DOONESBURY ON JOB CREATORS
There were no jobs created in America from 1945, when the war ended, through 2003. How could there be? Taxes were too high. Preposterously so under Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan (who left office with a 28% rate on long-term capital gains) and Bush the Elder. You remember those awful times? Because of high taxes and powerful labor unions, America had no job growth from 1945 through 1992. Employment rose almost not at all, from 53 million to 119 million. And then it got even worse — Clinton came in, with his awful tax hikes. In those disastrous years — strangled by the insane Democratic regulation that kills jobs — we added barely 23 million more jobs. Barely 23 million!
Then we elected George W. Bush. We slashed taxes, especially on the best off (because as Nobel-prize-winning economists Frank Luntz and Joe Scarborough have shown, the best off use those tax cuts to create jobs) — and job creation — finally! — took off. And now we have the Romney/Ryan plan (see Friday’s post) which seeks to build on the enormous Bush success* by slashing taxes even further.
Because, as noted in this wonderful Doonesbury, job creators are very sensitive. Circumstances have to be just right for them to unleash their magic powers. Which is why, I say again, until Bush 43 came along, we had created almost no jobs since 1945.
*And reduce the deficit!
THE BUMPER STICKER SHOULD READ:
If tax cuts created jobs, we’d be drowning in them.
Borealis reports that “M-1” — the name it’s given its first generation WheelTug® system — “is up and operating in our lab [and] ready to drive a 737 around the tarmac. It has plenty of power. The system works.”
My pretend-nemesis, the evil Spaniard, remains certain it’s a fraud. But what if it’s not? El Al, Alitalia, Jet Airways and Israir have signed on as launch customers and one can imagine that this video — and perhaps on-site visits to see it live — might bring other airlines on board. The anticipated savings per plane is in the vicinity of $500,000 a year. There are north of 10,000 planes on which this system might be installed. If there is a 50% chance this will work and become the new standard (what airline wouldn’t want to save hundreds of thousands of dollars a year on each of its planes?) . . . and if by leasing these patented systems the company could realize a $50,000 annual net from each plane . . . and if uses for the technology could be found elsewhere (cars?) . . . and if . . .
It reminds me of my days as a 21-year-old with stock options at a company whose shares were soaring and splitting and soaring and — while comically tame by Facebook standards (I stood to make about $3 million in today’s dollars, not billions) — it was glorious. I would walk home from work every night multiplying earnings by P/E ratios by the number of shares on which I held options, doing the calculation pre-split and post-split, composing letters I would write to inform the shocked recipients of my anticipated largesse (even then I was a bleeding heart) — it was glorious.
The bubble burst; the CEO went to jail; I went back to school and wrote a book about it. But, while it lasted, it was glorious.
I’m 99.9% certain that WheelTug is no fraud, but only 50% certain there’s a bonanza here that management will successfully realize for its shareholders. So no one who can’t afford a 50/50 chance of total loss should have shares in this crazy speculation. And maybe the odds of success are nowhere near 50% — I do tend to get carried away with my enthusiasms (have you tried Paul Newman’s Low-Fat Sesame Ginger salad dressing? Oh. My. God.).
But with Borealis (which owns most of Chorus Motors which owns most of WheeltTug) selling at $5 a share and thus valued at just $25 million — a Manhattan condo recently sold for $90 million — I’m sure having fun doing the math in my head, dreaming.
FACEBOOK — AND THE IMPORTANCE OF GOVERNMENT GRANTS
This interview in The Atlantic posits that Facebook’s success is — in at least one sense — very bad news for Silicon Valley. Venture capital will be diverted from game-changing science to Angry Birds.
THOMPSON: Does this represent a large-scale failure among venture capitalists in the Valley?
BLANK: It’s not like anybody is doing evil or bad. It’s like what Willie Sutton said: Social media is just “where the money is.”
THOMPSON: What’s the fix?
BLANK: I don’t know what the fix is. Thank God for federal government grants, and the NIH . . . .
THOMPSON: So is American innovation simply doomed, or is it more complicated than that?
BLANK: The headline for me here is that Facebook’s success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we’re dancing on its grave. On the other hand, Facebook is a great company. I feel bittersweet.
There’s a lot more here. To emphasize my point, I elided Elon Musk and Google. But if we do want job creation (and deficit reduction), the Romney/Ryan plan of slashing taxes — and cutting federal government grants, widening our gap with China even further — is madness.
Quote of the Day
Every debt is ultimately paid, if not by the debtor, then eventually by the creditor.~Jim Grant
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