Combatting the Delusional Local Politicos

Local politicos and some screwy business leaders are blind to the obvious. They think business will relocate to Wisconsin simply because we have water availability thanks to Lake Michigan. Happily, Patrick McIlheran pointed out the fallacy of this type of thinking in an op-ed piece he wrote in Sunday’s local rag.

Some selected highlights. Any emphasis mine.

I wonder if this was what it felt like to own a polka-records company in 1977, telling yourself that with Elvis dead, the kids would forget rock and come back.

Keep waiting. Meanwhile, we’ve got lots of people saying Atlanta’s drought will be what sends ‘em all scurrying back to Milwaukee.

From the man on the street to essays in political journals, people living on the shores of the world’s largest, most beautiful backwater are figuring that the drift of people, money and power to the Sunbelt will surely end now. They want our water, so they’ll have to come back.

Even serious, thoughtful people say this. “This is a very big economic development tool for the Great Lakes region,” said Todd Ambs to Milwaukee business leaders last month. Ambs runs the water division for the Department of Natural Resources. He knows more about the flow of water than I ever will. The message, he says, is, “you can come back to the Great Lakes.”

Not going to happen, says John Kasarda, who knows more about the flow of economies than I ever will. Kasarda, who researches entrepreneurship and demographics at the University of North Carolina, says there’s simply no evidence that constrictions in water supply alone can torpedo a burgeoning region. Phoenix and Las Vegas, you might recall, thrive. The southeast isn’t short of water. It just doesn’t organize its distribution well - yet.

The people who think Atlanta’s drought will send people back here are buffoons. With telecommunications being what it is today, people can live just about anywhere they want. So, the jobs will go to where capital is welcomed and stay where it is treated fairly. As Kasarda points out:

The lake won’t save us. A new attitude might, suggests Kasarda. What made the Sunbelt as much as air conditioning was a pro-enterprise culture, he says - an encouraging attitude toward growth, a “flexible, non-union environment,” decent taxes. “They put out the red carpet for business,” he says, and it worked.

And here? “The attitude in Milwaukee toward business is awful, and you just don’t see it anywhere else,” Briggs and Stratton CEO John Shiely told a reporter this month. He and other executives had the temerity to say the same in public last winter and were excoriated as wanting “to return to the 19th century.” How dare they mouth off! Don’t they know their place?

Suppose Atlanta were rewound to some prior century - that its growth were halted. It’s gained a million people in six years; where might the next million go instead? Shiely contrasted Milwaukee with the welcoming attitude in Murray, Ky., and that should be a hint: There are lots of other Sunbelt towns. If Atlanta’s got too many people drawing from one little river, that’s solved as people spread to other rivers in the welcoming, low-tax South.

Think the above isn’t true? Guess what? Texas just surpassed New York as the state with the most “Fortune 500″ firms with 58 now in Texas.

Some of that was due to the growth of local firms but more was because of firms that relocated out of the high-tax, anti-business climates of states like the socialist shithole under Pol Pot Doyle Wisconsin. Seems to me Texas is not exactly known for having a lot of water. (As I side note, I paid $4.75/gal for avgas in Texas compared to $5.85/gal here.)

Until the negative attitudes toward business are reversed here, we’ll have plenty of water. No jobs, of course, but plenty of water.

Thank You Very Little

Many people have Heath Savings Accounts or HSAs. They’re a very effective way to afford health insurance and, are a staple of small business health plans. If you’re unfamiliar with HSAs, you can see a nice summary here.

As is their wont, the Dims want to end this. Why? They want you to have health insurance only if you buy it from the government. The Wall Street Journal covers it today.

“Democrats have made affordable health care a mainstay of their election agenda, but apparently only if you’re willing to get insurance through the government. Witness their stealthy assault on Americans who prefer the private-sector option of Health Savings Accounts.

This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.

A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to “weapons of mass destruction” – because they introduce more individual choice into the health-care marketplace.”[...]

Honest to God, how do people this stupid keep getting elected? What’s worse, this idiot thinks the Feds are more capable than individual consumers in finding health care that’s best for them.

The WSJ concludes its op-ed with some very good advice.

“Democrats, including Hillary Clinton and Barack Obama, decry the high and rising costs of health care, including insurance “overhead.” Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money. The Senate should stop this one dead in its tracks.”

I hope the Senate will stop this one, too but I’m not overly optimistic. The end of HSAs would all but end health care for small businesses. Of course, the goal of the majority party in the Senate is to wipe out all business…corporations, no matter their size, represent pure evil in the eyes of the Dims.

It’s About Time

Wisconsin is finally going to join the 21st Century/get off it’s ass and do something to help economic development.

Plans to expand 35 miles of I-94 from six lanes to eight between Milwaukee and Illinois moved closer to final approval Friday with a report that declared the project would comply with federal environmental laws.

Naturally, the ankle biters are opposed. Here’s one that’s especially moronic coming from, naturally, the ACLU.

[...]“They (those opposed to the expansion) also argued that the project would violate civil rights laws by pouring more money into road construction and depriving minorities and low-income residents of public transportation options.

“One can’t look at this without finding a pattern of discrimination against disfavored groups and communities in our society,” said Dennis Grzezinski, an attorney working with the ACLU.” [...]

Sigh.

Schumer Actually Coherent for Once

With the turmoil in the financial markets, mostly caused by the stupidity, and to a lesser extent, greed of the affected financial institutions, there is now a clamor for more regulation of the U.S. markets. Despite being one of the most heavily regulated markets on the planet, the U.S. is not well-regulated in terms of giving the financial institutions the framework they need in the globally intertwined financial markets.

Chuck Schumer, the Democratic Libtard Senator from NY has an op-ed piece in The Wall Street Journal which accurately sums up the problems and he offers some solutions. Oddly enough, for Schumer, many of the points and solutions he raises do make sense, some are surprisingly good. You can read it all here.

A few comments on some of his points, not necessarily in the order raised in the op-ed piece. (Any emphasis mine.)

- Look closely at unifying and simplifying our regulatory structure, perhaps moving toward a single regulator. In this era of global markets and global actors, we cannot return to the older model of separate businesses with separate regulators. We must consider whether a more unified financial regulatory system could provide more efficient regulation. In our report on maintaining the competitiveness of our financial sector, Mayor Michael Bloomberg and I suggested we should look closely at the system now in place in the United Kingdom. They have a single strong, effective financial regulator, focused on results and not rules, with the power to act. Such a regulator would likely have called in Bear Stearns managers and told them to improve their capital position long before the crisis arose, thus avoiding the backdoor action the Fed was forced to take.

If Congress takes only one action (they won’t of course but one can only hope) this would be the one to enact. The Glass-Steigel Act, enacted after the Great Depression and designed to separate commercial banks from investment bank is, essentially moot. Organizing the regulatory bodies into one body with different divisions would let regulators and financial institutions to work more harmoniously in the changing markets.

- Figure out how to regulate currently unregulated parts of the financial markets and opaque and complex financial instruments. There are too many vital players in the financial markets who operate beyond the scope of federal regulators, yet have the ability to put the system at risk. If investment banks are able to borrow from the Federal Reserve’s discount window, then they must be subject to greater regulatory scrutiny. Similarly, we must create an effective regulatory framework for derivatives transactions, such as credit-default swaps, which have grown into a multitrillion dollar part of the financial system.

This is a no-brainer. I would take another step. If The Fed is going to guarantee the obligations of a firm like they did here via the taxpayers, then the taxpayers deserve to share in the upside. A straight equity position with a buy-back/ put provision would be one way to start.

As it stands now, The Fed, or more correctly taxpayers, have taken an equity postion with NO possibility to share in the upside. Put any gains in the general tax fund.

- Recognize that a global financial world requires global solutions.In this era of global finance, we have international markets but we still have national regulations. The danger is that there is often a rush to the place where regulation is lightest and least effective. For example, one of the difficulties in regulating the derivatives market is the concern that if we do it unilaterally, the business will simply move to London, making the system no safer and causing the loss of many American jobs. It creates a dilemma: We cannot allow ourselves to be pulled downward, but we also cannot ignore what happens elsewhere and its impact on our competitiveness.

A tough proviso. Capital is now so mobile, that it is probably an impossible objective. Better to work with London and try and cover MOST of the bases. BTW, other options besides London now include Singapore, Hong Kong and Seoul, all of which are efficient and are courting firms with their lack of onerous regulations like Sarbanes-Oxley. Speaking of which, eliminating “SOX” would be a good start as well. (SOX places enormous costs on business, no matter their size. It discourages small firms, who would surely benefit from access to the capital markets from getting to the capital markets.)

- The Bush administration’s hostility to regulation has to end. We’ve seen the consequences of this approach in too many places. Look at the housing crisis, where unregulated mortgage brokers and lightly regulated mortgage originators like Countrywide played a major role in creating the current mess. Regulators must regulate and use the authority Congress has already granted them to protect the public interest.

Naturally, being a libtard, Schumer had to throw in the obligatory shot at Bush or risk the wrath of his base. The fact is, the 106th Congress is so inept and so poorly led by Reid and Pelosi that any attempts to re-write legislation would have probably not been possible. By staying hands off, at least Bush kept the playing field the same. BTW, Chuck, I didn’t see YOU leading any legislation prior to the current situation. A regrettable, but predictable comment by Chuckie. Chuck, if you want to do something useful, why don’t you DEMAND the resignation of Harry Reid as Majority Leader?

Anyway, the above is a decent start at overhauling regulations that were designed for a system that disappeared long ago. If Schumer really means what he says, in the op-ed piece, then there is a chance of the U.S. catching up with the rest of the world in financial regulations.

Just remember something. You can’t legislate the stupid penalty out of the equation, nor should you. At the same time, when the time comes to pay the stupid penalty, then you gotta pay up.

No Surprise Here

It’s no surprise really that the US Bowling Congress (USBC) is leaving Milwaukee. The MJS has the details here.

As usual with the MJS it’s what’s NOT being reported. The M-7 or Milwaukee Seven group was unable to come up with a plan to keep the USBC here.

[...]“When you look at the major cost factors, staff costs and benefits, real estate occupancy costs, property tax costs, it showed that our numbers were comparable, a percentage point or two from each other,” said Jim Paetsch, director of corporate relocation for M-7.

In addition, employee health care costs in Milwaukee were a little bit higher than Dallas, Paetsch said.[...]

But what was NOT reported is that every employee who relocates to Texas will immediately get a pay raise. Why? No state income tax in Texas. My guess is the Editiorial Boards in the Dallas/Fort Worth area are not calling for one either.

Business Climate in Milwaukee

Yesterday (1/20/0 the MJS ran an interesting Op-Ed piece on the business climate in Milwaukee. The article, tried to show how Milwaukee could benefit from following the Hong Kong Model. Entire article here.

As someone who has spent a LOT of time in HK in the old banking days and still continues to go there (3 times per year for about 7-10 days per visit) I would love to see Milwaukee become a Hong Kong. The author, a James Casey, Jr., a Shorewood native, is now a visiting professor in HK had some good ideas. Sadly, he missed a crucial point but the article had some points that are quite valid.

Perhaps the most crucial point in the article was the following:

“Hong Kong is not perfect and Milwaukee is not beyond hope. Hong Kong has its challenges in a booming part of the world. And Milwaukee has assets that other cities lack. But I will say this: Hong Kong is infused with an “entrepreneurial spirit of urgency” that has largely been lacking in Milwaukee for decades. Milwaukee seems to be coasting on the legacy of a dynamic 1948-1970 period.”

Well, that goes without saying. In Milwaukee, and in Madistan, people want to talk plan, form committees and study things ad-nauseum. By the time a decision is reached, the situation has radically changed and the cycle begins anew. People who run for office try and figure out how government can become more intrusive.

Two other key points were made as well.

Elected representatives - and the general public - need a sense of urgency: This sense of urgency is not just for fixing problems that have festered for 40 years, but is based upon recognizing that international pressures are becoming greater.

Transportation is critical: Not only are Chinese authorities expanding the MTR (subway) system, but they are building and expanding freeways. The Hong Kong region generally lacks the “paralysis by analysis” mindset cited by former Milwaukee County Transportation Director Robert Brannan in the 1970s (in reference to the freeway battles). It is an embarrassment that the KRM project is stalled and the Milwaukee County bus system is in such bad shape; those need to be fixed. But transportation improvements go beyond mass transit. The freeway system needs to be rebuilt and modernized, and the Stadium North Freeway gap needs to be completed. Milwaukee has been crippled by the failure to complete a basic, long-term freeway network. The people of Hong Kong have not bought into the argument that it is either freeways or mass transit. They are improving both, and they are not talking for decades about doing it.

The above points are also quite valid. The HK freeways and subways are excellent. Of course, there are about 6.75million people in HK so mass transit is far more critical than here in MKE. Mass transit takes many forms, including freeways.

As I pointed out earlier, the author missed one VERY KEY component in his article. The tax climate. HK has prospered as a business haven because of low taxes.
Now, HK sets its own tax rates independent of Beijing today and London during colonial times. Thus, the rates are “national” rates. But check it out this brief summary.

16% flat tax on salaries.
No capital gains taxes (but no deductions for losses, either)
No estate (death) taxes.
No taxes on income earned outside of Hong Kong (although you would have to deal with taxes in the country where the income was earned).
There are “stamp taxes” which cover a myriad of services, but these are minor, ususally about US$1.25 or so. The highest I ever paid was $10.00 when I sold some stocks I owned on the HK exchange.

Furthermore, HK does not give any tax credits for relocation. Why should they? People and companies WANT to go to Hong Kong in order to take advantage of the workforce and opportunity to keep what they make.

Compare that with the depressing climate as outlined in my earlier post.

When you make $1.0million in HK, people applaud. They don’t try and take it way from you.

The author made some fine points; sadly, few, if any of them will ever go into practice here.

This is Not Good

From the MJS News blog.

Madison - Up to 5,000 taxpayers received letters recently that may have shown their Social Security numbers through the address window, the state announced today.

The Department of Administration printed, folded and mailed the letters for the state Department of Revenue. The federal government requires that the Social Security numbers be printed on the forms.

Everyone affected was offered free credit monitoring in a letter sent Monday.

The error affects taxpayers in 10 communities in northeastern Wisconsin.

It would the second such error this month and the third in just over a year.

In late 2006, about 170,000 taxpayers were sent tax forms with their Social Security numbers on the mailing labels. Earlier this month, a state mailing to 260,000 Medicaid recipients also had their Social Security numbers printed on the mailing labels.

Both earlier cases caused an uproar and promises that such mistakes wouldn’t be repeated.

Search Your Phone Calls

This could be interesting.

WASHINGTON (Reuters) - Communications regulators have cleared Google Inc (GOOG.O: Quote, Profile, Research) to bid in an upcoming auction of coveted wireless airwaves, according to auction documents released by the Federal Communications Commission on Monday.

Google was among a list of potential bidders released by the FCC that have made a required up-front payment and have been cleared to take part in the high-stakes 700 megahertz wireless auction.[...]

[...]The 700-megahertz signals are valuable because they can go long distances and penetrate thick walls.

The spectrum is to be auctioned off in several different blocks, ranging from smaller regional blocks to large, nationwide ones.

Up-front payments for the spectrum licenses can range from several thousand dollars to more than $100 million, depending on the size of the license a company is seeking.

The auction is seen as a last opportunity for a new player to enter the wireless market. Google and other Silicon Valley leaders see the wireless spectrum as a way to create more open competition for mobile services and devices than those available on existing networks.

I’m sure many of our Cheddarsphere denizens in the tech industry understand the tech stuff better than I do but it seems to me that this is going to benefit the consumer in many ways. If Google can get the nation-wide spectrum, then consumers will no longer be tied to a small selection of phones offered by providers. It also seems to me that the data capable devices will become even more powerful.

This Really Surprised Me

The MJS reported today that Midwest Airlines pilots do not have the training to land Cat II or Cat III instrument approaches.

(Nice summary on Instrument Approaches here for those of you who are interested. More here.)

[...]“At Mitchell International, which accounts for 77% of Midwest Airlines and Midwest Connect flights, 1,800 feet to 2,400 feet of visibility is needed to land, depending on which runway is used, Reeve said.

With additional training, pilots can land with 1,200 feet of visibility - what the airlines call “category II” landings - or 700 feet, known as “category III” landings, Reeve said.

The main aircraft used by Midwest Airlines is the Boeing 717 jet. Those aircraft will be able to land in category III conditions once the training is completed, Reeve said. The carrier’s MD-80 jets will be able to land in category II conditions, he said.

The Skyway pilots who fly for Midwest Connect will be certified to land in category II conditions, Reeve said. Midwest Connect also uses jets flown by St. George, Utah-based SkyWest Airlines Inc., whose pilots are already certified for category II landings, he said.

Midwest Air told its pilots last week that it would add training for reduced-visibility landings in 2008. Reeve said that announcement was not related to numerous flight cancellations and delays that Midwest Airlines and Midwest Connect had after an unusually snowy December in Milwaukee, as well as several foggy days in December and January[...].

If Midwest Pilots were only allowed to land Cat I instrument approaches, then they had no more clearance than any IFR private pilot. As an ex-commercial guy, who was rated in Cat IIIc aircraft (look, Ma, no hands!), I can’t understand why an airline would NOT train their pilots to the highest levels of the aircraft they fly (not all aircraft are Cat III certified.) To me, the safety factor of having better trained pilots and the ability to execute Cat II and Cat III landings far outweigh any cost. I just find that very curious, especially since Mitchell has Cat II and Cat III approaches.

In many cases, Reeve said, visibility was so poor that those flights would have been affected even if the Midwest pilots could do category II and category III landings.

Well, the above statement may be true but clearly there were many cases where the inability (due to lack of certification by the FAA, not pilot skill) of Midwest pilots severely inconvenienced a LOT of passengers. I’m sure it drives the ex-military guys crazy since they all carry the military equivilent of Cat III.

Happily, Midwest is going to start rectifying this problem immediately.

Stupid is as Stupid Writes

I’m never confused when I see moronic editorials from the Milwaukee Sentinel Journal. Why should I be?

Here’s the latest editorial which shows why it’s a good thing to have a monopoly in the news market. While the MJS runs articles about how to get business to relocate here, they (the editorial board) support the destruction of the rights of business owners. You don’t like smoking? Tough.

Let the owners decide. The Fuel Cafe, a very popular (and formerly smoking allowed place) in the 3rd Ward just went smoke-free. It was THEIR choice, not a choice of Pol Pot Doyle and his little cocksucking sycophants minions in the Legislature.

Given the stupidity of the editorial board, an extension of management, is it any wonder why the stock charts look like this? Maybe Steve Smith, the CEO of JRN, can explain the performance of his stock by saying that none of his editorial writers smoke and that none of them understand how freedom of choice and market forces work while explaining the stellar performance of JRN stock under his tenure. Take a look at JRN vs. the S&P.

Good for you, JRN…none of you smoke as you all destroy shareholder value. Nice job.