The 21st Century World Economy Has Arrived

The United States was not interested in the rest of the world until WWII.  Our nation kept up its protectionist and no alliance philosophy until that war thrust us (were we dragged?) into a position of leadership.  Exceptions to that basic idea did occasionally occur.  There was the famous bombardment of pirates off the north coast of Africa in the early 1800s.  That was an independent action that led to know alliances.  WWI is the outstanding example of working together with other countries to defeat a common enemy.  At the end of that war the United States did not join the League of Nations.  Instead the country reverted to its no alliances philosophy.

The idea of no alliances apparently dates back to Thomas Jefferson. He extended Washington’s ideas in his March 4, 1801 inaugural address: “peace, commerce, and honest friendship with all nations, entangling alliances with none.” 

A Cato Institute article on free trade confirms the philosophy of high tariffs. The article provides a U.S. Department of Commerce graph that shows 30% import duties on durable goods until WWII.  Pat Buchanan, the conservative talk show host and former presidential candidate, still contends that the United States would be better off economically if trade barriers were in place.  He repeated that position on the McLaughlin Group on Friday August 21, 2009.  When was the last time he went shopping?  Walmart, Target, Sears, Best Buy, etc. are all part of the global market place.

It’s understandable why Buchanan and others believe that protectionism is the salvation for the United States.  We can’t compete with other nations for many goods and services.  Our cost of living is just too high.

Listed on President Barack Obama’s top five books to read this summer is Thomas Friedman’s The World is Flat.  It’s a book that tells us something we already know but in horrifying detail.  This book tells us about the interdependence of every nation in the world.  The quote “President Obama will probably learn of the operation from CNN” evidences how well we have connected everyone.  Even Mayanmar’s (Burma’s) secretive government has been unable to keep events in that country a secret from the world.  Neither 10th century Muslims nor Asian dictators can stop the interconnected world.  Visit Toronto, Canada and it’s like visiting the United Nations.  You will realize the world cannot be turned back.

The answer to our dilemma is innovation and invention.  This nation gave birth to assembly line manufacturing (Henry Ford’s factories), the telephone, the computer world, and the internet.  It was Thomas Edison who invented the light bulb and the first recording devices.  The largest and most successful aircraft manufacturing companies were built in the United States.  It’s that creativity that will revitalize this nation.

What will it be?  I don’t know.  It could be new car batteries or new ways to generate electricity or something else.  The new world has arrived.  Get excited!

Will Israel Attack Iran?

The answer to the question is, only the Israelis know for sure.  According to Micah Zenko in today’s Los Angeles Times the likelihood is high.  Mr. Zenko says Iran has until late September to provide the desired response to an international proposal for stopping nuclear enrichment.  Given Israel’s history of a first strike doctrine this action is definitely a real possibility.

A columnist in the Pakistani Spectator has provided some important information that would support the thought that Israel is physically positioning itself for such an attack. The unidentified “Guest Blogger” contends that  “In a latest move Israel has moved two of its Saar Missile Class warships through the Suez Canal. Ten days back Israel also sailed its Dolphin class submarine, capable of launching a nuclear missile strike, to an unidentified location.”

Of course, if this is an accurate report, Iranian intelligence knows about the positioning of Israeli ships.  Can we rely on Michael Oren, the new Israeli ambassador to the United States, when he said on Fareed Zakaris’s GPS that Israel would only use nuclear weapons in response to another nation’s first use?  Frankly I doubt it.

Although there appears to be more peaceful times in Israel, its last two wars have ended in a draw.  Perhaps that was enough for Israel’s enemies.

Iran doesn’t have nuclear weapons now.  I am guessing that Israel will strike Iran if it believes there is a real threat.  It just won’t be nuclear.

New Technology-Goodbye to the Post Office

Everyone reading this blog knows this reality.

A new world of high technology is making the post office obsolete.  A large portion of our population now communicates via email.  Even Seniors, the over age 65 group, are using email services as their primary communications tool.  I tutor computer use at a Senior Center one day a week.  Every one of those seniors wants to learn how to use email and the internet.

Soon Newsweek, Time, and all of our newspapers will be part of the past if they do not change to an internet version.  Those old commentators appearing on talk shows are wrong when they say newspapers and magazines will survive in printed form.  Newsweek has gone to an essay format in an effort to save itself.  Jon Fine of BusinessWeek forecast the end of magazines and newspapers well over two years ago.  Advertising revenues for all of these publications has seen a significant decline.  The growing advertising venue will be your ads and coupons on your cell phone.

The U.S. Postal Service is about to give an enterprising company a large retail distribution system when it closes about 700 facilities.  Congressmen will be trying to stop the clock and retain those operations.  If they are successful it will prove that the Federal government cannot manage its existing affairs let alone increase its involvement in health care services.

Health care aside think about the possibilities for the use of 700 strategically located facilities through out the country.  Perhaps UPS or Federal Express will step in to take over these locations.  If not, these facilities are an opportunity for 99¢ Stores or some other chain. 

There is No New Direction for Our Economy

I am mystified about the economic direction of our country.  Despite the optimism in the stock market there really is no new direction for the nation’s economy.  It may be accurately reported that net income of many companies has increased but it was mostly the result of reduced labor costs and reductions in inventory.  Cash for Clunkers was a great idea for clearing dealer lots but who will buy a car now that the program has ended?

With credit card interest rates up and with far fewer offers from the banks for new credit card accounts there has been an obvious reduction in card usage.  Most of us are burdened with too much credit card debt to buy very many new things. After all we consumers had a total outstanding bill of almost $1 trillion.  The reduced card use is a good thing for the individual but bad for an economy that relies on consumer spending.

The $768 billon stimulus bill was a great idea to jump start the economy.  The problem is that only $89 billion has actually been paid out.  That is about 12% of the allocated money.  This is particularly maddening to me when I see streets that need resurfacing all over my city.  Other projects are talked about but there has been no action.

We are left with actions by private enterprise to invigorate the economy.  The wealthy are too happy to care and the rest of us really are praying.

We need more than prayer and hope.  The world is changing faster than ever before.  Other nations have economies that are far better managed than ours.  Even our next door neighbor, Canada, is more successfully managed than the United States.  China and India are both reported to having seen a turn around in their economies.  Unless there is an inspired government that isn’t involved in political infighting or industries that quickly step up to the table, and that means within the next 12 months, the United States will follow Japan into a longer downward financial spiral.

Isn’t Health Care Rationed Now?

A sixty year old gentleman, who works for a pest control company, comes to my home every other month to spray around the outside of the house to reduce the invasions of bugs.  He was hospitalized from June 30 to July 4.  He had a blood infection in one leg.  The doctor wanted him to stay in the hospital another week.  He wanted to go home and enjoy some vacation time.  The doctor relented and he went home.  He went back to work a week later and although the leg is sore he is recovering.

He was hospitalized for four nights.  His medical insurance is denying him coverage for two nights.  The insurance company contends that two nights care was sufficient time for his recovery.

Is this a case of rationing health care?

Senator Edward M. Kennedy

Reading the Associated Press version of Ted Kennedy’s life is like reading a soapbox novel.  It’s hard to believe that people like the Senator actually exist in real life.  Maybe that is because my life has been very quiet in comparison.

It appears that Ted Kennedy finally did grow up.  He really did realize his youth was too foolish.  There is no doubt that he did take advantage of his family’s influence and power in Massachusetts.  The Massachusetts State Attorney General, Edward J. McCormack, running against Kennedy for U.S. Senator in 1962 said, “If your name was simply Edward Moore, your candidacy would be a joke.”  That was an accurate assessment of Ted Kennedy back then.  In at least the 18 years of his life, after his marriage to Washington lawyer Victoria Reggie, he finally became a significant force in his family and in the U.S. Senate. According to ABC News Kennedy authored 2,500 pieces of legislation. 300 of those bills were passed into law.

Ted Kennedy will be missed.

Going Postal on Health Care

I almost forgot that Tom Purcell is supposed to be writing humorous columns. Today’s piece was definitely was not one of those. It is a very serious column that has at least one significant flaw. Healthcare insurance has been in the hands of private enterprise since insurance was invented. The postal service was included in our Constitution. Fed Ex is a recent development. So why hasn’t private enterprise done a better job? Could the answer be greed? The United States is the only industrialized nation in the world that does not provide its citizens with universal health care. That isn’t funny.

Bill George’s column in BusinessWeek does a very good job of highlighting some areas that need attention now. Mr. George is correct in saying that “Obama has surrendered policy to politics.” His proposal for health-care reform is worthwhile considering. Trying to get our senators and congressmen to listen to our ideas is nearly impossible. Many of those representatives are receiving donations from health industry companies for their re-election. It’s unlikely they will be listening to the voting public.

Military Politics

The Military Industrial Complex Lives

Let’s be honest.  There is a big link between the Military and the industries that supply military equipment.  This is not news.  President Eisenhower warned of this issue in a 1961 speech.  In case you have forgotten, he was the supreme commander of our European army in WWII.

Some of us would like to deny that military is not a necessity.  There are people and nations in this world who would like to see the United States fail.  The problem is that many Americans love military things.  They love the fight.  They love the equipment that helps the military carry out its assignments.

Military equipment needs evolve as the world changes.  Some of that old reliable equipment is not necessary or appropriate in the year 2009 and beyond.  That is obviously the result of new items that are technologically superior to those old reliable things.  The most obvious item I have seen in news reports is the drone aircraft.  Those drones are controlled from points thousands of miles away from the field of battle.  60 Minutes’ Lara Logan provided a report telling how the control of the “unmanned aerial vehicles” is accomplished in Nevada.  This equipment really does make many of our manned aircraft obsolete.

The Boeing Company launched its own attack on public opinion by advertising the need for the C-17 cargo plane.  A full page ad appeared in the Los Angeles Times.  The Times reported that similar ads appeared in major newspapers around the nation. The same article provided interviews with people who are calling the continued manufacture of this plane as corporate welfare.  There is a UAW union that of course contends that there is a need for this plane but they are interested in protecting the jobs of its members.  The coast will be $275 million each.

I do not know how many other old reliable pieces of equipment are still on the “buy” list.  Shouldn’t these decisions be made by the Secretary of Defense?  It appears that politics and a need to provide welfare for various companies is taking priority over the nation’s real needs.  Those 14,000 people that will be effected by closing down the Long Beach aircraft factory could be utilized manufacturing high speed trains, wind turbines for power generation or other needed products.

Stimulus Money Well Spent

I have ridden on the subways in D.C., New York, Boston, Philadelphia, and Toronto.  All of them provide a marvelous means of transportation.  Here in Los Angeles we really only have one subway line.  It stretches from Downtown to North Hollywood for 17.4 miles.  The usage proves that the city needs a subway system.  Seats are difficult to find at mid-day.

Angelenoes love their cars.  I have grown up in this city and have driven through some of the worst traffic nightmares.  They were on the 101, 405, and 5 freeways.  Some traffic has made a 30 minute drive into a 3 hour nightmare.  A trip from my home to LAX (using the 101 and the 405) is 30 miles but you should allow 1½ hours and that is the time without serious accidents.    

For two years I worked on Wilshire Boulevard.  It always amazed me that conventional buses would travel down that street in group of three to accommodate the extraordinary need for public transportation.  That was happening at lunch time not at rush hour times.  If you missed a group of three there will be another group in 5 minutes.  In spite of the obvious need for a subway under that boulevard it has been resisted by many people.  The NIMBYs have succeeded and in the process have hurt the city’s poorest people and caused major traffic congestion.  Who cares about the poorest among us?  The have no political voice and so they are ignored.

In the mid 1980s NIMBYs successfully had a federal law passed prohibiting the construction of a subway under Wilshire Boulevard.  Now that the congestion has become overwhelming, that law has been reversed.  The mayor wants to see this project completed in less than ten years.  Building that $6.1 billion subway would employ many thousands people and the resulting mass transit would be eco-friendly.  This would be a worthwhile project for stimulus money.      

Update on Health Insurance Company Profits

This information was obtained from Yahoo’s financial reports site (http://finance.yahoo.com).  This is Operating Income.  You could argue that their income per share is low.  I would argue that the job they fulfill in our society requires that their profits remain even lower given their purpose.    

Quarter ending   6-30-09:	Aetna	$2.475 billion
	Coventry Health Care	$619 million
	CIGNA	$378 million
	Humana	$1.073 billion
	UnitedHealth	$859 million
	WellPoint (Blue Cross/Blue Shield)	$3.592 billion