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A couple of stories…

November 3, 2012

I am a conservative. I will always vote for the candidate that believes in the smallest government. I would like to share two stories of what the policies of liberals have done in the life of a friend of mine and in my own life. I will start with my friend. Names have been changed to protect people’s privacy.

My friend Jim is a Korean vet who worked for a construction union for his entire adult life, except for his time in Korea. During his career, he worked hard for the union as well as the contractors for which he worked. I would describe him as a good union man. He fought for good benefits, both while working and after retirement. He used to tell me proudly of the “cradle to grave” care of the union. We often discussed politics, business, and unions. While we had dramatically different views (He was a liberal Democrat), he taught me so much over the years. I am proud to count him as a dear friend, and in many ways a mentor.

When Jim retired at 67 after nearly 50 years of membership in the same local, he discovered over time that the “cradle to grave” care wasn’t what he had been promised by union leadership over the last 50 years. The union had failed to set aside enough money to provide for their aging membership. As a result, retirees were informed that they would have to pay “a small percentage of the costs of their health care”. This percentage grew over a few years to consume almost all of his pension.

The roots of the problem were two fold. First, the union leaders assumed that there would always be a large number of union members to fund the retirees benefits. When this began to change as more and more work went to non-union contractors, they failed to plan for the future and set aside more funds to take care of the faithful members, like Jim. Secondly, the union leadership felt that they should have salaries commensurate with their status. Eventually, they lost sight of the men they were elected to serve. They saw the accumulated funds for member retirements as their personal slush fund. Money that rightfully belonged to the members was used to buy influence and power for the leaders.

In the end, Jim became bitter toward the people that lied to him for many years while they feathered their own nests. He began to see the union leadership as just as corrupt as he saw the corporations that he railed against.

Fast forward to today. I am a small business man. I started my own business servicing industrial machinery over 20 years ago when the company I worked for went bankrupt. The failure of that company was an engineered death designed to allow the owner to fill his pockets at the expense of employees and vendors, much like Solyndra.

My business is founded on simple principles. First, I will not enrich myself at the expense of my employees. I have never made more money than my top mechanics, and often far less. Second, as long as my employees abide by my three simple rules, I will do everything I can to educate them and reward them. The rules: 1) Don’t lie to me. 2) Don’t steal from me or our customers. 3) Don’t show up for work stoned or drunk. Violate one of them and you are fired.

A typical new hire is a person with little real experience but has a desire to learn. Over time, they will have the opportunity to learn to be a millwright with significant electrical controls experience or a master electrician with significant mechanical knowledge. Starting rate is 150% of minimum wage (or more depending on skills). Top rate is over double that. Plus, we generally have between 10 and 15 hours a week of overtime. My top employees typically earn high five figures, equal to my wife, an Ivy League educated critical care nurse. Over the years, I have had three employees leave to start their own successful businesses using skills they learned working for me. I don’t begrudge them their success, even though I have to start over, investing in a new person.

Over the years, especially the last four, my expenses have skyrocketed, largely due to government mandates and regulations. For the sake of example, I am picking one, unemployment insurance. In 20 years, I have laid off four people. One was someone that I should have fired, but laid him off so that he could collect unemployment until he found another job. He collected for 5 weeks. The other three were laid of in 2009 after I lost a major account that represented 70% of company revenues. Before they were laid off, I borrowed $150,000 to pay their salaries for six months while I sought new customers to replace the revenues. Unfortunately, I failed to accomplish that and was forced to lay them off. Yet, I still have to repay the money borrowed to support them for six months.

Even though my company has never had a negative balance in our unemployment insurance fund, our rate went from 0.6% of payroll to 7.0%. For a new hire, this is a $2000 penalty for me. For a top employee, this is almost $6000. This is a ten fold increase in just one expense. Why should I be penalized for running a business that is successful, run for the long term, and is not part of the problem? Our government created tax breaks for companies that hire people, do research, or buy equipment. Unfortunately, I don’t qualify for any of them, in spite of investing $50,000 in training the average employee in the first 3-5 years of employment. These expenses mean that I will not seek to grow my business or hire new people until the regulatory environment changes.

I share these things because it is policies of both major parties that have created the problem. Just like the leadership of the previously mentioned construction union, politicians are more than willing to pad their own pockets and to buy votes to maintain their power and prestige. I am against cutting the lifeline of welfare, social security, or medicare for those who need it. However, I believe that there are ways to change the application of the programs that would provide for the needs of the truly needy while reducing the cost to the taxpayer and preventing welfare from becoming a lifestyle. Unfortunately, with few exceptions, neither side is willing to have an honest discussion of fixing the problem.

For example, welfare reform is completely off the table. I have a fairly equitable solution that encourages success and individual growth without hurting those that truly need. Welfare benefits are currently worth X dollars. What is so wrong with saying that if you get a job, your benefits won’t be reduced until you earn 30% of X. For each dollar you earn over that level, your benefits are reduced by $0.30/dollar earned. If you earn over 60% of X, the reduction is $0.60/dollar earned. You wouldn’t lose your benefits until you earn more than the benefits are worth. At no point would you have less than if you only receive X dollars in benefits. This method provides an incentive to work and to improve. Yet, even this modest reform is completely unacceptable, to liberals in particular.

Ultimately, power corrupts. I include myself as guilty. To paraphrase Gandalf from Tolkien’s “Lord of the Rings” series when offered the Ring of Power:  “I would start off benefiting Middle Earth. But eventually, I would become evil.”  This tendency is part of the human condition. We can’t be trusted with power. This is true of corporate presidents, union leaders, bankers, Wall Streeters, politicians, and OWSers. It is true of all people. As a result most politicians are more interested in their own short term future than they are in fixing the problems, just like you and I.

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