U.S. Constitution Dying of Neglect

October 29, 2012

While Michiganders are fortunate to live in a state not considered a “battleground” by either of the presidential campaigns, thus sparing us the onslaught of obnoxious TV ads, we are, however, being bombarded by commercials by those both for and against six different ballot proposals.  Of these six proposals, five are proposed amendments to the state constitution. 

It got me wondering just how typical or unusual this might be, so I did a little research.  I was surprised by just how dynamic a document the Michigan state constitution really is.  The Michigan constitution was first adopted in 1835.  Included in that constitution was a provision that every sixteen years there be placed on the ballot a proposal calling for a state constitutional convention.  As a result, since that original constitution in 1835, there have been five additional constitutional conventions in Michigan.  On three occasions – most recently in 1963 – the new constitutions that came out of those conventions were approved by the people.  Two were rejected.  The ballot proposals that call for such conventions have failed twelve times, most recently in 2010. 

Most ballot proposals to amend the state constitution fail.  But, since the last Michigan constitution was adopted in 1963, there have been 28 amendments.  Seventeen of these were citizen initiatives placed on the ballot by a petition process.

Now, let’s contrast that to the U.S. constitution.  The last (and only) consitutional convention was in Philadelphia in 1787 – 225 years ago.  That convention was called only six years after ratification of the original Articles of Confederation in 1781, which soon proved unworkable.  The one and only big revision to the Constitution occurred only 4 years later in 1791 with the enactment of the Bill of Rights – the first ten amendments.  Since then, in the last 221 years, there have been only 17 additional amendments.  One of these, the 21st, repealed the 18th, which enacted prohibition.  (Michigan was the first state to ratify this amendment!)  As a result, only 15 amendments enacted since 1791 remain in effect.  In the past 50 years, only 4 amendments have been enacted.  The most recent, the 27th amendment, preventing congressional pay raises from taking effect until the next session of Congress, was enacted in 1992.  That one took a while.  It was first proposed in 1789.

Article V of the constitution defines the process for amending it.  It can be done in one of two ways:  (1) A proposed amendment must first pass in both houses of congress by a two thirds majority before being submitted to the states for ratification.  To be ratified, it must be approved by three-fourths of the states.  The founding fathers didn’t want to make it nearly impossible for a proposed amendment to pass by requiring unanimous approval.  At that time, three-fourths of the states meant that nine states had to approve the amendment.  I wonder if they’d still require three-fourths of the states today, or would they lower that bar to maybe two-thirds,  now that a proposed amendment must be approved by 38 states?  (2) Or, two thirds of the states can demand that Congress call a constitutional convention to propose an amendment, to then be ratified by three-fourths of the states.  The latter procedure has never been used. 

As a result of this procedure, it’s very difficult to amend the constitution.  But it can happen pretty fast, especially if the people are angry enough.  The amendment that was proposed and ratified most quickly was the 26th, which lowered the voting age to 18. In 1965, relatively early in the U.S. involvement in Vietnam, Barry McGuire recorded Eve of Destruction, the first anti-war song.  It included the lyrics:

You’re old enough to kill, but not for votin’
You don’t believe in war, but what’s that gun you’re totin’?

As the war raged on for years, as casualties mounted (most of them below the current voting age of 21), and as anti-war sentiment grew, these lyrics became a rallying cry.  In March of 1971, Congress proposed the 26th amendment to lower the voting age to 18.  It only took a little more than three months for it to be ratified by the states.

Our founding fathers acknowledged their own shortcomings when it came to drafting a constitution and were eager to revise it as dictated by circumstances.  It only took them six years to recognize that their original document, the Articles of Confederation, were woefully inadequate.  Then it only took them four years to admit that the new Constitution needed serious amending with the Bill of Rights.  Three years later they added the 11th amendment, laying the foundation for sovereign immunity.  Ten years after that, the 12th amendment was ratified, revising presidential election procedures.  The 13th amendment, which abolished slavery, wasn’t enacted until 61 years later in 1865.   Since then there have been amendments to establish the federal income tax and to give women the right to vote, among the more significant amendments.

It’s not that lawmakers haven’t tried to update the constitution more frequently.  There have been over 11,000 proposals for amendments that have failed to be passed by Congress, including balanced budget amendments, an amendment that would limit constitutional protections to natural persons and not corporations, a human life amendment, an amendment that would grant citizenship only to babies born in the U.S. with at least one parent who is a citizen, and many others. 

An amendment that has never even been proposed is one that we need perhaps more desperately than any of the others – the 28th Amendment proposed on this web site – prohibiting the U.S. from running a trade deficit and from being a member of any international organization that does not recognize America’s fundamental and sovereign right to manage trade in its own best self-interest, including the use of tariffs. 

Many of these amendments, especially the one I’ve mentioned above, are desperately needed.  Without them, the United States is headed for economic ruin.  Like nearly all states, the state of Michigan maintains a balanced budget because the legislature is forced to do so by Michigan’s constitution.  It gives the legislators the “cover” they need to defend their actions to their constituents.  Everyone knows that they have to make tough compromises to comply with the constitutional requirement. 

Not so in Congress.  The days when congressmen and senators would work together and compromise in the best interest of the common good are long past.  Lobbying is too intense, as is the scrutiny of special interest groups who can distort every vote to make the congressman or senator appear to be the worst villain since Hitler.  Without the driving force of a constitutional requirement to make tough decisions, nothing will ever be accomplished in Congress.   Unfortunately, it has become impossible for any proposed amendment to be passed by Congress for all the same reasons.  It’s impossible to ever again get a two thirds majority to agree on anything.  Consequently, our badly outdated constitution and the nation itself is dying of neglect.

Multi-national corporations have hijacked our government because the constitution doesn’t more clearly define what it means by “the people” and makes no distinction between “freedom of speech” and advertising space in print and on air that is sold to the highest bidder for the purpose of spreading propaganda containing distortions and outright lies.  (It seems inconceivable that the amendment regarding free speech pre-dates the invention of the telegraph, radio, television and the internet and hasn’t been clarified since.)  The federal government has bankrupted the nation because there are no constitutional requirements to maintain a balance of trade and a balanced budget.  The founding fathers could never conceive that we’d be so foolish and would be horrified at what’s happening. 

A hopeless situation?  Probably.  Unlike in 1971, when lawmakers responded to a tidal wave of anger as their constituents watched their sons die in a war over which they had no say at all, no amount of voter anger is sufficient to sway lawmakers from doing the bidding of their multi-national benefactors. 

But there may be a tiny crack through which “the people” – real people – can still have an impact.  Buried in the first amendment amid the freedoms of speech and religion is a lesser-known right:  the right to petition the government.  Unfortunately, the supreme court has even blunted that right by ruling that, while the people have a right to petition, the government has no obligation to respond.  Nevertheless, there is one petition to which the federal government must respond – a demand by two thirds of the states to call a constitutional convention to propose an amendment.  While it now seems impossible to get an amendment approved by Congress for possible ratification by the states, the other method spelled out by the constitution for making amendments which has never been used may be our best hope.  How could that ever happen – two thirds of the states calling for a convention?  It could happen if the people of those states, through the petition process, got measures on the ballots that would require their states to make such a demand.  It’s something I’m going to look into for the state of Michigan.  Can an issue be placed on the ballot that would require Michigan to call for a constitutional convention for the purpose of proposing the “28th amendment?” 

I imagine that it would be very, very easy – especially here in Michigan – to get enough signatures on a petition to place that issue on the ballot.  Imagine the possibilities if word of such a move in Michigan spread to other states.  Hey, I know it’s the longest of all long shots, but it’s something worth looking into.  I’ll let you know what I find.

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CEOs to Congress: Fix the debt problem by cutting our taxes!

October 25, 2012

http://www.cnbc.com/id/49514249

I saw this above-linked article this morning and couldn’t let it pass without comment.  It seems that a group of 80 CEOs is sending a letter to Congress, purportedly telling Congress to fix our debt problem. 

In a letter posted on the Wall Street Journal website late on Wednesday, the U.S. corporate chiefs said it is urgent and essential to put in place a plan to fix America’s debt.

But is it really the debt crisis they’re worried about, or are they interested in something else? 

The corporate chiefs said the fiscal plan must include “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”

“Pro-growth tax reform” is code for “cut our taxes.”  There is no tax that is “pro-growth.”  All taxes siphon money out of the economy, hurting growth.  Thus, “reforming” taxes in a manner that is “pro-growth” means cutting them – especially theirs.  In case there’s any doubt about that, “… broadens the base …” means tax someone else.  And “… lowers rates …” makes it even more explicit what they want when they say “comprehensive pro-growth tax reform.” 

They also know that this thinly-veiled plea to cut their taxes will carry more weight if they can get voters to rally behind them.  (Just in case the fact that they bankroll congressmen’s and senators’ campaigns doesn’t carry enough weight with them.)  So they cloak this plea in a seemingly patriotic appeal to cut the deficit in the best interest of the nation, preying on those gullible enough to believe that some combination of cutting taxes and token spending cuts (not big ones, mind you, because that could hurt corporate profits too) can magically eliminate the deficit and give us a balanced budget. 

The irony is that it’s precisely these people who champion and benefit most from the very condition that necessitates deficit spending in the first place – the free trade policy that has produced a massive trade deficit.  Those trade dollars, siphoned from the economy, have to be plowed back into the economy in some way in order to avoid a deep, permanent recession and to maintain the illusion of prosperity.  Once foreign investors bought every American asset there was to buy, the only way left to keep those dollars going back into the economy is to issue debt (sell them government bonds) and use that debt to fund government programs.  Notice that they don’t utter a peep of protest about our trade policy or the need to restore a balance of trade in order make meaningful deficit reduction possible.

Do these CEOs understand this?  Probably not.  Nor do they care.  Based on my admittedly limited experience, CEOs often aren’t the sharpest tools in the shed.  (Donald Trump comes to mind as an example, though most others are better at keeping their mouths in check.)  They’re usually type-A personalities (a polite way of calling them bullies) who are also blessed with high level schmoozing ability and political astuteness.  As I pointed out in an earlier post, many are examples of functioning sociopaths who care nothing about anyone but themselves, but who are adept at creating an appearance of caring when it suits their interests.  Thus this letter to Congress. 

That’s a harsh indictment of the people who run our major corporations, but what else can be said about people who put their companies’ interests (which, again, suits their own self-interest) ahead of the interests and the common good of their countrymen?  Well, the term “traitor” comes to mind but, in the interest of political correctness, we don’t use harsh terms like that any more.


Candidates’ Responses to Debate Question on Outsourcing

October 17, 2012

I’ve had little to say about the presidential campaign since it really doesn’t matter whether President Obama gets re-elected or George Romney replaces him.  We’ll get the same thing on the only two issues that really matter – trade and immigration.  Each made it clear that we’ll get more immigration because we’re a nation of immigrants, etc.  Neither  understands anything about the role of immigration in driving up unemployment and in making our energy and environmental challenges that much more impossible to address.  No surprise there.

No surprise on trade either, but their answers were so predictably sophomoric and so illustrative of exactly what’s wrong with this country, that I can’t let them pass without comment.

By this point in the debate, I was dismayed that not a single question had yet been asked on the subject of trade.  Finally, near the very end of the debate, audience member Carol Goldberg hit the nail on the head (in terms of what’s ailing our economy) with this question:

The outsourcing of American jobs overseas has taken a toll on our economy. What plans do you have to put back and keep jobs here in the United States?

Romney responded first:

…  people think it’s more attractive in some cases to go offshore than to stay here. We have made it less attractive for enterprises to stay here than to go offshore from time to time. What I will do as president is make sure it’s more attractive to come to America again.

Companies didn’t leave the U.S. for China because it was a more attractive place to do business.  Get serious.  When they began the exodus from the U.S. in favor of China, China was a primitive, communist, hell-hole of teeming humanity struggling to scoop enough rice from paddies to feed themselves.  They left the U.S. – the richest, most advanced nation on earth because China was a more attractive place to do business?  Don’t be ridiculous.  Even the prospect of cheap wages wasn’t enough to offset all of the logistics costs associated with moving operations over there, training illiterate workers and suffering the consequences of poor quality.  Companies went to China for one reason:  in pursuit of a virgin, untapped market of 1.2 billion consumers.

Now, we’re going to have to make sure that as we trade with other nations that they play by the rules. And China hasn’t. One of the reasons — or one of the ways they don’t play by the rules is artificially holding down the value of their currency. Because if they put their currency down low, that means their prices on their goods are low. And that makes them advantageous in the marketplace.

If you’ve been a follower of this blog, you already know that this claim about currency exchange rates is completely unfounded.  Although it may seem logical, the data shows that there is absolutely no relationship between exchange rates and trade imbalances.

Predictably, Romney went on to blame corporate tax rates and even “Obamacare.”  I won’t waste time on that part of his response.

Then Obama got his turn.  He emphasized his approach of doubling exports, and had the audacity to claim that we’re on track to meet that goal.

And we are on pace to double our exports, one of the commitments I made when I was president. That’s creating tens of thousands of jobs all across the country. That’s why we’ve kept on pushing trade deals, but trade deals that make sure that American workers and American businesses are getting a good deal.

We are not on pace to double our exports.  In the most recent month, we lagged that pace for the 11th consecutive month by the largest amount yet.  And while one can say that rising exports have added jobs, one must also then admit that the greater increase in imports has wiped out even more.  And the trade deals he’s pushed?  Since implementation of the deal with South Korea, our trade deficit with that nation has worsened by 31%.

Moderator Crowley (who I thought did an outstanding job) then posed her own question about trade:

iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here?

Following Romney’s patent answer about leveling the playing field, making China play by the rules, and making America “more attractive,” Obama had this to say:

Candy, there are some jobs that are not going to come back. Because they are low wage, low skill jobs. I want high wage, high skill jobs. That’s why we have to emphasize manufacturing. That’s why we have to invest in advanced manufacturing. That’s why we’ve got to make sure that we’ve got the best science and research in the world.

Huh?!?!?  Manufacturing ipads, Macs and iphones represents “low wage, low skill jobs?”  Are you kidding me?  These are the very latest, most technologically advanced products on the market!  If these aren’t high wage, high skill jobs, then just what the hell is?  What exactly is he proposing that we would make here?  If making these things isn’t “advanced manufacturing,” what is?  And we already have the best science and research in the world.  Apple developed those products here, but then immediately sent the manufacturing to  China.  Why?  Because their potential (but unrealized) market is four times as large as ours and China insists upon them being manufactured there as a condition for access to their market.  I wish Crowley could have followed up with questions like these.

All we get are the same answers we’ve been listening to for decades:  “level the playing field.”  “Make them play fair.”  “Complain about currency manipulation.”  “Compete harder.”  “Cut corporate taxes.”  Has any of it made a bit of difference, except to allow our trade imbalance to grow steadily worse?

How I wish I could have been a 3rd candidate responding to that question.


Trade Deficit with S. Korea Worsening

October 13, 2012

In March of this year, the trade deal that President Obama negotiated with South Korea went into effect.  The president hailed it as a big win for American workers.  Because South Korea is 15 times more densely populated than the U.S., I predicted that the results would be just the opposite – that our trade deficit with South Korea would worsen substantially. 

Two months ago, I reported that during the first four months since the deal went into effect, our trade deficit with S. Korea did, in fact, worsen by 18% compared to the same four month period in 2011.

Now, six months into the trade deal, the deficit has worsened by 31.6% compared to the same 6-month period in 2011.  (During that same time frame, our overall trade deficit worsened by only 0.3%.) 

Thanks to the president’s free trade deal with S. Korea, our trade deficit with that nation is getting worse fast.  Imagine what will happen in 4-1/2 years when the small tariffs that still remain on S. Korean cars are lifted in accordance with the agreement. 

The point is that, when one understands the role that the inverse relationship between population density and per capita consumption plays in driving trade imbalances – and just how dominant and consistent that role is, it’s easy to predict the outcome of almost any given free trade deal.  It was easy to predict that this deal would yield exactly the same results that we experience when dealing with almost every other badly overpopulated nation. 

 


What Happened to Obama’s Goal to Double Exports?

October 11, 2012

http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

In January, 2010, President Obama set a goal of doubling U.S. exports in the next 10 years.  He referred to that goal during the debate with Romney, as though it was a goal that was being met.  (Nobody called him on it.)  The objective was to emulate Germany, an economy that thrives on manufacturing for export, and thus whittle away our huge trade deficit.  I said then that any plan that focuses on exports was doomed to failure from the outset, since the U.S. has absolutely no control over exports, which are driven by foreign demand.  (The only thing we can effectively control, if we ever tried, is imports.)

This morning the Bureau of Economic Analysis released its report of international trade for the month of August.  (See above link.)  Both overall exports and manufactured exports declined for the 2nd month in a row.  Overall exports are at their lowest level since March, and manufactured exports are at their lowest level since September of 2011.  Overall exports lagged the president’s goal for the 13th consecutive month by over $24 billion – a new record.  Manufactured exports lagged the president’s goal for the 11th consecutive month by more than $15 billion – a new record.

This economic strategy – the bedrock of Obama’s plan to boost the manufacturing sector and the overall economy – is an abysmal failure.  It’s a failure because it never had any chance of succeeding.  Aside from begging our trade partners to boost their imports of American goods – a tactic that has been a proven failure for decades – no other action was taken by the administration to actually work toward the goal because there’s nothing it can do. 

Will there ever come an American president with the backbone to say “enough is enough” and turn his focus on imports?  Will there ever come a time when we bid farewell to the World Trade Organization and its avowed goal of running a rigged trading scheme that favors undeveloped and developing nations?  Not in the next four years.  Obama has proven that he’ll do nothing about it.  Romney has vowed to make matters worse by pursuing even more destructive free trade deals. 

Here are the charts of the data:  Obamas Goal to Double Exports     Balance of Trade     Manf’d exports vs. goal     Manf’d Goods Balance of Trade

When Obama took office, I predicted that, if he didn’t address the trade deficit, he’d be a one-term president.  In a month, that prediction will come true.  And my prediction regarding President Romney will be the same.


A Growing Recognition of Globalization’s Role in Ruining America’s Economy

October 7, 2012

http://www.tradereform.org/2012/08/behind-the-new-view-of-globalization/?utm_source=rss&utm_medium=rss&utm_campaign=behind-the-new-view-of-globalization

Now that I’ve returned home from two weeks in the north woods and lakes of northern Wisconsin, where internet access is unavailable without a long trip into town and a re-engagement with a small version of the daily rat race (which I avoid at practically all cost), I’m slowly getting caught up again. 

A little while back, reader Ken brought to my attention the above-linked article which reports on how more economists are arriving at the conclusion that free trade (especially with China) is, in fact, hurting American workers.  Seems blatantly obvious, but this is a leap for economists who, for decades, have closed their eyes and repeated their mantra that free trade benefits all, in ways that are very tangible for those with trade surpluses and in ways mysterious, intangible and completely indiscernable for Americans. 

The author of the article still manages to conclude that protectionism is not a proper response, but at least it seems that some economists are starting to wonder. 

You might also enjoy my response and couple of responses to it.  (Scroll down throught the comments.) 

Thanks for sending this, Ken.


Unemployment Falls to Pre-Obama Level, Unbelievably, but as Predicted

October 5, 2012

Last month, when reporting on August unemployment, I made the following prediction:

Next month (the last report before the election), the labor force will shrink further, enought to bring the unemployment rate down to 7.9% – the level it was at when Obama took office.

This morning, the BLS (Bureau of Labor Statistics) reported that the unemployment rate fell not to just 7.9% but to 7.8%.  I should have expected it.  It wouldn’t be good enough for unemployment to end up at the same level, just before the election, as when Obama took office.  If it did, Romney could make hay of the fact that unemployment didn’t improve during Obama’s term.  But now Romney can’t say that. 

And I should have expected that the BLS would have to come up with some other gimmick to make unemployment drop, since the media wised up last month and roundly mocked the claim that so many people had dropped out of the labor force.  So, instead, this month the BLS claims that the employment level (the number of people working, according to the household survey) rose by 873,000 – the biggest leap in over 29 years and the fourth largest increase since record-keeping began in 1948.  (The largest occurred in April, 1960, when it rose by 1,286,000.  In June of 1983 it rose by 991,000 and in June, 1948, it rose by 889,000.

Come on!  Given the state of the economy and given that the establishment survey reported a sub-par job increase of 114,000 (only 104,000 in the private sector, both figures corroborated by the ADP employment report from yesterday) – less than needed to keep pace with growth in the labor force, does anyone believe that the employment level grew by 873,000?  Here’s the BLS report:  http://www.bls.gov/news.release/empsit.nr0.htm.  I’d like to also provide you the raw data that goes into that calculation of unemployment (the spreadsheet that I’ve been providing each month), but there seems to be problems with WordPress this morning that prevents me from uploading the spreadsheet.  It’ll be back next month. 

This month’s report crosses the line.  It’s just too unbelievable and the timing of such an unbelievable report is way too fishy.  Seriously, I think that there needs to be a congressional investigation into the workings of the BLS and whether or not the White House is pressuring the BLS into releasing bogus or doctored data.  The data upon which economic decisions are based has to be reliable and trustworthy.  Does anyone trust this data after this month’s report?