Tuesday, May 31, 2011

NY-26 and Splitting the GOP Vote

The fact is that it is not too hard to split the Republican vote. In 1992 Ross Perot did it (with or without help from the Clintons). And in the NY-26 special congressional election a perennial Democratic candidate, Jack Davis, ran as a "Tea Party" candidate, spent millions of his own money, and gave the election to the Democrat.

Frankly, I'm not sure that this is as big of a problem as Clark Judge thinks it is. Why? Because the tactical win that Democrats get from splitting the Republican vote doesn't help them strategically. So Bill Clinton won the 1992 election with the help of Ross Perot. But by governing way to the left of the electoral center he set up the massive Republican win in 1994, which gave the Congress to the GOP for the next 12 years with a hiccup in 2001-02.

So the Democrats managed to split the Republican vote in NY-26 in a special election in May 2011. Maybe President Obama can demagogue the Mediscare issue for a reelection win in 2012. But the facts on the ground are still facts. Medicare is heading for the rapids. The whole federal budget is heading for the rapids. Pretty soon there will be no more money.

If the Democrats really care about seniors they would be working to craft some kind of a bi-partisan deal to repair Medicare's finances in the long term. If they really cared they would get the government out of Medicare except for direct vouchers for those that need them.

But that is not how Democrats think. They are politicians; they think in terms of winning the next election. And the way to win elections is to get people scared. The way to keep peoples' votes long term is to keep them dependent.

The only problem that Democrats have is that the majority of the American people don't want to be complete dependents on the government. So the only way they can win is to gin up special situations. They must destroy George W. Bush in order to win back the Congress in 2006. They need a complete financial meltdown in 2008 to get inexperienced Barack Obama past the finish line. They need a fake-a-rama Tea Party candidate to win a special election.

But in the end the US is a center-right country. And all the political shenanigans in the world can't change that. They just make it more difficult for the American people to get where they want to go. And that's a shame.

Monday, May 30, 2011

Remember the Fallen

The men and women that fell in America's wars did not, usually, die protecting their homeland. They died for an idea.

The prime example is Memorial Day itself, the memorial of those that died on the battlefields of the Civil War. The question at issue, directly or indirectly, was the question of plantation slavery, a modern capitalist idea first developed by the republic of Venice and brought to hideous perfection in the sugar plantations of the West Indies and the cotton plantations of the Deep South.

So it has been ever since. The Spanish-American War was about colonialism; World War I was siding with Western European democracy against Central European authoritarianism. World War II was a battle against fascism--a secular religion that collapsed society into the national state. Then came the Cold War, the battle against communism--a secular religion that collapsed society into the national state. Now we are battling against the last holdouts against democratic capitalism, the Islamic extremists of the Middle East.

All those that fell in those wars all fell for the idea that we should blend political and economic power rather than allow one or the other to dominate.

Of course, the United States is not a paragon of virtue. It has not always pursued its vision to make the world safe for democratic capitalism with perfection. It has succumbed to the temptations of power; it has got into quarrels that it should have kept out of. But the U-turns of the Obama administration, on Iraq, on Guantanamo, on renewing the Patriot Act, have proved that US foreign policy is not just ginned up by right-wing cliques, but part of what America means.

The United States of America is a commercial democratic republic and it instinctively uses its power to nudge the world in the direction of democratic capitalism. It can't make everyone into democratic capitalists, but it can show how well it works, and it can make life difficult for thug dictators and thug activists throughout the world that raise a flag against the Pax Americana.

In the day-to-day slog of this work it often seems like nothing changes. And then you look around and notice that Germany is the leading democratic country in Europe, the Soviet Union doesn't exist. And you notice that India and China, those ancient civilizations that took 20th century detours into socialism and communism, are trying to make up for lost time in bringing the benefits of capitalist prosperity to their peoples.

Remember the Fallen. They did not die in vain.

Friday, May 27, 2011

Palin and the White Working Class

Just in time for vacation season, Gov. Sarah Palin (R) has tricked out a bus for a One Nation tour of the Northeast. Here's the announcement on SarahPac.com:

This Sunday, May 29th, Governor Palin and the SarahPAC team will begin a trip through our nation's rich historical sites, starting from Washington, DC and going up through New England. The "One Nation Tour" is part of our new campaign to educate and energize Americans about our nation's founding principles, in order to promote the Fundamental Restoration of America.

In other news, Ronald Brownstein of the National Journal reports that the most demoralized group in the nation is the white working class. Working class whites used to be the overwhelming majority, and

whites who have not completed college remain the backbone of many, if not most, communities and workplaces across the country.

They are also, polls consistently tell us, the most pessimistic and alienated group in American society.

No surprise there. The "average high-school-educated, middle-aged man earns almost 10 percent less than his counterpart did in 1980."

But here's the kicker. Minority men have done worse, and have suffered just as much in the recession. But minorities are optimistic. "63 percent of African-Americans and 54 percent of Hispanics said they expected their children to exceed their standard of living." Only one third of the white working class believe that.

Well we know what is going on. It is all about religion. America's secular religion, run by our liberal friends, has spent the last 50 years telling minorities how wonderful they are and how liberal politics will transform their lives. And liberals have been ostentatiously spraying taxpayers' money at them.

A century ago, the Progressives and then the New Deal liberals were doing the same gig--for the working class. And the working class believed them.

But now, liberal presidential candidates sneer at the white working class as "bitter clingers." All the benefits they showered on the white working class have melted into air. Even the foundations of the liberal deal with the white working class, Medicare and Social Security, are tottering.

And the white working class has been flip-flopping between the Democrats, that used to love them, and the Republicans, that can't quite bring themselves to seduce them.

Until now.

When Sarah Palin mounts a bus tour with a tricked-out bus, and starts at the Rolling Thunder motorcycle ride at the Pentagon on May 29, 2011, you know what it is all about. It is about connecting with the white working class. It is about a Fundamental Restoration of the white working class. Because if Sarah Palin can talk the white working class out of its funk and get it to believe in itself again...

All I can say is that I'll bet the other GOP presidential contenders right now are thinking: "Why didn't I think of that?"

Thursday, May 26, 2011

Medicare, Mediscare

The general line on the GOP defeat in the special election in NY-26 is that the Democrats successfully demagogued on Medicare. This seems to have lifted Democratic spirits and disheartened Republicans.

Actually, I don't think that the Democrats' Mediscare strategy will be all that effective. Sarah Palin has already shown how to demagogue it right back: "death panels".

The tactical situation on Medicare depends on the skills of individual politicians. The larger picture is quite simple.

On its current trajectory, Medicare is going to eat the federal budget and maybe the whole economy.You can see that in the CBO's Long Term Budget Outlook (Medicare is the red band):

So it's pretty clear what has to happen. Wealthier older Americans are going to have to pay more for their health care, and in return, hey should demand the right to structure it the way they want it. Poorer older Americans, people that won't or can't put up money of their own, are going to have to be rationed.

The Ryan Plan does that. The Obama Plan, hidden in ObamaCare with its Independent Payment Advicory Board or "death panel", is a health care rationing plan for all Americans.

There's a tantalizing piece from Daniel Foster on a meeting between former President Bill Clinton and Paul Ryan. Here's the money quote from Bill Clinton:

I think the Democrats are going to have to be willing to give up, maybe, some short-term political gain by whipping up fears on some of these things — if it’s a reasonable Social Security proposal, a reasonable Medicare proposal. We’ve got to deal with these things. You cannot have health care devour the economy.

Actually, I believe that the Democrats are never going to give up short-term political gain on Medicare. They are always going to argue that any cuts in any government program puts grannie out in the street. But the Republicans also have a line on demagoguery, and they can hammer home the line on unelected bureaucrats getting in between patients and doctors and rationing care.

I suspect that the nation will be making a grand political decision about all this next year. With a bad economy, inflation taking off, housing barely out of the doldrums, and entitlements all on the political agenda, we are going to get a memorable political year in 2012.

While the political professionals all seem to like the safe hands of Govs. Romney, Huntsman, and Pawlenty to lead the GOP charge, I still hanker for the political skills of Sarah Palin. Think of the US in Normandy: Palin as Gen. Patton and the other chaps as Gen. Bradley. Everyone seems to think Palin is crazy, but I think she is crazy like a fox.

Wednesday, May 25, 2011

Precautionary Principle: License for Activists

Nothing seems more reasonable than the Precautionary Principle, that it is better to be safe than sorry. And it has become the guiding principle of the environmental movement. In the Wingspread Statement, it is defined thus:

When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically.

In this context the proponent of an activity, rather than the public, should bear the burden of proof.

The process of applying the Precautionary Principle must be open, informed and democratic and must include potentially affected parties. It must also involve an examination of the full range of alternatives, including no action.

All seems well, but as Jonathan Adler writes, in practice it is profoundly incoherent. He quotes Cass Sunstein:

The precautionary principle, for all its rhetorical appeal, is deeply incoherent. It is of course true that we should take precautions against some speculative dangers. But there are always risks on both sides of a decision; inaction can bring danger, but so can action. Precautions, in other words, themselves create risks—and hence the principle bans what it simultaneously requires.

In practice, of course, the Precautionary Principle is a power tool that allows the cultural and political elite to stop stuff they don't like, for it is easier to raise fears about good new ideas than to do something about bad old ideas. Thus, writes Adler, the precautionary principle is used to "burden private actors, most notably corporations, that propose altering the environmental landscape in some way or introducing a new product or technology into the stream of commerce." The problem is that the precautionary principle doesn't address the fact that while there is a risk from doing something, there is also a risk from doing nothing. Elites and governments across the world have insisted that we "do something" about global warming even though it is completely uncertain what the effects of global warming on humans will be, if there is any.

No doubt, the precautionary principle relies on the tendency of people to "dislike losses far more than they like corresponding gains," and there is also the human tendency to wait on a developing problem until it is clearly a serious problem.

But the big problem with the precautionary principle is that it hands government another weapon in its armory of power tools. Any special interest can use the precautionary principle to game the political system. And since the precautionary principle requires artful and articulate people to deploy it, you can understand why the educated elite would like it.

The bottom line is that anything that gives the government more power is questionable on its face. Government is force, and there are some things in the world that can only be done with force. But humans are social animals, not regimental animals, and most things in this world can be done best by persuasion, cooperation, and exchange.

The problem of government is to limit government. There is no pressing need to give governments more ways to deploy force.

Monday, May 23, 2011

Things Liberals Believe That Ain't So. Part XXVII

It's not that liberals believe in power, or that liberals believe that they know best, or that liberals believe they are more evolved than other people.

The big problem is the things that liberals know that ain't so.

And one of the things that liberals know is that corporations are uniquely powerful entities that must be ruthlessly controlled. Otherwise they will take over and return us to the days of the early industrial revolution.

That's what the chaps at The Nation believe, and that is what all the liberals believe in the precious places, like Cambridge, Berkeley, and Austin.

But here are quotes dug up by Kevin Williamson. Surely, if the sainted liberal that invented Keynesian economics, John Maynard Keynes, thinks that businessmen are wimps, then it must be so.

Here is Lord Keynes, the inventor of modern Keynesian stimulus, writing after the end of World War I when everyone was enraged about "war profiteers."

We are thus faced in Europe with the spectacle of an extraordinary weakness on the part of the great capitalist class, which has emerged from the industrial triumphs of the nineteenth century, and seemed a very few years ago our all-powerful master. The terror and personal timidity of the individuals of this class is now so great, their confidence in their place in society and their necessity to the social organism so diminished, that they are the easy victims of intimidation.

So just what are we supposed to believe about those awful businessmen, demoralized by a few radical politicians?

Here now is Keynes writing to FDR. Here is what he said about businessmen.

Businessmen have a different set of delusions from politicians, and need, therefore, different handling. They are, however, much milder than politicians, at the same time allured and terrified by the glare of publicity, easily persuaded to be “patriots,” perplexed, bemused, indeed terrified, yet only too anxious to take a cheerful view, vain perhaps but very unsure of themselves, pathetically responsive to a kind word. You could do anything you liked with them, if you would treat them (even the big ones), not as wolves and tigers, but as domestic animals by nature, even though they have been badly brought up and not trained as you would wish.

Yet our liberal friends insist that businessmen are dangerous carnivores feasting off the browsing herbivores of the middle class, and that liberals with elephant guns are needed to keep the businessmen in their place.

It really isn't so, liberals. The dangerous ones are the crony capitalists: the bankers that politicians need to float their paper and help deliver easy money, the green capitalists feasting on the politicians' fantasies of cheap, clean energy, the Iowa corn farmers earning fat profits from the politicians' ethanol scam.

In other words, the only bad businessman is a crony capitalist created by some stupid liberal program.

Thursday, May 19, 2011

Presidential Silly Season

Oh dear. So Mitt Romney has doubled down on his awful RomneyCare and Newt Gingrich has put his foot in it by trashing Rep. Ryan's budget plan, a plan so radical that it puts off Medicare reform for ten years.

We must be in the presidential silly season, as candidates maneuver and the media and the pundits look for cheap laughs.

All the old tropes are appearing. First of all, we have the usual complaint that all the Republican candidates are midgets. In fact most of them are seasoned and successful politicians. Mitch Daniels has been governor of Indiana since 2005. Before that he was head of the federal Office of Management and Budget, a corporate officer, a think tank president, and a political staffer. Tim Pawlenty was a two-term governor of Minnesota, and before that a state legislator and city councilman. Newt Gingrich was the guy that ended forty years of Democratic control of the House of Representatives. If these chaps don't make the grade then what exactly do people consider a top-drawer candidate?

If you don't like soundness and solidity in Daniels and Pawlenty or the excitement of Newt, there are the girls: Sarah Palin and Michele Bachmann. Our liberal friends like to sneer at them, but I suspect that they will both prove much better politicians than their enemies believe. Bachmann is in her third term in Congress and before that served for six years in the Minnesota State Senate. Before that she was an activist in pro-life and education politics. Sarah Palin has been in electoral politics since 1992 as city council member, mayor, and governor. Really, what's not to like?

Of course, my taste runs to the girls. I ask: Is America ready yet for a conservative woman president? Is it, liberals?

Let's face it, the politics of the next generation is going to be about trimming the welfare state down to size, converting wasteful government programs in health, education and welfare into rational, sensible, compassionate social cooperation where government plays a limited backup role, and people, the American people, actively engage in these vital social and moral activities and turn away from the current culture in which we pay our taxes and leave all the dirty work to government functionaries.

What better than for a woman to be in charge of this immensely difficult work, transforming America from the corruption and cronyism of Obama's Anmerica into nothing less than the best it can be?

Wednesday, May 18, 2011

Live by the Sword

For over a century labor unions have been the darlings of the center left. Labor unions and their members provided the horse-power for the progressive agenda and the educated elite responded with privileges and government largesse.

The progressive agenda has been a mixed blessing for the working man. It has privileged some workers. For half a century auto and steel workers lived the life of Riley on government privileges, but now Detroit is a wasteland.

For half a century government unions have delivered fabulous wages and benefits to their union members. But now it looks like the worm is turning. As Josh Kraushaar writes, unions are taking a big hit this year, and not just from crazed Republican governors like Scott Walker (R-WI). Unions think the public loves them, but now even Democratic governors are giving them the push.

They lost in Connecticut, where a Democratic governor who was elected on the efforts of labor, Dan Malloy, abruptly issued pink slips to about 10 percent of the unionized public workforce this month after negotiations hit a standstill—with threats of more to come. His approach worked: Labor leaders conceded to $1.6 billion of givebacks of wage and pension benefits, with concessions in collective bargaining. This from the governor who has framed himself as “the anti-Christie”—someone who would run counter to the way New Jersey GOP Gov. Chris Christie antagonized public unions.

Look, there is no rocket science here. Politicians love you to death when they think you can deliver money and votes. But if it looks like you could be a liability, politicians are long gone.

There's a bigger story here. In the 19th century politics changed from an elite game of landowners and absolute monarchs to a game of popular democracy. So the new democratic politicians got all lovey-dovey with the working man, and offered them privileges and benefits from the government in exchange for their votes.

If you ask me, the working man would have done better to follow the advice of cigar-maker Samuel Gompers and keep away from the left-wing political class. Politicians don't give a damn about "people like me." They just care about getting elected. So the center left doesn't really care about helping the working man get into the middle class, or getting a decent competence in the burgeoning city economy. It just liked the idea of being the source of government benefits and getting working people to look to the government instead of their authentic social institutions.

Oh dear. Now that the government unions have looted the government coffers, encouraged by the politicians, the voters are mad. So we can expect that the politicians will now say, heck, I never liked those union thugs anyway. In my view the Democrats have been leading the labor unions towards a cliff in the last decade. The Card Check bill that the Democrats dangled in front of the unions was probably never a real possibility. And the current tilt at the National Labor Relations Board, symbolized by the action against Boeing for expanding its aircraft production in South Carolina, is going to end up with a humiliating defeat for labor.

The conservative line on this is that people should not look to the government for security. They should look to their own social and cooperative organizations. They should not get in bed with politicians and look to them for privileges and benefits. Because it will all end in tears.

Human beings are social animals, not administrative animals. You get a much better society when people cooperate with each other than when an administrative elite orders people around. But some people have to learn this the hard way.

Tuesday, May 17, 2011

Lay Off the Dogs and Chimps

Today the American Spectator's Ben Stein very properly takes out after the folks piling on the accused rapist Dominique Strauss-Kahn, head of the International Monetary Fund. Writes Ben:

In this country, we have the presumption of innocence for the accused. Yet there's my old pal from the Ron Ziegler/ Richard Nixon days, Diane Sawyer, anchor of the ABC Nightly News, assuming that Mr. Strauss-Kahn is guilty.

Quite right, Ben. But here's what troubles me. We've heard a lot of people talking about "crazed chimpanzees" in connection with DSK, put like we heard a lot about "sex poodles" when former Vice-President Al Gore was accused of getting aggressive in a San Francisco hotel one night. Isn't it about time we stopped pretending that animal sexual behavior is somehow more violent than human sex?

I'm a little disappointed that Ben Stein, a noted dog-lover, and owner of "Puppy-wuppy," didn't raise this issue.

Is it really the case that chimpanzee sex is comparable with human rape? Or that the behavior of Al Gore towards a hotel masseuse made him into a "sex poodle?"

Now it is true that chimpanzee sex is highly hierarchical. The alpha chimp male gets most of the sex, from accounts that I've read, to the extent that about 25 percent of the chimplets born into a troop of chimps get to be fathered by him. It is the low-status males that have to grab a piece of the action while nobody is looking. But hey, the alpha chimp doesn't get his access to females by brutalizing them. He gets it by brutalizing the other male chimps.

And what is it about poodles and sex? Are we talking about toy poodles barking up someone's leg? We cannot, surely, be talking about standard poodles. Standard poodles are French hunting dogs, adapted for swimming in cold French water in winter. They are friendly chaps and full of life and vigor, canine athletes, and have nothing in common with ageing male politicians getting aggressive with the hotel help.

It's time to lay off the dogs and the chimps, and create a new entry in the American Psychological Association's upcoming DSM-5. How about Luxury Hotel Aggression Syndrome?

Monday, May 16, 2011

Obama's Upside Down Economy

Hugh Hewitt's political guru chappie Clark Judge has three political-economic "data points" to think about this morning. Here they are:

First, there's a report on Obama's stimulus, reported by Powerline blog. The Obama stimulus created/saved a net 450,000 government jobs. The Obama stimulus destroyed/forstalled about 1,000,000 private sector jobs. So the net stimulus effect was to destroy about 500,000 private sector jobs. Nice going Mr. President.

Second, in the Wall Street Journal, Edward P. Lazear reports that in a healthy economy the US generates about 5.5 million jobs a year. Right now it is generating about 4,000,000 jobs a year as it has for the last two years. Nice going Mr. President.

Thirdly, the revision of unemployment and inflation data may be seriously under-counting both unemployment and inflation, according to the chaps at Economic Policy Journal. This is not necessarily President Obama's fault, but probably politicians ensuring that the high inflation numbers of the 1970s never happen again.

The point is that the ruling class is clearly failing, and failing badly. Conservatives say that the solution is simple. Don't let the politicians run the economy. Politicians deal in winning elections, and that has nothing to do with growing the economy. What we need is a greater separation of powers to keep the politicians from smashing civil society to pieces in their quest for political power. And we voters can help. Whenever some politician comes down the road promising to "fight" for us, we need to say No Thanks, chum. Because the politician is going to be "fighting" with our money.

Really, it's not that hard.

Friday, May 13, 2011

Obama's "D" in Demagoguery

Maybe the president knows something that I don't know. Maybe Latinos just love talk about moats and alligators at the border. But I don't think so.

I don't think the president does demagoguery very well. Charles Krauthammer writes in "Demagoguery 101" that the president, in his El Paso immigration speech, was trying to gin up votes rather than advance a national conversation on immigration, and I agree. But I don't think that the president was conducting a class in how to do demagoguery. I think his demagoguery is usually lame, and notably so in this case.

To be good, it seems to me, a demagogue must strike rage into the hearts of his supporters and fear into the hearts of his opponents. Think of the eight years of liberal demagoguery against President Bush.

With President Obama, on the other hand, his opponents treat his attempts at demagoguery as a joke. Moats? Alligators? Whack me with a wet noodle. And what about the president's supporters? What about the Latinos that are anxiously awaiting amnesty and the opportunity to come out of the shadows? What might they think about the president's rhetoric?

The American people tend to give the president the benefit of the doubt. That is why it is usually not a good idea for the opposition to attack the president. That's why the Republicans got into trouble when they decided to impeach President Clinton. That's why it took until 2006 for the Democrats to lay a glove on President Bush. That's why it took until the last week of the 1980 presidential campaign for challenger Ronald Reagan to move ahead of President Carter in the polls.

It seems to me that President Obama is heading for trouble with his lame demagoguery and his lame economic policy and his lame budgets and his lame NRLB beating up Boeing for moving production to a non-union state. To say nothing of the lame ObamaCare that the Democrats pushed with lame corrupt bargains to wavering senators.

What we have here is an aging dynasty that is demonstrating an embarrassing need for lame macho gestures to prove its manhood.

Instead, President Obama and the Democrats are proving the opposite. Their agenda is narrowly partisan and doesn't resonate with the majority of the American people. The president can be beaten in 2012.

Thursday, May 12, 2011

No Crony Capitalism without Government

It's all very well to remind us, as William K. Black does, that the real crooks got away with murder in the late great mortgage bubble and meltdown. Of course they did. Otherwise it wouldn't be crony capitalism.

The Office of Thrift Supervision, the successor to the S&L regulator where I worked, made no criminal referrals in the latest crisis. The Office of the Comptroller of the Currency and the Federal Reserve made less than a handful. Mortgage and investment banks also made very few referrals -- and never against their senior officers.

Putting it as concisely as possible, Black tells us:

The defining characteristic of crony capitalism is the ability of favored elites to loot with impunity and the failure of regulators to do their jobs.

But let us look at the cases he gives us.

First there is the "Texas Rent-a-bank scandal" in the 1970s. According to Joseph M. Grant in The great Texas banking crash, crooks looted $10 billion from "fifty thrifts and banks in the South and Southwest."

Notice something? "Thrifts" were special government-subsidized banks.

Then we have the S&L meltdown in the 1980s. Savings and Loans: government subsidized banks were caught short in the 1980s as they were forced to borrow at high short-term interest rates while their loan portfolios were all long-term 30 year mortgages at low rates.

Then, of course, we have the housing bubble in the 1990s and 2000s, at the center of which were the government-subsidized mortgage giants that were encouraging mortgage originators to sell them mortgages for low-income borrowers.

Of course the government went easy on these crooks. The crooks were just implementing government policy, only a little too enthusiastically. After all, if you are setting up a boom with easy money it doesn't take a genius to figure out that sooner or later it is all going to end in tears. So you need people running the show who aren't too worried about consequences. Otherwise your affordable mortgage boom will never get off the ground.

Look. I'm all in favor of prosecuting bad actors and crony capitalists. But to act shocked, shocked, that fraudulent mortgage origination and/or securitization is going on when you have set the system up in the first place to flood the credit markets with bad paper is nothing but play-acting.

Our liberal friends like to think of themselves as the educated ones, the tolerant ones, the supporters of science. But when it comes to the unraveling of their ideas, from the housing subsidy game to the job-training game to the whole welfare state benefits game, our liberals can go into a denial that make climate skeptics look like rank amateurs.

The simple fact is that when the government starts swinging money around it attracts bad actors like honey attracts bees. Whenever the government gets into something it is always trying to game the system. If it's Social Security then the government is giving pensions to people that haven't saved much money. If it is Medicare then the government is giving health care away to people that haven't put aside money to pay for medical costs in their declining years. If government is running welfare it means that government is giving money to people that don't work much. If government is giving money to education it means that a lot of people are going to school that don't value education that much.

Of course the bad actors come out of the woodwork and game the government's system and commit fraud. Of course the worst of the bad actors probably have good connections with politicians. Of course they do. When you are a bad actor you need some friends in high places to slap down the occasional bureaucrat that doesn't know which side his bread is buttered.

We won't crack the code on crony capitalism until we stop government creating subsidies and economic favorites.

But that means we have to break the religion many people have that you can do good with government programs and subsidies. We, the people of the United States, are a long way from losing faith in government spending, especially when it is spending on "me."

Tuesday, May 10, 2011

America's Big Social Problem

Back in the 1950s, writes David Brooks, something like 96 percent of adult men were in the labor force. Only about one man in twenty was not working or looking for work. Today, around one fifth, 20 percent of men, are out of the labor force. It's worse at the bottom, of course.

According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree.

So what does David Brooks propose to deal with this social problem? He worries about all the money we spend on Medicare when we should be spending it on the structurally unemployed.

It will probably require a broad menu of policies attacking the problem all at once: expanding community colleges and online learning; changing the corporate tax code and labor market rules to stimulate investment; adopting German-style labor market practices like apprenticeship programs, wage subsidies and programs that extend benefits to the unemployed for six months as they start small businesses.

I see. So government is the solution to this problem.

There's another way to look at this. It is to say that government is the problem. Thomas Sowell worries about one little problem, students that "can graduate from some of the most prestigious institutions in the country without ever learning anything about science, mathematics, economics, or anything else that would make them either productive contributors to the economy or informed voters who can see through political rhetoric." He is talking about the problem of over-educated people in the developing countries, graduates of government universities, that can't get jobs.

The problem is much bigger than a question of funding--or even the problem of the glut of university graduates stupid enough to spend money on a degree in underwater postmodern basket-weaving.

The problem is that government can't be trusted with education. That's because in the hands of government, education becomes captured by the teachers and special interests. For decades, high schools have turned out graduates that need remedial course in colleges. What has happened? The problem has gotten worse. Of course it has. Because angry parents and students can't fire their schools and go down the street. The education industry is too powerful.

But even the problem of government schools doesn't really address the problem. The problem was illuminated years ago by George Gilder in Visible Man. It was about a disabled ex-Marine who knocked up an underage teenaged girl. He married her and got a job at a lumber yard, and supported her and their baby. But when she reached 16 and could go on welfare and get an apartment, well, then their relationship broke apart, and pretty soon the ex-Marine broke apart too.

It's an old story, and it points out a timeless truth. The big social problem is not the suffering working class or traditionally marginalized communities or any other liberal fantasy. The problem is how to socialize the boys, and turn them towards productive work and away from their natural instinct for mayhem and rapine.

And about that, our modern educated elite has nothing to say.

All of which means that things are going to have to get much worse before we can have a hope of making them better.

We will know when there is hope. It will be when the quota conservative at The New York Times feels able to propose to his liberal readership solutions to social problems that go beyond rearranging the government programs on the deck of the Titanic.

Monday, May 9, 2011

That Magic $250,000 a Year

Various conservatives have remarked upon the significance of the Obamian $250,000 a year dividing line. Above that are the rich that must "pay a little more" in taxes and below it are--well, the liberals.

Otherwise why wouldn't Democrats be demonizing everyone over $150,000 a year, or $100,000 a year, or anyone over the median of about $50,000 a year?

Reihan Salam takes a look at this.

In an essay titled “Desperately Seeking Revenue,” Rosanne Altshuler, Katherine Lim, and Roberton Williams of the Tax Policy Center found that achieving a budget deficit of 3 percent of GDP by 2020 through tax increases on over-$250,000s would require doubling their rates, kicking the top rate to 76.8 percent.

A far less damaging strategy would be to reduce "tax expenditures", or loopholes, in the federal income tax, but that would affect liberals, especially in the $100,000 to $250,000 range, and they are the core base of Obama vote.

When our liberal friends go on about how the rich have benefited from the Reagan and Bush eras they neatly elide their own situation. For over the last 50 years there has been a huge increase in employment of experts in government, from colleges to regulatory agencies, that has hugely benefited liberals. Of course, liberals don't earn multimillion dollar salaries in these jobs but they do earn good money, often propelling a liberal couple into the six-figure income bracket.

Charles Murray is saying the same thing in his upcoming book about how well the upper-middle class has done on a variety of statistical indices in relation to the rest of America, most notably, in marriage.

The culture war is, of course, a class war between the upper-middle class, the educated elite, and the rest of the middle class. Up to now this war has been a stalemate because the liberal elite has bought the support of the underclass and other financially stressed Americans with the money of the rich (who pay 40 percent of federal income tax on 22 percent of the income).

My guess is that the major political achievement of the Obama administration is going be chopping off another limb of the Democratic coalition. With every decade it becomes more and more obvious that the administrative welfare state that tosses crumbs to the poor and the middle class is in fact government of the educated elite, by the educated elite, and for the educated elite. Everything else government does is just window dressing and tactical compromise.

In the New York Times today Paul Krugman chastises the elite for blaming the ordinary American for the mess we are in. He politely shows how the Bush elite brought all the messes down on our heads. Of course he would, he's writing for liberal NYT readers. But when you get past Krugman's partisan pot-shots, it is the educated elite of liberals that has brought the current spending crisis to a head, and it is liberals--those lucky few in the $100,000 to $250,000 a year range--that will soon feel the wrath of the people.

Thursday, May 5, 2011

Pew Voter Survey: Takeaways

The reliably establishment liberal Pew Research Center for the People and the Press has a new study of the US electorate, and David Paul Kuhn at realclearpolitics.com has a good all-round review of its findings.

In this study Pew divided the electorate into nine categories. Mostly Republicans were divided into Staunch Conservatives and Main-Street Republicans; Mostly Independents were divided into Libertarians, Disaffecteds and Post-Moderns; Mostly Democrats were divided into New Coalition Democrats, Hard-Pressed Democrats, and Solid Liberals. On the side-lines and not really connected to politics at all were Bystanders.

This "typology" contrasts with the groupings in the Pew 2005 voter survey which came out with the following: Republican-leaning groups were Enterprisers, Social Conservatives, Pro-government Conservatives; middle groups were Upbeats, Disaffecteds, Bystanders; and Democratic leaners were Conservative Democrats, Disadvantaged Democrats, and Liberals.

It's interesting to ponder on the changes to the typology. Pew has pulled Libertarians out of the Republican camp and Conservative Democrats out of the Democratic camp. They have rearranged the Republicans, blurring the ideological line between social and economic conservatives and identifying conservatives by intensity. They have created two Obama era groups, the independent Post-Moderns and the New-Coalition Democrats. It seems to me that those two groups are the most loosely attached to the Democratic camp.

But here are two interesting takeaways from the data in the new survey.

  • Once a liberal, always a liberal. Pew shows the age distribution of each group and it shows, e.g., that Staunch Conservatives (like me) are older than adults generally. One group, Post-Moderns is heavily weighted with young adults. But Solid Liberals and New Coalition Democrats track almost exactly with the national age profile. In other words, they don't become more or less Democrat as they age.
  • Hispanics aren't "hard-pressed". Looking at the numbers by race, blacks are heavily represented in the New-Coalition Democrats and Hard-Pressed Democrats (and non-existent in Staunch Conservatives). Hispanics are different. They are heavily represented in the New-Coalition Democrats but underrepresented in the Hard-Pressed Democrats category. The implication is obvious. Hispanics are much less tightly bound to Democrats. They are open season for 2012.

It is troubling for this conservative to look at the questions and their phrasing. One question asks whether corporations make too much profit. Are people really exercised about that? And there are no questions about social programs other than helping poor people too much or not enough. Are issues like education and entitlements "off the table?" Or are pretty well all voters except Staunch Conservatives agreed on the wonders of big government? And how about a question on "government has too much power" rather than government has too much waste? The answer is, of course, that if Pew were ahead of the game, asking questions that exercised 2012 voters, we would already know who is going to win.

Wednesday, May 4, 2011

Monbiot's Big Problem

Environmentalists face an impossible problem, according to The Guardian's George Monbiot. On the one hand they are pointing to catastrophe, the end of non-renewable resources, so we should cut back. Yet new resources keep appearing. So, maybe we have reached "Peak Oil." Meanwhile there is "tar sands, shale gas and coal." The predictions of catastrophe keep getting put off.

On the other hand, environmentalists are trying to get us to cut back, and people just don't do that.

In east Africa, for example, I've seen how, when supplies of paraffin or kerosene are disrupted, people don't give up cooking; they cut down more trees. History shows us that wherever large-scale collapse has occurred, psychopaths take over. This is hardly conducive to the rational use of natural assets...

All of us in the environment movement, in other words – whether we propose accommodation, radical downsizing or collapse – are lost. None of us yet has a convincing account of how humanity can get out of this mess. None of our chosen solutions break the atomising, planet-wrecking project. I hope that by laying out the problem I can encourage us to address it more logically, to abandon magical thinking and to recognise the contradictions we confront. But even that could be a tall order.

Of course, for a skeptic like me, it is the environmentalists that are doing the magical thinking.

First of all, the very word "non-renewable" is dicey. In the strict sense, everything is non-renewable. Wood is very non-renewable because on current energy consumption levels, we would cut down every tree on the planet in a couple of years to burn wood for energy. Oil is non-renewable because, obviously, there is a fixed amount in the planet. Nuclear fission is non-renewable because there is a fixed amount of fissionable material on the planet. For that matter, wind and hydro are non-renewable, but only on a time scale of billions of years.

In other words, "non-renewable" just means that we'll have to come up with a better idea some time in the near future. But that is the story of human life. When things can't go on forever, they stop, and humans think up another way to live. When environmentalists point to catastrophe, they are merely telling us that, sooner or later, we are going to have to adapt to new circumstances. Of course we will! That's what humans do.

Also, we humans have really been doing something about "trashing an ever greater proportion of the world's surface." An example I like to rehearse was told to me by a German in 1989. Germany had a real problem over pollution along the Rhine, he said. Every time there's an industrial spill we get a fish kill and a huge media feeding frenzy. What people didn't realize is that 30 years before there were no fish kills because there were no fish in the Rhine!

We should be careful of all catastrophism. Repent, for the end of the world is nigh, is a religious approach. It is very easy to smuggle it into science and then use science to legislate our moral agenda. The problem with all prophesies of the End of the World is that we might be wrong. When environmentalists predict catastrophe and it doesn't come, they begin to look less and less like rational advocates and more and more like religious cultists.

But the human, social, way to deal with problems is to adapt. We usually can't predict what will go wrong, but we humans are certainly good a responding to a crisis and all pulling together in the aftermath of disaster.

Tuesday, May 3, 2011

Bureaucracy vs. Prosperity

Compare the US Social Security system with the Chilean pension system. The US Social Security system has an unfunded liability of trillions of dollars. The Chilean pension system is celebrating its 30th anniversary and has presided over an economic boom in Chile, according to Monica Showalter.

Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.

Chilean workers are putting 10 percent of their income away in a real savings plan that will create jobs for their children when they are ready to retire. In the US, the 12.6 percent FICA tax just goes to pay current retirees. No savings; no jobs for the next generation.

There is a message here. The bureaucratic, administrative method is a dead method. It transfers money from productive uses into the political bazaar of government programs. And there is never enough, so the government always ends up cheating with the tax of inflation. But the free economy is different. There the system of credit and ownership rewards people for serving their fellows with products and services. People save for retirement and contribute to the prosperity of the next generation. They retire when they can afford to, not when they hit 30 years service in a government bureaucracy, or age 62 in the government's Social Security program. The free economy is a self-adjusting system. You want to live frugally and save money? Then you get to build a nest egg and you get to quit work when your nest egg is big enough. You want to spend it and live large? No problem, but reckon on working till you drop.

Talk to the man in the street, though, and you'll find someone that would rather rely on the government than the stock market. He believes in political power rather than economic power, in Senator Claghorn rather than Fidelity and Vanguard.

Meanwhile there is the example of Chile, where the private sector has given ordinary people 9 percent on their retirement money, compared to 1-2 percent in the US Social Security system.

Monday, May 2, 2011

Bin Laden Dead: Now What?

My argument for electing President Obama is that the nation had to put Democrats in charge of foreign policy to force them to confront reality. Democrats had spent the eight years of President Bush in opportunistically trashing everything he did, inspired by the left-wing culture that always looks for oppression and then denounces it.

The result has been gratifying, as Democrats have re-upped the Patriot Act, kept Guantanamo open, maintained rendition of terrorists, and abandoned the notion of trying terrorists in civilian courts.

Additionally, the Arab Spring has completely liquidated the Democratic idea of re-engaging the Arab political rulers.

But now, with the death of Osama bin Laden the question of the War on Terror raises its head. What is the War on Terror--or whatever you want to call it--really about? Democrats have trouble with this because of their culture of opposing oppression. This has prompted them to co-opt marginalized peoples and use them for their own purposes, as they used the working class as an excuse to build their centralized administrative state, and African Americans as an excuse to interfere in all relations between Americans that involve race. In other words, the liberal agenda is always to pluck oppressed peoples off feudal estates and slave plantations and move them onto the liberal plantation where the marginalized peoples are just as subordinate as before.

But the real movement of history has been not from one plantation to another, but the expansion of trust and the extension of horizons. Capitalism teaches us to abandon the local culture of the land, in which a lord defends his patrimonial estate from pirates and plunderers, and to submit to a new global culture of service and trust. Other people are not a threat, but an opportunity for exchange.

This new culture developed initially in the northwestern European lands, and met resistance even in Europe where the Educated Youth interpreted the new way as a new exploitation. In the last century Russia, China, and India made epic attempts to resist the new culture. China gave up in 1979 and India in the 1990s, and are now the poster boys of capitalist growth if not yet democratic freedoms.

The problem is the Arabic lands of the Middle East. Islam seems to encourage a culture that resists strongly the new culture of trust and exchange, and oil provided a source of wealth that gave the means to resist. Liberals, sympathizing with the oppressed masses of the Middle East, pat them on the head and encourage them in their resistance to the new global capitalism.

But oil-fueled Islamism ends up being a direct attack on democratic capitalism and requires the democratic capitalist nations to counterattack or at least to contain it. This is the reality that Democrats have been facing in the last two years now that they are in power. In the last ten years, the notion of Islamic extremism was personalized in Osama bin Laden. But now that he is dead, the strategic question re-emerges. What are we trying to do about Islamic extremism, and why?

It is good that bin Laden has been killed on Obama's watch, for now he and the liberal ruling class of the educated elite must decide what our grand strategy should be.

We may all hope that, when Republicans take over the federal government after the fiasco of Obamanomics, that the foreign policy of the United States will be set for the next generation in a sensible practical defense of democratic capitalism and a measured offensive against those who attack it.