Tag Archives: Commerce

American Capitalism & The Illusion of Laissez Faire

To draw from an opening phrase, in the beginning, there was capitalism. More accurately, at the beginning of our Constitutional Republic, government was committed to limiting – drastically – it’s footprint in the new American marketplace. Americans were free from the tyranny of government interference leveled at the former colonists at the hand of King George III. Our Founders and Framers sought to secure the right of the individual not only to property, but to commerce in a form lightly touched by government. My, how far we have fallen from the Framer’s original intent.

The original intent of the Framers where commerce was concerned – and especially under the Articles of Confederation – was to leave the new American people to reap the benefits of their crafts and labors. The Framers embraced a laissez faire system of capitalism. Laissez faire capitalism is defined as:

“…a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.”

A system of government’s only responsibility in a laissez faire capitalist system, where commerce was concerned and if adhering to the original intent of the Framers, was:

“…to protect the rights of the individual, by banning the initiation of force, thus making all relations between men peaceful, i.e., free from the threat of violence and fraud…

“…a system of checks and balances so ordered to protect the rights of the individual, from criminals and most importantly from the democratically elected voices who claim to speak for the ‘public good.’”

Today’s American “free market system” is actually anything but a laissez faire capitalist system; a free system.

Starting a small business today requires that the aspiring entrepreneur incur significant start-up costs including fees, costly regulatory acquiescence, licensure requirements, taxes, tariffs, diversity quota hiring and other associated costs, taxes, actions and/or fees. Add to that the impossible task of acquiring necessary to-market development capital from a financial institution – many of which were afforded lifesaving financial infusions of taxpayer dollars, courtesy of crony capitalists in Washington, DC – and you have a formula for a stagnant economy and high unemployment for the “producers,” and the selective enrichment of the connected, the elite and the “chosen few.”

This was not the case so long ago. And as little as 30 years ago, starting a small business meant reaping the rewards of ingenuity and hard work. Someone with a dream; someone with a “good idea,” was able to acquire capital to launch small business initiatives based on that tangible idea; based on a well-crafted business plan and model. Sadly, today, no one “invests in ideas” anymore. Financial institutions and capable venture capitalists balk at the “good idea”; recoil from the uncertainty of start-up entrepreneurship because of the non-guarantee of return on investment, even as many of them have been deemed “too big to fail” when they make bad business decisions of their own, only to receive government-funded (read: taxpayer-funded) bailouts. This all happening while the “good idea” start-up concepts wither on the vine for lack of start-up capital.

Additionally, many a creative entrepreneur is neutered – or hamstrung – by the fact that the “powers that be” have declared they did not jump through the traditional “educational hoops”; did not attain the necessary piece of paper and the required student loan debt to be considered “competent” or “intelligent” enough to conceive of the “next big thing.” Of course, this certainly must come as a surprise to Bill Gates, or to the late Steve Jobs, two pioneers of the computer age who dropped out of college. So, too, must is be shocking news to the many “gangsta” rap moguls who possess a depth of language proficiency usually reserved for those with a single or low double-digit intelligence quotient, and most of whom know the assembly of automatic weaponry better than algebraic theory.

And while the successful navigation of the “educational hoops” does not guarantee entrée into the realm of the financially anointed, sometimes the connections and friendships acquired at many upper-echelon secondary education establishments can serve to circumvent the ties that bind “producer Americans” to the grind of the average. Yes, I am talking about elitist crony capitalism.

Case in point: Toni Townes-Whitley.

According to TheDailyCaller.com:

“Toni Townes-Whitley, Princeton class of ’85, is senior vice president at CGI Federal, which earned the no-bid contract to build the $678 million [failed] Obamacare enrollment website at Healthcare.gov. CGI Federal is the US arm of a Canadian company.

“Townes-Whitley and her Princeton classmate Michelle Obama are both members of the Association of Black Princeton Alumni.”

Coincidentally, George Schindler, the president of CGI Federal’s Canadian parent CGI Group, became an Obama 2012 campaign donor after his company gained the Obamacare website contract. What a coincidence…

What does all of this have to do with laissez faire capitalism? Well, actually, nothing. It has nothing to do with laissez faire capitalism. And that’s the point.

Considering that our economic system has turned into a fiscal bordello of short-cuts for the Progressive chosen few, bailouts for the “too big to fail” financial institutions, and a playground for the crony capitalists, is it any wonder the financial markets have ceased reflecting the health of the American economy? How are investors supposed to know when the next major economic disaster is approaching when risky investments and questionable financial schemes are always rewarded in their failures and losses with government-backed (read: taxpayer-funded) bailouts? For the “chosen ones,” where is the “risk”?

The original intent of the Founders and Framers was to have an “American capitalism”; a system of commerce and investment based on achievement, investment, hard work, production and, yes, failure. The American system of capitalism was designed to leave the evolution of society and the decisions about the “common good” to the people. Today’s “anything but free market system” is a disingenuous scheme establishing pre-determined winners and losers; a manipulation of the laissez faire capitalist purity that promotes equality in outcome over an equality of opportunity: economic and social justice.

In an economic system enslaved by the Progressive ideology, economic and social justice is of a paramount importance, trumping the small business, the innovator, the entrepreneur and the producer; trumping and extinguishing opportunity for all, opportunity guaranteed in the United States Constitution.

An economic system enslaved by the Progressive ideology dictates who will win and who will lose; who will acquire wealth and who will live just above poverty, all according to an oligarchical elites’ idea of what is fair, what is not and who is worthy.

Under a Progressive economic system, opportunity is dead and the American Dream, but for those chosen by the Progressive masters, swings from a rope off a branch of a socially engineered (read: Socialist) tree, long-standing on the Progressive plantation.

“Not houses finely roofed or the stones of walls well builded, nay nor canals and dockyards make the city, but men able to use their opportunity.” – Alcaeus

July Durable Goods Orders Come in Better Than Expected

New orders for manufactured durable goods in July increased $7.7 billion or 4.0 percent to $201.5 billion, the U.S. Census Bureau announced today.

The report showed a return from weakness mainly in automobiles and aircraft manufacturing. And some renewed weakness in the defense sector.

Excluding transportation, new orders increased just 0.7 percent. Cars and auto parts grew a much more than expected 11.7% over June probably illustrating a recovery from the impacts of the Japanese earthquake and tsunami.

Commercial aircraft and parts also contributed to the positive report with a 7.9% month-over-month increase in shipments and a surprising increase of 43.4% in new orders.

The negative side of the report focused on defense spending. Military aircraft and parts shipments dropped 9.7% and new orders were 6.1%. In June the same sector had seen new orders drop more than 20%.

 

 

John Bryson, Commerce Secretary, Appointed For Jobs or Climate Change?

If confirmed, Commerce Secretary John Bryson will be tasked to double U.S. exports over five years. He is a long time dedicated green environmentalist. With all that, maybe we ought to wonder what Bryson will be exporting over the next five years.

Last year, John Bryson served on the United Nations advisory group on Energy and Climate Change; they established a course of action in meeting Millennium Development Goals by 2015. It calls for “policy-makers and business leaders” to transform the performance of energy sources over the coming decade. There were eight Millennium Goals that includes ending poverty & hunger, universal education, gender equality, environmental sustainability and global partnership. In their report, “Energy for a Sustainable Future: Summary Report and Recommendations,” high-income nations may increase R&D investments and focus more on supporting developing countries. They also “encourage the United Nations and its Member States, other multilateral institutions, and the private and non-profit sectors to take the actions needed to achieve its goals.” According to the Secretary-General of the United Nations, Ban Ki-moon stated “Addressing the challenges is beyond the reach of governments alone. It will take the active engagement of all sectors of society: the private sector; local communities and civil society; international organizations and the world of academia and research.” It appears that the advisory group he participated supports the United Nations Climate Change movement.

In addition to serving on the UN advisory group, John Brysonalso co-founded the National Resource Development Center (NRDC), an international nonprofit environmental organization that protects the world’s natural resources, public health and the environment. Their mission is “to safeguard the Earth, its people, its plants and animals and the natural systems on which all life depends.” They strive to create a new way of life for humankind, one that can be sustained indefinitely without fouling or depleting the resources that support all life on Earth.” Apparently, the center he founded supports the Global Climate Change movement.

Bryson does have some business experience as the CEO of a California’s power company, Edison International. After 18 years as CEO, he retired in 2008. In the 2000 and 2001, his company was in involved with the California blackouts and a subsidiary of Edison International nearly went bankrupted. His experience also expands to sitting on a board of Walt Disney Co and Boeing Co. where he was director.

Apparently, the Republicans sought to oppose confirmation unless the Obama Administration submits to trade agreements with Panama, Colombia and South Korea. Jim Inhofe’s Press office released this YouTube video on John Bryson discussing the Hidden Carbon Tax. Darrell Issa also referred to Bryson as a “green evangelist.”

As the Business Roundtable and the U.S. Chamber of Commerce give him positive responses, it appears that John Brysonwill be doubling U.S. exports over five years. We should have learned our lesson when someone states they are going to fundamentally transform America, we may want to ask…to what? Maybe one of the first questions we should ask of John Bryson…export what, jobs, money, goods & services?

U.S. Durable Goods Order Drop Much More Than Expected

The commerce department released its advance report of April durable goods orders. Due to a slump in auto and aircraft manufacturing, durable goods orders dropped 3.6%, a much larger decrease than the 2.2% expected by analysts.

New Orders

New orders for manufactured durable goods in April decreased $7.1 billion or 3.6 percent to $189.9 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 4.4 percent March increase. Excluding transportation, new orders decreased 1.5 percent. Excluding defense, new orders decreased 3.6 percent.

Transportation equipment, also down two of the last three months, had the largest decrease, $4.9 billion or 9.5 percent to $46.7 billion.

Shipments

Shipments of manufactured durable goods in April, down following four consecutive monthly increases, decreased $2.0 billion or 1.0 percent to $194.9 billion. This followed a 3.1 percent March increase.

Transportation equipment, also down following four consecutive monthly increases, had the largest decrease, $1.5 billion or 3.0 percent to $46.6 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in April, up twelve of the last thirteen months, increased $1.6 billion or 0.2 percent to $849.5 billion. This followed a 0.7 percent March increase.

Machinery, up fifteen consecutive months, had the largest increase, $2.2 billion or 2.2 percent to $103.6 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 2.1 percent March increase.

Inventories

Inventories of manufactured durable goods in April, up sixteen consecutive months, increased $3.2 billion or 0.9 percent to $350.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.7 percent March increase.

Transportation equipment, also up sixteen consecutive months, had the largest increase, $1.0 billion or 1.0 percent to $106.1 billion. This was also at the highest level since the series was first published on a NAICS basis in 1992 and followed a 2.4 percent March increase.

Capital Goods

Nondefense new orders for capital goods in April decreased $5.3 billion or 7.3 percent to $67.6 billion. Shipments decreased $1.1 billion or 1.6 percent to $66.0 billion. Unfilled orders increased $1.6 billion or 0.3 percent to $495.5 billion. Inventories increased $2.2 billion or 1.4 percent to $157.8 billion.

Defense new orders for capital goods in April decreased $0.5 billion or 5.8 percent to $8.0 billion. Shipments decreased $0.4 billion or 4.5 percent to $8.1 billion. Unfilled orders decreased $0.1 billion to $147.7 billion. Inventories increased $0.2 billion or 0.8 percent to $20.8 billion.

Revised and Recently Benchmarked March Data

Revised and recently benchmarked seasonally adjusted March figures for all manufacturing industries were: new orders, $445.3 billion (revised from $444.2 billion); shipments, $445.2 billion (revised from $443.5 billion); unfilled orders, $847.8 billion (revised from $848.3 billion); and total inventories, $579.6 billion (revised from $578.7 billion).

Source:
U.S. Commerce Department:  http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

 

Why Do Democrats Want an Internet Shopping Tax

Internet Sales TaxCall it the eBay or Amazon tax – or perhaps the Barnes and Nobles, Apple Store or New York Times Online tax – call it whatever you like, but it is a tax. A tax proposed by Illinois’ own Senator Duck Durbin (D) that will be levied on all online purchases.

The Main Street Fairness Act, as Sen. Durbin’s bill is named, aims to reverse the decades long moratorium on online purchases that was put in place to foster online commerce. Now that virtual stores are actually closing down their brick-and-mortar counterparts the Federal government is looking to help the states.

There is a constitutional component involved. When someone purchases something online from a site that has a physical store in that same state, most states enforce the collection of state sales tax from the consumer. It is only when someone makes a purchase across states lines that the feds are even permitted to intervene, thanks to the [Interstate/Indian/Foreign] Commerce clause.

To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes [1]

The commerce clause has long been used by those in favor of a stronger central government so it should come as no surprise that it is Democrats doing more of the same.

There is a problem with the thinking on this bill. It will now create a situation where online retailers now suffer a bit of a disadvantage. A buyer selecting a $20.00 item from shopping.com would then get to pay a state sales tax on top of the shipping costs AND will have to wait a few days for their purchase to get there, possibly damaged in shipping.

With the new bill not offered up to the public as of yet, analysis was done against H.R. 5660, a bill with the same name but submitted last year by Sen. Durbin.

There are many legal and common sense perspectives to consider. First, is the Supreme Court Case of Quill Corp. v. North Dakota, which the bill cites as a basis of authority. Quill is an office furniture retailer that had no facilities nor employees in North Dakota and therefor positioned that it was no burden on the state which gave the state of North Dakota no standing to force Quill to collect sales tax for the state. Notice, the argument isn’t about whether or not the consumer should pay sales taxes, but rather who could be compelled to collect them.

With the legal out of the way, comes the common sense. Imagine the complexity a business would have to deal with the understand the sales tax rates of each State, the counties that add a bit and the municipalities with their extra .25% sales tax. The chart of taxes is difficult enough to deal with for in-state companies, much less someone trying to operate a nation-wide concern.

Then – the costs. H.R. 5660 lines out the funding for:

  • Implementation of an online multistate registration system
  • Establishment of advisory councils
  • Provisions for funding and staffing the Governing Board

It should go without saying this will only skim money off the collected state funds. It would necessarily have to. That multi-state registration system won’t build or run itself and the councils and governing boards will be filled with even more bureaucrats that make huge sums of money and get ridiculous benefits. By the time that money gets to back to the states from which it came, it will be a fraction of what it once was – if it gets back to the states.

The final and most important part is that the Federal government will now control the revenues that come from these purchases. That will allow them yet another carrot and/or stick to use against the states. Similar to how the federal government pressures states into certain provisions in order to receive federal highway dollars, the states will be given orders that they must follow if they want to receive their share of the federal internet sales tax money. This is another attempt of the central planners in our society to weaken the power of the states. Imagine how the federal government could affect a cash strapped state like say .. Wisconsin, when they aren’t playing the way the majority in Congress desire.

This tax isn’t about ending budget shortfalls for the states. They could do that on their own, although painfully, without this kind of intervention. This is about power – pure Federalist, big-government power. The bill only requires 10 states to sign on which is almost certainly an indication that the bill’s sponsors know that not very many states will cede their sovereignty just for a few crumbs from the Federal table.

Sources:

[1] – Constitution of the United States – Article 1, Section 8, Clause 3