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STRAIGHT LOGIC (From today's edition of THE WALL STREET JOURNAL)

Posted by Maritimus 6 years, 9 months ago to Politics
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‘Secular Stagnation’ and the Cheap Burger
What do Sheldon Silver, the European Central Bank, and McDonald’s have in common?

By
Holman W. Jenkins, Jr.
Jan. 23, 2015 6:21 p.m. ET
It may seem peculiar to link the arrest of New York Assembly Speaker Sheldon Silver with the European Central Bank’s latest monetary legerdemain. And even more peculiar to link both with the troubles of McDonald’s.
But Europe, Japan and the U.S. have been desperate to stir private-sector growth and yet refuse to consider how they treat their private sector. Europe gave itself austerity in which the private sector shrank and the government didn’t. Big-name economists keep insisting monetary policy can conjure growth without anyone having to question any ideological, political or policy embraces of the past three decades.
Nobody asks: How can we make our societies ones in which people find opportunity? They worry about the distribution of income but not the absence of income-creating opportunities for individuals.
The lesson of Sheldon Silver is that this phenomenon has mostly to do with a self-interested machine protecting its own privileges.
Mr. Silver, as you may know, is the long-serving speaker of the New York state assembly, a man the New York Times calls the state’s “most powerful Democrat” and the capital’s “most powerful figure.” He was arrested Thursday for millions of dollars in graft. Two decades of his “service” is why upstate New York is America’s microcosm of France, a place of permanent stagnation. It can’t even avail itself of fracking, as Pennsylvania and Ohio have done, because fracking displeases the disconnected New York City liberals whom Mr. Silver must propitiate to keep himself in power decade after decade.
McDonald’s has had two bad years, and sales are down sharply in the U.S. Meanwhile, Shake Shack is seeking an IPO on Wall Street that would value the tiny chain at $568 million.
This has led some to draw a line of causation, but McDonald’s doesn’t compete for the same customers and its real future may lie more in cost control than in imitating the boutique burger chains like Shake Shack and Five Guys.
McDonald’s has decades of experience in Europe and Japan, and can see where things are going. Our youth unemployment may be half of France’s, but it’s twice the rate that prevailed at a similar point in the 1990s recovery. Our new business formations are the lowest in 35 years, more like Europe than the U.S. According to Gallup, companies are dying faster than new ones are being born.
The administration’s Affordable Care Act raises costs for businesses like McDonald’s that hire thousands of full-time workers at a low wage. Its labor enforcers are overturning settled law to make McDonald’s liable for alleged violations of its independent franchises.
A writer for the New Yorker applauds academic studies showing that hikes in the minimum wage have only a small impact on overall employment, “usually confined to teenagers and unskilled workers”—i.e., McDonald’s workers.
President Obama himself, when he keeps intoning that every job should pay enough to support a family of four, is essentially saying McDonald’s jobs shouldn’t exist.
Though McDonald’s would never put it this way, the company has already started adapting. McDonald’s once filled its U.S. menu with salads, wraps and fruit options that few customers buy. The idea was to appease its foodie critics. Now the company is “simplifying” its menu and giving franchisees freedom to drop non-sellers—and the disproportionate staff needed to support them.
McDonald’s customers were never keen on customization, preferring speed and a cheap price. But now the company is introducing customization-friendly automated and smartphone ordering—because it allows franchisees to cut counter staff.
The essence of Europe’s malaise has long been a politics tilted heavily toward protecting those who have jobs from those who want them, where the biggest losers are the young and unskilled, and where stagnation is the general fate. Even with the bad news of recent years, McDonald’s U.S. stores still generate twice the sales of its competitors, including Burger King. But they also employ twice as many workers, upward of 50 per store. Look for that to shrink as McDonald’s adapts to an America becoming more like Europe, with an economy unwelcoming to the unskilled and unprivileged trying to find an entry into the world of work.


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  • Posted by dbhalling 6 years, 9 months ago
    Excellent article, but there is one false premise. "But Europe, Japan and the U.S. have been desperate to stir private-sector growth and yet refuse to consider how they treat their private sector."

    Obama (you didn't build that) does not want to see anyone be successful and this is true of most politicians. They want people to be dependent on them. The only reason they pay lip service to the economy is that they want to get reelected.
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    • Posted by mdant 6 years, 9 months ago
      Yes, they only want the private sector to grow if it can be done consistent with their socialist vision. Which basically means they do not want any aspect of the private sector to grow unless they have control over it. For them, a poor country is better than one that lacks close government control.
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  • Posted by wiggys 6 years, 9 months ago
    after all is said and done the problem just happens to be, has always been and will continue to be GOVERNMENT. any intelligent person who does their homework wanting to start a business in the usa will say no way. do you blame them? doubtful.
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  • Posted by RonC 6 years, 9 months ago
    The first skin on this onion I'd like to peel back is the static viewpoint of the do gooder progressive politician. He looks at last year's pie chart, calculates what is needed to satisfy this year's handouts and divides the pie. Never once understanding you can have a bigger pie by placing incentives in a manner that encourages growth.

    The Progressive view on incentives and growth is that we have already grown enough, any additional revenue should be taxed as a winfall so they can help more sheople. This is a dis-incentive.

    An assertion I will make is the many Progressives were locked in their rooms for disciplinary reasons as small children. I base this on two observations. 1st, in many of the HUD foreclosures I have purchased I have noticed the door locks are installed to lock them into the children's bedrooms; 2nd, is the complete lack of understanding how incentives work. An example of that would be a mandate and penalty for failing to sign up for the "Affordable Care Act". That is punishment, not incentive. Incentive would be premiums lower than your old plan, more hospitals and doctors than your old plan, and a tax discount for making the change. People would flock to that.

    Likewise, if we lowered the Corporate income tax to the lowest industrial nations, companies around the globe considering a new facility would look to the US as a tax haven. If you are an out of work machine operator, does it matter if Mercedes or Glock owns the facility, as long as it's the work you wanted. Low information voters fear all of the money leaving the country, but the truth is only the profit leaves. Labor, materials, utilities, transportation all stay here. If we remodel the corporate taxes the profit would mostly stay here. Not by decree, rather because it wanted to.

    Something magic happens if we bring labor back into our solution. The roughly 1/3 of our adult population that now draws a check from FUTA, housing from HUD, and groceries from foodstamps, would become contributors rather than mooches. The cash flow would improve 200% right out of the box, because not only has the draw down stopped, they are now paying taxes in. Progressives never see this either. The concept of incentivizing the job creators to gain the cashflow of the workers in an abstract to them, if it exists at all. If the creators do something like that it needs to be immediately taxed, perhaps at a higher rate so they have paid their fair share. Or should I say fare?

    The next skin of onion is the progressives ability to project. Remember the days of $4 gas and the theme "drill baby drill". Those in charge told us it would do no good to drill, we could never solve the problem. Anyone that has ever made a living solving problems knows the sooner you start the sooner it makes a difference. With little or no help from gov't, and on mostly private lands, we broke the monopoly in about 6 years...that's a long time from never. Incentives and new technology are funny that way.

    Following the logic of that last example I deduce that if we started creating real incentive, not tax code BS, in a few short years most of us would be working, have money to spend, and have happier more fulfilling lives. Most will not win a Nobel prize, but for most a family, a home, a car, a ladder to climb, a retirement account, and access to health care equal a more enjoyable life.
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    • Posted by 6 years, 9 months ago
      I could not agree with you more. It is palpable to me that Progressives' goal is not to maximize the number of people having "more enjoyable lives", as you phrase it, but control. And that control, not for the "common good", as they spell their excuse, but for direct, ruthless power and the loot that the power brings, a la Sheldon Silver.
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  • Posted by woodlema 6 years, 9 months ago
    The attitudes of the 50's, 60's, 70's and 80's has been replaced with the entitlement attitude of the 90's and 2000's.

    It has only taken 40 years to go from the "Greatest generation of DOERS, to an entire generation of lazy, entitled, moochers.

    Arnold S. the "Governator" had an AWESOME motivation speech that he lived by and became successful at. Listen to him, and ask where has that gone?

    I LOVE Arnold's speech. THIS IS HOW TO SUCCEED!!!
    https://www.youtube.com/watch?v=R1JBQMXb...

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    • Posted by mdant 6 years, 9 months ago
      Great motivational speech/video. Even though I was a bodybuilder in my younger days and still workout regularly, I never liked Arnold much as a person. He was a cocky a**. However, you can not argue with his success and while he may have caught some breaks, he really did work his butt off.
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  • Posted by freedomforall 6 years, 9 months ago
    Don't teach any entrepreneurship, discourage individual achievement, and you get few entrepreneurs and achievers.
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    • Posted by $ jdg 6 years, 9 months ago
      Entrepreneurship doesn't need to be "taught," it comes naturally. But not if a thousand hearings and ten thousand dollars in licenses stand between the would-be entrepreneur and opening day; then it may never come. This is why the existing system is rotten to the core and needs to be smashed, or at least evaded and disobeyed. Local needless bureaucrats are no better in any way, and no more rightful, than needless bureaucrats from Washington.
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      • Posted by freedomforall 6 years, 9 months ago
        When I grew up there was a respect for entrepreneurship, and public schools praised it and taught the things needed to succeed whether as an employee or in small business. It also taught self reliance was to be valued. If you think this has no effect, you are completely mistaken. I agree with your evaluation of the system as it is, but the environment has a great deal to do with the tools taught, the confidence instilled, and the morals and goals encouraged, and those are vital to pursuit of entrepreneurship. The environment includes parents who may be successful business owners or wage slaves or those who have been taught that the end justifies the means. Infants don't come out of the womb as entrepreneurs.
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        • Posted by airfredd22 6 years, 9 months ago
          Re: freedomforall,
          It's a shame that a pointed analysis like yours loses its credibility for using a words like "wage slaves." the people you state are "wage slaves,' are in fact workers that provide the necessary labor that any business needs in exchange for payment as it is valued by both worker and employer. An economy can only function when both parties are satisfied with such an exchange. That does not mean that the value placed on the labor will be a 100% agreeable, but that it is a negotiated agreement and no slavery is involved. To throw around words like slave makes true slavery into a joke.

          Fred Speckmann
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          • Posted by freedomforall 6 years, 9 months ago
            Hi, Fred, Some do provide services for legitimate businesses and some are wage slaves to looters who produce nothing, treat employees with no respect, and impede progress for others. That was part of the point I was making. Some people have a good work experience and impart that experience to their children. Some have a poor work experience and impart that to their children. You don't think the phrase 'wage slave' is appropriate, but that is the way some people feel about their jobs and that is the experience they pass on to others. Obviously it is a completely different issue than slavery experienced in the early 19th century.
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            • Posted by airfredd22 6 years, 9 months ago
              Re: freedomforall,
              your last sentence makes my point, it's the word slavery that i find to be the problem. Words have meanings and to use them out of context cheapens your legitimate points. Furthermore, your other explanation of bad experiences for some employees leaves out that they are free to choose another job or start their own business. No one ever promised that work is always going to be pleasant, that's why it's called work and not fun play.

              Fred Speckmann
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              • Posted by dbhalling 6 years, 9 months ago
                either you own yourself or you don't, If you don't own yourself you are a slave - period. The income tax does not state any limitation. So you don't own your efforts, so you are a slave.
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                • Posted by 6 years, 9 months ago
                  Hi db,

                  I hope that you can make yourself a bit more clear. For instance, what is the definition of the limit at which one looses the ownership of oneself? Or: it would seem to me that when one exerts one's efforts, those efforts are by definition one's own. The products of those efforts may or may not have a different owner.
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                  • Posted by ekr990011 6 years, 9 months ago
                    The definition of the limit at which one looses the ownership of them self is:
                    When someone else can come in and take or own what you produce or do regardless of your opinion on the matter.

                    For example:
                    If someone takes your work without your consent then you are not free.
                    If someone dictates how you act, you are not free.

                    "Or: it would seem to me that when one exerts one's efforts, those efforts are by definition one's own."
                    That is the point, you don't own your efforts. In a job where that is seemingly the case you are actually paid for your efforts or your work on a given project. Thus your work is yours even if the final product is not.
                    However you are no longer free when your efforts are taken without your consent, or a mutually agreeable settlement.
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                    • Posted by 6 years, 8 months ago
                      Hi, ekr990011,

                      Thank you.

                      I think that I understood that long time ago. I was trying to politely show that there is a confusion in how people speak about action, effort, work and product. In my opinion, action is any volitional bodily movement or volitional and conscious thought process. Effort is action directed toward a desirable outcome, which can be a physical product or a result of the thought processes, such as a conclusion. Work is exertion of power, i.e. effort, over some defined time. Product is the result of that physical work or a "communicable recording" of the conclusion (see above) and, sometimes, of the "thought path" to reach it.

                      With that in mind, I would say that as long as I am conscious, I myself and nobody else "owns" me. I am enslaved if another can threaten me with bodily or mental suffering, unless I take actions that he commands me to take, contrary to my rational self-interest.

                      I see plenty of people misusing the term "slave". The way I understand it, income tax has nothing to do with slavery. Humans, being social animals, always have needed some kind of social structure, i.e. "government". Government produces nothing and, thus, the cost of government must be born by the "governed", i.e. some kind of tax.

                      All the best.
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  • Posted by airfredd22 6 years, 9 months ago
    Re: Holman W. Jenkins, Jr.,

    Bravo Sir, you not only have your finger on the problem but have very articulately explained all the factors involved in the potential damage of forcing increased wages on the fast food business.

    Your explanation of the damage corrupt politicians like NY Assembly Speaker Sheldon Silver cause to economies in the states or for that matter the Us economy as a whole is also right on the money, pun intended.

    The European examples you p[resented are also 100% on point. Politicians worldwide will never acknowledge that even though they know the truth of the negative effects of high taxes and regulations because sadly their denial of these truths are based on their own corruption. No truer words were ever spoken than by Lord Acton, "Power tends to corrupt, and absolute power corrupts absolutely."

    Fred Speckmann
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  • Posted by $ splumb 6 years, 9 months ago
    I remember seeing two Warner Brothers cartoons that look to be from the 1950s. They taught the basics of entrepreneurship. No, I can't remember their names. One was a twist on the shoemaker and the elves story. Instead of doing the work for the shoemaker, the elves taught him how to grow and expand his little business.
    Those cartoons would be very useful today. Air them on TV and make them mandatory viewing in schools.
    Aha, after a little digging, I found them. "Heir-Conditioned", "By Word of Mouse" and "Yankee Dood It"
    https://www.youtube.com/watch?v=2auI6Uz3...
    https://www.youtube.com/watch?v=Kh0ibjXC...
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  • Posted by Herb7734 6 years, 9 months ago
    This is what you get when Washington, which has no experience in a given field tell the actual people who work in that field, what they must do to run their enterprises politically correctly. It's like Homer Simpson telling his boss how to run a nuclear energy facility. As to Silver, regardless of the illegalities, it illustrates how devotion to an irrational agenda is harmful to everyone, even the persons promoting it.

    By the way, Thank you Mr. Silver for giving bigots and jihadists another reason to hate Jews. They've got enough problems without your "help."
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    • Posted by wiggys 6 years, 9 months ago
      your comment about Washington having no experience in a give field suggests that they have some experience in some field. if you are referring to the gimmies you are correct, if you are referring to people who in essence put a gun to your head you are again correct. other than theft I can not think of ANYTHING that they do in Washington that is productive.
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      • Posted by 6 years, 9 months ago
        I think that it is fair to say that any government, by definition, is not productive. Then the only question left is how much is a government an obstacle or an enhancement to production. When I read our Constitution, I think that I can see very clearly that its authors understood this very well. I am no historian whatsoever and there may exist, in the vast literature about our beginnings, sources which illuminate this to much finer detail. I just do not know. On the other hand, it seems to me quite significant that an ignoramus can sense this from between the lines.
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  • Posted by $ Ben_C 6 years, 9 months ago
    I get really tired of the "concentration of wealth" arguement from my liberal friends. Few are business owners. Most are employeed by our local university. They seem put out when I respond - "it doesn't matter. What matters is the ability to follow a dream and start your own business. Try it a and get back to me in five years." None have tried - too scary. They would rather keep their job and complain about 'producers.'
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    • Posted by dbhalling 6 years, 9 months ago
      Unfortunately, the large amount of cronyism (really fascism) means their arguments have some validity. Plenty on Wall Street and even more in Washington DC did not earn their wealth. Warren Buffet and George Soros get deals that no one else can..
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  • Posted by Robbie53024 6 years, 9 months ago
    The workplace isn't merely hostile to the unskilled, but to the "educated" as well. Look at how many college graduates cannot find a job. Now, they are partially at fault for their plight, as many are getting degrees in fields either not needing more workers, or in fields that just have little value (I just this past week had to meet with a private equity firm and took a look at the backgrounds of the staff. While the partners and financial staff all had business and finance backgrounds, the office staff had degrees in acting, fashion design, classical and Mediterranean studies, etc.)
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  • Posted by $ allosaur 6 years, 9 months ago
    I can just see our more than equal elite betters in their elected and appointed places turning up their collective noses at such observations in that quaint Wall Street Journal .
    Didn't Obama, the most highest elite best of all betters, say that everything is getting better in the state of our union?
    That means that those elitists who know what is best for us may just continue to do what they are doing. For they are just so much smarter.
    Pass the Kool-Aid, please.

    https://www.youtube.com/watch?v=LHFEcyUN...

    http://www.usdebtclock.org/
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  • Posted by $ Thoritsu 6 years, 9 months ago
    Hey, every job should be able to pay for a family of four, assumes every person should have a family of four. Many should have none, but have many Most that have proven their worth have few.

    If every person should be enabled to raise a family of four, what is the incentive to earn more before starting a family?
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  • Posted by H6163741 6 years, 9 months ago
    Yet another move to further dumb down Americans. Why would anyone go to college or try to advance beyond an entry level position, if they are making $15 an hour flipping burgers? Of course, those jobs will probably not exist. Even McDonald's has a breaking point, and I doubt anyone will pay $20 for a Big Mac.
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    • Posted by $ jbrenner 6 years, 9 months ago
      Reasons to go to college:

      1) You have not shrugged yet.
      2) You want to be prepared for when the producers are in power again.
      3) You are getting ready for Atlantis until you are recruited, which I just might do if you choose to get ready for Atlantis at Florida Tech.
      4) You have Dagny's need to save what is left rather than Galt's desire to destroy that which has been produced so that it cannot be used against the producers.
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