America, Welcome to the Poorhouse, by Jane White (Hardcover, 2009)|
(You can print this review in landscape mode, if you
want a hardcopy)
Mark Lamendola, author of over 6,000 articles.
She destroys her own credibility, while insulting the
intelligence of her readers.
The author is upfront in stating she has an agenda. She proposes
specific legislation, but she fails to make a case for adopting her
proposals. In fact, her habitual reliance on errors of fact and on
fallacious logic requires the reasonably well informed reader to reject
anything Ms. White proposes.
The book is remarkably full of factual errors and logical fallacies,
some of which I will address shortly. It also promotes several ideas
that show a lack of understanding of such things as what regulatory
burdens do to jobs.
One of her proposals is to do away with Adjustable Rate Mortgages (ARMs).
The author had a bad personal experience with this form of financing, so
has concluded it's inherently predatory. It's not.
My personal experience with ARMs has been very positive. The key here
is that you base your loan on the "worst case" cost of the ARM and then
apply the 30% formula. If you do this, you can get excellent financing
that poses no extra risk. Simply abolishing ARMs won't stop abuse in the
loan industry, because the banksters will just use something else.
Using the "logic" that the product is somehow inherently dangerous or
evil, the UK recently passed some legislation doing away with glass
beverage containers in pubs because they could be used as weapons. That
idiotic legislation will do nothing to stop physical abuse, but it will
mean a greater rate of disease spread (plastic is less hygenic than
glass) and more green house gases being emitted to produce all that
plastic. Someone wasn't being very smart.
Similarly, banning ARMs will do nothing to stop financial abuse. The
reason the author didn't make a decent case for banning ARMs is there is
no decent case that can be made. The facts simply aren't there, which is
why she fabricated her own I guess. Rather than buld a proper argument,
she can only recount the bad things that happened to people when ARMs
were used in the abuse process. Fortunately, the author does make some
other recommendations that could be effective. But who can trust her
after the botching on the ARMs?
Let's look at another area where she's got it all wrong. Picture the
economy as a balloon. What happens when you let air out of a balloon? It
doesn't rise, it sinks. When the government spends money, it does not
spend its own money because it doesn't have any. It must take that money
from the private sector (which produces wealth).
This taking of money lets air out of the economic balloon. You do not
create value by creating money. You create value by producing goods and
services you can sell in the marketplace. To produce, you need capital.
When the government removes capital, it weakens the economy. Government
spending doesn't stimulate the economy, precisely for this reason. And,
for precisely this reason, it weakens the economy.
Anything spent on or by the government is pure overhead. Some
overhead can't be helped. But there's a limit to how much overhead an
organization can carry, whether it's a business or a country. And it's
painfully clear that the USA is way, way, WAY past that limit. This has
been documented six ways to Sunday, even by the GAO.
Beginning in 2004, a first-term US Senator began establishing his
track record. He voted for every spending measure that came before him,
earning him an F rating from such citizen watchdog groups as the
National Taxpayers Union. In other words, he devoted his entire senate
career to damaging the US economy any time the opportunity to do so
Ms. White adores this same man, speaking glowingly of him and
repeatedly holding forth the idea that he is going to fix the economy
and do other wonderful things. However, he's already stuck a big pin in
that balloon we mentioned earlier. His baby, the Porkulus Package,
stimulated massive layoffs and other economic damage instead of leaving
capital in the system where it could do some good. Most of the
provisions are wealth transfer schemes.
We're supposed to believe that this product of the Chicago corruption
machine, who has dedicated his entire political career to transferring
wealth from regular Americans to the corporate fat cats, is somehow our
pal and will somehow clean things up. This would be nice, if not for
If he had wanted to fix the economy, he would have pushed for the
repeal Sarbanes-Oxley--a worthless piece of legislation that didn't stop
AIG but has put American corporations at a huge competitive
disadvantage. People who are out of work need to send their bills to
Sarbanes and Oxley for payment. The GAO reports that IRS employees spend
half their office time surfing p*rn and gambling sites. They spend much
of the other half running self-enriching scams like the Hoyt Fiasco.
They have something like 120,000 employees. Back in the 1980s, several
studies concluded that each government job destroyed about 50 private
sector jobs. Solution: Lay off half the IRS and create 3 million jobs in
the private sector.
The author seems oblivious to this bit of reality, instead praising a
guy whose entire political career has been about two things: bloating
the bureaucracy even more and voting for wealth transfers to the fat
The Obama spending problem isn't the only area where the author needs
a reality check the author needs. She wants a mandatory 9% 401(k)
matching on the part of employers. Let's do the math. Joe makes $50,000
a year. His employer is now forced to give Joe a 9% pay raise or fire
Joe. Hmm. Multiply 9% times zero salary and Joe isn't doing so well.
Joe's employer now pays an offshore person $30,000 a year to do the job
that Joe did.
The reason for this is, amazingly enough, money does not grow on
trees. Businesses can carry only so much overhead, period. Add more, and
they let people go. It's as simple as that.
Yes, it's true many big corporations are essentially raped by their
corrupt, thieving boards because the same people serve on each other's
boards and have an inherent conflict of interest like the fox guarding
the chicken coop. Simple solution: Enforce the laws against theft. This
would free up funds for employee pensions and retirement plans. Since we
have a plunderment instead of a government, don't hold your breath for
this to happen. What is happening is mid-size and small businesses are
creating the jobs that those in the previous case cannot (due to the
parasites at the top).
I'm not sure that forcing businesses to lay people off is a good
idea. Maybe Ms. White would like to turn down all income for a year to
see what that feels like.
But, she says, Australia did the 9% thing and it's working just fine
for them. That may be true (I don't believe it just because she said it,
as she gets so much else wrong and contrary to actual fact), but
Australia also is not carrying $60 trillion in unfunded obligations,
paying to support 24 aircraft carriers (twice as many as the rest of the
world combined), running a current debt north of $11 trillion,
staggering under a President who plans on $1.2 trillion in deficit
spending, and so forth.
The two economies are very, very different. And in 2011 when the
babyboomer demographics hit with a vengeance, the differences will be
even more stark.
She also wants university tuition to be subsidized. With what? Money
we don't have?
The solution isn't to throw taxpayer's hard earned dollars at things.
If the government wants to do something, it could force universities to
modernize. There are also non-government ways to solve this. University
productivity is right where it was 100 years ago, or maybe even worse.
Adopting modern management methods and business practices would allow
universities to cut their tuition to 10% of current levels (yes, these
are real numbers).
Simply subsidizing poor management and bad business practices is not
a solution, and all we will get for our money is more of the same
behavior. We've subsidized K-12 and graduate people who can't read and
write. Do we really want to subsidize higher education? It's a moot
question anyhow, as the money to do it does not exist. The United States
federal government can't even make the minimum payments on its credit
card, so having it make even more purchases is irresponsible at best and
insane if you think about it for 3 seconds.
She also confuses a college degree with college connections. Ivy
League schools don't give a better education (unless you consider being
taught by an undergraduate at Harvard better than being taught by a
qualified professor at a non-Ivy school), they give the connections to
the elite. This has been widely written about in the literature. The
whole thing is about class and social standing, not about money. She
looks only at the money.
The purpose of graduating from Harvard isn't to be the best educated.
In fact, Harvard MBA are famous for their colossal blunders and amazing
incompetence--see the business literature. The purpose of graduating
from Harvard is to get the social "creds" in the right circles. Ms.
White complains about how Harvard awards scholarships, but seems
clueless as to why the university's degree program exists.
Ms. White paints the political spectrum as a left/right contest. It's
not. While she's correct about the two wings of the Demopublican Party
basically being the paid employees of lobbyists (though she frequently
applauds members of its left wing), she overlooks the fact there's a
viable second party: the Libertarian Party. The same issues she bemoans
about the Demopublicans are not happening in cities and counties with
Libertarians serving as a majority on their councils and boards. In
those locales, people are getting improved services and lower property
Another thing she gets wrong is her idea of what causes inflation. In
fact, on page 201 she makes a false statement that there's been no
inflation since the 1980s. During Alan Greenspan's 18 year reign of
error (August, 1987 to January, 2006), the value of the dollar was cut
in half (50% inflation). If you move the starting point of inflation
analysis to 1999, and look at the following 10 years you also see a 50%
inflation rate. This is an astounding level of inflation.
But Ms. White claims inflation has been killed by lower-wage
countries. No, jobs have been killed by outsourcing to those countries,
the same way they would be killed if we adopted the 9% tax she
recommends. That has not affected inflation one iota. There is no
causality between the two.
Inflation is what you get when the number of dollars in circulation
rises in relation to the value of goods and services. When the Federal
Reserve pumps out money, we get inflation. When it contracts the money
supply, we get deflation (typically, the amount contracted is far less
than the amounts injected thus an inflationary trend over time).
She likes Keynes. He was debunked over 20 years ago. Nixon used
Keynesian economics with disastrous results. As did FDR.
She claims FDR's spending ended the Depression of the 1930s. That bit
of propaganda was thoroughly debunked by economists years ago, because
it defies logic. You cannot get a balloon to rise by letting air out of
She talks about "the business lobby" as if the businesses that
provide jobs are evil. Yes, there are evil people running certain
businesses. And most members of CONgress are simply the paid employees
of those businesses, passing wealth transfer legislation to benefit
But her indictment of all businesses as bad and somehow opposed to
the workers on whom those businesses depend does not have a factual base
on which to stand.
There isn't a "business lobby." There are specific lobbies that use
government as a tool for stealing from other people. I suggest the
author read about Teddy Roosevelt's battles so she can understand the
distinctions. The same kind of people battled Andrew Jackson. There were
four assassination attempts on Jackson, for that reason.
She claims Greenspan followed Milton Friedman. This isn't true. Dr.
Friedman wanted to abolish the Federal Reserve. It just isn't the case
that the Chair of the Federal Reserve held that position for 18 years
but was somehow an acolyte of Dr. Friedman. Let's not forget also that
Greenspan pumped out so much money during his reign of error that the
dollar lost half its value. That's a 50% tax on everything you own and
ever will own plus all revenue. This staggering confiscation of wealth
is the opposite of what Dr. Friedman called for.
This book has many more errors of fact and many other nonsequitors.
The author filled the book with falsehoods from which her case does not
logically follow, and tossed in some facts from which her conclusions
also do not follow. She relies heavily on the old "there's water in the
ocean so my point is true" argument. She doesn't care if a purported
fact is relevant or true, she uses it to leap to a conclusion that isn't
logically related to it.
The subtitle gets fulfilled via proposals that would be disastrous if
adopted, and also by some basic advice that is the same stuff we've been
reading for years.
The author has a good writing style, and she presents some good
information. But most of what she says is nonsense. I'm not providing a
chapter by chapter synopsis for this book because I can't recommend it.
Shame on Ms. White for releasing this fantasy work and calling it
"nonfiction." It's one thing to be disinformed on a few facts, but it's
quite another to use a litany of falsehoods as the basis for supporting