Romney’s Five Point Plan

What is Romney’s plan, exactly? He broke it down for Fortune into five categories:Below each category is my response in blue.

(1) Aggressively promote domestic energy development, especially fossil fuels. 
How can anyone disagree with developing domestic energy sources? The question is at what cost in terms of the environment and future generationsOur concern should be which presidential candidate will implement the best energy policy for us and future generations. The President has a duty to think beyond tomorrow.

World-wide demand for energy will increase dramatically as more countries develop a middle class. The BRIC countries, Brazil, Russia, India and China are well on their way to becoming good economic competitors. In 2005 the U.S. consumed 16 times as much energy per capita as did India. They have a population that is roughly 4 times ours. As India becomes more prosperous their consumption rates will get closer to ours. Over the same time period we consumed 6 times more energy on a per capita basis as China. Countries in southern Africa are beginning to experience economic success. It is also easy to envision a time when Egypt, Iran, Saudi Arabia and Jordan begin developing a middle class and thus consuming more energy on a per capita basis.

I want a President who is not squandering our future today and thinking about the next generation and the generation after that. Who do you trust to do this; Romney or Obama?


The policy should factor in the sources of energy and the affects on the environment. After all, it is our children and grandchildren we are discussing. I wonder how Dick Cheney would feel if some of this development impaired his favorite trout streams in Wyoming. He may get mad enough where he would consider taking a few oil executives out for some sport shooting.

(2) Expand the market for U.S. goods overseas by negotiating new trade agreements and standing up to China on intellectual-property and currency issues.
The Obama administration is already addressing this issue. This is why Hillary Clinton has traveled more than any other Secretary of State in our history. Negotiating treaties must be done in private. Holding a press conference on a regular basis announcing what we are demanding of other countries, and what they are demanding of us, would be counter productive. Romney knows this.

Can you imagine if, while Romney was at Bain, he held a daily press conference detailing the progress being made in his attempt to buy Staples? The deal would never have happened. It would have broke down and a competitor of Bain would have stepped in and bought Staples.

This country has invested billions, if not trillions, of dollars into technology. Technological development allows us to maintain a high living standard even as it is difficult to compete against the low cost of labor in other countries. Many of our advances made as a country can be attributed to the space program and the development of the internet by scientist working for the government. I would not be typing this on my flat screen monitor if it were not for this nations ability to create useful technology. Steve Jobs and his fellow employees at Apple would never have created that smart phone you have in your pocket if prior presidents did not have the foresight to invest in technology. YES, STEVE JOBS MADE APPLE. He made it utilizing the technology funded by our tax dollars.

 Korea and Japan need to lower tariffs on our auto exports to their countries. The current administration is working on this. I have more faith in Obama to get it done than R&R
(3) Improve workforce skills by transferring job-training programs to the states and going after teachers’ unions, which, he says, stand in the way of school choice and better instruction.

This is another one where the devil is in the details. Education, just as defense, is a national issue. If this country is going to maintain a high standard of living, relative to other countries, we need to do everything possible to nurture the greatest asset we have for the future, our children. How are we going to make sure the next Einstein, who may be a person of color, living in inner city Detroit, without a father and with an unemployed mother who has a drug problem, gets properly educated? It would be a great loss to the country if we let that child be sucked into the abyss. We must find a way to save what she has to offer society.

Condoleezza Rice at the Republican National Convention said, “But today, today, when I can look at your zip code and I can tell whether you’re going to get a good education, can I honestly say it does not matter where you came from, it matters where you are going? The crisis in K-12 education is a threat to the very fabric of who we are.” We need to address this at a national level not only for the sake of the child, but also for the sake of the nation.


I am a firm believer in giving as much power and authority as possible to the level of government that is closest to the people. The problem is each individual should have an equal chance to get a good education.

George Romney’s son, who grew up in Grosse Pointe, Michigan, had a much better chance of getting a good public education than the boy who lived eight miles away in Detroit. Further, there is an even possibility that the child living in Detroit, having the necessary skills and attributes, would to be far more successful than Mr. Romney if given the chance. Not only did the young boy in Detroit lose, but so did the nation. We cannot afford to let that happen. The world is too competitive.
 (4) Attack the deficit through budget cuts, not tax increases. 

I see that Romney has already learned the Pledge of Allegiance to Grover Norquist. Personally, I find it scary to see so many politicians take an oath to an individual, and his organization, that may be in conflict with the oath they gave to us voters when we elected them to office. The country has a serious challenge to get our fiscal house in order. It is going to require budget cuts and finding ways to increase revenue. To take tax increases off the table this early in the process is irresponsible. This issue is directly related to number 5 below.

(5), reshape the regulatory climate to “encourage and promote small business” rather than swamp it. 
This is certainly a worthy objective. My problem is how do they accomplish this while R&R is so indebted to the crony capitalists that stand in the way of small business competing. The bribes, campaign contributions, that Romney is receiving from the oligarchs who are taking over our economy will not allow this to happen. These cronies remind me of Don Corleone when he said in the movie the Godfather, “some day, and the day may never come, I will call upon you to do a service for me.” They will be calling on Mr. Romney.
1 Mitt Romney’s 5-point plan for the economy, Fortune, August 15, 2012
2 The above is corrected for an error relating yo India’s population. It is approximately 4 times that of the United States instead of 10 times as earlier stated.

Obama And Democratic Convention

Here is what Barack Obama and the Democrats need to do at next weeks convention. They need to explain the contrast between the Democratic parties platform and the platform revealed by the Republicans last week. While doing this, major falsehoods expressed by Republicans must be addressed.

Obama must debunk the fallacy that the country is worse off than it was four years ago. The events causing the collapse of housing and stock markets did not happen in the fall of 2008. The fall of 2008 was when the market, and thus the country, acknowledged the devastation of home values brought about by sub-prime lending throughout the first eight years of this century. It is like you opened a $50,000 savings account in the year 2000 and someone went online in 2004 and stole it; however, you did not discover it until 2008. When were you actually out the $50,000; in 2004 or 2008?

In the normal course of banking and finance, holders of financial assets are required to establish a reserve for losses against assets acquired. When a bank makes a car loan they immediately set up a loss reserve. No lender expects a specific loan to default on the day the loan is made.  However, an experienced lender knows that a certain percentage of loans made will end up in default. He just does not know which specific loans will fail.

If proper loss reserves were established as sub prime loans were originated, the housing bubble would not have occurred. Wall Street pulled a bait and switch on the American economy and so far has paid no retribution for their greed. The bad news is the economy would have been in recession much earlier and unemployment would have been much higher during the middle of the last decade. The recession however, would never have gotten out of hand and turned into a near depression.

President Obama is being blamed for the depression-like recession that we are experiencing when in fact the seeds were sown long before he took office. Further, a downturn of this magnitude does not turn around quickly. When he took office we were losing 700,000 jobs each month. We are now adding approximately 200,000 jobs monthly. This is a big turnaround; however, there is still much pain and suffering occurring.

Obama then needs to state his objectives for the next four years which should include the following:

1. Continue the process of pulling out of Afghanistan.
2. Enforce anti-trust legislation in those industries controlled by oligopolies.
3. Invoke the Volcker Rule and break-up banks that are too big to fail.
4. Develop and implement a long term plan that will resolve our debt issue. This includes raising taxes on the wealthy and making cuts to expenditures, including entitlement programs, if necessary.
5. Further stimulate the economy, thus creating jobs, by making sound investments in our future including infrastructure, internet upgrades, education, transportation, energy exploration and rebuilding some inner cities that make sense.
6. Aggressively seek retribution, whether in criminal or civil courts, from entities causing the sub prime meltdown using the proceeds to assist homeowners damaged to get relief. This, in affect, will be a stimulus costing the taxpayers very little.
7. Commit to improving education for it is the surest road out of poverty and low wages.
8. Enforce anti-trust legislation in those industries controlled by oligopolies.
9. Fight to repeal the Supreme Courts decision on Citizens United by amending the constitution.

The Republicans spent their convention touting the wonderful job small business does to create jobs. They are correct and acknowledge it. However, make very clear that the republicans sold out small business to crony capitalists by accepting egregious contributions, bribes, from their chums that Paul Ryan spoke of in the Financial Times in July of this year.

“Both political parties have fallen victim to “partnership” with large and well-connected companies, especially in energy, housing, finance and healthcare. Republicans have been guilty of confusing our pro-market principles with pro-entrenched business policies…. A growing coalition of reformers … reject this pernicious crony capitalism. Our solutions promote an opportunity society, one that is rooted in the US commitment to free enterprise.”

The GOP is going to find it difficult to break-up the oligarchs that control wall street, banking, broadcasting, the internet and many other industries that are in the way of small businesses being able to compete. These oligarchs are also in position to hold down wages because they need to compete less for labor as they drive their competitors out of business.

Why Is Unemployment high?

Why do we have such high unemployment? If you talk to ten economists, you will get fifteen answers. Let me give you answer sixteen.


Congress has refused to pass an adequate stimulus package and a plan to control our nation’s debt problem. A stimulus package would increase jobs while building and repairing infrastructure to compete better in the future. Passing a plan relating to our federal debt would brighten the outlook for the country and improve confidence. Congress says it wants to reduce debt; however,it refuses to raises taxes on the wealthy. We need both a stimulus and a long-term debt plan.

Congress is at fault regarding both not having either plans and both the congress and President are to blame for not having a plan regarding our deficit. The Republicans are blaming the President for our high unemployment and yet it was their party’s past policies that caused our near depression and their present practices are preventing further stimulus.

We were in a near-depression and we still have not climbed out of it. Depressions take more than a day to create and recovering from one takes a long time. Most families not only had their income drop, but also saw their net worth fall because of the decrease in value of their largest asset, their house. Further, housing values have been slow to recover. The result has been the consumer has lost confidence and has not been in a mood to spend.


We drained our nation’s capital and lost lives by fighting two foreign wars in a manner that provided very little benefit to our nation. As a result we have thousands dead and trillions of dollars wasted.

In addition, much of the consumption in the prior decade was a result of tapping the equity in the family home to use as collateral to have the money to spend. Over the last four years the consumer has been paying down his debts and rightly so. As a result, there is less demand. He is not ready to start borrowing again for consumption. In short, he has lost confidence.

In the last decade too much was consumed relative to income per family. Therefore, do not expect consumption per capita to get back to the “good old days” soon. We will need to rely on exports to increase the demand for goods and services produced in this country.  Increasing exports is a challenge and does not happen quickly.  The world is competitive and increasing exports will take time.

We have too much regulations on small business, we do not defend small business from big business and we need to enforce anti-trust laws against big business where needed. We should not burden Small business with the same rules as big business. Capitalism works fine to the benefit of the nation for small business. Competition requires they give the consumer what he wants. Further, when a small business acts improperly the damage done to the nation at large is minimal because their small sixe.

Capitalism for many industries controlled by oligopolies is broken. Free markets in these industries do not exist. Oligopolies control these industries and need more regulation. Capitalism exists to serve society. Society does not exist to serve capitalism. We should either fix capitalism where it is not working by enforcing anti-trust laws or recognize there are some industries that must be highly regulated. We are comfortable regulating utilities. If capitalism does not work in an industry one alternative is to recognize the problem and treat it as a utility. Capitalism is not working anyway.

Protect Small Business From Big Business

‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.’ (Adam Smith, The Wealth of Nations, 1776).
“Small business creates most of the jobs.”, Paul Ryan, Republican Congressman, Fox News Sunday, 8/7/11
Why is our government and conservatives not protecting small business from big business? Could it be that the large oligopolies are also large contributors to our politicians?
What does the American auto industry, the health care industry, wall street firms and the banking industry all have in common; other than they were all on the brink of failure?

These are industries where the production side of the industry is no longer a free market with many producers competing head-to head to earn the business of consumers, or customers, of the industry. Instead each of these industries are controlled by a relatively small number of very large corporations that have transformed these markets into oligopolies. (The auto industry is now an exception to this in that it is very competitive as a result of foreign competition.)
Adam Smith when he discussed “rational self interest” and competitive markets in his book Wealth of Nations, envisioned many consumers buying goods and services from many producers with everyone looking out for their self-interest. By keeping markets “free”, producers pursue their rational self-interest and this best meets the needs of the consumers and the citizens of our country, who are also looking out for their self-interest. Under this system, what is in the producers self interest is to provide the best product possible to the consumer, while striving to be a low cost producer for their niche.
This consolidation of markets began in the late 1960’s early 1970’s in the auto industry when it was transformed from a free market to an industry controlled by three giant corporations and one union. As this transformation was occurring the auto company’s and auto union’s self-interest became separated from what the consumer wanted and/or needed. Competition between the companies broke down and this gave an opening for foreign competition to enter our markets and the beginning of the end of the American auto industry as we knew it.
Other industries saw what was happening in the auto industry and that government was not objecting so they followed the same path with little concern we were losing our free market system to a more centralized market system of oligopolies. As a result, we now have major markets where the producing entities self-interest is not in line with the self-interest of the consumer. What is in the self-interest of the entities in these industries is to keep the oligopoly alive. Thus the creation of special interests and lobbyists.
These oligopolies have bought the protection of our representatives in Washington and state capitals. I am always baffled by the fact that corporations and unions cannot vote in this country, however they are allowed to buy votes with their contributions. Small business is said to be the major contributor to job creation. Why is it that our politicians are not defending these small business from the job stealing large corporations?
We lost track of a key ingredient that Adam Smith identified as necessary in order for “rational self interest” to work. There must be many producers. In too many industries, the number of producers has shrunk and the ones remaining have gotten “too big to fail”. This is true in the auto industry, the banking industry, wall street, health care and will soon be true in the computer software industry and cell phone industry.
When discussing the health insurance industry proponents for this specific oligopoly site the fact that the bigger the insured pool, the lower insurance premiums can be. However, I submit that this “bigger pool savings” is more than offset by the fact that the rational self-interest of the companies is not totally aligned with the rational self interest of the insured. The insurance industries self-interest is to keep the oligopoly alive. The self-interest of the insured is to have as many insurance companies as possible clawing to get his business and thus ringing out all excessive cost, including unconscionable salaries for top executives, to earn the consumers business.
The liberals are right that regulation is required and conservatives are right that a free market is the best way to meet the needs and wants of our citizens. The common ground is that regulation is essential to make our markets free. We have too many industries where companies have too much power, their self interest is not aligned with the citizens of this country and they are too big to fail.
It is time that our politicians breakaway from the shackles of oligopolies, special interests groups and lobbyists. Use antitrust legislation to bring back free markets.