Tuesday, November 30, 2010

Central Bankers are Useless

Wikileaks is all very well. But who needs to know that the Arab rulers in the Middle East are more pro-US than they like to let on, or that they are afraid of Syria and Iran. We knew that. We just didn't know the words they used.

We also know that good old Arthur Burns, Chairman of the Federal Reserve Board from 1969-74, was a pushover who let President Nixon push him around and inflate his way to reelection.

Now we have the old-fashioned equivalent of WikiLeaks to tell us.

It turns out that Uncle Arthur penned a diary in spiral-bound notebooks during his years in Washington, DC. His widow gave the notebooks to the Gerald Ford Presidential Library, and now we have Inside the Nixon Administration: The Secret Diaries of Arthur Burns edited by Robert H. Ferrell.

The diaries don't tell us anything new. We already knew that Arthur Burns was a pushover. It's made pretty obvious in bouncing titles like A History of Central Banking in Great Britain and the United States by John H. Wood.

In fact Central Banking shows pretty conclusively that 20th century central bankers were mostly completely useless bureaucrats. In the US there were only two that were any good. William McChesney Martin had his moment when he won the Fed vs. Treasury battle in the early Fifties by raising interest rates to end the accommodative policies during World War II. And Paul Volcker stopped the Seventies rot with bar-tight monetary policy to break the Nixon-Ford-Carter inflation.

The most useful commentary on monetary policy since the government gave us the Federal Reserve Board is that the dollar, worth about 1/20th of an ounce of gold in 1913, is now worth about 1/1400th of an ounce of gold. Here's another benchmark. When Uncle Arthur bought his spiral bound notebooks back in 1970 they cost $0.49. Today the notebooks cost $4.95. That makes today's dollar worth about ten cents in 1970 dollars. Thanks to our brilliant central bankers.

One of the justifications for our current policy of "mild" inflation is that it helps prevent meltdowns like the Great Depression of the 1930s and the frequent financial panics of the 19th century.

That's nice to know.

Monday, November 29, 2010

Diversity? What Diversity?

Everybody knows that liberals are all in favor of diversity. Except when they aren't.

For instance, in the light of the recent election, which party is the more diverse? Here's the way the Washington Post sees it.

The Republican Party's big gains in the House came largely from districts that were older, less diverse and less educated than the nation as a whole. Democrats kept their big majorities in the cities...

The Obama coalition remained intact. Democrats remained strong in areas with the party's core of minorities and higher-educated whites.

Republicans made big gains with the white working class, of course.

We've all been carefully taught to believe "diversity good," "minority votes good" by our liberal preachers, but what does it mean? It means that the Democrats do really well with people who get benefits from the government, but not so well with just about everyone else. In particular, writes Michael Franc, Republicans do really well with veterans.

How diverse is your party, honestly, if its voters are confined to the educated elite and its benefit clients in the inner city? Wouldn't it be much more broadly based if it had solid support in the great American middle class?

If you think seriously about the Democratic supporters, you have to be concerned. The black vote is up over 90 percent. That can only go one way, and that is down. And the Hispanic vote is notably driven more by economic status than by race. As Hispanics integrate into the great American middle class they start voting Republican. Obviously liberals will vote Democratic until the last government grant evaporates and the last abortion is performed, and good luck to them.

The Washington Post puts up a brave front, celebrating gains in Hispanic votes and hauling out demographer Ruy Teixeira: "Republicans do the best in areas that are typically not growing very fast and don't look like the present, or certainly the future, of the country," he says.

There's another way of saying that. People voting against the regime are people who are losing out in the Obama economy of stimulus and crony capitalism. Of course the losers are voting against the government. That's what they always do.

Politics always involves a lot of blind faith in your side, putting a shine on your party's prospects and painting a dark prospect for the other guys.

But is it really a glorious future for the Democrats if their voters are liberal experts and government beneficiaries? Surely the Democratic Party was built for better things than that.

Friday, November 26, 2010

Wall Street and Washington

Whenever the politicians create a scapegoat, you can guess one thing. The scapegoat isn't to blame. It's the politicians.

So when the politicians blamed greedy bankers for the mortgage meltdown, you had to know that the bankers were at worst the willing accomplices of the real greedy crooks. And they had to be the politicians.

So when you read about Charles Gasparino's Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street you know the real story.

There's only one thing to remember when it comes to figuring out Wall Street. It's the old, old line from Jesse Unruh, once Speaker of the California Assembly. "Money is the mother's milk of politics," he said. Unruh was talking about campaign contributions, but the same applies to government finance, only in spades. If money is the mother's milk of elective politics, then money is the very red blood corpuscles in the blood stream of government. Here's a story that tells it all. I got from The Merchant Bankers by Joseph Weschsberg.

After the Napoleonic Wars, in 1815, the Allies demanded an indemnity of 700,000,000 francs from the defeated French. How on earth would the French come up with that kind of money? Perfectly simple, said French merchant banker Gabriel-Julien Ouvrard. Don't borrow from the rich in France with a compulsory loan. Don't raise taxes. Float a bond issue in London. Everyone thought the guy was crazy. Why would the Goddamns pay for the indemnity? But it worked! Ouvrard got permission from the Duke of Wellington, the general of the Allied occupying army in France. He got merchant bankers Barings and Hope & Co to syndicate the loan and in 1817 the French sold a 350,000,000 franc bond issue in London. So they got Brit investors to cough up the money to pay the indemnity and got to pay back the Brits in installments.

This little story illustrates the reality of government finance. Governments need the bankers more than they need the armed forces, more than they need their supporters. Because it is the bankers, more than anyone, that keep them in business.

If you don't like the idea of Wall Street and Washington in bed together, then make the bed smaller. Cut the size of government. At least you'll know then that neither Wall Street nor government is comfortable.

Thursday, November 25, 2010

The Emergent Democratic Minority

Now that the prophecies of an Emerging Democratic Majority by chaps like John Judis and Ruy Teixeira have been laid to rest, let's look at the more realistic idea of an emerging Democratic minority, which seems more likely.

Michael Barone takes a look at the demographics of the late election and notes the desertions of several long-term stalwarts from the Democratic rank and file.

The Jacksonians from Appalachia and the South who have been Democratic since the days of Andrew Jackson in 1828 seem to be definitely gone.

The Germans and Scandinavians from Minnesota, Wisconsin and Iowa are definitely on the move, in particular in Wisconsin.

The Rust Belt was a disaster for Democrats as industrial workers in trouble voted against big government.

The Hispanics are showing definite signs of movin' on up from liberalism, in Florida, in Texas, and in Nevada and New Mexico.

Even the Finns in upper Michigan are deserting the ship.

The only chaps still firmly in the Democratic camp are gentry liberals and blacks. My prediction is that blacks will start deserting the Democrats as soon as Barack Obama leaves the presidency and they no longer feel the need to defend their guy to the death.

That leaves our friends the gentry liberals as the core of the Democratic Party. I want to believe that gentry liberals are Democrats because they benefit disproportionately from Big Government. Just voting their pocket-books, don't you know. But the trouble is that I know too many liberals that don't work for the government. They are liberals because they believe.

Tuesday, November 23, 2010

The Mystery of the Missing Voter?

Now I've seen it all! Democrats are apparently shocked by the mystery of the missing voter. What happened, they wonder, to the hordes of Democratic voters of 2008 that turned out to elect Barack Obama? Writes Gerald Seib,

A popular theory of this year's midterm election holds that Democrats took a shellacking in part because big chunks of the party's core liberal base, discouraged at the path of the Obama administration, stayed home rather than show up to vote as they did in 2008.

Well, not exactly. According to a Wall Street Journal poll of 2008 Obama voters that didn't turn out this year, they are not angry lefties. No, the explanation is much simpler than that. Sure, they are mostly self-described as Democrats.

But they also were more likely to identify themselves as "not very strong Democrats" rather than "strong Democrats." And the largest share identified their ideology as moderate rather than liberal.

In other words, these are Americans that are not strongly connected to politics and not strongly motivated to vote.

That fact rather steps on the desire of many strong Democrats to rile up the Democratic base by doubling down on the liberal Obama agenda with a strongly partisan attack on the Republicans.

No, the voters that stayed home are momentum voters. They voted for Obama because they got swept up in the euphoria of Hope and Change. To bring them out again, the president is going to have to rile up the uncommitted.

Really, that's going to be almost impossible, absent a big turnaround in the economy. Think about the average uncommitted young woman voter. In 2008 she found herself all excited by Candidate Obama because all her friends were excited. But now she and her friends are looking for work and not finding it. They are discovering, for the first time in their young lives, that politicians will say anything to get elected. They are discovering that politics really doesn't transform their lives with Hope and Change. What is it going to take to get those young voters back to the polls? A strong economy, that's what. But even so, they are not going to be marching to the polls in battalion strength like they did in 2008. You only get to do the euphoria experience once, when your side is out of power and half the electorate is groaning for release from the evil corrupt in-party.

What President Obama needs is a Morning in America feeling, like the feeling that Americans felt in 1984 when the economy had emerged from four years of inflation and recession. The big question is whether Obama's economic policies will deliver that. After all, his policies are the exact opposite from President Reagan's policies in 1981-84. Instead of hard money, he is backing "quantitative easing." Instead of spending cuts, he favors big spending increases. Instead of tax rate cuts, he wants to increase tax rates on the most productive Americans.

It's a great experiment, and we will see what works by 2012. And then the missing voters of 2010 will get to decide whether they want Four More Years, or whether they think it is Time for a Change.

Monday, November 22, 2010

The Meaning of the Secret Donations

Our friends at The New York Times are shocked, shocked to discover that the US Chamber of Commerce has been laundering "secret" donations for corporate special interests.

Specifically, according to a Times editorial, the Chamber has received secret donations from the insurance industry and from Wall Street.

Secret donors spent at least $138 million on the midterm elections, according to the latest figures, and 80 percent of that secret money supported Republican candidates. What will those donors get for their money, and who will they get it from?

Yes, it is very annoying that corporate interests are secretly spending money to oppose the Obama administration. Who would have thought it?

But the Times is missing the point. The reason that these corporate interests are laundering their money through the Chamber of Commerces is that they are afraid. They are afraid of what the Obamis would do to them if they came out and honestly admitted, with their contributions, that they are dead set against Obama and all his works.

Let's put it this way. The reason that many Democrats want Nancy Pelosi to continue as Minority Leader in the House is that she is a great fundraiser. Now why do you think that the lovely Nancy has such a reputation as a fundraiser? Charm? Personal beauty? A winning sales pitch? Or is it just naked threats to pay up or get thumped?

Here is a story that might illuminate the issue. Right after the 1994 elections Speaker-elect Newt Gingrich is reported to have told his people to put the screw on all the corporations. They hadn't contributed much in the runup to the elections, but now they had better learn which side their bread was buttered.

The fact is that the secret contributors to the Chamber were afraid. They were afraid of the consequences if it became known that they were contributing to Republicans.

And that, I suggest to my liberal friends, convinced of the enormous power of big corporations, is not good. Nobody, not progressives, not pro-lifers, not corporations, not unions should be afraid to contribute openly to the candidate of their choice.

As for me, I live for the day when government employee unions feel the need to hide their contributions to Democrats, because they are afraid to face the wrath of the permanent-majority Republicans.

Friday, November 19, 2010

State Winners And Losers

The US Bureau of Economic Analysis released its numbers on state GDP (called Gross State Product or GSP) for 2009 yesterday. The numbers are now up on usgovernmentspending.com. So now we can see the winners and the losers in the Great Recession.

Here are the top winners:

North Dakota3.9%

Looks like the energy states were doing best. Now here are the big losers:

New York-4.3%

Looks like two housing-crash states and two deep-blue basket cases. But Indiana?

Head on over to usgovernmentspending.com and take a look.

Thursday, November 18, 2010

What Do the Soros Guys Want?

I'm confused. After President Obama has rammed just about all that a lefty president could ram through Congress and the federal bureaucracy in the last two years, the rich-bitch progressive funders at the Democracy Alliance, George Soros, proprietor, are all bent out of shape. Says Soros:

"We have just lost this election, we need to draw a line," he said, according to several Democratic sources. "And if this president can't do what we need, it is time to start looking somewhere else."

I would think that the Soros brigade would realize that now is not the time to go soft on the president. After all, he and Pelosi are the front rank in the battle to stop repeal of ObamaCare and the federal takeover of the financial system, etc.

Actually, my confusion goes even deeper. These liberal moneybags, that style themselves the "progressive movement", are working to do what? Further empower the government employee unions to loot the government? I'd say that the big problem right now for genuine progressives is that the government administrative tail is so large and expensive that it is impossible to do anything.

Well, I shouldn't be surprised. Every liberal I check on knows all about the Koch brothers, how they are the top-down funders of the Tea Party movement, and how that is bad for America. But they seem to be wholly innocent of the influence of George Soros, who seems to be much more influential on the Democratic side. Scratch a liberal these days and she is worried about the peons working like indentured servants for Wal-Mart. Maybe so, but have you liberals checked to see how many people line up for Wal-Mart jobs whenever Wal-Mart opens a new store? And how the lines are much longer when Wal-Mart opens near a liberal city like Oakland or Chicago?

And what is all this about a progressive "movement?" How can we be talking about a genuine movement when it is composed of people who like the current administrative state and just want more of it? These are people who are part of the ruling class and want more of it.

The way to think about this is to think of it as religion. Religion is about faith, faith in the meaning of life and faith in the way things work. These liberal progressives are members of the church of liberalism. They believe in the Articles of Liberal Belief and they believe that what we need is more liberalism. The only trouble is that the mass of the American people are not co-religionists. They do not worship at the church of liberalism. No re-messaging or re-focus is going to change that. Here's a SEIU honcho:

"People are determined to help build a progressive infrastructure and make sure it is there not just in the months ahead but one that will last in the long term," said Anna Burger, the retired treasury secretary of SEIU. "Instead of being pushed over by this election it has empowered people to stand up in a bigger way."

Progressive infrastructure? Does Burger not realize that liberals already have a massive progressive infrastructure in place from the liberal media to the schools to the foundations to Hollywood to their own Democracy Alliance?

Really, this is good news for conservatives. These chaps are like Tory "ultras" in the 19th century. They are like southern segregationists in the 1950s. Their whole project is running on the rocks of unaffordable programs and pensions, and they are proposing to reinforce failure.

Bring It On.

Wednesday, November 17, 2010

The Content of His Character

The story of each great ethnic group in America has been remarkably similar. It starts with oblivion, continues to alarm and discrimination, then to ethnic power politics and pride, then arrival, and finally assimilation.

African Americans have traveled this road in full Technicolor, for they arrived in North America not as indentured servants but as slaves. There were not mere scuffles about them, but an outright civil war. Like the Irish, blacks have chosen the path of ethnic pride, expressed in monolithing voting and corrupt political machines. Like the Irish, blacks have finally elected one of their own as president.

Martin Luther King famously looked forward to the day when Americans would be judged on the content of their character, not on the color of their skin. Everybody interpreted that as an appeal to whites to judge blacks by their behavior not their race.

But there is another side to this, the question of how blacks judge their own kind by the content of their character.

In the climb from egregious discrimination ethnic groups tend to exhibit a strong sense of solidarity. They support their own kind, no matter what, in the battle for survival. But there comes a time when they obtain real power and are no longer the weaker group in the battle of political power. There comes a point where the group gets to go through the equivalent of the Temptation of Christ. They have the power to rule the world, but will they have the character to say: get thee behind me, Satan.

In the famous trial of O.J. Simpson for the murder of his dead wife's lover, a black-majority jury in Los Angeles County in 1995 voted to acquit the famous football player. But in a black majority congressional district in New Orleans in 2008 the voters threw out their Representative accused of corruption, William J. Jefferson (D), the first black to represent the district since Reconstruction.

Now we have the case of Rep. Charlie Rangel (D-NY), convicted by the House ethics panel of corruption on November 16, 2010. Will the House vote to expel Charlie, as they would a white congressman? Will the black voters of Harlem vote Charlie out of office as the voters of any white suburban district would already have done?

Because when the day comes that blacks routinely judge their own leaders on the content of their character then blacks will truly have arrived as One Hundred Percent Americans.

Compared to that, the election of a black president is mere bagatelle.

Tuesday, November 16, 2010

The New Republican Majority

Reviewing the 2010 battlefield, RealClearPolitics' Sean Trende notes two significant facts:

  1. Dems have lost rural and "Jacksonian" voters. A hundred years ago, the core of the Democratic vote was rural voters, farmers that hated capitalism and finance, particularly the finance capitalists that held their mortgages. These folks, along with the rough-and-ready Scotch-Irish from Appalachia, are gone for the Dems.
  2. Dems are losing suburban and white working class voters. These folks have been the real pivot point in the electorate in the last generation, leaning towards Reagan, then Clinton, then Bush, then Obama. Now they are clearly moving away from Obama and the Democrats.

Isn't it convenient, then, for Republicans that suburban voters and the white working class are being absolutely hammered by the Great Recession? And isn't it convenient that Obamanomics really has nothing to say to these hard-hit folks?

Then there are the young voters. You have to feel sorry for the young voters. There they are, having voted just like the trusties in their government educational custodial facilities told them, and now they are utterly screwed. Do you think that maybe in two years they might be ready to vote for real Hope and Change in freedom instead of Hope and Change in big government?

Yeah. How dumb can you be, imagining that big government is going to create Hope and Change? Government is force, baby. And government is the cockpit of the special interests, all of them opposed to Change.

Think, think, think. That's the order of the day. The door is open to create a big new majority coalition. So let's all think about how to appeal to suburban voters, white working class voters, and young voters.

Job One is jobs, jobs, jobs. And we know how to do that. Cut government spending and cut income tax rates.

Then there is education. We have to help the majority of Americans escape from the liberal model of education that prepares people for jobs in the Peace Corps and a career in environmental regulation. We need to reorient education towards the dominant learning method among humans and especially among average people: learning by doing.

I say "we" but I mean "they". The conservative policy on education is that it should be driven not by educrats and edu-theorists but by education consumers: students and parents. Let us empower ordinary people to supervise their ordinary education and empower them to decide when it is time to get out of school and into the "real world" of work and training. For many people, I suspect, the moment to leave full-time education is about age 13.

Crisis is opportunity. The Obama meltdown creates the political opportunity of the century. We conservatives care about the suburban voters and the white working class. We care because we understand what a century of liberal government has done to the ordinary person, and we want ordinary people to have a free and prosperous life liberated from the dead hand of government.

Let's listen to the surburbanites. Let's listen to the white working class. Let's work with them to build an America we can all share and be proud of.

Monday, November 15, 2010

Populist Darling or Embarrassment?

You tell me. Is Sarah Palin's reality show on TLC a brilliant effort to reel in the white working class? Or is it jumping the shark, as former supporter Jennifer Braceras believes?

It's the old, old question in politics. How folksy can you get without becoming a caricature of folksiness? Democratic politicians are required to show that they are just like you and me. That goes back to Thomas Jefferson who went to his inauguration in plain clothes. Writes Ron Chernow in Alexander Hamilton:

Jefferson eliminated the regal trappings of the Washington and Adams administrations and brilliantly crafted an image of himself as a plain, unadorned American... For two weeks after his inauguration, Jefferson stayed at his boardinghouse near the Capitol and supped at the common table.

So what are we to make of Sarah Palin's folksiness? Put it this way. Suppose you were Sarah Palin and you were planning a presidential campaign. You know that a campaign is all about image dusted with a little fairy dust of issues. You know that voters really aren't interested in wonky discussions of the details of health care. You have succeeded in numerous public debates and candidate forums down the years by avoiding the policy details and appealing directly to the emotions of the voters. You've been a successful elected politician since 1992, rising from city councilmember to mayor to governor. You've been savaged by liberals for being a hick and an embarrassment. What would you do?

I'd say that the thing to do is to play up your folksiness. Talk non-stop about "common-sense conservatism." Appeal to the great unwashed middle with down-to-earth media events. And hope that it all comes together.

I keep thinking about the white working class, and in particular the white working class woman. A couple of weeks ago I wrote about the white working class. It's had a pretty hard go because the Democrats have forsaken it for liberal women and minorities. And the Republicans just don't seem to get the white working class. Now here is Sarah Palin doing reality shows, hauling nets, piloting fishing skiffs, in the middle of her family. Yes, it's all rather récherché and hard to take for the educated classes. But what does it say to the working classes?

The question the pollsters always ask the voters is: Does the candidate care about people like me? What do you think?

Friday, November 12, 2010

It Can Only Get Worse

There are two practical political reasons for the Obama administration's QE2 policy. Reason one is to re-float the underwater debtors, the folks with underwater home mortgages. Until they are breathing again, the economy is going to be in trouble. The other reason is to gun the economy for the 2012 elections.

Why not? That's what Richard Nixon did in August 1971 when he took the US off the gold standard. The result was that the M2 money supply that had risen 6.5 percent in 1970 went up at the rate of 13.3 percent in 1971 and 13.0 percent 1972. In 1973, after the elections, M2 was ratcheted back to a 6.6 percent increase and we got the 1973-74 recession.

Here's what I wonder. Are the Obamis cranking the printing presses too early? Back in the 1970s the Nixon administration imposed wage and price controls in 1971. That kept the inflation under control for a while with consumer prices increasing by 4.4 percent in 1971, 3.2 percent in 1972. Then prices exploded by 6.2 percent in 1973 and 11.0 percent in 1974.

The thing to remember is that we don't have wage and price controls to make things look good in the runup to the election. Nor do we have the financial repression of the post-war years in which investors could not escape from dollar investments, and were screwed with interest-rate ceilings on bank deposits. And by going for broke a full two years before the election, the Obamis are risking big-time inflation well before the voters go to the polls.

Here's my judgment. The Democrats have lost the Mandate of Heaven; they have lost the luck o' the Irish that always made things work out for them. President Obama is a Mrs. Gummidge of a president, and everything goes contrairy with him. Things are going to get so screwed up that the 2012 election will make the 2010 election look like a cake-walk.

And here is the worst of it, if you are a Democrat. Democrats are going to be disproportionately hurt in the next few years. Whether it's social spending, green subsidies, public pension defaults, government employee layoffs, it's going to hurt Democrats more. But that strikes at the very heart of the Democratic project, which is patronage, pensions, jobs, and street money for the Democratic supporters. The very best that can happen is that Democratic supporters will lose heart and stay home. More likely is a massive Democratic split, a fight over the remaining spoils.

The worst of the worst, from the Democratic perspective, is Gov. Chris Christie. He is showing that a big fat roly-poly Republican governor can make hay over dissing government employees. He is publicizing the union official that wished for his death. He is publicizing the schools superintendent who is getting his contract renewed before state salary caps kick in. Nobody has ever succeeded in doing this successfully before. And if you can do it in New Jersey you can do it anywhere.

Things are going to get worse, and it's going to be the worst for the little people. Remember? Democrats fight for the people against the powerful.

Thursday, November 11, 2010

When the Patronage Has to Stop

Why is it that the old industrial mid-west, from Pennsylvania to Wisconsin, was the center of the lurch to the Republican Party in the recent mid-term elections? I have a theory on that.

Politics is the process of bribing the electorate. You offer them goodies in return for votes. In the old agricultural era, the only voters were the landlords, the descendants of the warrior class that conquered and occupied the land. Kings and princes had to keep the support of the landed aristocracy with privilege and gifts. The result was that the rich paid almost no taxes and the poor paid a lot.

In our modern era the opposite is true. Now we have the mass of the people voting and they demand patronage from the politicians in return for their vote. The social-democratic parties are the masters at this game.

But there is a problem. Patronage politics is not a stable self-correcting system. That's because the supporters are ravenous for rewards. So the politicians have to keep offering new bribes at every election, for the old bribes are not counted as bribes by their recipients but as their "rights."

What happens when the money runs out and the politicians can no longer keep the payments coming? You get the industrial mid-west.

The industrial mid-west was center of post-WWII unionized manufacturing. The idea was that prosperity was a combination of big manufacturing corporations, big labor unions, and government adjudicating between the two. The reality was that the big corporations promised enormous benefits to their employees through defined benefit pension plans and retiree health benefits that would be paid out of profits ten, twenty, thirty years in the future. Unfortunately when the future arrived there weren't any profits, or at least, not enough to provide the promised benefits. So now the big corporation, big union model lies in ruins. The patronage promised by the politicians, the lifetime employment, the fat pensions, all is vanished into air.

If you are a sensible, practical person, and all the promises of the politicians turn out to be so much hot air, then there is only one thing to do. You must move on, admit that your investment in the political patronage system was a failure, and start over. That is what the folks in the industrial mid-west have decided to do.

But that raises a question. Why haven't the voters of California and New York joined in? The answer is that the big-government patronage model is still working for them--just. But in ten years or so some presidential candidate will be talking to his rich supporters about the bitter clingers. Only this time they won't be the bitter clingers of western Pennsylvania, devastated by the hollowing out of unionized manufacturing. They will be the bitter clingers of the huge government sector that collapsed in the budget cuts of the 2010s.

Wednesday, November 10, 2010

The GOP and Minorities Canard

They'll have to come up with another one pretty soon. Just when the cognoscenti wrote off the Republican Party as a hopeless collection of angry white guys, it was 2010 and Republicans started electing black, brown and female candidates to office up and down the ballot.

It's not just that Republicans are electing young, interesting candidates, writes Michael Medved, although they are.

The Democrats, in other words, have become a party of shop-worn retreads while the GOP bench is full of next-generation leaders of potential national stature, including Governors Chris Christie of New Jersey, Bobby Jindal of Louisiana, Tim Pawlenty of Minnesota, Rick Perry of Texas, Mitch Daniels of Indiana, Senators John Thune of South Dakota, Scott Brown of Massachusetts, and many more.

First of all, Republicans are electing Hispanics.

After the recent elections, skeptics can no longer deride the GOP as an all-white party of grumpy old men. Marco Rubio, 39, became the new Senator from Florida while fellow Latino Republicans Bryan Sandoval in Nevada and Susana Martinez in New Mexico became the nation’s only two Hispanic Governors. Jaime Herrera, age 31, captured a Democratic Congressional seat in Washington State, while Raul Labrador did the same in Idaho. Two more Hispanic Republicans-- Bill Flores and Quico Canseco—knocked out incumbent Democrats in Texas.

Then you have South Asian Americans and African Americans.

In South Carolina, Indian-American Nikki Haley won for Governor while black conservative Tim Scott beat Strom Thurmond’s son (among others) for a Congressional seat. Alan West, an African-American Iraq War hero, trounced an incumbent white Florida Democrat.

Charles Krauthammer has described the 2010 election as a "reset," that gets the party strength back to 2004 before GOP fatigue set in. But the 2010 result seems to go further than that. It seems to be knocking the predictions of an enduring Democratic majority out of the ballpark. Especially when you add into the mix the entry of conservative women into the mix. Yeah, it's true that conservative women like Sarah Palin, Sharron Angle, and Christine O'Donnell don't get no respect. But here's a prediction. You ain't seen the last of conservative women in the political arena. The déclassée ladies from State U ain't gonna take the derision of the liberals lying down.

Women have spent the last century getting into the public square. The first thing they experienced was politicians offering the services of big government to liberate them from the hardships and the drudgery of the ages. With that liberation women could have careers just like men!

Well, it didn't turn out quite as promised, because most women aren't particularly interested in the greasy pole of careerism, and they aren't that excited about trashing their families and short-changing their children. So now women, led by conservative women, are trying to work out a culture that honors women as women rather than trying to turn them into men but without all the aggression.

It's a new era. You could call it post-racist, post-sexist, and definitely post-liberal.

And in this new era, big-government liberalism is turning out to be on the wrong side of history.

Tuesday, November 9, 2010

Bernanke Tries to Float Homeowners

If you want to boil national economics down to one issue, it would be this: When debtors get underwater, it messes up the economy.

The reason for this is simple. Modern capitalism runs on credit (means faith). The faith that runs the credit system is that the other guy can make his responsibilities.

A bubble is a situation where a lot of people borrow money to buy assets which subsequently plunge in value. So these plungers end up underwater. If they were to sell their now-depreciated asset they would still have to find extra money to pay off their debt. It doesn't take a genius to figure out that the economy is going to be in real trouble when millions of people are in this position, and are frozen in place hoping that, if they keep servicing their debt, things will turn out OK. The capitalist economy needs to have people freely trading and producing, not cowering in fright.

In other words, for capitalism to work, people must be able to cover their losses.

So now you can see what Ben Bernanke, Chairman of the Federal Reserve Board, is doing with his "QE2" money printing. He is trying to float the boats of the millions of people with upside-down mortgages. Once those boats are floating again then the millions of folks can sell their houses, they can move to new jobs. They can start to live again.

The cost of all this of course is enormous losses for the widows and orphans that own dollar-denominated assets. Because the whole idea is to devalue the dollar. You devalue the dollar and home prices rise. Home prices rise and underwater homeowners get to breathe again. Homeowners get to breathe and the economy recovers.

We've done this several times since the government asserted complete control of the credit system in 1913 with the establishment of the Federal Reserve. We did it in the 1930s. We did it during and after World War II. We did it in the 1970s when the US went off the Bretton Woods system. We did it after the Plaza Accord in 1985. We did it after the Mexican meltdown in 1994, the Long-Term Capital Management failure in 1998, the tech bubble in 2000, and the real-estate bubble in 2007-08.

Some day soon, it's going to be time for sensible, practical Americans to admit that the government has made a right mess of its constitutional right and duty to "coin money, [and] regulate the value thereof".

Once we've admitted that, then it will be time to do something about it.

Monday, November 8, 2010

Blacks Stay Home in 2010

You could have seen this one coming. "Black Americans voted with their feet in the 2010 midterm elections".

Yep, that's one of the reasons that the GOP did so well. Minority voters weren't quite as enthusiastic as they were in 2008. Writes black conservative Lurita Doan:

But why is this surprising? Consider: unemployment is greatest among African Americans, with the Bureau of Labor (BLS) statistics reporting in Table A-2, unemployment of 29% for Black American adults... [I]f you consider that BLS reported that for Black Americans between the ages of 16-19, the unemployment rate is a stunning 48%, this kind of disenchantment with an administration that promised so much, but delivered so little, should be expected.

And if minority voters aren't convinced by the unemployment numbers there's the clear signal from the defeat of reformist Mayor Fenty in Washington DC by the teachers union. Democrats care about teachers; they don't care about kids.

There's really only one way forward for blacks, now that we've had our First Black President. That's the good old Anglo-Saxon Protestant way symbolized by freshman Rep. Tim Scott (R-SC), who won the predominantly white 1st Congressional District in South Carolina. What does Tim Scott believe, asked Zev Chafetz?

What, I asked, would be his message if he is sent by the party to evangelize among African-American Democrats? “Faith in God,” he said. “School choice and vouchers. And private enterprise. I want people to know that the American Dream is still alive and well, and I’m living proof.”

African American Scott was an indifferent high-school student but a businessman mentor and Bible study in college "gave me confidence that I could think my way out of poverty."

Here's my prediction. The real importance of the Barack Obama presidency is that it will free African Americans from their faith in an earthly savior. They will turn to faith and self-reliance. They will return to the party of Lincoln and in another generation you will not find a more staunchly Republican group than middle-class blacks.

One thing you can learn from Bible study is this: "put not your trust in princes." Prince is an old-fashioned word for politician.

Friday, November 5, 2010

ObamaCare: The One Thing Needful

Many people are wondering: Why? Why did Nancy Pelosi and Barack Obama push through ObamaCare in the teeth of opposition from the American people and why did they sacrifice their majority in the House to do so?

The answer is simple. If you are a Democrat you believe that you only get a chance to enact progressive legislation once in a generation. You know you'll pay for it but one thing keeps you going. You know that, whatever the cost at the next election, the new social benefit you enacted will never be repealed.

Obviously this Democratic faith will endure until it is refuted by the facts of experience. Obviously, one fine day, a glorious Democratic progressive legislative achievement will get repealed by a Congress and signed by a president elected to do just that. And that will be the end of liberalism as we know it, for liberalism is the idea that you make society more equal, more dignified, and more just with gigantic government programs like Social Security, free education, and government health care.

The great political question of the next five years is whether in fact the American people really want the Republicans to repeal ObamaCare. If the American people want that then they will know what to do. All they have to do is elect a Republican Senate in 2012 and a Republican president. That's all it takes.

If the American people do that then it will be the end of the liberal dream. Because the American people will have demonstrated that it is possible to repeal a glorious government entitlement.

Will Republicans get to do this? Well, there is one thing to keep in mind. When Democrats passed Social Security most people didn't have a pension. When Democrats passed Medicare most old people didn't have health insurance. But today, in 2010, most people already have health insurance and they report that they are pretty happy with it. ObamaCare is extending subsidies to the 30 million without health insurance. Obviously, the rest of the American people are going to have to pay for that. They are going to have to pay for it in higher taxes and/or in higher health insurance costs and/or reduced access to health care.

I ask you: what do you think that the American people think about that? And what do you think the American people are going to do about that?

Wednesday, November 3, 2010

The Hard Road Ahead

The results of the mid-terms were good, but not great. Even so, as usmidtermelections.com shows, it was about the second best showing for Republicans since 1900.

But clearly, union muscle helped Democrats in California and Nevada to get Barbara Boxer and Harry Reid over the finish line and back into the Senate.

What we can understand on the morning after is the hard road ahead. For sure, the voters rejected Obama and the Democrats. Now we have to get back to work.

But the long-term prospects are favorable. Let's look at three reasons for liberals to tremble.

There is no more money The big idea of liberalism was to construct a rational system to deliver vital social services that people on their own would not provide to their fellow citizens. But the trouble with this plan is that when you hand any problem to government it just ends up as a patronage program. And you end up promising more loot to your supporters than you can possibly deliver. That's what we have in America today: a huge bloated government that pays a ton of people a lot of money to do nothing. Eventually government will renege: on its promises, on taxes, and on its debt.

Meaningless lives The big idea of liberalism was to liberate people from the yoke of necessity so they could live intelligent creative lives. There's just one problem with this. If you take away the struggle of life, the grind of work, the obligations to loved ones, then you are left with nothing but dust. For the ordinary person to make a difference, they must work, and marry, have children and raise them. Off in the corner some talented genius will come up with an original creative work. Good for him. But society cannot be organized for the benefit of the occasional talented genius. Sure, it works pretty well for elite liberals: selective universities, interesting sinecures, opportunities to help the powerful. But when the ordinary people are reduced to beneficiaries of compulsory government programs, forced to government schools, government pensions, government health benefits, what's the point? You end up as an eternal teenager playing with grownup toys, but denied the dignity of living as a free citizen who can make a difference.

Established church of liberalism The big idea of liberalism is that there should be a wall of separation between church and state. To view this in a larger perspective we could say that we need to keep a distance between the moral/cultural sector of society, the realm of hope and faith, and the political sector, the realm of rules and force. Liberals fail to understand that a secular established church of liberalism is just as much a breach of the separation of church and state as the old established churches of Christianity. The problem is that when you combine church and state the state ends up dominating the church. The spiritual fervor of the religious community withers away and the only thing you have left is the power principle of politics. All the great government programs amount to the legislation of liberal morality. There's a moral case to look after the old folks. But should we legislate support and force everyone to support old people? There's a moral case to make sure that every child gets an education. But should we legislate morality and force everyone to support a government child custodial system? There's a moral case to relieve the poor. But has a government poor law that legislates morality and forces people to support government poverty bureaucrats ever resulted in anything but misery for the poor?

We will see liberals stumbling and bumbling all over the place in the coming years. They will use every trick in the book to preserve their power. But it won't work. Because liberals amount to a corrupt aristocracy that has forgotten that an aristocracy is supposed to be the rule of the best, not the rule of the best-connected.

If that isn't enough, there is the problem of the economy. Since the Obama administration doesn't believe in cutting spending, and will have a problem getting any tax increases, it has resorted to a policy of inflation. That is what "QE2" means. By the spring of 2012 this policy should be delivering significant inflation and some new asset bubble.

The American people will not deal kindly with the president that has screwed up the economy for four straight years.

Tuesday, November 2, 2010

To Lead the White Working Class

Yesterday we looked at the Seven Habits of the Working Class, as tabulated by Henry Olsen. Olsen got his info from Patrick Muttart, "former chief of staff to Canadian prime minister Stephen Harper."

The seven habits included: Hope for the future, Fear of the present, Pride in their lives, Anger at being disrespected, Belief in public order, Patriotism, and Fear of rapid change.

I wrote that conservatives differs with the white working class on two of those factors: Fear of the present, and fear of rapid change. Conservatives tend to be competent people that expect to come out all right in the future, but the white working class understands that it is economically marginal; that is why the white working class has, sensibly, voted for a big government safety net.

If conservatives want to get the support of the white working class we have to demonstrate that we have concrete, practical plans to provide a social safety net that is better than the government safety net provided by big government. That may not be hard to do in the near future because liberals have spent all the money and the welfare state will have to renege on its promises. It's a Fram oil filter problem. Do we renege now, or do we renege later?

Now let's look at another factor: Anger at being disrespected. Let's look at Olsen's take on that:

This is the flip side of their pride. Working-class voters are very cognizant of their status in American life. They rarely occupy executive positions in their jobs and are consumers rather than producers of ideas. They feel keenly this relative lack of control over important features of their lives, and resent being ordered about as if they were merely pawns in someone else’s grand plan. They particularly dislike having their lives belittled as unsophisticated or inferior to the lives of educated or wealthy folk.

Attention, liberals and President "Bitter Clingers" Obama! Yep, when liberals go around talking about "facts and science and argument" and people not thinking clearly when they are scared, the white working class is liable to ask "are you talking to me, boss?" There couldn't be a clearer demonstration of President Obama's little problem with the voters. It's the liberal presumption that liberals are more intelligent than ordinary people and that the most intelligent should rule.

OK, so President Obama and the liberal Democrats are impossibly patronizing and elitist. But what about conservatives and Republicans?

I have two words for you: Sarah Palin.

Say what you like about Sarah Palin (and liberals certainly have--thanks, liberals) but Sarah Palin is a successful politician whose shtick is pitch-perfect for the white working class.

If the white working class is now up for grabs, and the Democratic Party is hopelessly elitist and condescending, which conservative politician would be the perfect foil for 2012? Which conservative politician would be most likely to hammer out a platform that speaks volumes to the white working class?

OK, put it another way. Which politician will infuriate the liberals and provoke them into saying snobby and mean-spirited things that will speak volumes to the white working class and uncommitted moderates in general?

Yep. Sarah Palin.

Monday, November 1, 2010

What the Working Class Wants

In a powerful article on the failures of Obamism Henry Olsen lists the seven cultural indices of the white working class.

  • Hope for the future
  • Fear of the present
  • Pride in their lives
  • Anger at being disrespected
  • Belief in public order
  • Patriotism
  • Fear of rapid change

Looking at that list, conservatives can say that we align automatically on most of them, but on two we have a problem: Fear of the Present and Fear of Rapid Change. For it is on those two items that the working class clings to the government welfare state. And it is there, it seems to me, that conservatives can and should work to prove to the working class that a non-government welfare state will help them and give them a better life: opportunity as well as security.

Let us bring this down to earth. If conservatives want to reform Social Security we must erect institutions that demonstrate to the working class that their savings won't be at the mercy of Wall Street. If we want to reform health care we must demonstrate to their satisfaction that the new system really will be safe and secure for them: that they won't be chucked into a second-rate nursing home for the last years of their lives. If we want to reform education then we have to persuade the working class that they will be able to afford a privatized system, one that values hands-on work as well as academic work.

Conservatives have a once-in-a-generation opportunity to develop a governing philosophy that converts our limited-government notions into practical ideas that communicate to the working class and also deliver for them.

It is not an accident, of course, that Sarah Palin almost seems to have been sent from central-casting to be the leader that can connect between conservatives and the working class. But you could say the same of Governor Chris Christie (R-NJ) or even Governor Mitch Daniels (R-IN).

Meanwhile I am still holding out for an 80-seat Republican pickup in the House of Representatives tomorrow.