Friday, April 30, 2010

Trying to Fire Up the Base

So President Obama is finished with implementing the care and feeding of his public-sector supports in his stimulus package and the federalization of health care. Now, according to Michael Barone, he has switched to playing politics, firing up the base for the mid-term elections.

Yes. Now he's dangling financial reform in front of voters mad at fat-cat bankers, and dangling immigration reform in front of Hispanic voters. But will it work, writes Barone?

[I]f policy doesn’t work, try politics. Gallup reports that “very enthusiastic” voters favor Republicans 57 percent to 37 percent in congressional elections. Will attacks on Wall Street, deep-sixing the cap-and-trade bill, and getting beaten on immigration change that? The Obama Democrats hope so. But I wouldn’t bet heavily on it.

Evidently the president thinks that he can paint Republicans into a corner as the paid puppets of Wall Street and the bigoted enemies of hard-working immigrants.

One thing about President Obama. He always exudes a remarkable self-confidence, as if he knows what he is doing.

But does he?

Is he really going to win by dividing the American people on immigration? We know that Gov. Jan Brewer's popularity (R-AZ) has skyrocketed since she signed the law on immigration status enforcement. We know that the 2006 immigration effort crashed on divisions in both parties and the American people's strong opposition to any amnesty for illegal immigrants until border security was improved.

After a year of President Obama, the dominating fact of his presidency is the willingness to go against the will of the American people in implementing items on the liberal agenda. For a conservative it is breathtaking, because conservatives always feel that they must have the American people pushing at their backs in order to make headway against the steady trade-wind of the mainstream media and the educated class. It was breathtaking when President Clinton fired the White House travel office back in 1993. No conservative would think of committing such blatant patronage, not in plain sight. But Clinton understood that he would get a bye from the Democrat-friendly media. Likewise, President Obama knows that he can do unpopular things because he's sailing downwind, with a friendly media wafting him along.


Unless the American people rise up and vote him down.

The question for this fall is: will the dividing line fall in the right place for the president or not?

Let us think of the president's politicking not as a threat but an opportunity to redraw the lines on the playing field.

Surely the Dodd financial reform bill presents a once in a generation opportunity to tell the American people the truth. It's not Republican Senators that are in the pockets of Wall Street, as they think on Comedy Central. Come now, folks, you can't believe something like that. It's Wall Street that's in the pockets of the Democratic Party. That's why Wall Street pays big bucks to Democrats and not the other way around.

Let me repeat this, because I don't want to be misunderstood. To understand power relations, you need to know, as Lenin insisted: Who Whom. Who is sucking up to whom, who is paying tribute, and who is collecting tribute?

Back when Newt Gingrich became Speaker of the House of Representatives in November 1994 the first thing he did was sent the word out to K Street that there needed to be more business contributions to Repubicans, and more Republicans working for the lobbying firms. Who whom.

But the American Association of Retired Persons, the fabled AARP, doesn't pay tribute to anyone. The president goes to the AARP, not vice versa.

So let's grab the opportunity to change the minds of the American people. It's not Republicans who encourage "too big to fail" banks. It's Democrats.

There's a similar opportunity on immigration. The Democrats and their willing accomplices in the mainstream media have done a bang-up job on selling the idea that the American people--and Republicans and conservatives in particular--are bigoted nativists.

And not just in America. Prime Minister Gordon Brown thinks the same of his own white working-class Labour supporters. Now there is an opportunity to establish another narrative.

It's not the people that are the bigots. It's the educated elite that are the bigots, cruelly allowing illegal immigrants to enter the country and be forced to live in the shadows where they become victims of every kind of discrimination and shakedown. Instead we should finish the fence, enforce the law, and then write an honest and fair immigration reform bill.

For too long, Republicans and conservatives have been afraid of their own shadows. It's time to meet the cynical manipulations of the Democrats, take principled, honorable positions on issues the American people care about, and boldly seek to persuade the persuadable.

Thursday, April 29, 2010

Pity a Poor Tory

In the British General Election set for Thursday May 6, the opposition Conservative Party is only leading by about 6 points in a three way race.

The Conservatives are proposing a radical reform of education and a radical reform of welfare. On education, they are proposing the Swedish system, which allows almost anyone to open a school and get government money. On welfare they are proposing some sort of move towards limiting open-ended benefits. And they are, nod, nod, wink, wink, proposing more spending cuts and fewer tax increases in their program to reduce the deficit, running at 12 percent of GDP.

Tory leader David Cameron has made a determined move towards the center, trying to woo the voters of the center party, the Lib-Dems. They call it "love-bombing." But what happens? The Lib-Dem leader, Nick Clegg, makes a big impression in the first televised debate between the party leaders (the first ever in Britain) and all the young voters swoon.

Finally, the London Economist gives Cameron a luke-warm endorsement:

According to the magazine’s lead editorial, the Tory leader is “much closer to answering the main question facing Britain than either of his rivals is. In this complicated, perhaps inevitably imperfect election, he would get our vote.”

Well, that's nice.

The problem the Tories face in Britain is in the numbers. There is a left-liberal party, the Labour Party, a center-left party, the Lib-Dems, and only one major center-right party, the Conservatives. Yet right now the Conservatives, in the lead, are struggling to rise above 35 percent in the polls. The fact is that, unlike the US, Britain is a center-left country. People just expect, as a matter of course, that the government provides unlimited public services. Any proposal to reduce spending is scorned as "Tory cuts," proof that the Conservative Party is the "nasty party."

Many Conservative supporters in Britain are complaining that Cameron has gone too far left. But what is he to do? If he stays right, then he can't pick up the precious people that vote for the Lib Dems. If he goes left then he risks losing voters to the anti-EC party, the UKIP. He's obviously made the judgment that the best strategy is to move left.

You can see the Conservative problem best by comparing Britain with the US. Here in the US we have a vibrant conservative movement that provides the energy for talk radio, Fox News, the conservative blogosphere, and a conservative Republican Party. And on top of that the movement just budded like a hydra, and produced the Tea Party. All this grass-roots and intellectual ferment keeps the Republican Party tethered to the right. It cannot move too far to the center, which you might call the easy, RINO option. It must persuade independents and moderates to move to the right.

In Britain, nada. No conservative movement. No Tea Party. What can a conservative politician expect to achieve without grass-roots enthusiasm?

On top of that, it turns out that for the US, there is a God in Heaven, and presto, we have a president who is playing John Wayne in a 21st century Western, and driving all them moderate dogies right onto the conservative range.

Pity the poor Tories in Britain. They just can't seem to get a break.

Wednesday, April 28, 2010

What Politicians Really Think

A political "gaffe," according to Michael Kinsley, is when a politician tells the truth. It is like an actor "breaking character."

In Britain today, in the middle of their General Election campaign they, are enjoying a "gaffe" committed by Prime Minister Gordon Brown. Brown was accosted by a 66-year-old Labour supporter who asked him about "immigration from Eastern Europe, tuition fees and the national debt." Brown handled the woman pretty well, but was overheard later describing her as "a bigoted woman."

Shades of Barack Obama describing the Pennsylvania voters in small towns that lost jobs years ago.

And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

Politicians are a funny lot. On the one hand they claim to care about the people and their needs. On the other hand they ruthlessly exploit them and divide them in their election campaigns. And behind their backs they sneer at them or patronize them.

The joke is on the politicians, of course. Voters wouldn't care about immigration if the politicians ran a sensible immigration policy and if there wasn't such a demand for low-skilled workers created by the welfare state. Voters wouldn't care about the debt if politicians had done their job properly and refrained from gunning the economy to buy votes. Voters wouldn't care about free trade if the politicians hadn't created subsidies for powerful industries that allowed them to ignore the global market trends. And voters wouldn't care about race if politicians didn't inject "racism" into everything.

What this all adds up to is a corrupt and cynical elite that ought to have been pitched out of power half a century ago. They've bribed the electorate on the one hand, and betrayed them on the other. They talk about the short-term vices of corporations but they themselves never think beyond the next vote and the next election.

Power is power, and powerful people hang onto power, in politics, in culture, and in the commanding heights of the economy.

In the short term, of course, powerful people get what they want: money, power and the love of beautiful women. But in the long term all powerful people manage to do is stave off the inevitable. And that only makes the inevitable adjustment--or explosion--bigger than it needs to be.

What a shame.

Tuesday, April 27, 2010


Last week I read a solid article by Nicole Gelinas in Investors Business Daily: "Wall St. Bailouts Would Be Invited, Not Prevented, Under Dodd's Bill". Gelinas is a policy analyst at the Manhattan Institute.

So, you say? Dog bites man. Presumably that's the whole point of the Dodd bill: to make Wall Street go cap in hand to the politicians when they get into a mess selling the government's paper. What's the deal?

Here's the deal. The article included a table that listed all the outlays and guarantees that the Feds have made to bail out the finance industry and others since the liquidity crisis of August 2007. You might be interested to know that the total in outlays and guarantees is just a little north of twenty trillion dollars. Yes, that's trillion with a "T".

I gotta have that, I said.

Fortunately, the numbers are easily available from the website of the Special Inspector General for TARP (SIGTARP). SIGTARP issues a quarterly report to Congress, and Gelinas got the numbers from there.

Bingo! I went to the SIGTARP website, downloaded a couple of pdf files, and voila: Naturally the site uses the world-beating technology of to present the information in an appealing and compelling fashion just like its sister sites.

However, modesty prevents me from coming up with a single bottom line number like Gelinas because, in my view, outlays and guarantees are apples and oranges. So I have come up with three numbers:

  1. Actual Federal Outlays in securities purchased and money loaned to bailed-out corporations.
  2. Net Federal Outlays including repayment of loans by the bailed-out beneficiaries (for the big banks have mostly paid back their emergency loans).
  3. Federal guarantees. That's the big number, rather like the unfunded liability of Medicare. It starts with the guarantee for Fannie Freddie bonds at $5.5 trillion.

Of course, the site is still under construction, and I have to update some numbers from the St. Louis Fed.

But if you want to know how much all these numbers add up to you'll have to go to The exercise will do you good.

Now I want to know why the domain was available for little old me. Ain't anyone paying attention out there to all this except me and Nicole?

Monday, April 26, 2010

Dividing Lines: Dems on Immigration

Politics is all about dividing lines. You win elections by drawing a dividing line that gets you 51 percent of the votes. The British Labour Party won the last three elections in a row on the dividing line of "Labour investment vs. Tory cuts."

A corollary is that if you want to divide the American people then you should call in the politicians. They'll do the job for you better than anyone.

Byron York writes today about a new dividing line. The Democrats are dumping the energy bill in the Senate for an immigration bill. The Obamis think that the only way to get the base out this November is to draw a dividing line on immigration.

President Obama hopes to increase Hispanic voting and fire up the Democratic base to avert potentially disastrous Democratic mid-term losses across the country.

You think? I'd say that they are more likely to fire up the Tea Party base and provoke a wipeout. That's the risk in dividing lines. You may find out that you drew it in the wrong place. After all, Hispanics, like most Democratic voters, are concentrated in a few areas. The ones that aren't concentrated probably aren't as passionate about immigration.

I say good luck to President Obama. He is probably the most divisive president in modern history and he is either going to transform America or he is going to ruin the Democratic Party for a generation.

Instapundit Glenn Reynolds gets to the heart of this in a link to a piece by Francis Cianfrocca on the Tea Party Movement: Cianfrocca writes about the problem of central planning, its misallocation of resources and its magnification of corruption (you think?):

The endpoint of central planning, if not outright failure, is a much deeper and more intractable division of society into haves and have-nots. After promising a better world for everyone, the progressives will end up creating a society that is more polarized than ever.

Let's generalize this a bit. The endpoint of putting anything into the political sector is to divide society. That's what we've done on education, on welfare, on health care. We have encouraged people to compete in the public square for government subsidies on education, on health care, and on welfare. And they do.

If we want to make America a better society, we've got to heal the divisions. That means that we've got to take politics out of as many things as possible. The science is settled on this. Researchers have found that by putting Americans in a room together to solve a problem they will almost always work together and compromise on a deal that gives everyone something of what they want. It's a win-win kind of thing.

But in politics, it's win-lose, and the loser goes away angry, muttering "wait until next time!"

That's the point of limited government. You limit the power of government and you limit the opportunity of politicians to divide us.

Friday, April 23, 2010

Obama a Socialist? Whatever.

Celebrated author Jonah Goldberg has a think piece in Commentary. "What Kind of a Socialist is Barack Obama?" he asks.

After a lot of thinking he decides that "neosocialist" is as good as anything. But what's wrong with "liberal fascist," Jonah, after the title of your bestselling Liberal Fascism?

But I think Jonah is trying to be too clever. Barack Obama is just the latest in a long line of political leaders that want to use political power to make society conform to their enlightened ideas.

People that go into politics are people who like to wield power. The purpose of law and constitutions is to limit that power. Because, in their own minds, there is no limit to the power they should seek and use--for the betterment of mankind, of course.

It used to be, in the agricultural era, that an elite of landed warriors ran the place. Their idea was to increase the amount of land they controlled, since land was the only source of wealth. War was what they knew, and war was what they did: war on each other and war on the peasants that grew the food that made them wealthy.

Now we have the "educated class" and they want things their way too. The only way they seem to know is through government power.

It will, of course, end in tears, or more likely mass graves. Because there is a limit to what force can achieve. After you have fought off the Huns or the Mongols and after you have tamed the latest generation of lower-class male youth, there's not much that government can usefully do.

The thing about government, all government, is that is goes bad fast. Because it is a system of winning election and rewarding your supporters, it is inherently corrupt.

So it doesn't matter how many left-liberal commentators you have singing your praises, your government-centric economy is inherently corrupt, inherently wasteful, inherently unjust.

You can see it in spades with the Obama administration. Everything President Obama has done has reeked of corruption, waste, and injustice. It started with the $787 billion stimulus that was nothing but a slush fund for Obama supporters. It continued with the GM and Chrysler bailouts in which the bondholders got shafted in favor of the unions that supported Obama's campaign. It reached an apogee with the corrupt bargain of the corrupt, wasteful, and unjust ObamaCare bill.

Now the Obama administration is pushing a financial reform bill that will vastly increase political (not regulatory) control over the finance industry.

I've said now for years that we needed Obama. We needed him so that the American people could decisively upchuck him and his style of big government politics.

Then we begin the noble task of getting government and government force out of the vital social tasks before this nation. We need to get government force out of health care, out of education, out of welfare, and out of retirement.

There is a simple reason why this is important.

It is because, as philosopher Ringo Starr says, "Everything the government touches turns to crap."

It's just not a good idea to have the education of children turn to crap. It's not a good idea to have grandma's health care turn to crap. It is not a good idea to have the relief of the poor turn to crap.

But I repeat myself.

Thursday, April 22, 2010

Silence on Fannie and Freddie

It's good to learn that General Motors and Chrysler are doing well and are paying back their bailout loans, made through the federal government's TARP fund.

You'd think, from the MSM coverage, that all is hunky-dory. Why, according to the administration, the total cost of TARP, the Troubled Asset Relief Fund, will only be $127 billion.

The administration expects the total cost of TARP to be less than $127 billion, though Mr. Allison [from the US Treasury] said improvements at American International Group Inc. and General Motors Co. could change that figure.
Erm. So why aren't we hearing anything about Fannie and Freddie, the government-sponsored mortgage giants, once the ATM of former administration officials, and now in government receivership?

OK, here's a report from Peter J. Wallison in The Wall Street Journal.

Losses at Fannie and Freddie are expected to be $400 billion. The latest estimate from the Congressional Budget Office is $381 billion. But maybe the Obama administration knows something we don't know.

Last Christmas Eve, Treasury removed the $400 billion cap on what the government might be required to invest in these two GSEs in the future, and this may tell the real story about the cost to taxpayers. In typical Washington fashion, everyone has amnesia about how this disaster occurred.

Yes. If you talk to your liberal friend, amply informed by The New York Times, he will have very little grasp of the Fannie Freddie debacle.

And that's the way it's supposed to be. Don't inquire too much about the many government messes that liberals have dreamed up over the years and are too proud to admit failure. Don't inquire too much about the bottomless pit that we taxpayers are committed to dig for the politicians who promised affordable housing for people that couldn't afford it.

And what about the bondholders at General Motors and Chrysler that got haircuts? We are not talking about the stockholders. The are risk-takers. We are talking about widow-and-orphan bondholders. The happy-talk news items and GM and Chrysler aren't talking about that. They are talking about GM and Chrysler repaying the government, not the bondholders.

There's a quote from Ringo Starr, the Beatle, that seems to address all of this. According to the philosopher from Liverpool:

Everything the government touches turns to crap.

No kidding.

Wednesday, April 21, 2010

Rush as Svengali?

Liberal women are starting to regret voting for Obama, according to blogger Bookworm.

But they are afraid. They are afraid that if they start listening to Rush he will hypnotize them--just like Svangali! When she's riding in the car with a liberal friend, Bookworm suggests turning on Rush. "No, no, I don't want to do that."

So here we have a woman who realizes that she made a mistake voting Democrat this election, who is open to conservative news (I believe her when she says she watches Fox), yet who assiduously avoids any contact with Rush. Incidentally, this was not a one time-0nly conversation. I had virtually the same conversation with two other regret-filled liberals.
How about that "regret-filled liberals?"

I think there is an important lesson here for conservatives. Don't frighten the horses. These liberal women are afraid. They are afraid they have made a terrible mistake. In particular, I suggest, they are afraid they have elected a president who is going to embroil the US in conflict, and women like to avoid conflict.

Remember. First we got the security moms. It looks like Bookworm was one such. Now it is time for the... er, well what do we call them? Hope-and-change moms?

The thing to remember about women is that they need to do the right thing. That's not because they are bad but because they are good. A woman's honor is her chastity, which means being clean and good, and doing right by the other women in her community of women.

Obama seduced these women by promising a world of sweetness and light. But he is delivering a world of conflict and Chicago Rules bullying. Women hate this sort of thing.

And even worse, Obama is threatening the well-being of the mothers and the children of women in America.

Stepping back to the larger picture, the reason that politics has become all about being "nice" is women. Back in the old days when only men voted, politics could afford to be bare-knuckled, with fighting firemen the backbone of the old Tammany Hall machine in New York City. Men love that, but women hate it, and women have the vote.

Also, women are more suggestible. So politics is now all nicey-nicey.

Except that Obama politics is not nicey-nicey, but bare-knuckle, f-word, Rahm Emanuel street fighting.

No wonder the Democrats are trying to smear the Tea Party movement as violent and racist. So far, the Tea Party has been remarkably hospitable for women. It has been friendly and full of laughter, and many of its headline figures are women. But if women can be encouraged to believe that the Tea Party is violent and nasty, why then they will be afraid to get involved.

Just like they are afraid to listen to Rush.

Tuesday, April 20, 2010

The Year of the Race Card

Although our Democratic friends appear to be in the catbird seat, passing universal and mandatory legislation over the opposition of the American people, don't forget that their power rests on a very shaky foundation.

It rests on scaring African Americans and Jews to death.

The simple fact is that you cannot get 90 percent of people to agree on anything unless you scare them to death. That's why you typically only get 90 percent electoral majorities in thug-dictator countries.

The reason that African Americans vote 90 percent for Democrats is that Democrats scare them all the time with the race card.

They have to. Otherwise they couldn't win a presidential election. Ever.

That's what James Taranto is talking about.

Since 1964, blacks have voted overwhelmingly Democratic. If Republicans were able to attract black votes, the result would be catastrophic for the Democratic Party. Even in 2008, the Democrats' best presidential year since '64, if the black vote had been evenly split between the parties (and holding the nonblack vote constant), Barack Obama would have gotten about 48% of the vote and John McCain would be president.

Guess what. The same thing applies to Jews. The reason that American Jews vote so heavily for Democrats is that Democrats scare them all the time with the Christian Right.

Political and religious leaders have always done this sort of thing. But it was all supposed to stop with the Sixties and the Civil Rights era.

Of course it didn't. And the reason is not that Democrats are evil, but because they got themselves in a jam. There is no way they can win power without striking fear into the African American heart.

One fine day, of course, African Americans will break out of their cultural ghetto and discover that people really don't care about them one way or another.

But Democrats can't allow them to find that out. Not until they have found a new victim class to ride to power.

Is it possible that this year, in their desperation to avoid a total wipe-out in November, the Democrats will jump the shark on race, and that African Americans will come to realize that they have nothing to fear but fear itself?

Here's hoping.

Monday, April 19, 2010

Goldman isn't the problem

It's all very convenient that the Securities and Exchange Commission has decided to indict Goldman Sachs, the uber-investment firm, right in the middle of the Senate's debate on the Dodd financial reform bill. Let's get those Wall Street rascals and make the financial system safe!

Like The Wall Street Journal edit page I find myself underwhelmed by the SEC's case. The Journal calls it less of a smoking gun and more like a water pistol.

Now, I have no particular fondness for Goldman Sachs. They mainly give money to Democrats, so I wonder just how badly Goldman will be hurt in the financial reform effort.

And I have no particular fondness for the SEC. Where were they when in mattered, in 2005 and 2006 when a bit of savvy regulation might have softened the crash?

But by all means select a scapegoat and slit its throat on the nation's altar.

Senator Dodd, principal author of the finance reform bill, is one of the hares that helped create the whole Fannie Freddie mess. Where was he in the early 200s when the storm signals were posted? Now he wants to hunt with the hounds.

My problem is that we need less government regulation, not more. We need laws to force more transparency, and especially make clear what risks a corporation is exposed to if things go south. We need laws, not regulation.

And the fact is that a lot of the problem would go away if financial corporations had to post more equity and carry less debt. Because it's equity that guarantees the financial system when things go south. The government righted the financial system in the fall of 2008 by buying equity, through preferred shares, in the banks. On the other hand, there's no reason why a futures market in debt securities couldn't operate successfully. But it needs sensible design so that it can inspire confidence--without the bumbling intervention of government regulators.

No, the big financial problem remains. It is the government's reckless credit policy, from its incompetent central bank to its credit subsidy facilities in mortgages, exports, student loans and who knows what else. Not to mention the ordinary on-budget federal deficit.

Fix that mess and you'll go a long way to fixing the nation.

Friday, April 16, 2010

Tea Party Not Radical Enough

I know that the radical and angry Tea Party movement is said to be full of racists and homophobes. But what bothers me is that it's not radical enough.

David Harsanyi in The Denver Post has been reading the CBS/NYT poll on the Tea Party movement.

[They] are more educated than the average American, more reflective of mainstream anxieties than any populist movement in memory and more closely aligned philosophically with the wider electorate than any big city newsroom in America.

They send their children to public schools and "majority of them also deem Social Security and Medicare worthy taxpayer burdens."

Oh dear. That's a shame. It means that the Tea Party folks aren't ready to get serious.

Social Security and Medicare are at the heart of the budget problem. That's because, according to the latest numbers being thrown around, the politicians have promised about $100 trillion more in benefits than current taxes can deliver.

In short, we can't pay for what we've been promised. (Forget ObamaCare!) Something will have to change. Otherwise the United States will end up like Argentina--which recently defaulted on its national debt and raided everyone's bank account--or Greece--which may or may not stop short of default.

Does it matter? Yes, it does. When the national government defaults then the economy takes a dive and ordinary people suffer. Here's how.

  • Pensioners lose their dollar denominated savings, because of devaluation or inflation.
  • Lots of marginal businesses go under. Lots of average people lose their jobs.
  • The poor suffer most. Especially today, where the government spends trillions every year on the poor. The Poles have a word for it: "eating the paint off the walls."
  • People will compete for a share of the smaller pie in the political sector. That will increase social conflict, setting American against American, group against group. People will rush for protection under some powerful patron.

It won't be a pretty sight. And it's a pity that the Tea Party folks are not yet ready for radical action. That is, they are not yet ready to give up on their share of the loot.

But they will. We all will. Because when the balloon goes up, we'll all know that the world starts again for us. At zero.

And that is a shame. Because we could take measured, sensible steps right now to reform Social Security and Medicare so that they don't break the bank.

But we won't. Because nobody, not even the Tea Party movement, is ready to get serious.

Thursday, April 15, 2010

Too Big to Fail. Again

Everyone agrees that a big factor in the recent mortgage meltdown was the "too big to fail" syndrome.

Big banks and big corporations are understood to be so big that their failure might cause a systemic failure of the credit system.

That's why we have the Federal Reserve System. To have a lender of last resort. And of course we have a bunch of other institutions each with a pot of money to help out in a jam.

Now come the Democrats in Congress with a $50 billion fund for the FDIC to use in case a big financial firm goes under in the future. According to Michael Barone:

Under the bill, the FDIC would use this "resolution authority" rather than have the firm go into bankruptcy courts, as Lehman Brothers did after it collapsed in September 2008.

But that just restores the situation that got us into trouble. Big banks know that, when push comes to shove, the government will bail them out because the government can't allow the credit system to fail.

Knowing that, they can afford to take big risks.

What is needed is to put the shareholders and bondholders on notice that they will be cleaned out. And it wouldn't hurt to have the major corporate officers personally liable to the full extent of their assets.

The way to cure "too big to fail" is to make sure that people are not just spending "other peoples money" when they are swinging their big dicks around on their highly leveraged deals. They need to worry that they are risking their mansions, their trophy wives, and their kids' educations.

The more that the government provides insurance the more it encourages "moral hazard," that is, the behavior that is insured against.

You'd think that the solons like Sen. Dodd (D-CT) would understand that. Maybe he does. But after all, a tax is a tax, and if the government taxes the big financial institutions for a big tax then they can spend the monies until the FDIC actually needs the money. The point is that money is money.

In reality, when the Feds get in a jam, they sell bonds or they print money. It really doesn't matter if they have $50 billion in a fund or not. At bailout time, the question is: does the market believe the Feds when they say that they stand behind Lehman or Fannie and Freddie. So far, the market has decided to believe the Feds. But in the future, it may not.

The big problem with our political masters is that they are not serious about anything except political power. They really don't care about the economy, about freedom, about people. They care about their power, they care about reelection and they care about people coming to them to ask for favors.

All the rest is narrative.

Wednesday, April 14, 2010

Trashing Bill Clinton's Legacy

Whatever you think of Bill Clinton, he did a bang-up job of rehabilitating the Democratic "brand."

During his presidency he changed the way that people thought about Democrats. They weren't hippy-dippy anti-war "Blame America First" activists or big-government ideologues. No, no. They were pragmatic New Democrats that understood that the era of big government was over. The extremists, on the other hand, were the mad, bad ranters on the Christian Right.

In one short year, President Obama has ripped Clinton's careful work to shreds. He's been running around apologizing for America, bowing to dictators, waving his finger at allies. And he has launched a full Monty liberal program of government takeovers from health care to automobiles.

And the American people hate it.

So now we've got to the point that pundits and prognosticators are salivating about a really big mid-term election this Fall. You know, the kind that historians love, with 70-plus seats changing hands in the US House of Representatives. Sean Trende thinks we could be looking at a real biggie.

He's got a chart that lines up elections with three factors: bad economy (check), previous "wave" election where one party did really well (check), and controversial agenda (check). When the stars align that way you can get really big elections. Like 1938, when the GOP picked up 79 seats. Or 1894 when 125 seats changed hands. Or 1874 when 96 seats changed party.

It's been a while. And these days, nobody expects a shift of as many as 50 seats, for, after all, these days politicians have enormous advantages of incumbency.

Except when they don't.

Looking back, you can appreciate the skill of Bill Clinton. He always kept nudging towards bigger government, but he always did it in a non-threatening way.

President Obama doesn't have the political skills of a Bill Clinton. He just figures: go for it. Go for all the liberal gusto you can and hope that, on the morning after, you have ratcheted big government up another notch.

Hey, it makes sense. Until, as the saying goes, you reach a Tipping Point, when the American people can see the strategic reality behind the words and the hype and the "brand."

At that point you remember that politics is civil war by other means and you just hope that things stay civilized.

Let's de-Clausewitz this. Politics is civil war for civilized people. And a 100-seat turn in the US House of Representatives is the political equivalent of the Fall of Atlanta.

Tuesday, April 13, 2010

Paying for Unemployment

They are arguing in the Senate right now about whether to extend unemployment benefits to 99 weeks. And the Democrats are playing the compassion card. According to the Wall Street Journal:

Iowa Senator Tom Harkin recently roared, "Is there any compassion at all left with Republicans for people whose checks are going to run out?" New York's Chuck Schumer calls Republicans "inhumane."

Just a minute, senators. The science is settled on this. Long-term unemployment is devastating to workers. The research shows that workers start losing job skills immediately they get laid off. It is essential for them to get back to work at something as soon as possible.

And as the Journal points out, people only start to look for work when their benefits expire.

Alan Krueger of the Treasury Department, who concluded in a 2008 study that "job search increases sharply in the weeks prior to benefit exhaustion." In other words, many unemployed workers don't start seriously looking for a job until they are about to lose their benefits.

For male workers in their 40s, a spell of unemployment very often means that they never work again. That's what the research shows. I'm not quite sure how this happens, but it does. Perhaps these men live off women, who are more inclined to work--at all ages. Or perhaps they develop bad backs and go on disability.

It may be good politics to shower your supporters with government benefits. But it is "inhumane," Sen. Schumer. People need to work. Men need to work, or they go bad really quickly. So your little plan of extending unemployment benefits to two years means that hundreds of thousands--maybe millions--of laid-off workers will lose job skills and never work again.

Yes, but what do we do? Suppose there aren't any jobs? We've got to help people!

Certainly. But this is the time to think about all the things that the government does to make it hard to find a job. It starts with the government's penchant for gunning the economy with low interest rates and Fannie and Freddie. It continues with minimum wages and licensing and credentialism and job-killing taxes.

Maybe if you geniuses could stop screwing up the economy for a moment we wouldn't need all these government benefits.

Monday, April 12, 2010

"Taxes are Its Sacrament"

It's tax time, and wouldn't you know, here's a liberal, James Carroll at The Boston Globe, talking about the sacred treasure collected in taxes by the government.

But the sting of taxes, paradoxically, is a prompt for gratitude because the returns we file, checks included, are both a signal and a precondition of the sacred treasure we share as a people — also known as commonwealth. Taxes are its sacrament.

Oh really! If that is the case then taxes are not really taxes but a tithe to the liberal church of the welfare state. In that case liberal politicians are some sort of German prince-bishops. And liberal journalists are altar boys.

And you can say goodbye to the First Amendment and the separation of church and state.

Of course, you have to give James Carroll credit. He is only being honest. Liberals really do think that the self-interested taxing and spending they preach is a sacred calling. Taxes are a sacrament and spending is compassion. They really believe that.

But they are wrong.

My American Thinker op-ed this week is on precisely this. Government cannot be compassionate and giving. Government is the force sector of social life. Its votaries are politicians and their coin is power.

If you want compassion and giving you cannot do it with government. Government is about taking from people by force and giving the proceeds out to the government supporters.

Government is force. Politics is power. All the rest is narrative.

Friday, April 9, 2010

Boost Palin? You'll Regret, Mr. President

"I wonder what he meant by that." That's what Talleyrand is supposed to have said on getting news of the death of the Turkish ambassador. Or was it Metternich on the death of Talleyrand?

So when the president responds to criticism by Gov. Sarah Palin (R-AK) on his nuclear policy:

President Barack Obama on Thursday made clear he was not going to take advice from Republican Sarah Palin when it comes to decisions about the U.S. nuclear arsenal.

You wonder. Is he serious? What would be the point of commenting on something Sarah Palin said? Does the president want to boost Palin because he thinks she'd be an easy mark in 2012? Or did he just say that in a careless throwaway remark?

I'd like to suggest this to the president: Don't boost Sarah Palin into the position of de-facto leader of the opposition. You'll live to regret it.

Your liberal pals in the mainstream media have done a bang-up job of demonizing Gov. Palin. So everyone left of center now believes that she is a flake.

Maybe they are right. But what if they are wrong? Despite the most horrendous attacks and humiliations, she's still there. She's very popular, not just on the far right wing but with moderate women. And I'd say she has the potential to appeal to rust-belt Democrats, the lunch-bucket Democrats that are on the cusp of deserting the new identity-multicultural party that sneers at God and guns.

Democrats have made much of Palin's inexperience. What are they talking about? She's been a professional politician since 1992. She's been a legislative politician on a city council. She's been an executive politician, as mayor and governor. And she's had experience as a regulator.

Yes, but she doesn't have national experience!

Here's my take on that. In my experience of politics, the higher you go, the more you get paid professional help. On the city council, you are on your own, and your staffers are as green as you are. But when you run for governor you start attracting contributions and ambitious people eager to hitch their wagons to your star. At the presidential level there is a whole subculture of campaign professionals, not to mention national think tanks, all eager to ride your coat-tails to national power.

Palin may have been inexperienced in national politics in 2008, but in 2010 she will be a kingmaker, and by 2012 she will have a fully functioning national political machine.

Palin has already defined her ideological position. She calls it "common-sense conservatism" and she mentions it with practically every breath. What does it mean? Good question, Senator. It means whatever she wants it to mean, but it seems to be uniquely suitable for a run against an ideological liberal.

If I were Obama I think I would much rather run against a Gingrich, a Romney, a Pawlenty, ordinary politicians without the star power of Palin.

But maybe the president knows something I don't know.

Thursday, April 8, 2010

Gift-giving and Quarrels

In our tax-paying politics and our exchange economy we have less and less opportunity for gift-giving. We pay our taxes because we must and we exchange our labor for money because that's the best way to earn our bread.

But Roger Scruton in "Gratitude and Giving" points out the importance of giving.

There is, in the gift-giving culture, a display of gratitude at the moment of gift, and a kind of rejoicing that warms the hearts of those involved. On the gift day the tribe does not merely put aside old quarrels; it feels a renewed surge of affection toward its neighbors. This affection is a kind of moral capital on which it may draw in times of conflict.

In our welfare state, where charity and religion have been marginalized, we lack the warmth of giving. So it comes as no surprise that, with the decay of neighborliness, there has also come an increase in conflict. Politicians draw dividing lines between red and blue, and people respond to their encouragement by demonizing the opposition.

Our liberal friends talk a lot about religion as a means of "social control," and they mean by that the power that religion gives the political elite to keep the populace afraid and subservient.

But they forget that religion also ennobles gift-giving, love, sacrifice, and forgiveness. Leaving aside the question of divine will, we can see that any belief system that encourages these qualities will also diminish the opportunity for conflict. People are quick to quarrel. The hard part is to get them to lay down their grievances. "I would you would accept of love and grace," says Sir Walter Blunt to the hot-headed Harry Hotspur in Henry IV Part One.

We need a culture of gift and grace because otherwise there is nothing but politics, and politics is about conflict, civil war by other means.

More and more, I like my Greater Separation of Powers between the three sectors of society: the political sector of force and taking, the economic sector of trust and exchange, and the moral/cultural sector of faith and giving.

Our liberal friends have made a mortal error, in thinking that the political sector, the locus of force, can administer compassion and caring.

They ought to have learned by now, since the great lessons of the last century were the inevitable brutality of fascism and communism, the regimes where the three sectors are collapsed into the political sector.

When you collapse the three sectors into the political sector all you get are mass graves and social collapse.

Even though liberals won't learn the lessons that are staring them in the face, there is no reason why we should stand by and let them wreck this nation while they learn the hard way.

We must take back this nation and revive the separation of the economy from politics and separate the necessary and ennobling care for the unfortunate from the brutality and the inevitable conflicts of power politics.

And the take-back starts in November.

Wednesday, April 7, 2010

Robin and Roger and Robert, Oh Yeah!

You can think of them as the Three "R's," the three folks that help you learn what to make of the current mess in America, the Mess of Obama.

From Robin of Berkeley, the recovering liberal, we get "The Rape of America." Here's what rape is all about.

Give me what you have because I want it. Whether it's the iPod torn from your ear, or a big chunk of your income, or your standard of living, no matter. I want it, I demand it, give it to me.

What does this mean? It means that that politics is about taking.

From Roger Scruton, conservative philosopher, we get "Gratitude and Grace." Grace, from the Latin , gratia, means giving.

The idea that the world is sustained by gift is second nature to religious people, who believe that they should be givers in their turn, if they are to receive the gift on which they depend for their salvation.
What does this mean? It means that religion is about giving.

From Robert Samuelson, economic writer, "The Poisonous Politics of Self-Esteem." Although " the standard view of politics is that it mediates conflicting interests and ideas." Yet more and more, politics is conducted in moral terms.

President Obama pitched his health care plan as a moral issue. It embodies "the core principle that everybody should have some basic security when it comes to their health care," as he said when signing the legislation. Health care is a "right"; opponents are, by extension, less moral... People backed it because they thought it "the right thing"; it made them feel good about themselves.

So on this view, people are using politics to set a moral agenda.

But I suggest that getting moral content out of politics is a chimera.

Government is force, and once you resort to force to enact your moral agenda, you no longer have a moral agenda. You just have force. Because morality is about you giving and sacrificing, not the other guy.

So now I want to fold this into my general theory of The Greater Separation of Powers between the three sectors: political, economic, and moral/cultural. Under the Greater Separation of Powers, we have the separation of church and state, and also economy and state, and also church and economy.

Thus we have state as the locus of taking, economy as the locus of exchange, and religion as the locus of giving.

Politics is about taking; if you carry politics into the economic sector you infect the process of exchange with taking: Robin of Berkeley's Rape of America. If you carry politics into the moral/cultural sector you make religion into a power trip, you transform giving into compulsory taking.

The great mistake of our liberal friends is to imagine that, by distributing benefits and "social justice" through the political system they are "giving."

But that cannot be so. A gift must be freely given, otherwise it is just a tax. When people who believe in giving through politics get into power, all they end up doing is raping the people. Because rape is an act of power, and politics is power.

That's why we believe in limited government. We believe in limiting the scope of taking, the arena of force. Only when you limit forcible taking can the sturdy fruits of work and exchange come forth. Only when you limit forcible taking can the delicate flower of grace and giving open its petals and bloom.

Government is force. Politics is power. All the rest is narrative.

Tuesday, April 6, 2010

Brits Go for Election

Today British Prime Minister Gordon Brown drove to Buckingham Palace to ask the Queen to dissolve the UK Parliament. There will be a General Election in Britain on Thursday May 6.

On that day, most likely, the 13 year reign of New Labour will come to an end. Yet as of right now, it is not certain that the disastrous rule of Labour will terminate. The center-right Conservative Party is only 4 to 10 points ahead of Labour, and probably needs at least 10 points to get a majority in Parliament.

How is it possible that a Labour Party that has nearly wrecked the economy, running a substantial deficit in the boom years of the mid 2000s is that close to winning?

The answer probably is that Britain is a center-left country. People want and expect "public services," meaning mainly the National Health Service, and they have a horror of ever having to pay for those services themselves. As my daughter told me of the French a decade ago: "Dad, these people are married to the state."

But David Cameron, leader of the Conservative Party, has a bold agenda. He proposes to reform the school system with the Swedish Plan. It's a reform put in place by conservatives in Sweden that allows almost anyone to open a school and get government money for it. About 15 percent of schools operate under this plan, and that's all it's taken to put the fear of God into the other 85 percent.

Then Cameron has a plan to mend "Broken Britain." There's a vast underclass in Britain that has never had a job and never intends to. You can read about it in Inspector Gadget's Police Inspector Blog. About 15 percent of the adult labor force is on "incapacity benefit," i.e., have been certified as unable to work. The dreadful harm that this widespread idleness has had on Britain is almost incalculable, and the US is heading that way.

Will the Brits take the plunge and elect a Conservative government? Probably. But Cameron has to be careful. The Labour Party has built up a huge client state, including welfare and incapacity beneficiaries, teachers, health workers, and the regulatory state, the so-called "quangocrats" in quasi-governmental agencies. Asking them to vote for change is like asking turkeys to vote for Christmas.

My prognostication is that the Cameroons have been holding fire for several months, waiting for the short election campaign before firing their muskets in a devastating volley. I think we'll see substantial movement in the poll numbers over the next few weeks.

And then there's turnout. Just as Obamis in the US surged out to vote in 2008 while Republicans stayed home, discouraged, I think we will see that Conservative turnout will be substantial while Labour turnout will be reduced.

But there will be plenty of nail-biting before the result is announced on the first Thursday of May.

Monday, April 5, 2010

Obama's Sore Winner Tour is Working

Conservatives are busy trashing President Obama's Sore Winner Tour. The president of all the people is out there challenging his opponents to put 'em up or shut up.

Conservatives are sneering at this, pointing out how the president's approval numbers are still stuck in the mid forties.

But nobody is talking about Rasmussen's Presidential Approval Index. That's the poll computed as (Strongly Approve minus Strongly Disapprove). Conservatives were gleeful a month ago when the index was hitting the high negative teens.

Guess what has happened in the week or so since ObamaCare passed? The Strongly Approve number has gone up about 10 points, from the mid 20s to the mid 30s. The Strongly Disapprove number has nudged up, a bit. The index is now a mere minus 10. In other words, the president's base is delighted with his historic achievement.

Overall, of course, the president's approval number, i.e., Total Approve, hasn't really budged. The net effect of the ObamaCare win is to convert a bunch of Approves into Strongly Approves.

Presumably, the president's Sore Victor Tour is intended to solidify those Strongly Approve numbers, and carry the Democrats through the mid-term elections in November when the key to victory is turning out the base. Time enough to worry about charming the moderates back into the president's column in 2012.

Maybe it will work. Maybe the economy will be going gangbusters by the second half of 2011, and the voters will reward the president with a second term.

There's another narrative. The current liberal euphoria will dissipate by November and the Republicans will score a stunning triumph. The big government expansion and the tax rate increases will slow the recovery and the huge monetary stimulus will convert into inflation (we are talking here about the exact reverse of the Reagan policies of 1981-85).

How will it all turn out? Stay tuned.

Friday, April 2, 2010

Good News on Jobs

For the third month in a row, the Bureau of Labor Statistics Household Survey of the labor market is showing strong positive growth.

(Yes, I know that there were "jobs lost" in the January and February employment report, but that comes from the Establishment Survey and we don't put too much faith in that here at

Here are the numbers:

Labor Force Change+111,000+342,000+398,000
Employment Change+541,000+308,000+264,000

This is good news. The Employment numbers show strong employment growth, although moderating month-on-month since the gangbusters half-a-million increase in the January number.

The Labor Force numbers are good too. They show that people are getting the word that employers are hiring, so they are returning to the labor force in ever increasing numbers and looking for work.

I think we can look for several months of good numbers based on what we see here.

The question is what happens in the future with the expiration of the Bush tax cuts Jan 1, 2011, and the deadening effect of all the increases in government spending courtesy of the Obama administration.

Here at we don't believe that increased government spending creates jobs. We believe that the way to create jobs is to cut government spending and cut tax rates. Works every time it is tried.

The big problem is that about 8.5 million jobs were lost in the recession. At the current rate of about 250,000 new jobs per month, say 3,000,000 a year, we are looking at three years to get back to the jobs peak in 2007, and another couple of years to get back on trend. We are talking about the 5,000,000 jobs that coulda, woulda, shoulda been created but for the meltdown and the recession.

As usual, the only place we can really look for help on the future is the stock market, which is always trying to look to the future. It has pretty well recovered to 2008 levels before the meltdown. But it is not forecasting right now a gangbusters economy in the year ahead.

Thursday, April 1, 2010

Beyond Fascist ObamaCare

What famous politician said the following memorable sound bite:

Tutto nello ObamaCaro, niente al di fuori dello ObamaCaro, nulla contro lo ObamaCaro.

I'm not sure how ObamaCare translates into Italian, but here's my translation into English:

Everything in ObamaCare, nothing outside ObamaCare, nothing against ObamaCare.

Well it wasn't Benito Mussolini and it wasn't Barack Obama. In fact nobody said it. Except me.

I am saying it to make a point. The point is that ObamaCare is fascism. With ObamaCare everyone is brought into the orbit of the government's health care plan. You may not be interested in the government's health plan, but the government's health plan is interested in you.

Everyone in the US is going to have to conform to the dictates of ObamaCare. Nobody is going to be able to get outside ObamaCare.

And nobody is going to be allowed to be against ObamaCare. That was the whole point of the Democratic leaders' march across the street to the Capitol on the day that ObamaCare passed.

Let's talk about liberals and fascism.

Our liberal friends have been rather quiet about Jonah Goldberg's Liberal Fascism, a 400 page tome in which Jonah makes the inconvenient point that while liberals may not be Fascists, their politics and their governing philosophy is fascist. Liberals always want a comprehensive and mandatory government program for everything that they care about. And they always put themselves in charge of the governing apparatus charged to administer the program.

Jonah points out that, if you take out the sharp uniforms and the marching and the secret police, liberal politics is indistinguishable from fascist politics. That's why he put the manifesto of the National Socialist German Workers Party in an appendix at the end of his book. He wanted his readers to see how close liberal platform comes to an actual fascist manifesto.

But we conservatives want something different. We do not want unity; we do not want government-enforced conformity. We want limited government, limited political power to give space for something more than the state. We are delighted that liberals should choose, for instance, a collective form of health care provision in the State of Washington with Group Health Cooperative. Wonderful idea. Go for it liberals. We just don't like it when liberals force everyone else into a Group Health Cooperative. Because when the government runs it and forces everyone in, it's not a group and it's not cooperative. It is simply government force, another instance of the liberal culture of compulsion.

Michael Barone just put out a piece in which he presents the current political situation in stark terms.

Over the past 14 months, our political debate has been transformed into an argument between the heirs of two fundamental schools of political thought, the Founders and the Progressives. The Founders stood for the expansion of liberty and the Progressives for the expansion of government.

Tea Partiers take the side of the Founders. They believe in liberty. The Educated Class takes the side of the Progressives. They take the side of government.

Not coincidentally, the 20th century, the century of the Progressive movement, was also the century of fascism. Fascism and Progressivism come from the same mold. They both believe in the supremacy of government and top-down administration.

The United States was founded upon a different idea, and the next months will determine whether that idea still flourishes in the hearts and minds of its citizens as it did in the mind of Abraham Lincoln.

We shall nobly save, or meanly lose, the last best hope of earth... The way is plain, peaceful, generous, just -- a way which, if followed, the world will forever applaud, and God must forever bless.

The way begins with the repeal of the fascist ObamaCare and the introduction of true health care reform that is as large-minded and practical and generous as the American people themselves.