Saturday, May 14, 2011

And Now, A Laugh.

In this day and age, we all just need a good laugh, preferably at something completely wrong. Therefore, I give you a new regular feature of this site that will go alongside such regular features as The Week in Stupid, Big Dumb Government: Week in Review, and our usual scintillating content on other areas like Anarcho-Misogyny.  Enjoy!  



This Sunday's message at The New Mount Olivet Baptist Church is a definite winner, guaranteed to pique your interest and keep you awake throughout the sermon: 




The First Baptist Church of Woodlawn, on the other hand, prefers to go right into the Devil's territory in order to engage in, er, outreach...just be careful whose hand you shake on Sunday.



And of course here we have the end result of all of that tolerance and understanding political correctness claptrap...



It's also good to go back to the good old days when advertisements weren't all trashy and sexy, but simply gave you that straightforward delivery...




Is our children learning?  Indeed they are!  No Child Left Behind, ladies and gentlemen!



Perhaps this is why Christians are so disproportionately impacted by the recent economic crisis...maybe we need an interfaith dialogue on long-term investment strategies and hedging against risk.



And finally, we have the Evangelical Daoist Born-again-and-again-and-again Buddhist, who has figured out how to share his faith with verve and enthusiasm!  Right on!


How To Fix The Economy

There are structural issues at work in the United States economy; issues with threaten not only our economic stability but that of the world as well.  The problem is that the United States economy, particularly its markets, is driven by rampant speculation and little else at the moment.  There are two major areas of concern that are intertwined, and both most be confronted head on before we can make any progress in dealing with the larger structural issues such as bad or toxic assets, rampant financial fraud in our mortgage markets, along with inflationary monetary policies and perverse incentives. Those major issues are derivatives and speculation.



Derivatives


For those of you who do not understand derivatives, I'll explain them to you with the following illustration that I have used to great success.  We begin with one basic axiom: a derivative is a bet.  On either side of the derivative, there are parties who believe that an investment will go one way or the other way.  The problem with derivatives is that one party usually picks a referee, say a bank, and they structure the derivative in such a way as to ensure certain odds for themselves.  The referee then goes out to find another party, say another hedge fund or investment bank, and they solicit them to buy into this "shitty deal."  The other party is usually unaware of the fact that the referee is completely on the side of the original party.  Moreover, the unique quality about a derivative is this: anyone can get in on that action, including the referee.

You can either buy into the derivative directly, or you can do so indirectly by purchasing insurance to hedge against the derivative's failure.  The insurance is called a credit default swap, and it is so named because you are swapping the risk of a default to the insurer for a nominal fee.  The fee is linked to the actuarial risk the insurer perceives as the chance the bet will go sour.

Now, if you're a referee with the ability to shape not only the original derivative in such a way as to ensure a certain outcome, but you're also the purchaser of a swap, you can buy insurance with an advantage in insight that exceeds the actuarial risk perception of the insurer.  Think of it like this: an arsonist goes into a bank, and he says to the bankers that he has a house he'd like to burn to the ground, because he's a pervert who likes to get off by burning houses to the ground.  The bankers ooh and ahh, because they're all perverts as well.  The bankers then go out to the nearby real estate investment firm, and they solicit them to purchase an investment opportunity in a house.  The real estate investment firm, realizing that the projections for a house in that particular neighborhood will trend upwards over time, agrees to purchase the investment opportunity, unaware that the other party to the deal is an arsonist.

The bankers and the arsonist all gleefully send emails amongst themselves, laughing and carrying on about the shitty deal they've given the real estate investment firm, and talking about how they managed to screw the insurance company that sold them credit default swaps as well.  They make arrangements to meet at the house on the night the arson is to be committed, and they all form a circle and gleefully jerk off until they are sated.  The bank then notifies the real estate investment firm the next morning that unfortunately, the investment deal has gone up in smoke.  The insurer pays out to the arsonist and the bank, and here's where matters get even better: a credit default swap, unlike any other form of insurance, can be purchased by any party even though that party has no direct interest in the house or the deal.

Suddenly, the insurer finds itself on the verge of collapse, because it sold insurance policies on the deal to many other parties, and they've all come to collect.  The insurer's existing policyholders all find themselves in a state of uncertainty, because their policies are obviously no good if their insurance company is going to collapse.  The risk they've been hedging against are suddenly uninsured, practically speaking.

The entire market starts to totter, because the risk from one or two deals has been distributed to many parties throughout the marketplace, and as it turns out, the insurer took most of its premiums and either compensated its employees or invested the proceeds in, you guessed it, derivatives.  The insurer does not have enough reserves to cover all of the losses associated with the shitty deal, and it certainly doesn't have enough reserves to cover potential losses on other deals.

I'll use another illustration as well, one that has been a little more road-tested.  There's a bum walking down the Vegas Strip, and he's dirty and smelly and torn and tattered. He clearly has no money, because he's a bum.  A hobo, if you will.  He walks down the Vegas Strip and come to the biggest, brightest, gaudiest casino and resort on the strip.  He pauses, turns, and heads into the casino, which we'll call The Tarantella.

He walks right past the doormen, the valets, the security guards, and on to the floor of the casino, where he is noticed by a pit boss as he sits at the high high stakes blackjack table.  The high high stakes blackjack table is reserved for those individuals who have tremendous amount of money, the whales and the "ballas."  The hobo is clearly neither.  However, the pit boss excitedly waves the casino manager over, and together they approach the hobo with gigantic grins.  They offer him a $1 million marker, and he accepts.

The hobo starts to gamble, and a waitress comes over to take his order of a magnum of Cristal and a ham sandwich.  The unthinkable begins to happen: the hobo wins hand after hand of blackjack, and soon his winnings are piling up.  The other gamblers take notice, and soon there is a crowd of spectators around the hobo and the high high stakes blackjack table.  The spectators start to bet amongst themselves on the bets of the hobo, and everyone is trading bets on his short-term and long-term odds of success.  Three insurance salesmen in town for a convention notice the crowd, and they inquire as to what is happening, and one of the spectators excitedly explains.

The insurance men have been doing well for themselves at the slot machines, and they decide to pool their winnings to start an insurance business right there.  They sell insurance against the hobo's success and failure, depending on the bets of the spectators, and they take around 10% of their proceeds and set it aside as a reserve to cover any losses.  They take the remaining 90% and buy magnums of Cristal and ham sandwiches, and they bet whatever is left over on the outcome of the hobo's bets.

Suddenly, the thinkable begins to occur: the hobo begins losing it all.  Everyone in the crowd who bet on his continued success turns to the insurance men, and they turn various colors that indicate their distress. They don't have enough reserves on hand to cover the losses.   The mood in the casino turns surly, and casino manager tells the pit boss to round up the valets and the security guards to go outside and shake down the pedestrians for whatever cash they can get.  These people need a bailout, because otherwise we could have a disaster on the Tarantella floor.

The hobo is the subprime borrower, his winnings represent the skyrocketing home values in a boom and the diminished values that follow in a bust, the casino is the mortgage bank, and the spectators are all speculators and investors who bought derivatives, and the insurance guys are the AIG types who sold credit default swaps. The guards and valets are the government, and  they're here to make you and your children's children pay for a mess you didn't make.

Do you understand how derivatives widen the pool of risk?  Do you understand how markets and their participants suddenly become inextricably intertwined to the point of paralyzing entire economies?  Now, there's a very simple answer for derivatives and credit default swaps: you outlaw the former entirely, and you limit the latter to direct participants.  I can't buy a life insurance policy on you as my readers for a very good reason: I would have an incentive to kill you in order to collect. It's a shitty deal.

Speculation


Today, 70% of the speculators in our futures markets where oil and other commodities are concerned are not end users. That is, they aren't the individuals who will take delivery of the oil or the gasoline or the pork bellies.  They're just folks who bet on the price because they can.

Much like that arsonist who bet on the house who intended to burn down, these types bet on the price of the commodity they intend to drive to insane levels because, well, they're the types of jackasses who get off on human suffering.  While most of us look at the events in the Middle East with horror and even revulsion, these folks look at the shootings of protesters with glee.  Instability!  Price volatility!  Happy happy joy joy!

What this means for you is that the price of your gasoline goes up 30% in a year, because oil jumps to over $100 a barrel on pressure from speculators even though supply levels are commensurate with $60-$70 a barrel.  That's right...on pure supply and demand, your gallon of gasoline would have more or less stayed constant in price.


What we need to do is simple: if you aren't an end user, like a wholesaler or a party who is actually going to be taking end delivery of a commodity, you don't get to speculate on the price.  You're banned from the market, because letting you play with the price of oil has wreaked havoc with the lives of ordinary people, who are paying vastly higher prices to get to work, buy food, and purchased finished goods, all because you are ginning the price up in a way that does not correlate to economic forces like supply and demand.









Structural Issues: Central Banking and a Fake Economy

The first structural issue we need to address is our central bank.  Simply put, there hasn't been a quarter of economic growth in this country since 1993 without Federal Reserve monetary stimulus.  That means that unless the Fed explodes our monetary supply, we have no real catalyst for economic growth in this country.

Simply put, the success of the Fed isn't that it makes your life better or enables you to live a higher quality of life.  It's that it now controls economic growth and contraction in this country entirely through its control of the monetary supply.  Things like productivity, ingenuity, supply and demand...they no longer matter.  The sole criteria of economic growth in this country is what the Federal Reserve does to our base monetary supply.

You feel as though you have more money than you did in, say, 1980, because you do.  Whereas you had a $12,530 median income in 1980, and today you have a $27,206 income, the reality of the matter is that both are the same in terms of aggregate purchasing power.  That's the miracle of inflation.  You have more dollars, but you can't get ahead because you have the same or less purchasing power.  It's a mistake to think that by more than doubling your number of dollars you've more than doubled your economic standing.  You haven't, because with more than double the amount of dollars, you've barely broken even on your ability to purchase what you need to live.

The only reason you don't feel it more than you do is because productivity gains have been significant. We've been able to do more with less.  The computer you couldn't have afforded in 1980 because it would have been half the median salary you earned back then is now a computer with hundreds of times the capacity at less than a tenth of the cost.  That's productivity.  Now, imagine what would have been possible had your dollar not been devalued over time while productivity went through the roof.  Your quality of life would be far richer and far better than it was. The American dream wouldn't be a thing of the past.

For those of you who made more and make more than those median amounts, you're still in the same boat.  Your purchasing power isn't what it ought to be because you've been robbed by a Federal Reserve that devalues your dollar to pay for the mistakes of speculators, bankers, and other forms of parasitic life. It isn't capitalism; it's socialism for the few at the expense of the many.  That's why the bottom 50% of Americans own less than 3% of the overall wealth while the top 1% own over 33% of the overall wealth.

It isn't their merit in the marketplace that gained them that disproportionate share of the nation's overall wealth. It's subsidies from state and local governments, tax breaks from the federal government, and the efficacy of the Federal Reserve's inflationary policies designed to cover that top 1% when their economic gambles go horribly awry.  It's not capitalism, or a free market, and you shouldn't feel bad about going against it and manning the barricades to take your government back.  Doing so does not make you a communist; in fact, standing by while it occurs means that you are guilty of aiding and abetting socialist oligarchs who have nothing but contempt for you and this country's free market ideals.

Simply put, the Federal Reserve in its current incarnation, owned as it is by the very banks who drive this country to the brink of economic catastrophe every five years or so, must be dismantled entirely.  It isn't independent in any real sense; it's dependent entirely on the whimsy of its banking overlords, many of whom occupy the boardrooms of banks like J.P. Morgan Chase, Goldman Sachs, and Citigroup. J.P. Morgan Chase CEO Jamie Dimon sits on the board of the New York Federal Reserve regional bank.

I am no central bank fan, but not having a central bank in the current global economic climate is a lot like coming to a gun fight armed with a butter knife.  What we need is a central bank under the auspices of our federal government, with total transparency.  Then again, what we need to do is to alter our federal government drastically, but this article is limited to economic remedies.

Structural Issue: Toxic Assets

The toxic assets that drove banks to the brink of insolvency at the beginning of this financial crisis are still present.  What we need to do is unravel those assets by stripping creditors of equity, and having a fire sale of those toxic assets.  We need a new Resolution Trust Corporation to come in, liquidate the major banks, and resolve this crisis in a final sense.

This problem is not new. Long Term Capital Management, the fund whose collapse was the precursor of the current economic collapse, was leveraged 250 to 1. It collapsed, and everyone said it was obvious that a fund leveraged 250 to 1 in terms of liabilities to assets would collapse.  J.P. Morgan was leveraged at an even higher ratio, as were many of the banks that did business with and ultimately took over LTCM.

John Meriwether
And the man at the center of the Long Term Capital Management crisis was John Meriwether, a man who had been pushed from Salomon Brothers in 1991 after that company had been caught in a treasury auction rigging scheme.  Salomon Brothers had forced Meriwether out after he had waited four months to inform the Treasury Department that his subordinate Paul Mozer had submitted a false bid in order to circumvent Treasury Department auction rules on purchases of Treasuries by a single party.  The resulting scandal netted Salomon Brothers a $290 million fine and Meriwether paid a $50,000 fine.  The fine would lead to Salomon's acquisition by Traveler's Group.

Meriwether went on to overleverage Long Term Capital Management in a way that nearly collapsed the world economy in 1998, and from there he founded JWM Partners LLC, a hedge fund that lost 44% and promptly shuttered its doors in July 2009.  Lest you worry that the economy will go without Meriwether's peculiar genius for losing billions due to hubris, he's back in action with yet another hedge fund, JM Advisors Management, which will focus in, you guessed it, "highly leveraged value arbitrage."  How nice it is that in America, you can lose billions of dollars for your investors and require a legendary bailout, only to emerge again and again to lose billions more.

John Meriwether's Success in Graph Form!


It's time to put a stop to people like John Meriwether and their companies, whose gambles can singlehandedly threaten the world economy with collapse if and when they go wrong.  A scorched earth fire sale of toxic assets held by banks that stripped hedge funds of equity would go a long way towards restoring a reasonable sense of risk management to a world which currently operates with little if any sense of risk due to the implicit guarantees of the Federal Reserve and the Treasury Department.

Structural Issue: Financial/Mortgage Fraud

As of 2004, the FBI was sounding the alarm that financial fraud was pandemic in the mortgage markets. However, as of the present day, few if any of those responsible have been prosecuted.  It's time for that to change.  Those executives and mortgage managers who presided over an environment of corruption and complicity need to face culpability for their crimes, and they need to go to jail in actual prisons.

If you looked the other way to avoid culpability for ill-gotten gains, you should find that life isn't always fair.  You should get burned.

What we need is the second coming of Ferdinand Pecora, and we need it because right now, as it was back in the Great Depression, the observance of Pecora is especially pertinent: "Legal chicanery and pitch darkness were the banker's stoutest allies."

If you don't prosecute fraud or malfeasance,  you create an incentive to engage in both. Current laws are sufficient to deal with the issue, but without meaningful enforcement, we don't have any real hope of providing a deterrent to repeat offenses.  It is time to dust off Eliot Spitzer and remove him from CNN, give him a room full of escorts, and let him run wild prosecuting those responsible for the rampant fraud that defined the mortgage markets.

Structural Issue: Perverse Incentives


At the heart of our problem with mortgage modifications is a system of compensation whereby foreclosures are more profitable to mortgage servicers than modifications.  Servicers are making a simple economic decision to foreclose rather than modify because they can make more money.  A mortgage that is securitized requires servicers to make upfront payments to investors in the security, but if the servicer forecloses on the mortgage, it gets the first position to recoup its expenses before the investors get anything for their losses.

Another example of a perverse incentive is force-placed insurance, which is the insurance a servicer purchases to maintain fully-insured status on a property when an owner fails to maintain his or her own policy.  Owners who are delinquent on their mortgages tend to lapse on their property insurance as well. The servicer then moves in with force-placed insurance, and here's where the problem becomes apparent, as outlined by Felix Salmon:

"When a homeowner fails to keep up their insurance premiums on a mortgaged residence, their loan servicer has the option/obligation to step in to buy a comparable insurance policy on the loan holder’s behalf, to ensure the mortgaged property remains fully insured….


Consider one case found by [American Banker's Jeff] Horwitz. A homeowner’s $4,000 insurance policy, was paid by the loan servicer, Everbank via escrow. But Everbank purposely let that insurance policy lapse, and then replaced it with a different policy – one that cost more than $33,000. To add insult to injury, the insurer, a subsidiary of Assurant, paid Everbank a $7,100 kickback for giving it such a lucrative policy — and, writes Horwitz, “left the door open to further compensation” down the road.


That $33,000 policy — including the $7,100 kickback – is an enormous amount of money for any loan servicer to make on a single property. The average loan servicer makes just $51 per loan per year.


Here’s where things get interesting: That $33,000 insurance premium is ultimately paid by the investors who bought the loan."

Mortgage servicers have an incentive to allow the cheaper form of insurance lapse in order to buy an insurance policy from their own subsidiaries at a far higher price that carries with it a significant kickback in compensation.  Remove the kickback, and you remove the incentive to act in such an unethical and potentially illegal manner.

Conclusion


This is by no means a comprehensive set of recommendations to fix our nation's economy.  However, by taking these steps, we can begin the process of placing our economy on a firmer footing by removing the incentives for unethical individuals to profit through their illegal and untoward acts.  Our nation's regulators and elected officials need to act in the best interest of the majority, rather than the catering to the interests of a select few people who can afford armies of lobbyists and ad campaigns.

The United States is uniquely situated to act as a leader in the world economy, and if we take the lead and the initiative in dealing with derivatives in particular, we can begin the process of restoring some measure of sanity to the global economy.  Derivatives have been used to help nations hide their sovereign debt, as in Greece, Ireland, Portugal, Spain, and Italy, and they have been used to enable shitty deals whereby one side rips off another.  These instruments do not serve our larger interest, and they are not linked to capitalism in any way, shape, or fashion.

Capitalism requires transparency and accountability in markets, and so long as the advocates of unregulated derivatives markets and unfettered speculation have their way, we will have neither.  Moreover, we will not have capitalism.  In its place, we will have oligarchical socialism that benefits the few at the expense of the many, and sees the U.S. Chamber of Commerce agitating for a debt ceiling increase, as they recently did.


The narratives foisted on us by a corporate owned media are largely false. Financiers and bankers backed Barack Obama's rise to power, and his contributors were among the biggest banks and hedge funds on Wall Street.  Socialism, if it exists, exists most pervasively and perniciously in the boardrooms of Wall Street and corporations throughout this country.  They are the ones who come to our public institutions with hands outstretched, and they are the ones profiting from the welfare state.  J.P. Morgan Chase makes money every single time an American goes on welfare, because J.P. Morgan Chase administers the debit cards welfare beneficiaries receive.  Companies like Lockheed Martin and Raytheon manage state welfare programs, and their investors have a vested interest in keeping Americans on welfare, either through disastrous economic policies or expansions of the welfare state.


If you think that the reason we can't manage to cut the welfare state down in this country is due to the tremendous lobby the impoverished have, think again. Socialism is profitable to some of the largest corporations in this country, and until we confront those corporations, we will not begin to correct our current economic malaise and the systemic issues that give rise to that malaise.

Barack Obama's Contributors

Friday, May 13, 2011

And In Texas...As Elsewhere.

And in Texas, where everything is indeed bigger than it is everywhere else, lawmakers struggling to deal with a $15 billion deficit over the next two years have managed to pony up $250 million over ten years for Formula One racing in Austin.  Despite the fact that Formula One has managed to fail in Indianapolis, Long Beach, Dallas, Phoenix, and Las Vegas, Texas lawmakers are running to pile on the dough.  There has been little if any attempt to demonstrate that the race will pay for its subsidy in profits, tax revenues, or jobs.  

And we wonder why our nation and nearly every U.S. states is practically insolvent: we're funding Formula One racing with public funds.  This is a private race series, run by private interests, and it ought to be financed by those private interests.  That's what private enterprise does: it ponies up the money to finance its own damn gambles, and if the private parties succeed, they reap the rewards.

And in Lubbock, my own Texas Tech Administration ponied up an additional $500,000 a year to pay head football coach Tommy Tuberville, who went an auspicious 8-5 during his first season as coach.  His salary is now $2 million a year.  The university subsidizes the athletic program to the tune of $2.25 million annually.  That means that the subsidy covers Tuberville's and, say, one of his assistant coach's salaries.

Tech is facing an 8% budget cut this year.  Its faculty members were less than enthused to hear that Tuberville got his raise, but in terms of profligate generosity, his raise was par for the course.  Rick Barnes, the head basketball coach over at Texas, is getting a $200,000 raise, which will take his annual salary to $2.4 million.

And let's take a look at subsidies in Texas for college athletic programs, as of the year 2009:

Texas A&M athletics received some $3.264 million in subsidies.
Texas Tech athletics received some $5.9 million in subsidies.
University of North Texas athletics received some $4.7 million in subsidies.
University of Texas at Austin athletics received some $1.8 million in subsidies.
University of Texas at El Paso athletics received some $11.375 million in subsidies.

Lest you think those subsidies are a really good deal for the communities, their impact on tax revenue is negligible given the increased services required in the form of police patrols and presence.  It costs money to make money, so much money, in fact, that little if any money is actually made off of sporting events financed by subsidies.

With $15 billion in projected deficits over the next two years, no publicly funded university ought to be spending millions subsidizing athletics.  If the athletics department isn't paying for itself and then some, it ought to be pared down.  That's business, and business deals in cold, hard reality. Then again, we're also dealing with academia, and a good many academics feel that their fair market value is in the six figure range.  Thanks to Texas law, you can look up the salaries of any public employee at a university, and I'd encourage you to do so.  The website for Texas Tech is located here. The University of Texas salaries are here. Oh, it's a sad day when the likes of assistant coaches, deans, and professors making upwards of $200,000 a year find themselves confronted with the pressing fiscal realities of a public deficit.  The question is this: what, exactly, can an assistant football coach be doing that entitles him to a market value of $350,000, a salary equal to that of his university's president?

As a public employee, why shouldn't he and his cohorts over on the academic side be facing salary cuts when state coffers run in the red?  Moreover, extrapolate that reasoning out to the federal level: we pay senators and representatives in Congress $174,000 annually to work for a third of the year.  Why is it that we pay elected officials anything, especially considering that many elected officials are multimillionaires?  There are 237 millionaires in Congress, and the idea that we should be adding $174,000 a year to their largesse when they can't even be bothered to read the legislation they don't write before they vote it into law is absurd.

When you consider the fact that we also pay retired members of Congress a pension that can equal out to 80% of their final salary, the issue becomes even more egregious.  Does anyone really believe that Congress has done a good enough job to merit $174,000 a year?  We have $168 trillion in current and long term deficits and unfunded liabilities.

It's not that we can't cut the money, or that we shouldn't.  At the very least, we should cut the members of Congress to a per diem renumeration.  And at the state levels, we ought to cut out every single public subsidy to private enterprise, and tie eligibility for state funds to salary cuts and the elimination of subsidies for athletic programs for public universities.  All the bloviating about fiscal responsibility needs to be replaced with common sense austerity at every level, in Texas and elsewhere.



The Perils of the NLRB: Autocracy and South Carolina

One would think that in America, companies have relative freedom to operate as they see fit, provided that they do not commit fraud, torts, or crimes.  This would include the right operate a business at the location chosen by a business, without regard for anything other than the company's best interests and bottom line.  This is, after all, America.

Enter the National Labor Relations Board, which recently decided that America is a place where a unionized company cannot open operations in a right to work state.  Boeing, a company not so near and dear to my own heart after their politicizing of an Air Force tanker bid that cost my own home state of Alabama sorely needed jobs, recently ran afoul of the NLRB by moving to open a plant in South Carolina after its Washington machinists, who are unionized, went on a 2008 strike.  The machinists cried retaliation, the NLRB said that Boeing's plan to open a factory in the right to work state of South Carolina was illegal, and I sighed deeply and made an exasperated noise.

What, exactly, would the NLRB go on to do if left unfettered?  Perhaps the next time an American company chose to relocate in a right to work state, it might instead decide to relocate abroad to avoid the NLRB's classification of its plans as illegal.  After all, in China, the authorities don't much object if you confine your workers to the site and work them for sixteen to eighteen hours a day.  They'll even supply you with political subversives to round out your ranks.  Dissidents work for food and the privilege of avoiding torture, and they never demonstrate the temerity to reply against their workplace conditions.

Perhaps the NLRB might consider that businesses looking at potential factory sites from now on will realize that after they open shop in a union state, they'll never be able to relocate or open parallel operations in a right to work state.  As a result, those businesses are likely to go straight to the right to work state and avoid union states altogether.  See Michigan for an indicator of how union friendly overregulation works.

As for the unions, they generally aren't fans of consent at all. If you work on a union site, you are automatically enrolled in the union, if the union has its way.  Its bosses get a cut of your check, which they then use to finance those wonderful annual conventions at resorts, replete with ice sculptures and an open bar.  Ah, solidarity!

Despite the fact that right to work states are generally doing far better than union states in creating and retaining jobs, the NLRB has decided to put a stop to the clear preference companies have for paying good wages to people who can't up and band together to strike at the drop of a hat.  Companies have greater flexibility, but amazingly, workers in right to work states have far more stable employment because they don't belong to an organization that obstructs necessary business decisions in the name of the union's bottom line: parasitic dues.  You see, when a company has to shut down production for an expanded period of time in order to deal with the union's strike, it loses money.

Why on earth would you want to retaliate for that? Why on earth shouldn't you be able to retaliate for that by decamping to greener pastures more conducive to your bottom line as a company?  It's called a free market, and in a free market, choices are available that make unions and companies alike behave equitably towards each other because they realize that neither side is indispensable. As a result, reasonableness and moderation tend to prevail.

Reasonableness and moderation, however, do not have fans over at the NLRB, whose board members decided to side with the union machinists in Washington despite the fact that not a single job in Washington would have been lost as a result of the South Carolina facility.  In point of fact, South Carolina would have gained some jobs in addition to those Washington jobs, and at a time where the nation faces 9% official unemployment (and around 20% real unemployment), you'd think the NLRB wouldn't be in the business of extinguishing jobs.  Such a policy wouldn't be...labor friendly.

However, the NLRB isn't about being labor friendly if the labor in question isn't part of a union.  As a result, South Carolina just lost the possibility of jobs created by Boeing.  At the end of the day, ideology wins out over what is in the best interests of this country and its laborers, and all because those laborers happen to be located in a right to work state.

Moreover, the NLRB is essentially saying that right to work states will have to worry about losing possible business as a result of their right to work status, because the NLRB doesn't much care what the people of South Carolina think, or what their elected officials have seen fit to enact through the democratic process.  No, no, no...democracy is all about unelected bureaucrats who have the fiat power to override and obviate the democratic consent of South Carolinians through their elected officials in order to make a value statement favoring union friendly states over right to work states.

Now, if you look at this and don't realize why the current field of Republican candidates needs someone serious to enter the race, get ready for four more years of Obama and four more years of NLRB shenanigans.  But why worry? We've only got rising inflation and chronic joblessness!