Those Big Greedy Bankers

Are bankers greedy?  Are they too big to fail?  Is it a mistake to allow banks to combine deposit and investment banking?  Yes, yes, and yes.  That's the conventional wisdom today.  And maybe the conventioneers have a point.

But all these cliches miss the main point.  After all, why was it that in the Crash of 1907 the biggest, greediest banker of them all, J.P. Morgan, ran the bailout and used his own money to bail out faltering corporations?  While in the Crash of 2008 it was the big bankers that needed bailouts with the government's TARP program?

Was Morgan greedier than the banker CEOs of 2008?  Were Chase Manhattan and J.P. Morgan bigger, relative to the market, in 2008 than in 1907?  And what about Morgan?  He was all over the place in investment banking as the chap that cleaned up the many railroad bankruptcies of the late 19th century.  And did the government's Federal Reserve System do any better in 2008 than Morgan in 1907 in righting the financial ship?

This is what we need to keep in mind when we evaluate, e.g., Warren Stephens' article in the Wall Street Journal about too-big-to-fail: "How Big Banks Threaten Our Economy."  Warren Stephens comes from the Stephens banking family of Little Rock, AR. You'll remember the name from the Clinton era.  Says he:

Five institutions control 50% of the deposits in this country. They are definitely too big to fail. In a capitalist economy, there should be no such entity. We should promote competition and innovation in the financial industry, not protect an oligopoly.

 He wants to limit banks to 5% of deposits, and break up banks currently over the 5% limit, keep $250,000 deposit insurance, and separate investment and deposit banking.  And no more bailouts.  Mr. Conventional Wisdom.

But Stephens is, in my view, missing the point.  The reason that banks went belly up in 2008 was that the government was forcing them to goose their real estate loans.  Not to mention that the inflationary anti-recessionary policy of the early 2000s encouraged borrowers to over-leverage.  The activities of Fannie Mae and Freddie Mac created a whole class of mortgages issued to people that couldn't afford any decline in asset prices.  Government was behind that, and a big-time political hack, James A. Johnson, campaign manager of the Mondale presidential campaign.

If we compare 2008 and 1907 we notice an important factor.  In 1907 Morgan regarded himself as the man in charge of saving the financial system.  He reckoned it was his job to fix the crash, and his job to bail out the firms teetering on the edge of bankruptcy.  In 2008 it was the government's job to do the bailout.  The result of the 1907 bailout was a restoration of the gold standard at the old parity of $20.67 per ounce.  The result of the 2008 bailout has been a significant devaluation of the dollar that may not yet be finished.

The big problem with finance is not greedy bankers and too big to fail.  The problem is that government has taken over the financial system and has ruthlessly exploited it.  With government in control the credit system is much more leveraged than in the old days.  Big banks understand that it is government that runs the system, government that sets the rules, and government that owns it.

If we want to get a financial system that is solid and stable we need to get the government out of it.  Well, not entirely because we still need the government to be able to borrow big time when we have a big time war.  But the lesson of the 20th century is that government is lousy at guarding the financial system, because it cannot resist using the financial system as a piggy-bank.

There has to be a better way.

Krugman and the Austerians

Paul Krugman, Keynesian extraordinaire, is crowing over the failure of "austerity" in Europe to reverse the economic decline.  He writes of "austerity" policies:

According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

He means, of course, the Keynesian textbooks preferred by chaps like him.  The basic idea is to keep borrowing to maintain government handouts and to print money to accommodate the borrowing.  Sooner or later the resulting inflation lifts all asset values and the credit system starts to work again.

In the alternative universe, the recession is the natural result of an inflationary boom; it is the period of adjustment after the failures of the malinvestments of the previous boom.  You can do your adjustment any way you want, by liquidating malinvestments or by printing money.  But the underwater debt has to be cleared one way or another.

The problem is that, in the European Union, the single currency has prevented the bad actors, Greece, Spain, and Ireland, from devaluing their currencies and refloating the credit system and its underwater debt.  So they have cut their budgets a little and raised taxes a little, but not enough to make it look as if they can start to lower their government debt to GDP ratio.  Markets are not stupid; they know that a rising national debt leads to default, sooner or later.

Keynesianism is not, and never has been, an economic doctrine.  It is a political doctrine, a way for the government pitcher to get out of a jam when the bases are loaded with sovereign debt.  It rewards the recipients of government benefits and debtors with the money of creditors.  How?  Debt default and inflation hit the creditor class, people with money in government debt or securities denominated in government money like dollars.

It is important to realize what a financial crash and associated recession means.  It means that the bet that a lot of people made against the future has failed.  In the case of the Crash of 2008 the bet was made by homeowners that assumed they would have the money to service their loans and cash them out at higher home resale values.  They were wrong.  Another bet was made by politicians in expanding their budgets when the good times rolled.  Well, they were wrong, too.  So now politically connected people need to cinch their belts.

The whole point of being a politically connected person, whether you are a crony capitalist or a welfare beneficiary or a senior like me getting Social Security and Medicare benefits is that you "can't" cinch your belt.  You are a victim on a fixed income: it's heat or eat.  As for the crony capitalists, they are contributing to the future with vital services like green energy and they have paid to play.  How can they be asked to contribute?

But somebody has to pay.  That is what happens in a recession.  Profits go down, wages go down.  People turn to government to help them out and reduce their losses.  But government just takes money from other people, and usually government takes money from useful activities, where people pay for products and services and spends it on less useful activities, like cutting checks for people who do nothing in return.

The politicians don't care.  They have tame economists to justify whatever they do, whether it is "austerity" or inflation or "retrenchment" or "sound money."  People like Paul Krugman.

Keynes a Symptom, not a Cause

The current wails about "austerity" signal the real problem with the big-government welfare state.  The Wall Street Journal properly points out that the Keynesian notion of austerity vs. growth is what Candidate Obama used to call a "false choice."

Spend more and you're for growth, even if a country raises taxes to pay for the spending. But dare to cut spending as the Germans suggest, and you're for austerity and thus opposed to growth.

This is a nonsense debate that misconstrues the real sources of economic prosperity and helps explain Europe's current mess. The real debate ought to be over which policies best produce growth.

And government spending doesn't increase prosperity.  How could it?  Government spending forces one set of people to pay for the goodies of another set.  What good could possibly come from that?

The bigger issue is the unsustainability of the welfare state model.  It is analogous to a homeowner up to his ears in debt.

When you ring up a lot of debt you are anticipating your future income.  You are assuming that you will have income in the future to service your debt.  But what if things go wrong?  What if you don't get the promotion, or your workplace closes?  Then you are in a world of hurt and if millions of people have overborrowed like you then it will endanger the health of the whole economy.  As Bagehot pointed out in the 19th century, the economy depends on "sound" people managing their money with prudence.

The welfare state is the same.  It sets up a high level of government spending assuming that the good times will always roll.  People sign up for the government programs and the free stuff and reduce their work effort to match.  When there's a recession the government revenues fall off and the programs that looked affordable in the good times cause the national debt to soar.  And of course the last people on earth to think that maybe government spending should be cut are the beneficiaries of all the free stuff.  That is called "balancing the budget on the backs of the poor."

Even if we say that welfare state spending is, overall, a good thing there is still the question of how much of a good thing the nation can afford.  A century of the welfare state shows it is almost impossible to adjust the size of the welfare state until there's a crisis.  The only time that government tightens its belt is when there's a looming sovereign debt crisis or galloping inflation.  This is surely not the best way to run a railroad.

In fact, of course, the social needs that government dominates--pensions, health care, education, and welfare--are not necessarily activities that must be performed by government.  They are social needs, for sure, but the clumsy force-centered model of government is surely not the way to meet such needs, which are not best met with one-size-fits-all government.

In fact the opposite is true.  The relief of the poor should not be a responsibility shuffled off on the government.  It should be the responsibility of each of us, as individuals and as groups joined into social service organizations.  Education is the same.  We are all called to raise up and educate our children, and to be there to help with our neighbor's children, and it is monstrous to shuffle it off on government functionaries who, like government workers since the dawn of time, think only of their emoluments and pensions.

Moreover, these social tasks are particularly the interest of women.  You can tell that just by listening to the conversation of women.  Yet our society encourages women in "careers," which were originally a brilliant notion to cure men of soldiering and divert their attention to fighting for dominance in organizations for the production of products and services rather than organizations for the securing of loot and plunder.  This is what we want for women?  Did anyone ask women what they wanted for themselves?

Keynesianism is not an economic system, it is a tactic for getting government out of a jam.  In the modern economy the government's demands upon the economic system have a depressive effect.  That's because it is all waste.  But this depressive effect becomes really serious in an economic downturn.  The Keynesian tactic solves this by continuing the government programs at their pre-recessionary levels, borrowing the money that's needed to continue its handouts, and inflating the currency to create an artificial stimulus.  Usually it works, at the cost of a 20-30 percent decline in the value of money.  But in a big downturn, like the aftermath of the 2008 credit crisis, some nations will be in danger of sovereign debt default before the economy recovers.

The solution is to radically reduce the size of government.  That will have two benefits.

First, it will reduce the weight of government spending and debt on the economy and enable government to respond with huge expenditures if there ever is a real catastrophe needing government help: think major earthquake or war.

Second, it will reduce the amount of freeloading and put the freeloaders to work helping their fellow citizens by producing products and services and by neighborly volunteer effort working to solve social problems.  This will benefit the freeloaders, and help them live happier, more productive lives, and also deliver more prosperity to society as a whole.

Liberals Out of Touch

In the New York Times review of Charles Murray's Coming Apart, Nicholas Confessore tells us a little more than he intends about liberal denial.  Writes he:

You will learn about working-class laziness, but you will find little discussion of the decline of trade unions or the rise of a service economy built on part-time work without benefits.

Murray's thesis is that the welfare state has led to a breakdown in white working class culture, the bottom 30 percent of white America: a decline in marriage, a decline of civic culture, and a decline in men working.  Meanwhile things are peachy keen up in the top 20 percent.  Marriage is doing fine, and divorce is even declining.  People work like mad.

Murray argues that the welfare state has hollowed out the bottom 30 percent.  But Confessore grumbles that things would be fine if only unions were still strong and benefits were still robust.

So let us give Michael Barone a word.  He was raised in Detroit, and there is something he wants you to know about those good union jobs for good wages and benefits.

I don't know how many times I've seen liberal commentators look back with nostalgia to the days when a young man fresh out of high school or military service could get a well-paying job on an assembly line at a unionized auto factory that could carry him through to a comfortable retirement.

As it happens, I grew up in Detroit and for a time lived next door to factory workers. And I know something that has eluded the liberal nostalgiacs. Which is that people hated those jobs.

That's one of the reasons why the unions ended up killing the automakers.  They insisted on "30 years and out" for the workers that hated their jobs, and then they insisted on health benefits for their retirees.  It was a bridge too far for the automakers.

One of the things that advanced lefty thinkers have been pondering for the last half century is that big, rationally-designed bureaucratic organizations are inherently oppressive and exploitive.  They necessarily treat humans as merely a means to an end, a labor resource, whether the big organizations are corporate or governmental.  Of course they have ended by tying themselves in knots over this because they can't let go of the idea politics is everything and that that enlightened thinkers ought to be organizing the lives of the workers.  They can't let go and let the workers organize their lives like any social animal.  They have to butt in and save the workers from themselves.

So we have the rank-and-file New York Times reader in denial about the 1950s and the philsophers in denial about the limits of politics.

I just took a quick look at Wikipedia's stages-of-grief article.  Did you know that there are critics that say the Kübler-Ross model is rubbish?  It is perhaps more accurate to term the denial-anger-bargaining-depression-acceptance progression is not a healthy, but a victim response to life challenges.  Since our liberal friends don't believe in adaption in a societal context (because it is social Darwinism, darling) they regard unfavorable trends as an insult to their self-esteem.  Thus they respond to change with disfunctional denial and rage.

We are called all our lives to adapt to changing circumstances.  The liberal model of the bureaucratic welfare state just doesn't work.  We are never going to have an economy again with "good union jobs at good wages" where we can sit back like bumps on a log and extract monopoly wages from our fellow citizens.  It was a fantasy back in the 1950s and it owed everything then and now to liberal political power.  Do liberals want to lead their followers out of a dead end, and encourage them to compete in the new world economy, or do they want to exploit their victim-denial response until the whole system collapses as in Greece?

Romney Team Comes to Play

The name of the game in politics is defining what people are allowed to say.  You can talk all you like about the First Amendment, but the truth is that there are a lot of things that you aren't allowed to say, not if you want to keep out of trouble.  We all understand this instinctively; it's part of who we are as social animals.

What is going on here?  It is simple.  If government is force, politics is intimidation.  The whole point of politics is to intimidate the other side into silence or meaningless babbling.  You want to be able to laugh off their proposals as so far out of the mainstream that they have left America; you want to be able to cast them as unpatriotic--liberals hate being on the receiving end of this.  And you want to be able to cast the other side as racist, sexist homophobes--conservatives hate being on the receiving end of this.

In normal times, in between elections, conservatives are at a disadvantage in the intimidation wars, because the mainstream media, from which most Americans get their news, tends to parrot Democratic talking points.  It's true that Fox News provides some push-back, but not a lot.  Put it this way.  The charge of racism sticks to conservatives and can be a career-ender.  But nobody dares to read the racist Reverend Al Sharpton out of polite society.

Everyone knew, during the Republican primaries, that as soon as the party had chosen a nominee the Obama campaign would launch a monster campaign of intimidation, and Republicans feared that Mitt Romney wouldn't be up to the challenge.

Well, forget that one.  The last couple of weeks, with the "never did a day's work in her life" flap and the Dog issue, demonstrate that the Romney campaign is ready to play rapid-reaction politics.  The campaign jumped on the Ann Romney attack with Twitter, and demolished the "war on women" meme.  Now with the discovery that Barack Obama claims to have eaten dog meat, according to the first of his autobiographies, the "dog-on-the-roof" meme is neutralized.

That's important.  My liberal friends love to bring up the story of the Romney dog on the car roof.  But hey, what about dogs in the back of pickup trucks?

Oh, and by the way, if you are worried about Mormon polygamy, what about Obama's dad?

All these side issues are, of course, "distractions."  But they are part of a campaign because they are attempts to intimidate the opposition, or counter attempts to intimidate.  It's good that the Romney campaign seems to be ready to play the intimidation game and win.

The question is: Can the Obamis take it?  The Obama people are from the one-party city of Chicago, where intimidation rules, and anyone that isn't a Democrat knows that you have to pay to play, and lay your tribute at the feet of the politicians.  But can they deal with their own dust being kicked up into their eyes?

Stay tuned.

Liberal Media Bias: Has Fox News Made It Worse

Back in the old days, the liberal media at least used to pretend it was neutral and objective.  But now that there is Fox News, the liberal media feel that since there's a conservative alternative they can put the pedal to the metal on their liberal bias.

That's the argument of Robert Stacy McCain at the American Spectator.

The very existence of a conservative-friendly TV news alternative, however, relieves liberals at other networks of any twinge of conscience about bias in their programming. They may well reckon, "If conservatives don't like it, let 'em go watch Fox." And given how liberals have demonized Fox -- portraying it as an all-powerful evil force in media -- some reporters may even feel the need to slant their coverage more stridently leftward, so as to counteract the exaggerated right-wing news menace.

He's probably right.  The trouble is that conservatives get the worst of the exchange, because there about 24 million nightly viewers of the network news versus 3 million for Bill O'Reilly on Fox News.

On the other hand conservatives need to stop whining about this and stand back for a moment.  We need to appreciate the enormity of what we are trying to do.  The yellow press grew up in the 19th century servicing the rising working class, dishing out scandal, afflicting the comfortable and comforting the afflicted.  For two hundred years there has been a bigger audience for corporate scandals than for government failure.  That's not just because of liberal media bias, it's because a lot of people experience themselves as victims of powerful forces, and buy the idea that government and journalists protect them from those powerful forces.

The destiny of the modern conservative movement is to change this culture, the culture of the working man railing against his boss, the victim railing against the Man.  It is a profoundly middle-class movement, based on the idea that if you want to change something, you get together with your neighbors and change it.  You do not wait around moaning about exploitation until some community organizer in a radical suit turns up to lead you.

In the United States there is a political party that represents people that prefer the "get-together-with-your-neighbors" model of society.  It is called the Republican Party.  There is also a political party that represents the "moaning about exploitation" model of society.  It is the over-under coalition of educated elite and suffering victims we call the Democratic Party.  Liberal media or no liberal media, there is no doubt about where to go if you are a Tocquevillian American that believes in forming voluntary  associations to do public work.  And there is no doubt where to go if you feel that you are a victim of powerful forces.

The point is that, for nearly a century, the majority of Americans have clearly felt that they benefited from a government that ran social programs like Social Security and Medicare.  So long as a majority believes this, the current system will continue.

If you want to change this status quo then you have to start a movement.  Obviously such a movement will experience resistance from the present elite and from the present beneficiaries of the status quo.  It is right and proper, therefore, that we should have a liberal media that defends the status quo, and ridicules the conservative movement that wants to change it.

But if the status quo should be seen to fail, or if its major proposals for change are experienced as negative change (Obamacare) then all bets are off.  That is the situation right now for the liberal media and the educated elite that backs President Obama and the Democratic Party.  Its programs are running out of money.  There is a danger of "austerity" or a collapse of the current patronage/clientage system in a sovereign default.  ("Austerity" means minor cuts in government programs that are experienced as life-changing by people that have adjusted their lives to rely on government programs for basic necessities).

When "austerity" bites, or default happens, then all bets will be off.  Then, and only then, people will be looking for a new political home, and they will be looking for a new media home.  All of a sudden the Democratic Party will find that it must adapt or die, and the media will find that it needs to change its politics or die.

There is no doubt that the Democrats would not have done as well as they did in 2006 and 2008 without the assistance of the mainstream media.  But what good did it do them?  They recklessly pushed through Obamacare, and then suffered the worst reverse in a mid-term in half a century--even though the Tea Party, vehicle of the reverse, was roundly denounced by all establishment opinion makers.

All in all, it is best to think of the media as a trailing indicator, like the unemployment rate, rather than a leading indicator, like stock prices.  When the welfare state collapses--as it will, because government always runs out of other peoples' money--the liberal media will shrivel up and slink away.  And nobody will give it a second thought.

But politics will not change.  People will still be out looking for free stuff from the government.

The "Out-of-touch" Stakes

The Democratic Party, everyone knows, is the up-to-the-minute, modern, hip, intellectual party.  The Republican Party, on the other hand is old-fashioned, turn-back-the-clock, anti-intellectual party--and out of touch.

That's all very well, but if you are running a presidential campaign you can't afford to be sitting around in a big room telling each other how hip you are and how out of touch the other guys are.  You need, at least, to get out more and listen to those out-of-touch people.  Because in a few short months they are going to be entering the voting booths and making decisions.

So the verdict on Week One of the presidential campaign has exposed a dangerous out-of-touchness in the operatives of the Obama campaign.  Let's just list the things that are going wrong.

1. The Trayvon Martin case.  Someone messed up on the due diligence when it turned out that George Zimmerman is half-Hispanic.  It is no secret that Hispanics don't like blacks, and think they are lazy.  (Whites, on the other hand have been carefully taught.)  I have a feeling that while the Trayvon case may raise black turnout, it will send Hispanics into the arms of the Republicans.
2. The Buffett Rule.  Maybe it seemed like a cool idea to gin up a gimmicky idea to make Mitt Romney look like an out-of-touch under-taxed rich guy.  But if this complicated idea only raises $5 billion a year, what's the point?  And then there is the dirty little secret that high tax rates don't really hit the rich.  They hit the people trying to get rich, all the way down the food chain to Joe the Plumber.
3. The Ann Romney Flap.  It's telling that the Romney campaign was ready to execute on a moment's notice on this one.  No sooner had liberal-feminist doofus Hilary Rosen delivered her "never had a job in her life" line that the Romney folks ginned up a Twitter account and were ready with a 1,000-gun artillery barrage.
4. The Social Darwinist Budget.  Democrats have raised Cain for 50 years every time Republicans have raised the question of entitlements.  Of course, Republicans have been right.  The sooner we get the government out of managing pensions, health care, etc., the better for the American people.  But the Republicans have never been able to get the voters to agree.  It's easy to see why.  The voters are right, from a selfish point of view, in agreeing with the Democrats.  The current generation of seniors will always be dead before the entitlements run out of money.  Only not this generation of seniors.  This may be the year when you can get Americans worried not about cutting their benefits but about not "doing something" about the budget.

The Obama guys are smart.  Even now they are reviewing the messes of the last month and making course corrections.  The question is whether they are smart enough to make strategic course corrections.

Because it is just possible that the Obamis are preparing to fight the wrong election.  That would really be "out of touch."

Romney's the One

Now that Rick Santorum has "suspended" his presidential campaign, Mitt Romney is the "presumptive" Republican Party presidential nominee.  Mitt's not what conservatives wished for in our dreams, but who gets to have their dreams?

Anyway, back in the middle of 1980 nobody thought that Ronald Reagan was the answer to our dreams.  Back then conservatives and Republicans were worrying about whether Reagan was too lightweight to win against Jimmy Carter.  Reagan wasn't very good at reeling off numbers about this program or that program.  Maybe he really was the lightweight, the B-movie actor that Democrats sneered about.

The situation is this, and it's all about Barack Obama.

1. Barack Obama is not a healer.  He is not the president to bring together red states and blue states as he promised.  He is not the post-racial president we thought he would be.  Instead he has reverted to his inner community organizer and is trying to divide the country along race and class lines.
2. Barack Obama has not fixed the economy.  Way back in 2009 I judged that Obama had made a strategic error in staying on his campaign promises rather than doing a Clinton and saying "oh gosh, fellas, things are a lot worse than I thought" and bagging the health care and environmental agenda till a second term.  The result is that business is on strike, sitting on trillions of dollars.  CEOs don't know what ObamaCare will do to them.  They don't know what Obama's green energy will do to them.  And they don't know what all the crazed regulation like Dodd-Frank will do to them.  So they are sitting on their hands.
3. Barack Obama really doesn't "get" America.  Maybe that's because he's lived in a liberal bubble all his life.  Maybe it's because he's never worked in the private sector, never run a business and understood at a gut level how you found and grow a business.  He regales audiences with the importance of investment in education, research, and health care--government investment.  But we have already spent way too much on education, scientific research and health care.  We could cut them all in half and not see a difference in outcome.  What's needed in today's economy is to lead the world in high-value products and services, things we can charge premium prices to balance the India/China advantage in cheap labor.  And that means business.

The election of 2012 is a strategic opportunity.  Instead of blurring the difference between the two parties and pretending that they are all in favor of business and growth, the Democrats are sailing under their true colors: tax, spend, and elect.  But most Americans instinctively understand that in a crony patronage system they will probably not be at the head of the line to collect the benefits.  So they know that that the way they can get ahead has to be through skills and hard work.  They think like Joe the Plumber.  They don't think about how to get ahead in establishment media, academia, or finance.  Those elite occupations are closed to people without the right connections and the right resume.  They think about how to buy a business and how to pay for it and how the tax system will affect their ability to grow that business.

Ever since Reagan the Democrats have been in a dither about whether to abandon their class/race/entitlement politics, or give it one last college try.  Bill Clinton ran as a New Democrat and won; he passed welfare reform and won again.  Al Gore ran fighting for the people against the powerful and lost.  Barack Obama ran as the healer and the uniter, and then turned into a partisan race and class warrior.  You can understand the liberal reluctance to abandon the bureaucratic big-government model.  It gave them all jobs and power.

The only question is whether Mitt Romney is the one to make the strategic breakthrough, utterly demolish the Democrats' race/class warfare politics, and send the them back to their kennels with their tails between their legs.  I'd say that a 55-45 presidential win, a 55-45 GOP Senate, and a continued Republican House would send a real doggie message to the Democrats.

Because, let us not forget, the GOP last had that kind of majority in Washington in the 1920s.  That is 90 years ago!

What You Are Not Allowed to Say

Humans are social animals.  We are usually careful to say the right things and do the right things.  We do that because we don't want to risk censure from the cultural invigilators.

John Derbyshire, late of National Review, always admitted that he didn't really care what people thought about him.  Last week he penned an article about race that got him canned.  The article was a satire on "The Talk" that black people give their teenaged children.  White parents should do the same, according to Derb.  Along the way, he wrote things that you are not allowed to write about race.  A liberal writer called for his firing, and National Review editor Rick Lowry fired him.  Reading Lowry's announcement, and a concurring piece from Commentary's John Podhoretz, you can see why.  National Review and Commentary are "respectable" publications that have to survive in liberal-occupied America, and cannot survive any ambush from the mainstream media.

Liberals are always calling for a dialog about race.  But when anyone shows up for a chat, he always gets sucker-punched.  The sucker punch is great fun for liberals but it sends a baleful message to whites.  Never mind about the notorious third rail of politics, Social Security.  Race is radio-active.

Over a century ago, America had a minority group that were considered just as backward, as criminal, as corrupt, as stupid as blacks are today.  This group was the Catholic Irish.  The Irish had to fight their way up in America from nothing, and they did it with leaders like Archbishop "Dagger John" Hughes of New York, who started out as a gardener in a seminary.  The Irish got no help on their way up, and the reform movement of the Progressive Era was, in part, an effort to clean up the wretchedly corrupt machine politics of Irish Boston and New York.  Eventually the Irish climbed their way into the middle class, elected an Irish Catholic president and started to vote Republican.

The African American story is remarkably similar to the Irish story except for one significant difference.  In the 19th century the goo-goo elite was disgusted by the Irish, and criticized their "shanty Irish" squalor and their tribal approach to politics.  But in America today the goo-goo liberal elite uses African Americans as a key part of its over-under political coalition.  Without African Americans as its rock-solid base and political patronage client the liberals would be journeying in the political wilderness.  An African American community that no longer feared a return of Jim Crow, that no longer had 70 percent of its children out of wedlock, that no longer headed the crime statistics, that was getting a decent education would be a placid middle class group that would only vote 60-40 for Democrats rather than 90-10.

One day that will happen, provided that liberal race politics doesn't embroil the US in a race war in the mean time.  It will happen because African Americans, like every immigrant group before them, ache to arrive in the Promised Land of middle-class respectability.

Meanwhile, as the immolation of John Derbyshire proves, you had better not say the wrong thing about race.  It could get you in a lot of trouble.  There is too much liberal power riding on the maintenance of the racial status quo.

Social Darwinism and Liberal Programs

President Obama last week criticized the Paul Ryan's House budget as "thinly veiled social Darwinism."  We are to imagine, apparently, that by reducing the rate of increase in government budgets the poor and helpless will suffer, and this is the social equivalent of the ruthless natural selection in the world of nature red in tooth and claw.

Of course, "social Darwinism" is merely a political catch phrase that Democrats deploy whenever Republicans propose to reduce the rate of increase in social programs.  But when liberals want to tie someone to social Darwinism, they grab Herbert Spencer, the self-taught 19th century social philosopher. Here is a lumpen-liberal description of Spencer's idea, from Susan Jacoby in Freethinkers: A History of American Secularism.

Spencer translated the biological theory of natural selection into what he called "social selection," opposing all state aid to the poor, public education, health laws, government tariffs, and even government-supported postal service.  Of the poor, he declared, "If they are sufficiently complete to live, they do live, and it is well that they should live. If they are not sufficiently complete to lice, they die, and it is best that they should die."

That is from Spencer's Social Statics.  But here is Spencer from The Man Versus the State, arguing against the poor law, i.e., welfare.  He summarizes his argument thus:

1. That the burden of the poor law fall chiefly upon the industrious classes.
2. That the existence of commecial restrictions, is, therefore, no argument for retaining it.
3. That even assuming a poor law to be directly beneficial, it is directly injurious, inasmuch as it prolongs the causes of distress.
4. That established charity is open to many of the strongest objections that can be urged against established religion.
5. That a poor law discourages the exercise of real benevolence, and lowers the standard of national character.
6. That were there no poor law, the increase of voluntary charity, and the decrease of improvidence, would render one unnecessary.

You can see how prescient Spencer is.  For our modern liberal welfare state  does indeed "prolong the causes of distress" with multi-generational welfare.  It has become indeed a kind of established religion of charity, in which the nation carelessly invests its benevolence in a class of welfare priests without actually ever actively contributing in a benevolent way.  And yes, the welfare state "discourages the exercise of real benevolence." Liberals, who believe in the state church of welfare, are the ones that give the least, as Arthur Brooks has argued in Who Really Cares?  Conservatives, who believe in a moral responsibility to give, give more.  Oh, and guess which group gives the most to charity?  It is the religious working poor.


Walter Russell Mead, in his series of articles about the end of the "blue social model" has argued that it is past time for liberals to own up to the failure of their social model.

It is past time for liberals to stop attacking the straw man of social Darwinism, if for now other reason than this.  The "blue social model" is going to be coming up, one of these days, for nomination for the "Darwin Awards."

For the law of natural selection applies just as much to human institutions as to animal species.  If a human institution won't adapt, it will go the way of the dinosaurs.  Liberals have insisted for a century that the best of institutions is the one that provides tax-supported "state aid to the poor, public education, health laws, government tariffs, and even government-supported postal service."  But what if they are wrong?  What if the state runs out of money?  What if the voters just refuse to pay for it?  What if the state, over the years, does less and less with more and more tax money?  Well, then the welfare state dinosaurs will die out and be replaced by some scuttling rats.

That was what happened in business in the 19th century when a bunch of nobodies started businesses in mid-century that ended up by the end of the century as gigantic enterprises.  The reason for their success was that with a few random ideas they massively lowered the cost of things like oil, transportation, and steel.  Natural selection at work, you might say.  Once they had made their money, of course, they got interested in philanthropy.  One of their benefactions was the University of Chicago.  You'll recall that, Mr. President.

Cunning, Extreme, or Desperate?

The question is:  When President Obama slams the Supreme Court, calls Paul Ryan's budget "thinly veiled social Darwinism" and truckles to the race-baiters over the tragic Trayvon Martin death, what is he doing?

It's like the famous line attributed to French diplomat Talleyrand after the death of the Turkish ambassador: "what did he mean by that?"

Is President Obama's divisive rhetoric a exercise in political cunning?  Is he playing a deep game that we don't even understand?

Or maybe the president is precisely the extreme leftist that conservatives have made him out to be.  That's what leftists do, from Marx on down.  They make inflammatory accusations designed to rile up the masses.

OK.  Perhaps the president is desperate and he is flinging accusations around because he sees his presidency slipping away from him.

My guess is "all of the above."  I expect that the president's people think that he has to create a strong Us vs. Them dynamic to keep his base energized.  I think that the president and his people are all pretty committed liberals that approach politics from a strongly left-wing perspective.  And I think that they know that they have a pretty hard row to hoe if they are going to win in November.

But I think the biggest reason for the president's divisive rhetoric is the word from the air-crew trainers after the US Air Flight 1549 ditched in the Hudson River.  In an emergency, they said, air-crew do exactly what they are trained to do.   No big surprise there.  That's why the military is big on training: it wants its soldiers and sailors to hold together when the bullets start to fly.

And that's how to understand President Obama.  This reelection fight is the biggest thing that Barack Obama has ever faced.  The stress is unbelievable.  So he is reverting to his training as an Affirmative Action black wafted ever aloft, and as a community organizer and left-wing activist.

That's what left-wing organizers do for a living.  They rile people up and organize them into a movement.

The question is whether this approach will work for a majority of American voters.  Do they want to be organized into a left-wing movement?

For the answer to that you must stay tuned.  But win or lose, I predict that the 2012 election will be a watershed in American politics.

Your Philosophy is "On Your Own" Mr. President

The brilliant shallowness of President Obama is an opportunity for conservatives.  In past times, Democrats were smart enough to wrap their lefty dogma in pleasing rhetoric; it wasn't quite clear that beneath the velvet glove of compassion was the iron fist of government force.  But President Obama and his speechwriters don't seem to understand, as Rush Limbaugh reminds us, that liberals can't admit what they really believe, because people would never vote for them if they did.

So now we have two back-to-back speeches in which mild-mannered Clark Obama rips off his shirt and reveals superhero Captain Lefty, faster than a high-speed train, more effective than a $1 trillion stimulus, able to leap conventional energy with a single green bound.  That sort of thing.

The president as Captain Lefty argued on Friday that the philosophy of the Republican Party was "you're on your own".  You're on your own if you don't have a job, don't have health care, born in poverty.  That's what he said.

Then on Tuesday the president argued that the Ryan Budget was "thinly veiled social Darwinism". By "gutting" things like "education and training, research and development, our infrastructure -- it is a prescription for decline."

Thank you, Mr. President.  By drawing a bright line I think you do all of us a favor.  Because, you see, on your philosophy, people really are "on their own."  That was the argument of Peter Berger and Richard Neuhaus a generation ago in To Empower People.

Berger and Neuhaus argued that the problem with big government is that is sweeps away all the "mediating structures" between government and the individual, thus leaving the individual powerless and alone before the mighty power of government.  It was the mediating structures--family, church, neighborhood associations--that really protected the individual by embedding him in these defenses-in-depth against overweening government power.

Berger and Neuhaus made an argument similar to Jane Jacobs and her Death and Life of American Cities.  She argued against the big skyscrapers and their wind-swept plazas bowled people around like sand on the shore.  What made cities livable were the little businesses and sidewalk life that provided texture and safety to the city and defenses against the megastructures.

What could be more social Darwinist than big government, Mr. President?  Under big government you had better have a powerful patron.  You had better make sure that you belong to the right race, or right age cohort, or right gender.  You had better make sure that you are a certified victim.  Otherwise government reckons it can leave you "on your own."

Here's what I mean by on your own.  It's a story by Lee Habeeb about the death of a young black kid, "Too Young to Die", in South Chicago, just south of your well-policed Hyde Park, Mr. President.  He was just helping out at a party for kids that needed a haven from violence.  But then a fight broke out and the kid got hit by a baseball bat.

“He was just trying to do something good for the ’hood because there’s nothing but violence around here,” Sunday Turman, 33, who hosted the party, told reporters. “Next thing you know, he hit the ground right in front of police.”

 Black folks in places like South Chicago are giving up on Democratic governments in the north.  They are heading back to the South.

Between 2000 and 2010, an estimated 1,336,097 blacks moved to seven major southern cities alone, according to the Brookings Institute, which compiled the most recent data from the U.S. Census. Today, 57 percent of the country’s black population lives in the South, a 50-year high.

Here's what I reckon, Mr. President.  I reckon that black folks are giving up on life in the inner cities run by the liberals in the North.  Because they reckon they are "on their own," stuck in violent cities where nobody cares.  Nobody cares about the schools; nobody cares about the black kids getting mown down as "collateral damage" in the gang wars.  Nobody cares enough to get the crime down--except in liberal enclaves like Hyde Park--and nobody does anything about the social Darwinism of gang warfare that turns their life into a miserable struggle against overwhelming odds.

At least these black folks will have the shreds of their old community to fall back on when they get back to the South.  Then they can start to build their lives again.  And maybe they will reckon that community starts with me and my family and my neighbors, and not the preening politicians that just leave you "on your own" in an urban jungle where the powerful rule and the powerless get caught in the crossfire.

Prudence, Mr. President!

There is in Barack Obama a certain recklessness, both in word and deed.

Take ObamaCare.  The president and his party ran a straight partisan operation, forcing the 2,700 page bill through Congress.  It only passed by one vote in the Senate and only by a few votes in the House.  No Republicans voted for it and a number of Democrats from moderate districts in the House got to vote against it to assist in their reelection.  So it wasn't a consensus bill, it wasn't really debated, and it wasn't negotiated with the opposition.  I call that reckless.  I call it a jam-down.  I call that naked force.

And beyond the recklessness, I don't think that it is good politics.  In politics you want to avoid making the opposition so mad that they come out in their tens of millions to vote against you.

Now we have President Obama, before the Supreme Court has even ruled on ObamaCare, doing the "nice little Supreme Court you got there" number.  It is frank intimidation, no doubt directed at Justice Anthony Kennedy, the swing member.  I call that reckless.

And beyond the recklessness, there is the unseemliness of dissing the Supreme Court, as the president already did in his 2010 State of the Union speech over the Citizens United case.

We can argue about the source of the president's recklessness.  You could say it comes from his being "wafted aloft" all his life, never having to dig out of a hole, and never really having to think about who he is pissing off.  Or you could say it comes from his left-wing beliefs.  Your properly trained community organizer is always trying to prompt ordinary citizens out onto the streets against their interest.  Very often, as in Zola's Germinal or in the real-life strikes of 19th century, the radical strike leaders caused in the ruin of the local strikers.  But the community organizer just headed out of town onto his next gig.

The statesman is not a community organizer.  He really needs to be prudent.  He is, with his day-to-day political power games, playing with peoples' lives.  You always got the feeling that President Bush was deeply affected by the responsibility of the office.  It is not clear just how President Obama feels about the office.  His image is so crafted that it is hard to know what he thinks about anything.  It does seem that he is piqued by the resistance to his agenda--beyond the normal Democratic party tactics of branding anyone opposed to big-government programs as mean-spirited and racist.

But the American people really expect the president to be prudent.  They expect him to be the president of all the people, and not be a cheap partisan.  With President Obama, you get the feeling that the cheap partisan shots are the man, and the "we're all in this together" rhetoric just an act.

Put in this way.  With President Bush you always felt that he was very careful in his partisan moments to keep the partisanship down to the minimum needed.  When he said that he was a uniter, not a divider, you felt that he meant it, and that he would try the keep the divisiveness that is necessary in any politics down to a low roar.  It was just the right thing to do.

But President Obama is a man of the left.  Ever since Marx the left has used over-the-top rhetoric to make its case, and the president seems to fit right in with the Marxian approach to politics.

It would be nice if the American people sent a message to Washington about the president's recklessness.  Because if you are one of the "little people" the one thing you don't want is recklessness. Reckless political failures fall hardest on the little people.

Beyond ObamaCare there is the recklessness of the current Fed inflation, the president's reckless budget, the recklessness of the green energy policies, and the recklessness of the huge tax increases scheduled for January 1, 2013.

We need a prudent president to guide the ship of state into the future.  We won't get it from the policies of President Obama.

Fear, HilllaryCare and ObamaCare

When Bill Clinton was selling HillaryCare in the House of Representatives back in the fall of 1993 he held up a credit card mockup in his right hand and said that HillaryCare was health care that could never be taken away.

That sounded like a winner, but the American people, persuaded by the TV personalities Harry and Louise, thought otherwise.  They reckoned that HillaryCare would raise the cost of their health insurance.  In other words, a take-away, as the labor union guys put it.

So you can understand that the Obamis went out of their way to tell the American people that ObamaCare would allow them to keep their current insurance and doctor and that it would reduce health costs.  And they bought off the insurance companies that had bankrolled the Harry and Louise ads.

And they passed ObamaCare without anyone knowing what was in it, and they gamed the costs so that the total cost as reported by the Congressional Budget Office (CBO) in 2009-10 would be under a trillion dollars over ten years.

But now that we are two years on from 2009-2010 the out-year costs of ObamaCare are appearing in the official CBO scoring.  Now the gross cost is up to $1.76 trillion over ten years.  And the American people have just experienced a couple of years of rapid increase in their health insurance premiums.

So we are back to the end game of HillaryCare, when Americans became firmly convinced that they would be paying for freeloaders, the fabled "uninsured."

There is another thing.  My friend Stephen reminded me of it.  A lot of Americans are afraid of what ObamaCare will mean for them.  In other words, a lot of American women are looking out at the future, and wondering if they will be able to afford the drugs and the care they need for their chronic health problems.

How right he is.  Fear is never far from the surface where health care is concerned.  The dreadful National Health Service in Britain is still celebrated because it took the fear out of health care.  You didn't have to worry about whether you could afford your doctor bills any more.  What a relief!

What slides under the radar is that government health care is not the best and, especially in Britain, it gets worse and worse as the nursing gets worse, and the rationing starts to bite, and old people get neglected.  Looking at it that way there is plenty to fear.

It's just like government education.  Government schools are so-so in the suburbs.  But then the middle class would get a so-so education whatever the government did.  But government education is lousy in the inner city, just where it is needed most.  Health care is OK for people with private insurance.  But Medicaid, the health care program for the poor, is a train wreck.

I imagine that, right now, the Romney campaign is thinking about how to play the "fear" angle on ObamaCare without seeming to be too blatant about it.  Because fear sells, especially with older women, and politics is a dance of our hope against their fear.