Category Archives: Politics: North Carolina

How to Get Less of Something: Only More

Last week I posted about how to get less of something; raise the price.  You see, as price goes up, demand goes down, that’s how it works.  If you sold 3 cases of beer at a buck a bottle, you could expect to sell less than 72 bottles at 2 bucks a bottle.  Now, this isn’t all bad news.  Sometimes, the supply is limited.  Take, for example, a concert.  You can only fit so many people into the RBC Center.  So, what sense would it make to price the tickets where the demand exceeds the supply?  Rather, a shrewd business manager would continue to raise the prices until the demand met the supply exactly.  Anyway, I digress.

In our story, the Great State of North By God Carolina has only begun, Be-GUN, to talk about assessing state sales tax for on-line purchases made as a result of pass though retailers.  Wow.  That’s a lot to think through.  But it works like this.

Say, as readers are flocking to this site by the ones and twos, I decide to cash in on the traffic.  I make a deal with randomsite.com and put their advertisement on the side of my web page.  Then, as my gentle readers clock though to randomsite.com and make purchases, I get a percentage.  The beauty of Capitalism.

Now, however, North Carolina is wanting to apply sales tax to those purchases made as a result of click through programs.

Much like our local pub above, these retailers are seeing sales go down as a result of prices going up.  After considering their situation, costs, benefits and other tricky business school kinda stuff, they decide to end their commission relationships with their on line partners.

Net/net – North Carolina sees the same amount of sales tax dollars as they would have without the law.  Namely $000,000.00.  And, this is the best part, North Carolina residents who run websites see a reduction in their incomes.  Further, we have to assume that these North Carolina residents are reporting the income that they make as a result of these relationships.  That is, they have to submit as income and then pay State and Federal income taxes on any money that they make.  Now the state, AND Obama, is losing the State Income tax revenues too.

Awesome.  Simply by talking, just talking, about such a tax, we have seen two on-line retailers leave the market.  The latest?  The NewsandObersever is reporting that Overstock.com is ending their arrangements with North Carolina partners.

The real slap in the face for Carolina?  This concept is SO insane that even the Govna’ of California, The Terminator, vetoed a similar bill in California.

How to Get Less of Something

Tax it.

If you want less alcohol being sold, tax it.  Same with cigarettes.  Do you wanna have fewer homes built in a certain area?  Tax new home construction.  This is true of all things.  People will buy less of something when that thing is more expensive.  This concept is very powerful; and should be equally obvious.  When you ask someone on the street to identify their favorite beer and then present them with the option of buying as many of them as they want at $10 a pop, think they’ll buy more or less than if you offered that same beer at $0.50 a bottle?  Right.  Me too.

However, when you get politicians involved you get different responses that you might expect.  Now, I’m not sure why this is the case, but I suspect that it has more to do with politicians enjoying the fruits of power than anything else.  But, you could also argue that politicians are just like everybody else and they just don’t KNOW certain things.  And so it should not be surprising when corporations walk away from States who want to tax business.  Remember, when you tax a thing, you get less of it.

The law hasn’t even passed yet and already North Carolina is getting “less of it”.

Amazon.com said Friday it has pulled the plug on commissions for North Carolina Web sites that make referrals to the online retailer, because a law designed to collect taxes on some of its sales transactions could soon be enacted.

Seattle-based Amazon said it wrote to Web site operators, telling them its “Associates program” will end after Friday. Web sites that posted links to the company about its products have received up to a 15 percent cut on sales.

As I mentioned, this law is only being considered at this time, it hasn’t been voted on or sent to the Governor.

But the Legislature is considering a provision in its final budget plan designed to collect sales taxes on these so-called “click-through” transactions.

Competing House and Senate plans both contain the provision, so it’s likely to be in the compromise budget proposal that could be approved in the next several days.

Rather than driving money OUT of North Carolina, how about our State Government just reduce our spend, by, say:

North Carolina expects to collect an additional $13.2 million in the coming fiscal year on the “click-through” transactions and by companies collecting sales taxes on music, video and software downloads purchased electronically, according to a legislative fiscal analysis.

I don’t know, 13.2 million?

Just another example of our Government trying to do too much.

Not the End, but The Beginning of Worse

I was reading the News and Observer this morning and saw that Smithfield Packing finally succumbed to the kudzu that is Unions.

Smithfield Packing, union agree on NC contract

TAR HEEL, N.C. — Smithfield Packing Co. and a union that worked for years to organize a huge North Carolina slaughterhouse say they have agreed on their first contract for the plant.

I have not yet taken the time to check and see if Smithfield Packing is a publicly traded company or not, but I am sure that the value of this company just took a 10% hit.  Not only that, but employment in the company went down today as well.

I repeat, there is nothing, not ONE thing that is good about unionization within a company.  Unless, of course, you are a Union official.

Unions effectively tax …  [company] investments by negotiating higher wages for their members, thus lowering profits. Unionized companies respond to this union tax by reducing investment. Less investment makes unionized companies less competitive.

And a less competetive company is a company that is not as valuable as a more competitive compant.  If you need further proof that Unionization is a bad thing, take a look at the States with the highest unemployment rates and see how many of them are Union states and how many are right to work.

Heck, I’ll save ya the time:

1 Nebraska Right to Work
2 North Dakota Right to Work
3 South Dakota Right to Work
4 Wyoming Right to Work
5 Utah Right to Work
6 Iowa Right to Work
7 Montana Forced Union
8 Oklahoma Right to Work
9 New Hampshire Forced Union
10 New Mexico Forced Union
41 Kentucky Forced Union
42 DC Forced Union
43 Tennessee Right to Work
44 Ohio Forced Union
45 North Carolina Right to Work
46 Nevada Right to Work
47 California Forced Union
48 South Carolina Right to Work
49 Oregon Forced Union
50 Michigan Forced Union

Interesting list, huh?

Teacher’s Unions

I know that we don’t have teacher’s unions in Carolina, but still, the negative effects are everywhere.

Today, the N&O reported on the idea of merit pay for teachers.  In this case, the merit pay seemed to be limited to the type of school a teacher taught at; not how well that teacher did.  But still,  it’s a start.

I started my working career as a teacher, it was the first job I had after college.  Further, that first year was also a “negotiation” year for the “EA” and the school.  I remember the feeling when I saw the results of my elected representation:

No raises for teachers going from 0-1, 1-2 or 2-3 years of experience.  However, raises for everyone else.

I knew then that the whole “working for a union thang” wasn’t for me.  I left as soon as the year was up.

What I don’t understand is how so many people, with a straight face, claim that paying more money to a better performer is bad. Ffor anything.  Really.  Never ever understood that.  Ya know, while I think that the salaries we pay athletes is gross, at least we have the right incentives in place.

  1. We agree on a specific number of years in the contract.
  2. I will pay you according to the market.
  3. When you are no longer able to perform, you are no longer able to be employed.

Why would it be any different for teachers?  Why, WHY, do we want to protect low performing teachers?

I just don’t get it.

The Damage Done by Unions

I have long felt that Unions in America are not only hurting the companies, but they hurt the workers too.  In short, Unions are damaging to the economy as a whole.The current exhibit in this long list of such exhibits?  The bond market.

Reuters reported last week that the bond market has turned.  What once was a very well understood relation between companies, unions and bond holders has suddenly been turned upside down.  Or, if not upside down, it’s at least been turned to the point that no one knows which way is up.  See, the point of buying a bond is that the bond is considered “secure”.  This term, in legalize, is meant to convey certain rights in the event of bankruptcy.  As it is now being played out, this right is being denied, or attempted to be denied to the bond holders of the auto makers; Chrysler and GM.

See, Mr. Obama is trying to put the bond holders behind other, more politically advantageous groups, in this case, the Unions.

…the Obama administration is offering most of the recovery value of those companies to “a favored political class, in this case the United Auto Workers…

What does this mean?  It means that people buying bonds are no longer going to do so with the secure knowledge that they are going to “get theirs” in the event the company has to declare.  And, you may ask, what does THAT mean?  It means, for companies with bargained for employees, that they are going to have a harder time selling their bonds and raising the money they need to conduct business.  And that, my friends, is BAD for business.

The whole concept is a strange one.  Politically attractive, sure, but strange.  See, on one hand, almost ALL of America is upset right now with “investors”, “speculators” and other groups of people that might have been making money when the banking crisis hit.  Most people feel that somehow it wasn’t the individual home buyers or the government that caused this problem, but that it was the folks trying to make money by floating that money.  So, Obama has a huge lever in the court of public opinion.

Then, of course, those bondholders are not united or organized.  While they may trend to act as a group, there is not formal organization and certainly they don’t have “members”.  So, by helpin the unions out, you have helkped out a very organized outfit complete with mind numbing numbers of people who just wait to be told what to do.

The other area that this is so concerning is that we seem to have people who actually believe that money just flows.  From somewhere.  Just waiting to be picked up.  And that if I don’t have enough of it, well then, by gawd, someone must have my share of it.  So I am going to go take it back.  Sigh.  I get so tired of that mentality, so so tired.

However, in the end, I really think that it is this movement toward the support of the Union that is going to be the largest threat to NC.  I just wonder if anyone else sees it.

Wake GOP Has This One Wrong

For a long time now, the left has cornered the market on Education issues in our politics.  They have dominated this perception and have won that marketing strategy.  For example, when asked which party supports education, most North Carolinian’s will reply that it’s the Democrats.  The irony of this is, of course, bitter.  It is the conservative family that stresses discipline, delayed gratification and higher education.  Many of the traditional democratic base does not take full advantage of the education system in our country.  So, how is it that the democrats have won the day on this issue?  It’s because the Teacher’s Unions support the liberal cause.  And when you have the teachers supporting the democrats, you end up having the perception that the Democrats support Education.  Simple.

And deadly.

We have to do a better job on this issue; there are very few things more fundamental to the success of a society than the education of it’s citizenry.  The higher the educational base is, the more wealthy that nation is, the better the economy and the better the innovation.  Quite simply, education is the engine that drives a nations out of the grinding poverty of third world status into the ranks of modern nations.  And for the elite programs, it is what drives modern nations into Super Powers.

Education is key; we have to take that issue back.  And that is why this saddens me.

Today, the Wake County GOP issued a statement saying, in short, “We disagree with the Year Round calendar.  Parents, take your child out of school for a day to protest.”

Even if I agreed with the concept that Year Round calendars are bad, which I don’t, THIS is NOT the way to handle that conflict.  Grown adults sit down, reason and come to valid conclusions.  They do not, repeat do NOT use children in a game of chicken.

This is just one more reason why the GOP is finding itself struggling.

We Are In Trouble

I will try to be as simple as I can be:

Economics: The study of the distribution of scarce resources with alternate uses.

So, I am sitting reading the Internet today and come across this gem.

Some highlights:

  1. Allow the Governor to ration gas in similar situations.
  2. Allow the Governor to freeze fuel prices.

Look, this is simple.  Gas is a thing that if people were able to obtain for free, would soon run out; we wouldn’t have enough to go around.  So we have to ration it.  Today, we do this using money; as the price goes up, yuou may trend to use less, as the price goes down, you will tend to use more.  Now, what the government wants to do is end the normal market method of rationing it and put it into the hands of elected officials who have almost zero ability to have a complete understanding of the market forces.

The result will be predictable:  Lines.

Why We Have to Fight the Unions

Certainly this last election was troubling for me here in Carolina.  We saw all the obvious, no need to rehash that here and now.  However, upon further reflection, I am perhaps most troubled by the increased influence of the labor movement here in North Carolina.  As a transplant, my history of struggles between the state and the unions is incomplete, but I understand that it has been brutal at times and even bloody.

Be that as it may, the impact of labor unions on the economic health of a state is dramatic and obvious.  And as the economic health goes, so goes the health of that state in general.  This includes the ability to create jobs, to keep those jobs, to balancing the budget and creating an environment that allows general and overall growth of that state.

This afternoon I came across this entry from Carpe Diem.  In it, Perry is showing that the highest ranking states in the “Economic Outlook Rankings” are almost all Right to Work states while the lowest are not.  Further, the net migration numbers are showing that people are leaving those Union Friendly states in droves.  And where are they moving to?  You got, Right to Work states.

But this is not news, it is just demonstrating what we really, already know.  That unions destroy economic progress.  And people, knowingly or not, vote with their feet and simply leave.  And typically, those that CAN leave are the ones that DO leave resulting in a continued downward spiral.  For example, see California:

California, which once lured Americans from near and far, is now driving out millions of the most productive residents – including high percentages of the most affluent.

“When California faced a Mount Everest-sized $14 billion deficit in 2003, one of the major causes for the red ink was the stampede of millionaire households from the state,” says a report called “Rich States, Poor States” by economists Arthur Laffer and Stephen Moore. “Out of the 25,000 or so seven-figure-income families, more than 5,000 left in the early 2000s, and the loss of their tax payments accounted for about half the budget hole.”

So this is what has me concerned about this past year’s election; the increased influence of the labor movement.  And here is why:

Big Labor’s Top Ten Special Privileges

1.  Exemption from prosecution for union violence.
2.  Exemption from anti-monopoly laws.
3.  Power to force employees to accept unwanted union representation.
4.  Power to collect forced union dues.
5.  Unlimited, undisclosed electioneering.
6.  Ability to strong-arm employers into negotiations.
7.  Right to trespass on an employer’s private property.
8.  Ability of strikers to keep jobs despite refusing to work.
9.  Union-only cartels on construction projects.
10. Government funding of forced unionism.

Just take a look at this list.  While I always have had a good healthy distrust and dislike for Unions, I have never seen it laid out bare like this.  Not ONE of these things even passes the basic sniff test.  Now don’t get me wrong, I fully support the right of worker or workers to “unite” in their common goal to approach management and offer a bargaining position.  What I do not support, is this legal mandate that exists that offers this kind of protection to a single organization.

And this is what scares me.

I Wish We Had a Cool Governor

Now, don’t get me wrong.  I don’t have the same feel for the Good Gov’na Purdue that I have for Obama; not even close.  But how nice it is to listen to some of the best conservatives in the country talk about the stimulus package:?

http://www.wral.com/

Louisiana Gov. Bobby Jindal, a likely 2012 presidential contender, has said he would reject a portion of the money aimed at expanding state unemployment insurance.

Notice the level of detail intimated by Jindal.  He is not rejecting all of the money, just that money that speaks to unemployment insurance.

Gov. Haley Barbour, R-Miss., said he was considering a similar move. Taking the unemployment dollars, he said, would force his state to eventually raise taxes when the stimulus money runs out, putting in place what he called an unfair tax on employers.

“There is some (money) we will not take in Mississippi. … We want more jobs. You don’t get more jobs by putting an extra tax on creating jobs,” Barbour told CNN’s “State of the Union’ on Sunday.

Again, very detailed analysis of the package.  These guys know the good from the bad; almost as if they–you know, READ the bill.

Michigan’s Democratic Gov. Jennifer Granholm said there are other states that want and need the new money: “We’ll take it. We’ll take your money.”

States with unemployment rates significantly differ- ent from that of the U.S

States with unemployment rates significantly differ- ent from that of the U.S

Guess who’s state is that highest bar, just left of center?  Yeah, that’s right.  The Great State belonging to Gov. Jennifer Granholm.  That, by the way, is not an accident.

At issue for Jindal and Barbour is a provision in the stimulus bill that could allow people ineligible for unemployment benefits to receive them anyway. That could eventually force a tax increase on employers, both governors have said.

Nice.  So even if the state doesn’t want the money, the Federal Government forces them to take it anyway.  And they have to raise taxes as a result.  How is this legal?

Some Democrats took a harder line at a press conference arranged by the Democratic Governors Association to praise Obama for his leadership on the stimulus. DGA Chairman Brian Schweitzer of Montana and Maryland Gov. Martin O’Malley dismissed GOP detractors as “fringe” Republicans eager to score political points.

“All of us are committed to working with President Obama to pull our nation’s economy out of the ditch that George W. Bush ran it into,” O’Malley said. “If some of the fringe governors don’t want to do that, they need to step aside and not stand in the way of the nation’s interests.”

Sorry, but when you complain of “fringe” Republicans and then say “pull our nation’s economy out of the ditch that George W. Bush ran it into” you lose some all credibility in my book.

The line drew a rebuke from Sanford, the Republican Governors Association chairman.

“I think in this instance I would humbly suggest that the real fringe are those that are supporting the stimulus,” Sanford said. “It is not at all in keeping with the principles that made this country great, not at all in keeping with economic reality, not in keeping with a stable dollar and not in keeping with the sentiments of most of this country.

Finally, Republicans acting like Republicans.

They Will Never Learn

Okay, okay.  So I get it, I mean, who doesn’t?  In fact, who could miss it?  The whole world, literally, is in some form of economic downturn or another.  Much, if not all, of this can be laid at the feet of the real estate or housing bubble here in the United States.  It was, after all, the inflation of homes that caused banks and other lending institutions to over extend themselves and take on some really really bad investments.

Now, if you wanna get into any form of political blame game, you can.  Either it is the republicans for “de-regulation” or it’s the democrats for the Community Reinvestment Act.  Maybe it’s democrat ssenators refusing to reign in Frannie and Freddie.  Heck, maybe it’s republican senators failing to reign those guys in.  Whatever, the point is, some form of government “tampering” led the housing markets down the path they have taken.  And the result is, well, the result is where we are today.

So, the lesson?  The lesson, of course, is to just let stuff be.  Especially the housing markets!  Just don’t touch ’em right now!  For gawd’s sake, don’t touch ’em.

Right?

Anyone listening?

Cricket.  Cricket cricket.

Nope, they aren’t.  And here is the proof:

http://www.wral.com…

Paragraphs rendered:

A report being considered by Chatham County commissioners says that recent development trends have divided the county and priced people out of some areas.  In recent years, the eastern half of the county has seen a housing boom, with development springing up close to areas such as Cary and Chapel Hill. Meanwhile, experts say, the western portion of Chatham hasn’t seen that same growth.

This happens all the time.  Certain land areas experience higher growth than others.  As the demand for those land areas increases, that land becomes more expensive.  The county needed top study this?

“The homes that were being created were for people who were in a higher-income category,” Commissioner Carl Thompson said.

Ahh, well, maybe not.  Seems that that intuit what’s going on.  Good.

Real-estate broker Katy O’Leary said that weekly, she has to tell some customers that they can’t afford a home in the eastern part of the county. Home prices there run from $350,000 and up, she said.

I suspect the same is true of Jaguar dealers.  Some people can afford homes in expensive neighborhoods  Others can’t.

O’Leary said the disparity of housing prices has an easy explanation: “The dirt’s too expensive.”

High lot prices force developers to build mostly only higher-end homes, she said.

Amen sista’!  End lesson on Econ101.  Wait, what?  They aren’t happy with this?

We could “actually require developers, maybe, to set aside certain portions of their development as lots for moderate-income homes,” Thompson said.

So, here we are.  In the middle of an economic housing bust, one we are trying to fix by ridding ourselves of a housing glut, and we are going to ADD to the complexity by mandating builders build homes on property they otherwise wouldn’t.  The result?  Somewhere, someone will be paying more for a home than it’s worth.  Sound familiar?

Jeez.