The Lesson From Cantor's Loss

2014-06-11 09:35 by Karl Denninger
market-ticker.org

There's a lot of whining going on this morning, particularly among "business pundits", about the Cantor loss. One of the most-common is the lament that this means immigration reform is "dead."

Let's just start there, because it's such a juicy target.

Immigration reform is a fancy way of saying amnesty, job destruction, wage depression and exploding welfare costs, all of which are "demanded" by both the Chamber of Commerce and industries large and small.

You have illegal Mexicans running around cutting lawns because of these policies.

You have illegal Mexicans roofing houses for the same reason.

Never mind migrant illegal workers in agriculture.

All of these and more depress wages for Americans. That's the entire point and reason they're hired instead of Americans -- they will work for less.

Labor and capital, in a free market, balance their demands through relative scarcity of both. Labor is checked in its demands by the fact that should it not the business in question goes under and now you have no job at all. Labor has had this lesson taught to it multiple times, but it rarely learns it precisely because there is government support that adds distortion to the market -- and as such labor believes it can compel (rather than negotiate) what it wants. The consequence of this is found in Detroit; a once-vibrant manufacturing powerhouse with all sorts of businesses that employed millions at decent wages.

Everyone focuses of course on the auto industry, but the problem was neither located there or limited to that line of business. Virtually every firm in that town was trashed systematically at the same time government employee unions (e.g. police and fire) managed to ram through the same sort of compulsion wage and benefit demands that were hammered into the private marketplace. Not only did this bankrupt thousands of firms in Detroit it bankrupted the city itself.

One of the worst offenders is found in the public education system. "Throw more money at it" was the refrain; after all, it's for the children. But the "children" didn't want to be there and were in fact thugs -- and worse, were rewarded for being thugs! What, pray tell, is No Child Left Behind but a bald claim, backed by billions of taxpayer money, that a 17 year old who has zero interest in being in school and prefers to gang-bang has to be accommodated instead of being expelled even though doing so means the other kids in the same classroom have their educational experience damaged?

Ultimately the limit of sweeping this crap under the rug was found and the city came unglued. And no, despite what is being trumpeted, that problem has not been solved. In fact the deterioration now is spreading -- to Chicago, San Francisco and elsewhere, because the very same reason it happened in Detroit has been transported elsewhere.

Immigration is often cited as a poster child of the problem, but the real problem is that politicians have allowed themselves to be labeled "extremists" if they try to demand that deals struck are actually honored.

Two of the most-egregious examples happened under Ronald Reagan. Reagan negotiated a package of tax cuts along with spending reductions that were promised by Tip. The tax cuts were signed into law and became immediately operative. The spending reductions never happened and Reagan, instead of demanding that they do before he was willing to sign a single additional bill into law, buckled.

The spiral of government deficits and debt acceleration came directly from that act. For that act of theft by deception Reagan deserves to have his grave*****ed on daily by every single American that has seen their purchasing power destroyed in the intervening years. You got ****ed by that clown's refusal to stand on his principles and enforce the deal Tip made with him, and you continue to get ****ed to this day. Every single dollar spent in deficit comes out of your purchasing power; it must, as a matter of mathematics!

But Reagan didn't stop there. He also provided "one time" amnesty in 1986 for anyone here before 1982 under the provision that the flow of immigrants into this country on an illegal basis was going to be stopped and that 100% verification of employable status was going to be enforced.

But when the bill got to his desk the enforcement provisions had been watered down into irrelevance at the insistence of business lobbyists. Reagan signed it anyway despite it not being what he negotiated.

Amnesty was granted. The flow of illegals not only didn't stop it accelerated and by virtually any accounting you wish to use there are more than double the number of illegal invaders in this country today compared against 1986. You can count on the fingers of one hand the number of people imprisoned for employing illegal immigrants since that day as well.

See a pattern here?

You ought to.

When you don't enforce your agreements you will be exploited.

The issue for the Republican Party is that it has continually claimed to be helping the American people while in fact it has never enforced its agreements over the last 30 years. It has never demanded that existing agreements be upheld before entertaining further negotiations on something new and different.

That's dishonest -- intentionally so.

It is exactly this sort of high-speaking horse**** that has allowed the medical system to run monopolies on everything from the price of an MRI to the price of a drug when under the law that is supposed to be a felony everywhere and in every line of business. You can have your PET scanned in an MRI for $20. Why can't you use the same machine at the same price?

It is exactly this sort of high-speaking horse**** that has led the Republican Party to lead on, advocate and pass laws giving super-status to educational loans and refusing to allow them to be discharged in bankruptcy, thereby driving the cost of education up at 500% the rate of general price inflation and making it impossible for a young person to earn their way through school without debt. Again, monopolization -- attempted or accomplished -- is supposed to be a felony.

It is exactly this sort of high-speaking horse**** that has led to somewhere between 15 and 20 million illegal invaders in this country, each of which takes a job from an American citizen, and then we double down on that by handing out "benefits" to these people whether it be "free" education, "free" school lunches or "free" housing, food stamps and medical care. At the same time we claim you must have car insurance to drive unless you're an illegal immigrant in which case we not only don't require the insurance we don't lock the illegal invaders up for not having a driver license they can't legally acquire when they hit and wreck YOUR car!

It is exactly this sort of high-speaking horse**** that leads to the situation where 3/4 of all the money sent and printed into creation by Congress is funneled off to patronage, grift and fraud. We know this factually because we could end poverty in America among citizens today, run a $400 billion a year surplus and not touch one dime of defense spending. The Republican Party claims to be the party of fiscal restraint and prudence; what they really are is the second party of grift, fraud and patronage, right behind the Democrats.

The problems this nation faces are all resolvable. 80% of them are resolvable quickly, easily, and without impoverishing anyone -- except for those who have as their sole means of "making a living" stealing from someone else, whether that be an illegal immigrant or some individual or firm that relies on that 75% theft ratio in government spending.

If we cut this crap out today college educational costs will collapse by 75% or more, medical costs will collapse by 80%, nobody will need high-priced medical insurance as they'll be able to afford to pay cash for nearly everything and a catastrophic policy for the rest will cost less than car insurance does. The job market will improve massively for Americans because the illegal invaders will either leave or be forcibly deported and anyone who employs them will be imprisoned. By running a surplus we will stop inflating the money supply and destroying American's purchasing power which will inure to everyone's benefit. By getting the grift and fraud out of Washington on a permanent basis through the removal of the programs where the spending is concentrated, as they will no longer be necessary, we will be able to do all of that while at the same time cutting taxes by 30% across the board.

Nobody wants to talk about this and put it all on the table. Not republican, not democrat and most-infuriatingly, not even so-called "Libertarians."

Eric Cantor is just one pustule of political machinery in this country that robs and kills not only jobs but people on a literal basis. Last night that pustule got popped.

It is time for the people of this country to rise and demand that all of the above stop under pain of every remaining jackass in Washington DC meeting Cantor's fate.

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