Like Thelma and Louise...off a cliff

As we head over the so-called fiscal cliff, there are actually very few things that are certain.  No, I do not think that it is certain that we are headed for a major recession as a result.  If we were, I think that the President and Congress would be working for a solution.  If 2010 taught us anything, it is this; economic problems almost certainly will cost Washington politicians their jobs.  However, we have just enough political inexperience in Washington for this to be dangerous.  We have enough people who don't know when and how to compromise.  Or perhaps this is a calculated move.

Taxes will go up in just a couple of days, and there will be many in the GOP who will say, "I never voted for a tax increase."  They will blame the other party.  But in reality, they refused to compromise and as a result, passed a large tax increase on everyone.  Sooner or later Americans will wise up to this reality.  But for now, it seems that the extremists in both parties will win the day.

I remember the advice that one sociology professor told me in college.  Politicians do not get elected to solve problems.  They get elected because problems exist, but if they actually solve problems, they will never be elected again.

For example, many people will tell you that George HW Bush lost in 1992 because people were sick of Reagan-era policies.  That is probably not the case.  Look at the GOP today.  Reagan is a demigod.  Why not continue to support his second in command.  The problem was that the Cold War ended.  Bush no longer had the Cold War and the fear of the Soviet Empire as a plank in his platform.  He lost some of the support in his party and the Reagan Democrats because of it.

Perhaps the best thing that the GOP can do is to allow Obama some successes.  It will weaken the eventual democratic nominee in 2016.  Perhaps the worst thing for the GOP is for Obama to speak at the Democratic Convention in 2016 telling America that Hillary needs to finish the work that he was unable to get done while he was in office.

Another thing that would benefit the GOP is for Obama's policies to fail so badly that no one in their right mind would vote democrat.  They want to be able to say, "I told you so." They want to say, "don't like what America has become?"  You voted for this in 2012.  History shows that this strategy may backfire.

From a pure definition standpoint, the Great Depression ended before Roosevelt ever won.  But America has not recovered in 1932.  The economy was growing, but America had not yet recovered.

America had not recovered by 1936.  Roosevelt won again.

America had not recovered by 1940.  Roosevelt won again, and had a new problem.  The specter of war.  Sure, the US did not officially enter the Second World War by the fall on 1940, but the British and the Soviets were fighting the Nazi's by themselves and it was not looking good.  It would only be a war time build up that would put the US back to 1920s employment levels.  From October 1929 to December 1941 Americans had trouble finding work for 147 months, and the democrats won the day because the problem was never really solved.

I have to think that if the GOP is going to win the White House in 2016, that one of the problems that exists today will have to be solved.  Success can change the political climate just as much as failure can.

One fiscal cliff story that I find far-fetched is the threat of $8 per gallon milk.  If that does happen it won't last long.

In economics, I learned about something called an equilibrium price.  It is the price that an item will sell for if there is no interference from the government, including taxes.  It is where supply and demand meet.  My hunch is that the equilibrium price for milk is much lower than $8 per gallon.

Here is what could happen if government subsidies for milk run out.

Retail giants like Wal-Mart will be free to use their marketing power over suppliers to push the price down.  They are not free to do so now.  In fact, Wal-Mart and others may sell Milk for a loss in order to take advantage of impulse buying on high mark-up items.

If the price from Milk goes up, farmers who sell their cows for meat may get into the dairy business.  Farmers who produce grade-B milk (Milk not sold directly to consumers but used as ingredients for other food processing) may get into the grade-A business.  If people can make money from dairy farming, more people may chose it for a living.  And finally, milk will be imported from Mexico, Canada and other nearby countries for sale in the US.

In other words, supply will meet demand.  In the long run, who knows, milk may cost less.

Government farm programs, such as farm subsidies do not make the price of milk go up, they support an artificially high price.  

But one thing about economics is certain.  If there is a surplus, the price is too high.  Last I checked, there was a surplus of dairy products in the US.  If my understanding of economics is correct, prices will go down because of the fiscal cliff, not up.

Falling prices are usually not a good thing.  That leads to higher deficits and higher unemployment.  A deflationary economy leads to a depression.

There is one other thing on my mind this morning.

In my wanderings yesterday, I was delayed by a traffic accident outside a gun dealer.  (I was not involved, but the road was blocked for emergency vehicles.)  Many who believe in defending themselves with assault rifles were trying to purchase weapons and ammunition while they believed they still could.  Gun dealers are making a financial "killing" by the threat of more gun control legislation.

Schools are soft targets for violence because there are very few people at schools are able to defend themselves.  They always will be.  Gun control laws will not change that fact.  Trained and experienced armed guards and safe rooms are probably the best answer.  This might be a good place to put retired police officers and military men/women who are really to young to retire to work.  There are no easy solutions.  Training and arming teachers is not a good idea.  A bunch of inexperienced people using deadly force is never a good idea.  There will be collateral damage and lawsuits as a result.

Gun control laws are what I would term as "feel good" legislation.  Members of Congress who vote for it will be able to tell their constituency that they have done something, meaning they have passed a law, but in reality have done nothing.

On Gun Control and Suicide

Bob Costas on Sunday Night Football has opened up the gun control can of worms again.  He said that Jovan Belcher would still be alive today if he did not have a gun.  Using his

Guns are often blamed for violence in our society.  Advocates of gun control have good data to back them up.  About 60% of suicides and 54% of homicides are performed with handguns. 55% of all handgun deaths are suicide, 45% of all handgun deaths are homicide.  10% of gun deaths are either accidental or justifiable. It is very easy to draw the conclusion that handguns are the cause of so much death in our society. 

But the real debate is no whether handguns are the cause of the violence or just the tool.  And what is the root cause of the violence.  Do people have violence sewn into their souls and the guns are just the tools?  If they did not have access to guns, would they chose something else?

Let's take the Jovan Belcher incident in Kansas City this week.  If he wanted to take his own life, and the life of his girlfriend, he could have done the deed in several different ways.  He could have driven his car over a bridge, for example, as there are many in the Kansas City area over the Missouri River.  Needless to continue to list all of the options out, but if someone is determined to take their own life, there are many ways to do it.

Suicide is complicated.  It is a mystery; even to the experts.  What would cause a person to take their own life is the great unknown.  But it is becoming epidemic in some professions.  One of those professions is American Gridiron Football.  Belcher is the latest high profile suicide in the NFL family.  The most prominent was hall of fame linebacker Junior Seau last summer.

The trouble with suicide, you can't talk to those who succeed. 

Even with murder, one does not know what causes people to snap and become more violent.  If that was understood, more could be done to prevent it.

It is real easy to blame the tool that was used in any crime or tragedy, but to say that there would be fewer suicides if there were more limited access to guns is, for lack of a better term, jumping the gun.  Hand guns are to suicide and murder as the Internet is to pornography.  It is a tool that makes the job a little bit more convenient.  Focusing on the tool does not solve the problem.  People who have anger issues will find something else to use.