other lobbyists, it does not lie with the 99% or the 1%, it does not lie with workers or CEOs or the greed of any of them.

The blame lies with a small number of individuals who have, whether well-intentioned or not, taken it upon themselves to centrally plan countless aspects of the economy and the market. Many of them will speak endlessly about the virtues - the benefits - of what they do. And these virtues are great motivators for individuals to give of their vote and support for them. And there certainly are benefits. Rarely, though, do these individuals stress the cost. I have listed a fraction of the costs.

Put simply, voters, Americans and individuals must ask themselves -- Is it worth it?

Is THIS - the economic crash we suffered through and the continued poverty and economic stagnation - an acceptable cost of the various benefits and promises offered by politicians?

Breitbart.com: The Vision of Andrew Breitbart

2013-02-06T19:15:00.000-08:00

Andrew Breitbart started his career under the guidance of Matt Drudge. Both were similar in their natural ability to harness the pulse of society and present it in a way that is nearly impossible to duplicate. Both, based on their work, seem to have been very similar in their political beliefs. That being, as Breitbart has said:

"a Reagan conservative, with libertarian sympathies" -- http://en.wikipedia.org/wiki/Andrew_Breitbart

Breitbart had big plans for Breitbart.com before his death. It was to be, like the various websites that were merged into it (BigJournalism, Big Hollywood, etc.). One of those components, Big government was launched with Mike Flynn, of Reason Foundation (a libertarian leaning organization) as editor-in-chief.

BigGovernment and the other associated websites had, as their biggest success, the drive and ability to expose secrets, past dealings, hypocrisy and failings of government, fraudulent or otherwise in addition to bringing to light the the ills of media and other organizations that act in concert with various big government actors.

When the TEA party burst on the scene, Breitbart was there. And he was a major supporter and purveyor of their message of small government. He, like the TEA party, certainly must have understood that the message alone was not enough to be effective. The message must be a means to advance influence, not an end.

The message must be used to advance ideals. This is done by building a coalition of support. In 2010, the Breitbart supported TEA party utilized the masses of conservatives that held their economic and government beliefs, but also utilized the republican party and libertarians to deliver and build support for this message. Such massive ground level support coupled with the reach of the republican party and fueled by the bad taste of Obamacare saw a large scale victory for the small government movement in the House and Senate wins for republicans, many of them TEA party affiliated, and a renewed national focus on limiting government size and control.

That was a major win, but it was just one battle in a large war. That "war" the Breitbart was fighting was against Big Government, Big Journalism and Big Hollywood. What these groups have in common is a progressive, liberal mindset with progressive, liberal goals. They were the "enemy". And those that fought the march toward bigger government and cozier relationships between government and media were "allies".

Organizations from CPAC to GOProud to Reason Foundation all supported and were supported by Andrew Breitbart.

At the time of his death, Breitbart was preparing for, arguably, the biggest battle in that "war". The fight against the election campaign of Barack Obama.

Breitbart.com and those that continued to carry the torch of Andrew Breitbart took this task head on. And while it didn't succeed (and might have been more successful had Andrew been involved) they were focused and stuck to his goals and vision.

And while folks like Ben Shapiro are spot on in terms of their gun rights arguments, much effort must be put in to keeping that Breitbart from slipping. Since the election, more and more attention has been focused on battles against allies, rather than the main enemy groups. Rather than drawing attention to the failings of democrats and big government liberals and progressives, a portion of the focus has been moved to republican leaders, folks like Karl Rove, and, just today, a negative article about Rand Paul, an ally with heavy support from the libertarian and TEA party factions of the wide tent of Breitbart supporters.

I don't think that the vision of Andrew Breitbart has been lost, but the current situation requires a strengthening of focus. It needs to be understood that the republican party, the TEA party and the libertarian party represent large groups of supporters of the Breitbart message. That support is a necessary means for more effectively achieving the goal of smaller government.

Those potential allies have not made it easy on the Breitbart team. Certainly the tactics of Karl Rove and even John Bohner have been harmful. But the solution should be to embrace and "use", for lack of a better word, those people and their supporters to build bridges and coalitions of support for common goals.

The same goes for Rand Paul. His foreign policy, while not completely in line with the conservative leaning folks, is one in line with smaller government.

Breitbart.com is a very powerful and wide-reaching messaging tool, but that messaging and vision must create alliances, even with those who have made alliance difficult, if the goal is to succeed in reigning in government growth and spending. That vision is alive and well and in a position to act in a very positive way if managed properly and used to build a strong force for small government and its many, massive benefits to liberty, freedom and quality of life. The Breitbart message is a key player in the transition to smaller government and must succeed.

What Drives Growth? Investment or Consumption?

2012-12-05T21:54:00.001-08:00

Hypothetically, suppose an individual, we'll call her Jane is unemployed and takes a chance on the lottery. She wins $500 and has to decide what to do with it. She decides, she is going to be generous and use it in a way that is best for the economy. Here question is, should she go out and consume, splurge on a new laptop to play on facebook, twitter and whatever other leisure uses that a computer can be used for? Or should she invest the money?

So she thinks about the economic consequences of each.

If she buys a $500 computer, she can have a lot of fun, and her spending will provide revenue to HP computers. That is certainly good for the economy, right? Because their profit goes up.

Then she considers possible investments, and gets an idea. She would "invest" in a computer, and use it to do some contract work designing software for small businesses. The very same one she would have bought to spend her leisure time on. HP still gets the same $500, so they, their investors, and everyone down stream from that purchase gets the very same benefits. So the economy gets the same benefits either way, and she benefits, because she can generate herself some income that she can spend to help the economy even more. She also realizes that this is much better for herself as well.

As she develops her skills, her customer base grows, and their orders and demands grow. She soon realizes that she cannot handle it all herself. She asks her sister, who she trains, to join her. She buys another computer, and the two of them continue to attract new customers and make enough money to cover their expenses with a little left over. Soon, that leftover capital gives her an idea.

If she hires 2 more programmers and a marketing professional, they could expand further. So she makes those hires and buys 3 more computers and a printer for the marketing materials.

the businesses is really running great, she is making a good living, and she feels bad. She sought to benefit the economy and those around her, but has, instead, made herself modestly wealthy off of her $500 win.

This doesn't last long, as she soon realizes, she has done both. While maximizing her business returns, and thus her own earnings, she has bought 5 computers and a printer, and now, including herself, employs 5 people. She has grown the economy by 5 jobs, 5 computers' and a printer's worth of earnings for HP and created products that allowed other businesses to grow.

That is a lot of economic benefit, she realizes, and is extremely excited and quickly gets back to putting all her effort in to growing her business.

So investing the $500, led to the various benefits throughout the economy and for herself. Buying a computer for fun would have done far less.

Clearly, investment is the bigger driver of growth. One would think that economic policy would be set in ways to maximize investment and production. Right now, it is the opposite. Work and investment are punished.

Warren Buffett Outs Himself as a Political Shill

2012-11-26T19:26:00.001-08:00

In his most recent New York Times Op-Ed, Warren Buffett makes even clearer what I, and many others, have known for some time.

He is a political shill.

He begins with a hypothetical situation:

Quote:

SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

That would be precisely my response if the investment were, as are all investments more risky than leaving the money in my federally insured bank account; and the return on the investment was just beyond the threshold of return I had marked for the level of risk involved; and an increase in taxes would lessen that return enough to bring the return below that threshold. This is not an unthinkable scenario, nor is it predictable as it relies on individual tastes.

Quote:

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

That is because investment returns, as he has pointed out were very high. But in assuming that the tax rates caused this supposed boom, or that they did not hinder it, he is committing the same logical fallacy that his literary pal Paul Krugman often employs. Correlation, unfortunately, does not equal causation.

Quote:

So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities.

But giving more of the return on those invested funds to the government is quite similar to (and likely worse than) stuffing it in a mattress. Higher taxes means less after tax income to reinvest. The difference is stuffed in the mattress of the government.

Quote:

And, wow, do we have plenty to invest. The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust.

A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent.

Well this is a complete contradiction to his earlier points, and is quite devastating to his argument. The low tax rates of recent years, he is rightly pointing out, have left him and his wealthy friends with more capital to invest.

Quote:

The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.)

I am sure he can personally attest that these folks do not work 40 hour weeks.

Quote:

Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing.

That is because these ultra-wealthy are measured by wealth, not income. So when they lose money, regardless of the rate, some will not pay any taxes. Nice red herring though.

Quote:

But the reform of such complexities should not promote delay in our correcting simple and expensive inequities.

And now his true aim comes to light along with a clear tie in to the Obama rhetoric.

Quote:

Our government’s goal should be to bring in revenues of 18.5 percent of G.D.P. and spend about 21 percent of G.D.P.

No.
__
Buffett is smarter than the politically guided arguments he is making. He has let his political allies and their class war rhetoric cloud his logic to such a degree that, in his effort portray the rich just right, he has contradicted his own argument. He said at one point in the article, "It’s nice to have friends in high places". Ironically, one very obvious explanation for Buffett's political writings is the very real possibility that the financial benefit his political friendships (one, thanks in part to him, in, arguably, the highest place) will be far greater than the cost imposed by such a tax increase.

In short, he is a shill and a crony.

http://www.nytimes.com/2012/11/26/opinion/buffett-a-minimum-tax-for-the-wealthy.html

2013: Lots of Taxes Coming...

2012-11-07T10:44:00.002-08:00

In the very near future, we have a lot of tax changes that, of course are current law and have been for a while. So while they are not tax hikes, they sure will feel like it. Whether you know a punch to the jaw is coming does not change the fact that it hurts, nor does it change the damage that it does beyond whatever preparations are made to brace for it.

That said, in 2013 we have a 3.8% surtax on investment income for those earning more than $200K (this is for individuals) per year. This is on everything from interest, dividends, capital gains, real estate, etc. This, combined with the increase in marginal rates, puts the top income tax rate at 43.4%. Additionally, the top rate for long term capital gains will go from 15% to 20%. Add the investment surtax, and the top marginal rate for capital gains earnings becomes 23.8%. This is over a 50% increase.

Boo hoo, those poor rich folks, right? Like they need more money, right?

Ignoring the effects throughout the economy, rich or poor, that this destruction of capital will have, it is not just "the 1%" that will be hurting.

If nothing is done, the effects will be much greater on the poorest and the middle class. These are the folks much less capable of absorbing such an impact.

First, the payroll tax will go up by 2%. That, plus the fact that employers are paying more in Medicare taxes means less take home pay.

(side note: if this tax went up even more, to the level it would need to be to adequately fund Social Security and Medicare, there would probably be a stronger push to reform the programs)

Next, the bottom capital gains rate (individual gain of 35K or less) goes from 0% to 10%. This impacts the small business owner who sells his company, or sells a rental property for a net gain, or someone with a small investment portfolio that they rely on to supplement their income/retirement.

Next, the bottom tax bracket (individual taxable income below $8,700) goes from 10% to 15%. A 50% increase. Add in the payroll tax increase, and some one with that income (or that portion of anyone's income), will see a 70% increase in tax expense. Every other bracket will also see an increase except the second one (income between $8,700 and $35K for individuals).

Will anything be done, legislatively, to stop this?

Should anything be done, legislatively, to stop this?

The Question...

2012-09-20T14:52:00.003-07:00

Much has been made of the recent video from a Romney fundraiser and the statements he made about the 47% of Americans that he thinks we vote for Obama no matter what.

Much of this discussion has lacked any reference to the context.

So to add some context, here is the question that he was answering when he made those comments:

Quote:

For the last three years, all everybody's been told is, "Don't worry, we'll take care of you." How are you going to do it, in two months before the elections, to convince everybody you've got to take care of yourself?

-- http://www.motherjones.com/politics/2012/09/full-transcript-mitt-romney-secret-v...

And Mitt's response, broken up for my own comments (from the same website):

Quote:

There are 47 percent of the people who will vote for the president no matter what.

While I think this number is high, he is right that there is a large percentage of people that will vote for Obama no matter what, just like there is a large number who will vote for Romney no matter what.

Quote:

All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them.

Many think that he, here, is saying that that whole group fills all of these characteristics. I think, based on the way he is saying it, he is throwing out a condensed lists of some of the attitudes that are held among the percentage of voters that will vote for Obama no matter what. It would be like, if someone was discussing government workers, and said "they are the teachers, the firefighters, the policemen and women...". He is saying that, among that group are people who believe these sorts of ideas regarding the role of government.

Quote:

And they will vote for this president no matter what. And I mean, the president starts off with 48, 49, 48—he starts off with a huge number.

Again, I think the number is high, but there is a number.

Quote:

These are people who pay no income tax. Forty-seven percent of Americans pay no income tax.

These are two completely separate statements, and I quoted them together to point this out, because many think he is saying that this 47% is the same as the "47,48,49% that he referenced earlier. Again, he is listing another quality that is common among that group that will vote for Obama no matter what. Many in that group pay no income tax, and indeed, will not be swayed by a proponent of lower income tax. That the actual percentage number (47%) used is the same is merely coincidence and not meant to make the groups synonymous.

Quote:

So our message of low taxes doesn't connect. And he'll be out there talking about tax cuts for the rich.

See above.

Quote:

I mean that's what they sell every four years. And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives.

This one gets back to the question asked, which wondered, how he would convince them they have to "take care of yourself". He is pointing out that IN THE CONTEXT OF THE CAMPAIGN, a campaign with the goal of obtaining the votes to win the election, it is not his job to worry about getting those votes. It, further, is not his job, in the context of the campaign, to convince them of the idea of taking care of yourself, rather than, as the questioner asserted, having government "take care of you". So this isn't about convincing specific individuals that they should care for themselves, but more about the belief held by many Obama supporters and Obama himself that government help is a necessary part of life.

Quote:

What I have to do is convince the 5 to 10 percent in the center that are independents that are thoughtful, that look at voting one way or the other depending upon in some cases emotion, whether they like the guy or not, what it looks like. I mean, when you ask those people…we do all these polls—I find it amazing—we poll all these people, see where you stand on the polls, but 45 percent of the people will go with a Republican, and 48 or 4…

Here he is pointing out that there is a group in the middle, that is not committed to either side, and as the tape cuts off, he seems to be starting to say that he, too, has a large group of people that will vote for him no matter what.

It seems that when context is added, much of what he said makes more sense and the "explosiveness" is mostly lost. It becomes clear that the point being made is one about a distinction between more or less government "support", not one about not caring for a large portion of the population.

The Ryan Pick

2012-08-15T19:47:00.001-07:00

Last weekend, Mitt Romney announced his selection of Paul Ryan as his running mate. The selection and announcement, shrouded in secrecy, was a great display of the Romney campaign's attention to detail, which is hopefully a preview of what a Romney presidency might look like. The process included a walk through the woods, a couple drives to Chicago and air travel that went completely undetected by the media, all in an effort to make sure everything went completely as planned.

The inevitable question is whether he was the best pick. While he was not the best, generally, he was certainly the best of those being considered for many reasons:

He has a budget plan, that is detailed, addresses entitlements and reforms the tax code. It is not enough, but it is much better than anything else that has come out of politicians, lately.

On those entitlements, the Ryan-Wyden plan is the farthest any proposal has gone in correcting the destructive Medicare program. While complete elimination at the federal level would be better, it is a step in the right direction. The use of a sort of market driven competition will likely see costs stabilize, but Medicare will still be a huge burden.

Paul Ryan has made the anti-Obamacare argument better than anyone has. He has studied the numbers in great detail, and understands the impact it will have on the economy and our destructive and dangerous level of national debt.

His tax plan, while, again, not ideal, brings the incentives of tax code closer to being in line with the goals of greatest economic growth and stability. A consumption tax would be better, but cutting taxes on business, investment and work will surely incentivize all three.

He has the charisma to debate these issues in a way that gets the points across in a concisely and effectively.

On a more philosophical note, he has, since college, been a follower of many Austrian School economists such as FA Hayek and Ludwig von Mises, along with being a supporter of Ayn Rand. It is becoming increasingly clear that an understanding of Austrian economics will be necessary to correct the economic situation in which America currently finds itself.

From policy to philosophy, Paul Ryan is clearly the best pick, among the commonly discussed contenders, in regards to the proper way to correct our economy and fix our bloated government. Whether he was a good political choice, remains to be seen.

Speculators...

2012-07-31T11:53:00.004-07:00

No, this is not about oil or housing.

It is about the New York Times.

According to Michael Graetz of the Times,

Until Mr. Romney recognizes the right of voters to understand the finances of their leaders, all we are left with is speculation.

But voters shouldn't be left to speculate on their own, so the New York Times has made sure to do if for them, and do so in a way that only describes the potential negative possibilities.

Putting business assets into an individual retirement account invested in a Cayman Islands corporation allows Mr. Romney to avoid the “unrelated business income tax” — a 35 percent levy — on at least some of his I.R.A.’s earnings, a tax that he would have had to pay if his I.R.A. were held directly by a financial institution in the United States.

With an I.R.A. account of $20 million to $101 million, the tax savings would be more than a few pennies.

The I.R.A. also allows Mr. Romney to diversify his large holdings tax-free, avoiding the 15 percent tax on capital gains that would otherwise apply. His financial disclosure further reveals that his I.R.A. freed him from paying currently the 35 percent income tax on hundreds of thousands of dollars of interest income each year.

As with any American, Romney has invested money using an IRA. An IRA has certain tax benefits, namely, deferment of taxes. Romney has not avoided taxes by having an IRA. He has deferred them. This actually seems to be a tactic that will see him paying more taxes. Most people put ordinary income in to their IRA. They do not pay taxes on that income until they take the money out, at which point it is taxed as ordinary income. Romney has put investment income (taxed at 15%) into an IRA, and when he takes it out, he will pay the ordinary income rate (generally considerably higher). So Romney is not "avoiding" taxes any more than every other American who uses an IRA. In fact it is possible (while we are speculating) that he is paying more.

Given the extraordinary size of his I.R.A., [b]we have to presume that Mr. Romney valued the assets he put in his retirement account at far less than he would have sold them for[/b]. Otherwise it is quite a trick to turn contributions that are limited to $30,000 to $50,000 a year into the $20 million to $101 million he now has there. But we cannot be certain; his meager disclosure of tax records and financial information does not indicate what kind of assets were put into the I.R.A.

One does not have to presume that. Perhaps the Times does to fit their narrative. Another, more plausible, explanation is that he put Bain Stock and other company stock in it when they first started (while they were valued at, effectively zero, as most startups are), and has kept them their through the explosive growth of said companies.

Either way, releasing a couple more years of tax returns will not answer that.

Moreover, we have no clue whether Mr. Romney paid any gift tax on transfers, now valued at $100 million, to a trust he set up in 1995 for the benefit of his five sons. Until this year, the federal gift tax had a lifetime exemption of $1 million, and it taxed gifts in excess of that amount at rates between 29 and 44 percent. A gift of $100 million to one’s children could, therefore, require paying a tax of as much as $29 million to $44 million.

Well, since he is legally required to, we can know with a decent amount of certainty that he has paid the gift taxes. If he hadn't, he would have broken the law and been convicted.

No one should begrudge Mr. Romney or his family the wealth they have earned

Which makes this statement earlier in the article nonsensical:

Rich people don’t send their money to Bermuda or the Cayman Islands for the weather.

-- http://www.nytimes.com/2012/07/31/opinion/the-mysteries-of-mitt-romneys-financial-records.html?_r=1

What a pathetic display by the New York Times.

"Betting other people's money", "fair share", "different set of rules", etc.

2012-07-03T10:37:00.004-07:00

General Motors(GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.

Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.

Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.

But that's not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.

Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.

-- http://news.investors.com/article/616849/201207030826/gm-bailout-taxpayer-loss-rises-as-shares-fall.htm

As GM stock continues to hit new lows (the article was written before trading began today, and it is off its low), the Federal Government's loss on their investment continues to grow. And it does not look like this investment will be dumped any time soon.

This is a clear case of making a bad bet with other people's money, namely, the taxpayers. Obama has chastised banks for doing the same thing with money from willing investors. Our government has, and continues to do so, with unwilling taxpayers.

It is time to end this losing bet. That $10 billion can be better spent elsewhere (as could the much greater sum that has been depleted down to $10 billion).

On top of that, GM was given special privilege to carry forward prior losses (even after bankruptcy). This means they paid zero taxes on $7.8 billion dollars in profit. This would not be bad at all, if this effective rate were extended to all businesses, but it is not, it was given to a privileged business, whose success political benefits those in office. Making matters worse, this is being overseen by a president that has shown an interest in people and businesses paying their fair share. So long as other businesses are paying taxes, GM is not paying its fair share.

Finally, as I have just pointed out, GM is playing by a different set of rules than the rest of the people and businesses in America. President Obama has used this phrase to attack many wealthy people and businesses, yet he fully supports the various different rules afforded to GM (government backing/investment, tax benefits, etc).

It is time to dump this investment...

Campaign by Distraction: The Obama Plan to Avoid Economy

2012-05-10T10:45:00.000-07:00

Although the official campaign started less than a week ago, President Obama and his supporters have been in campaign mode for quite some time. The President knows that he has weaknesses when it comes to the economy, his promise to turn things around and his inability to keep that promise.

The Obama campaign certainly knows that: 1) the economy has the potential to be a major, even fatal, complication in their push for re-election, and 2) that most voters consider the economy (and the jobs that go with it) to be the most important issue on November 6th. They know that to win, at least one of those conditions (and hopefully two) must be changed.

It is arguable how much the President can do to correct the economy, especially given the short window of time. The campaign staff and supporters, however, can not meaningfully effect the economy, so option two is the one they will focus on: changing the minds of voters relative to what is important in this election. They will continue, through November, to press Social and Environmental issues back to back to distract from the economy. They have already done so with attacks on "Big Oil", the case of Sandra Fluke, the Ann Romney discussion, the Gay Marriage issue, and the ongoing discussion of Immigration.

Through both ads and press conferences, Obama has been made sure to strategically place a spotlight on 'Big Oil" to demonize their profits, blame them for high gas prices, and eventually link them to his opponent or their party. This attack has also hit speculators. He has spoken of the benefit of Green Energy and harm of oil, while avoiding the fiscal harm of Solyndra and similar "investments".

In January, while the republican candidates were staying generally focused on the economy, George Stephanopoulos brought up the issue of contraception during a debate. It seemed odd at the time, but a few short weeks later it became more clear. It was a prelude to the HHS announcement that Insurers would be required to cover contraception. Thus sparking a national debate and accusations of a "war on women". Not long after, we had Sandra Fluke, aided by former White House Communication director Anita Dunn, came forward with all the charisma of a seasoned politician to decry the possibility that Georgetown students, and women everywhere, might be denied mandatory coverage of their, sometimes lifesaving, contraception coverage.

When the Sandra Fluke controversy died down, along came Lobbyist and Consultant to DNC Chairwoman Debbie Wasserman Schultz, Hilary Rosen, with her 35 visits to the White House, to reignite the "War on Women". Claiming Ann Romney, and by extension Mitt Romney, could not possibly be effective at understanding the issues women face because Ann "never worked a day in her life". Beyond the fact that this claim is completely false, it furthers the strategy of creating a narrative that Women, in particular, will be face expanded challenges should Mitt Romney be elected.

As of this past Sunday morning, Obama was, in the eyes of voters, against Gay Marriage. Then Joe Biden (who supported the Defense of Marriage Act) announced he had changed his views. Within days, Barack Obama had also "evolved" his views. This announcement came complete with well designed and crafted campaign materials and talking points, as though it was planned.

Finally, there is the ongoing Immigration issue, for which Obama has very little clarity regarding policy. It doesn't matter. As long as he vaguely say that he wants reform, while attacking the specifics that his opposition provides, and tout statistics that show a decline in illegal immigration (even though the current trend started be for he was elected, and has little to do with his policies), he can cover all bases.

The Gay Marriage issue is the most recent, but will not get him to the election. The buzz will die down. That is when the next controversial issue will be thrown into the spotlight by someone associated with Obama, the Democratic Party, or his campaign.

These issue are important issues, but in the minds of voters none are the most important issue. The most important issue is the economy, and they seek to avoid it. Sure they have responses if questioned, and materials they will use to defend the economy and the Obama policies. It is not complete silence. But the clear goal is to use social issues as, often brought to light by those "outside" the campaign, to sway voters away from the economy and into voting for Barack Obama.

The big question is: what will the next issue be?

Will Occupy Wall Street last?

2012-03-23T18:21:00.000-07:00

Occupy Wall Street appears to have survived the winter and seem to be gearing up for a long summer of activity to further their political, economic and social goals. The question many are asking is, will they last?

The movement began with the belief that the rich, or 1%, took and maintain their power on the backs of, and to the detriment of, the other 99% of the population. This perception is most notable in the way members of this movement view bankers and other occupations generally associated with Wall Street, hence the name and location of their original protest.

Unlike the TEA Party, Occupy Wall Street has been seen by the general public as being abrasive, violent, and engaging in criminal activity to gain attention and get out their message. They seek to annoy and disrupt, rather than partake in the traditional means of public debate and discussion.

Also unlike the TEA Party, Occupy Wall Street has made little attempt to utilize the American political system to achieve their goals. While the TEA Party has been influential in local and national elections and policy, the only connection to the political process for Occupy Wall Street has been a small number of far left politicians giving quiet words of support and encouragement.

The Occupy Wall Street Movement, while claiming to represent 99% of Americans, are not supported by nearly that percentage of the population for partially due to their methods. They interact within society in a way that from the beginning (occupying Zucotti Park) was illegal and generally understood to be an anti-social strategy. They never sought legitimate, structured discussion, and continue to avoid such debate.

Their method is one aspect, but more important is their message. Of the many messages (often mixed) the main one is the need for equality in income and a lessening of the power and money (that they believe was gained illegitimately) of the top 1% and the influence it provides them within government. They, seemingly, wish to have this goal achieved through government action, which adds to their hypocrisy.

On their hypocrisy, there is much to be found. They dislike the influence that money, especially Wall Street money, has over our political system and government, but rather than turn off government's ability to sell influence, they seek to have government (the one profiting from the influence selling) to legislate it away. Beyond this, they overwhelmingly support Barack Obama, who has accepted more financial support from Wall Street than any candidate for office ever has and has appointed many former Wall Street executives to influential positions in his administration.

The the most basic goal of Occupy Wall Street is to lessen the divide in incomes in America while removing the influence that money has in our government, which is a good one. Their means to that end is where the problem arises, and is where they lose much of the population.

Whether Occupy Wall Street lasts to achieve their goals depends on their ability to tailor their message and delivery to fit what the majority of the population understands to be civil and proper. This means acting within our political and social norms and working through the election process to present their ideas to voters and let the general public decide. If they do this, they will be around for a long time, but if they continue their current methods and degrade into increasing criminality and violence through this summer, they will not last long enough to achieve their goals.

The Constitutionality of the Patient Protection and Affordable Care Act

2012-03-09T19:19:00.000-08:00

The US constitution expressly lays out powers of the federal government. It also expressly states that anything beyond those expressly laid out are given to the States and the people. This means the federal government cannot act in any way outside of those given powers.

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." -- Amendment X, US Constitution

Nowhere in the expressed powers of the federal government are they given the power to mandate that every individual must maintain health insurance coverage.

This is the real issue with the mandate. Not aspects of the mandate detailing certain types of coverage, not religious freedom to exempt certain types of coverage, but the right of individuals or States to not be federally mandated to make purchases or participate in specific commerce by force. All other side issues are distractions from this one, and only succeed in obscuring and drawing attention from this fact. These other, more minor, issues only act as a concession, that, but for these minor details, the rest of the Act is good and right.

This is the goal of the supporters of the Affordable Care Act in furthering these discussions and keeping these petty fights in the news. These arguments are important and pressing the First Amendment rights are a worthy means to the end of retaining your rights to choose whether to buy a product, but, generally, trying to bring the discussion back to the overall point that a federally mandated commercial action, whether it is buying insurance or buying cell phone, is unconstitutional.

Those who disagree will point to the commerce clause:

"[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;" -- Article 1, Section 8, US Constitution

The commerce clause states that the federal government has the power to regulate commerce among the several States, and it can be argued that Healthcare commerce is transacted within and among the states. however, commerce can only be regulated not forced. That is, the federal government can regulate, for example beef purchases among the States, but it cannot say that one must purchase beef.

The constitutionality of the entire mandate is the key issue, and these other more minor discussions distract from this. It is this constitutionality that will be taken up by the Supreme Court this summer. Let's hope they make the correct decision to limit the seemingly unlimited power that the commerce clause gives to the federal government.

The high cost of Gas

2012-03-02T17:20:00.000-08:00

If someone said that Gasoline is currently cheaper than it was in 1995, would you believe them? Of course not, it was a dollar a gallon back then, and now its 4 dollars (5 in some places).

The dollar is not an accurate measure of cost. The dollar is a fiat currency whose value is controlled by the Federal Reserve, which has a monopoly on supply and the ability to create supply without cost.

To see a more accurate picture of where gas prices are, one must compare them to other commodities. For example, this chart shows the price of Gasoline since 1995 in mg of gold:

Presidential and even Congressional policy are common targets of people upset over high gas prices. Not enough drilling, too much demand, and OPEC are other usual targets.

As this chart clearly shows, aside from the president having the power to choose the Federal Reserve chairperson, those things are all insignificant, as the price has stayed reasonably constant when the value of the dollar is removed from the equation. Therefore, the real culprit in the high gas prices is the expansion of the money supply.

Chris Matthews puts politics aside...

2012-02-10T17:53:00.000-08:00

There has been a recent uproar among Catholic leadership, Catholic individuals and employers, and many other Americans related to the aspect of the Affordable Care Act requiring health insurance policies to cover contraception for all members. Chris Matthews had a segment on this issue:

Chris Matthews is a Catholic as well as a known supporter of President Obama, and hosts a show on MSNBC which admittedly leans left. John Heilemann likely thought he would get a pass for his use of White House talking points.

Mr. Heilemann claimed that the contraceptive issue was not important because it was already law in 28 states, and Chris Matthews challenged him to support his claim with a source outside the White House.

The National Catholic Reporter explained, "Currently, 28 states have laws requiring contraceptive coverage as part of health plans. According to the National Conference of State Legislatures, 20 of those states offer some type of exemption...Whether exemptions exist or not, Catholic groups in all 28 states can avoid the contraceptive mandate in one of three ways, says the U.S. bishops’ conference. These include self-insuring prescription drug coverage, dropping that coverage completely or opting into a federal law that preempts any state mandates. Critics say the narrowness of the recent federal ruling would block religious groups from taking any of these avenues."

-- http://ncronline.org/news/politics/hawaiis-contraception-model-has-downsides-some-say

Clearly, the Federal Mandate is nothing like the legal requirements that these states have instituted.

States are not the same as the Federal Government. States have many powers that the Federal Government does not. Legislation regarding requirements for health insurance coverage is one of those powers.

The recent change to the policy that was announced by President Obama is reported to remove this requirement. This change is simply a paper change that shifts the reporting burden. It changes nothing of substance. These organizations that object will still be required (starting in 2014) to buy coverage for their employees or face a fine which would subsidize the individual insurance purchased by the employees. The individual members of these policies (the employees) would still be able to be provided contraception free of charge, and the insurer would be forced to cover the entire cost of it. This changes nothing related to money that flows from religious organizations to insurers and then on to the pharmacy providing the contraception. It simply changes how money is accounted for and how the cost is reported.

What about employers and small business owners who are Catholic or have other moral objections to contraception? They will now be forced to provide coverage that pays for contraception, with almost no chance of getting an exemption.

This issue is one of great importance to many Catholics and people of all faiths and political belief. And while religion and the Catholic Church have gotten a great deal of attention, it goes deeper than that. It is an issue of personal choice and the right to decide what to buy and not buy.

Thank you Chris Matthews for putting politics aside and standing up for the rights of Catholics and all Americans.

The Buffett Rule

2012-01-24T20:32:00.000-08:00

President Obama has spoken many times of his desire to pass a "Buffett Rule". This rule would increase the tax rate of people earning more than $1 million. This, we are told, is in the name of everyone paying their fair share. Here are a few thoughts on the matter:

Warren Buffett earns nearly all of his money from capital gains as the largest shareholder of Berkshire Hathaway. He, therefore, pays most of his taxes based on the capital gains rate of 15%. This money he earns is based on the growth of companies that have also paid taxes at a 35% rate (their effective rates may be lower, but they likely pay large amounts of taxes).

Buffett's effective tax rate is 17.4%. His secretary, Debbie Bosanek, pays, according to Buffett, somewhere between 33% and 41%.

Ms. Bosanek receives some of her income from capital gains through the stock she is given by Mr. Buffett. To get up to an effective rate, after deductions and including the lower capital gains income, total income would have somewhere near or above $379,000 per year and would be in the top bracket. She would also be in the vilified 1%. The problem is that nobody truly knows.

This situation, while it is an exception and not a rule, has been used by President Obama to show the need for a "Buffett Rule" to ensure millionaires pay higher tax rates, regardless of how their income is classified.

With the importance of this issue, and the role it played in the State of the Union Address as well as the role it is playing in the push for higher taxes, there should be full transparency and a full discovery of facts. Debbie Bosanek should release her tax return from last year in support of her boss and his political push to pass a tax increase that many do not support. It is absolutely necessary if this situation is to be used to push tax policy.

This political relationship between the President and Warren Buffett is especially troubling due to the recent Keystone Pipeline XL news.

President Obama recently rejected a proposed pipeline to carry oil from Canada to the Gulf.

The alternative to piping is to carry the oil, much more expensively, by railroad. Warren Buffett has a great deal of investment in the railroad industry and would benefit substantially from this alternative.

The link between Warren Buffett and Barack Obama is one that benefits both and is the definition of Crony Capitalism. It is a company using it's influence, without transparency, to advance a political cause of the President, and that President using his political power to advance a business interest of that same company. It is wrong and their relationship is not one to be seen as a good one or one that advances the cause of America.

Obama Promotes Bain Consultant

2012-01-17T21:26:00.000-08:00

According to Washington Examiner, President Obama has promoted Jeffrey Zients to OMB director in his administration.

Zients worked for Bain and Company from 1988 to 1990.

Prior to this promotion, he served as Deputy Director of the Office of Management and Budget under Jack Lew.

Obama strategist David Axelrod recently criticized Mitt Romney for having a "Bain mentality".

This should prove an interesting promotion among those who support President Obama and have already begun to assume that another Bain Alum, Mitt Romney, will be the Republican Presidential Nominee.

The South Carolina Republican Primary

2012-01-15T11:02:00.000-08:00

The upcoming South Carolina Primary this weekend will be the first "southern" primary in the nomination process for the Republican Party in the 2012 Presidential race. The candidates are the same as in New Hampshire, but the population doing the voting is much different. A few points regarding this upcoming debate:

Mitt Romney has won the Iowa Caucus and New Hampshire primary, and is polling in first place in the South Carolina primary. Rick Santorum has gained momentum, as has Jon Huntsman. Ron Paul and Newt Gingrich continue to be strong, but unable to break into the top. Rick Perry is well funded, but has been lacking in results so far.

South Carolina is considered to be more conservative than both Iowa and New Hampshire. Mitt Romney is considered to be the more moderate candidate in the race, while the other candidates are seen as splitting the conservative vote. The fact that all of them remained in the race after New Hampshire means that they will continue to split that area of the vote.

Many say that this will be a tough primary for Mitt Romney due to being more moderate than the other candidates. However, he does not lack experience in gaining conservative votes. In the 2008 primary, it was his splitting of the conservative vote with Huckabee and Thompson that lead to McCain's South Carolina victory in that primary.

The attacks on Mitt Romney's work at Bain Capital will backfire on those that are making or supporting such attacks. The republican voters of South Carolina will see through such attacks and understand them for what they are: attempts to degrade the record of a very successful, job-creating company by deceitfully picking negative aspects of private equity while omitting the many benefits and successes of Bain and companies like it. This will hurt Gingrich (now polling in second place) and Perry whose large amount of funding has kept him in the race despite less than desirable results.

The South Carolina primary may be the end for Rick Santorum and Jon Huntsman due to lack of funding (however both have been gaining momentum), but the rest of the candidates still seem to be financially able to continue regardless of the results.

Ron Paul, as usual, has very strong and vocal support. They will continue to stay strong through the vote, and with a solid push this week could lead him to a strong third place or even second. He will need to immediately start looking to the future to continue his run.

South Carolina is proving to be a very interesting contest, but will come up far shy of deciding a nominee or even taking many out of the race. I predict that Mitt Romney and Ron Paul will have a good showing when the results come in, and Rick Perry, Rick Santorum, and Newt Gingrich will come up short of their expectations. This could all change based on performance in the 2 debates this week or any big news between now and the vote. More than likely, all of them will survive and be looking ahead to Florida at the end of the month.

President Obama and the National Debt

2012-01-13T15:48:00.000-08:00

The national debt has been a growing problem for years. Many think that it is risky and could harm everything from our economy to our national security. This week, President Obama requested another increase in the limit on our debt. Here are a few points on the issue:

The most recent request is for $1.2 trillion, which will bring the limit over $16 trillion.

This request is necessary to keep the government running properly due to money being over-appropriated.

In 2008, Candidate Obama said this:

Under his administration, $5.8 trillion has been added to the national debt. That is more than the "unpatriotic" amount added in the 8 years that George W. Bush was president.

Neither request is unpatriotic. President Obama's request is simply hypocritical.

It is the Congress, not the President, that spends money. The president can affect the spending level through leadership and proposing a budget that will lead to less spending.

The most recent budget President Obama proposed was in February of 2011, and was defeated by the Senate 97 - 0.

The debt ceiling increase, while requested by the president, is more the fault of the Congress. Obama was wrong to call President Bush unpatriotic. He also has failed to take actions and propose policy, during his first 3 years in office, that would lead legislators to slow or stop the growth of our debt.

Mitt Romney: The Bain Conspiracy

2012-01-12T19:18:00.000-08:00

A recently released video from the superPAC Winning Our Future, which supports Newt Gingrich, claimed that Mitt Romney spent his time at Bain Capital tearing down companies and firing workers for his own personal gain.

A few points on the issue:

The film discusses a company called UniMac, a maker of laundry equipment based in Florida. They claim Bain dismantled their company and put them out of work. Bain bought a division of Raytheon that included UniMac, along with other investors. They sold the division for a profit of nearly $100 million dollars. They did not destroy the company. They actually did the opposite and grew its value by well over 25%. It was not until after Bain was no longer involved, that the company went bad.

Next is KB toys. Bain did not purchase KB toys until Romney no longer was involved in the management of Bain. Also, when it restructured under bankruptcy protection in 2005, according to bloomberg.com, it was taken over by Prentiss Capital Management, which said that it was market forces and weakness that caused the bankruptcy, not debt.

Then there is DDi. A victim of the Dot-Com crash of the early 2000s. It has since recovered to over 75% of the jobs it had before the crash. Again, Bain grew the value of this company by $85 milion before selling their share. It was not until 2 years later that the company filed for bankruptcy.

AmPad is similar. Bain grew the value of the company until its IPO. Even after selling a large portion of their stake, the value grew. It was not until later that the company turned bad.

Venture Capitalists do not make money by destroying the value of companies. Their money is earned by growing companies.

The companies discussed in the film are a small portion of the companies Bain invested in. Nobody is successful at investing 100% of the time. There will be times when companies go bad. Venture Capital, and Bain, clearly have had a positive net effect, or they would not be in business.

Some examples of Bain success: Sports Authority, Domino's Pizza, Staples.

This attack is a bad political move. It will not play well among republicans in the nomination process. It is attacking so-called vulture capitalism, and this will only hurt the people supporting such attacks.

In the general election, the Democratic Party will use it to further their idea of class warfare. Americans will see beyond that argument. Americans understand that businesses, small and large, drive our economy along with the people they employ. Companies and employees work together, support each other, and need each other, and people will not want to see this way of thriving diminished.

Ironically, the people in this video are being used as pawns by politicians whose goal is to tear down another for their own gain.

Much of this film purports that Bain Capital, and by extension, Mitt Romney destroyed these companies, and made a handy sum doing it. This is not a logical claim. For an investor to make money investing in a company, that company has to grow in value. All of these companies grew in value under the ownership of Bain Capital. This is why they made such large profits. They created wealth.

To put this issue in terms of the Presidency, the leaders of America have a duty to promote the general welfare. Right now, promoting the general welfare means creating an environment for growing the value of our American economy. Mitt Romney was involved in growing the value of companies in which Bain Capital invested, and growing the wealth its stakeholders. In America, the workers, entrepreneurs, students and children and all who call America home are the stakeholders. His work at Bain Capital, if anything, shows he is capable of growing the value of the American economy.