The Real Deniers

When the global warming enthusiasts started talking about "climate deniers" that was the moment that we all knew that global warming wasn't a science.  It was politics and religion.  Because science doesn't care about good and evil, about right and wrong.  It just cares about the instrumental results: does it work?

Still, science isn't everything.  It may be, as science seems to propose, that the universe has no meaning, but clearly, humans as social animals depend on the notion that life has meaning: they act as if it does.  There may not be "free will" but the cultural meme of the "responsible self" seems to have clear cultural benefit in human culture.

Sometimes, in other words, denial has its virtue.

But the denial of marginal economics and the price system by the Left is not one of them.

It was the classical economists that elucidated the remarkable social benefits of the price system, how it motivates people to serve others and how it corrects mistakes -- the wrong product at the wrong price -- through the cleansing effect of losses.

It was the marginal revolution of 1870 that placed the capstone in the powerful arch of modern economics.  If you need a reason to embrace the importance of the marginal revolution, here's a good one.  About four economists discovered this solution to the problem of use value vs. exchange value at about the same time.  There was Carl Menger in Austria, then Stanley Jevons in Britland, Leon Walras in Switzerland, and John Bates Clark in the US.

Significantly, this revolution cut the ground out from underneath Marxian economics -- with Das Kapital published ten years earlier in 1860 -- which had spun a brilliant labor theory of value and exploitation out of the contradictions between use value and exchange value.

The point is that there is no such thing as absolute value, in use or exchange.  Funny how liberals can opt for absolute transcendental values when needed.  And we thought they were all relativists.

In the economy there are just prices from buying and selling, and people make decisions about buying and selling based not on labor unit or usefulness or the exchange value but on a decision to buy or not to buy at a certain time and a certain place at a certain price.

• Does someone decide to work an extra hour?  It depends on the return on that marginal hour of labor, taxes included, and the perceived value of the forgone leisure, on that day.
• Does someone decide to buy a product?  It depends on the price, and other things that might be bought instead.

If you accept the basic science of the price system and the marginal revolution then you cannot be a Marxist and you cannot be a Progressive and you cannot be a supporter of the liberal administrative welfare state.  Because all these fashionable doctrines require a denial of the truth of the price system and the truth of the marginal revolution.

That's why liberals in the 1980s refused to admit the ideas of supply-side economics and called it "trickle-down" economics.

Arthur Laffer's famous curve in particular had to be marginalized, because it hit liberals right where they lived.  The Laffer Curve says that, if you are a big-government liberal and want to maximize the return on taxes, you ought to realize that higher tax rates do not mean higher tax collections. But, of course, the whole point of progressive politics is to demand that the "rich" pay more.  So the Laffer Curve cannot be true.

The problem with the deniers of the price system is not merely academic.  We have today a nice little piece about Venezuela and the cratering of the economy under Hugo Chavez.

The country that Chavez left us is a country that is financially ruined. True, we still have a lot of oil under our feet and good management can bring us back to a semi functional state in as little as half a decade. But the bonanza of the last decade will have been spent with very little to show for it.  It has been swallowed by corruption, inefficiency and gifts because what Chavez has done is to distribute cash around, never establishing anything productive and sustainable over time. Nothing.

The point is that the price system does a much better job of bringing the poor out of poverty than egalitarian politics -- let alone the particularly thuggish version practiced by Chavez.  Because the only way you bring the poor out of poverty is with the price system constantly jogging businessmen and consumers to improve their game.  Under chavismo nobody improves their game.

Then there are the disappointing returns from the financial transaction taxes recently imposed in Europe, reported by Daniel J. Mitchell.  These taxes, taking about 0.1 percent on the value of each financial transaction, seem to be collecting about 50 percent of the expected revenue.  Faced with the tax, people are doing fewer financial transactions.  Marginalism in action.  Who knew?

Lastly there is the peerless Sen. Elizabeth Warren (D-MA).  She had a lefty up before the Senate Banking Committee to discuss the virtues of the minimum wage laws.  As one critic wrote: "Leave it to an academic to be totally ignorant of the workings of the economy."

There are a lot of liberals running around calling people that disagree with them "deniers" and "bigots."  But for some reason there are a lot of liberals running around that can spout absolutely ignorant things about the workings of the economy without being sent to the dunce's corner.

We know why that is.  Nothing is left of liberal politics if you accept the basic notions of the price system and marginal economics.  And that nobody can deny.

Liberals on the Wrong Side of Main Stream of Life

I agree with Roger L. Simon.  The problem is not gay marriage, it's marriage, and marriage is declining sharply among low-income Americans.

That's the whole point of Charles Murray's Losing Ground.  We, the top 20 percent, the educated class, the ruling class: we are doing fine.  We are educated, married, credentialed, prosperous.  But the middle-income folks are not doing so well, and low-income folks are not doing well at all.  Low-income women are not getting married, not much,  and low-income men are not working, not as much as their upper-income betters.

We know why low-income women aren't getting married.  It's the benefits.  If you are a single woman there are all kinds of government benefits out there for you, Julia, so why not get yours?  Why not marry the state instead of a low-income man who is disinclined to "get out and get me some money / like some other men do," as the song goes.

But if you don't get married and have children more or less in that order you are cutting yourself off from the main stream of life as a social human.

And if you, Julian, don't get a job, and don't marry the mother of your children and support them into adulthood you are cutting yourself off from the main stream of life as a social human.

Same goes for gays and gay marriage.  Look, if you decide to live with a same sex partner, our modern society says OK.  And it makes sense that it should make tolerant accommodation for people that make that choice.  But gay marriage, or "marriage equality" is not going to wish away the basic fact that gays  cut themselves off from the mainstream of life as a social human.

And that is true whatever the settled science about homosexuality eventually tells us about the "gay gene" or the notion that almost everyone is instinctively bisexual.

Last Fall, I voted in Washington State for gay marriage.  But I still think it is stupid.  I am taking the Benjamin Franklin attitude: experience keeps a dear school, but they will learn in no other.  Gays are politically powerful.  They won't leave us alone until we give them gay marriage.  OK.  So now you got it.

What gays will want after gay marriage, God only knows.  Because once a political cadre gets a movement organized, it seldom walks away from political power once it has got what it wants.

And that is the larger point.  Liberals are drunk on political power.  That means that liberals always need a political issue to divide the country, because Politics is Division.  It always means that they are dangling free stuff in front of the voters, because the basic originary form of politics is the warrior band marching through the world looting and pillaging.

But liberals are tempting people off the main stream of life with their glittering free baubles from gay marriage to welfare.  It's not an easy life being poor, but the payoff from marriage is huge if you are poor.  A Brooking study says that

the poverty rate among families with children could be lowered by 71 percent if the poor completed high school, worked full-time, married, and had no more than two children.

Yeah.  The Census Bureau data shows that the lowest-income household quintile has the least number of people working, and the top quintile has the most people working.

So the more that liberals subsidize single parenthood the more they are encouraging poverty.

You could say the same about divorce.  Speaking as a divorced man, I probably would not have got divorced if it had meant paying support to my ex-wife for the rest of her life, as it used to be before "no-fault" divorce.  And who has benefited most from "no-fault" divorce?

One of the reasons for morality and social norms and social control is to provide guide rails, to shepherd people along the main path of life and make it difficult to go off at a tangent.  In many ways, the whole point of the modern era is to remove the stigma for jumping the tracks of the main line of life.  You can say that it starts with the Romantic movement and the German cult of creativity.  We seem to be determined to deny that there is nothing more creative in this world than creating children and raising them to independence.

But if you are a ruling class you rather like the idea of a dependent and grateful peasantry, tugging at forelocks, or even shouting hosannas at politicians speechifying in front of Greek columns.

Apart from the moral question of living a meaningful and socially useful life on the main stream of life, there is the practical side.  If you build yourself a life with skills, and spouse, and children, and a reputation for kindliness and helpfulness, then you are probably in a good position if the government runs out of money and you are thrown back on your own resources without any lovely government entitlements to smooth your way.

A notable feature of all Democratic voters is that, one way or another, they have voted for plugging into government, just like a plug-in hybrid.  But if you are unmarried, childless, low-skilled, then you are really vulnerable if things go south and the wonderful wind farm can't juice your hybrid because there is no wind.  In the end, it isn't going to do you any good by voting for big government.  In the end, government will take care of itself, not you.

That's a big difference from life in the main stream of life.  Because if you get into trouble on the main stream of life then probably your spouse or your children will take care of you.  It's the social human thing to do.

The Liberal Generation That Knew Not Carter

For a geezer like me it's hard to understand the new generation of liberals and their renewed push for big government.  Haven't they learned the lessons of the liberal failures in the stagflation of the 1970s?  Don't they realize just how the Reagan Revolution turned things around?

Well, actually they haven't; they don't.  Because if you are a chap like Ezra Klein, born 1984, or Markos "Kos" Moulitsas, born 1971, you weren't there.  Klein wasn't even alive!  Nor could they have reached political consciousness in the early 1980s when against all fashionable opinion, the amiable dunce Ronald Reagan turned around the US, economically and culturally, from the existential despair of the late 1970s.

It was in the late 1970s that liberals, having failed to maintain a vibrant economy and culture, reckoned that nobody could do it.  It was a huge embarrassment when Reagan actually did it, and it demoralized a whole generation of liberals.

The truth is that if you cut government spending, cut regulations, and stabilize the credit system, you get big-time economic growth.  That's what Reagan did in the early 1980s.  It took a couple of years for the economy to take off, but when it did...  Well, it shut liberals up for a couple of decades.

But then a new generation came along that knew not Carter and the utter futility of big government politics in the Carter era.  Golly gee-willikins, they began to say, how come we don't have comprehensive national health care yet?

Well, the new generation will find out in due course.  They will discover, as Obamacare grinds the nation to a halt, that the administrative liberal welfare state is a terrible idea, at least as far as comprehensive, centralized, bureaucratic, administrative "affordable" health care is concerned.  Probably the Medicaid problem (where up to 90 percent of Medicaid beneficiaries can't get a doctor) will metastasize across the whole health care system, and liberals will blame the insurance companies.

In Reason today, they are talking about the new crew at The New Republic.  The magazine started out in the 1910s as an unapologetic cheering section for big government.  But in the 1980s it had some second thoughts, as thoughtful liberals realized that something had gone wrong.  The New Republic started to get a bit skeptical of big government.  But now, with Obama and the Kos and Klein generation, it's back to full-throttle big government, and damn the torpedos!

How clueless can you get?

But don't despair.  The fact is that things are already going badly wrong.  The Great Crash of 2008, blamed on greedy bankers, was really a failure of politicians mucking around with the credit system.  The current Federal Reserve money-printing exercise is a full-on admission of political failure, the failure to reduce spending to fit the national revenue.  Atlantic today has a piece on the explosion of the Social Security Disability program, now at $128 billion a year and counting.  Way to go, liberals!  The entitlements are on course to crash in ten years.  Government education is lousy, and government pensions are going to bankrupt the states.

Why Worry!

If President Obama were a Republican the mainstream media would be screaming bloody murder.  But as it is, we will have to wait until the current generation of Democrats hits the wall, and the American people recoil in disgust.

Although Republicans are pretty discouraged right now, things are really not so bad politically.  FDR in the 1930s ran full-speed-ahead for six years before hitting the wall of a 60 seat reversal in the 1938 House midterms.  He won 57% to 40% in 1932 and 61% to 37% in 1936.  Obama, lest we forget, won 53% to 46% in 2008 and 51% to 47% in 2012, losing the House in 2010.  There is a difference!

The facts are that just about everything the Obama adminstration has done economically has hurt the nation's economy, from stimulus to Obamacare to energy regulation to putting off entitlement reform to cranking up the printing press to proposing a higher minimum wage.

But, you say, the American people are clueless on economics.  They don't understand how the Obama Kos Klein generation is hurting them.  That's true.  But the American people do know when it is Time for a Change.  And they will be knowing it good and hard by November 2014 and November 2016.

You can already feel the change in the air.  The fact is that Democrats have been on a forced march for the last 12 years, ever since the insult of Bush's "selection" in 2000.  After the reelection of Obama they reckon it is time to enjoy the fruits of office and relax a little.  They are only human, after all.

But the thing about government is that Government is Force, and for people that support the opposition, the incumbent government is always experienced as unjust.  The longer the incumbents are in power, the angrier they get.  Those are the kind of people who will be turning out in 2014 and 2016.  Liberals may swan around in their liberal bubble, but outside the bubble people are hurting, and pain is what motivates people to get to the polls.

But it is a shame that we have to relearn the lessons of the 1970s.  Because it is always the little people that get hurt.

The Future for Men

The Instawife Dr. Helen Smith asks about the silence of the men.  It's pretty obvious today that the corporate world discriminates against men.

Here's an example from James Taranto today.  Girl at Python (that's a scripting language used in Linux) conference hears two nerds making sexual jokes about big dongles and fork redos behind her.  Complains about it in a tweet.  Guys get fired.

Hey lady!  Yer think you might have spoken to the guys yourself instead of going crying to the teacher and having the little squirts sent to the principal's office?  And boasting about it on your blog?

So what are men doing about it, asks Dr. Helen?

Nothing.  Because they know that in corporate-land they will just get squashed, as "the entire weight of the organization and society come down on the uppity man for questioning a powerful woman."

But there is a solution, and it is the obvious one.  Men, real men, don't belong in big administrative organizations.  Administration is domination.  Big, relational organizations are ideal for women, who are good at managing complicated human relations.

So what do men do?  Isn't this obvious?  Women are lovers, relaters, carers, but men are fighters.

Men have to get out of the big bureaucratic organizations and do something else.  In other words, the future for men is to form startups.

Think about the Taranto-reported episode if all the participants were in a startup firm.

1. The participants would know each other.  So the woman would probably have the balls to tell the guys to knock off the adolescent smuttiness.
   
2. The participants would all be important members of the startup team.  They wouldn't be replaceable cogs in a machine.  So nobody would be getting fired just to make the problem go away.  Instead, the firm's owners would come down on all of the participants: the nerdly men for risking the success of the startup, the woman for not dealing with it on the spot and telling the guys to knock it off.

Needless to say, when you are the startup there is no Human Resources that can fire you.  There's no corporate politics, there is no manipulation of the "system."  There is just the band of brothers (and a sister or two if they can take the heat of battle) all working together trying to win the big one.

Let's get a bit of perspective on this.  Men don't belong in government schools.  They don't belong in government universities.  They don't belong in government bureaucracies.  That stuff is for girls and sissies.  And men probably don't belong in big corporations.  Big corporations are for semi-sissies.

Real men get out on their own and start something new.  That's what fighters do, and real men are fighters.

The great thing about the Internet is that even if you are not a two-fisted fighter you can make your mark.  You can create your own app or website in the basement, and if it hits the spot you can make a fortune, or at least a chunk of change, without actually having to get involved in hand-to-hand combat.  I know, because I did it.

And really, it's about time.  For decades cultural critics have been sneering at the "organization man" the "one-dimensional man" and the like.  Frankly, they have a point.  When you are walled up in a big organization you are living in a kind of plastic Disneyland; you are about as divorced from reality as a liberal reading the New York Times or listening to NPR.  We men are better than that.

Of course, real men don't indulge in sniggering smut within earshot of beautiful women.  And gentlemen don't indulge in sniggering smut within earshot of any woman.  But that is another story.

When the Fed Stops the Music

Why has the Fed been able to print so much money without igniting inflation?  That's what Larry Kudlow is asking today.  The answer is that people are carrying much higher cash balances.

Michael Darda argues that Fed reserve creation and its unemployment target (the 6.5 percent Bernanke-Evans rule) has only partially offset a negative velocity shock of historic proportions...

Economist Scott Grannis... argues that consumers have increased their cash balances and that banks are holding onto extra reserves in order to avoid risk following the financial meltdown. As a result, the M2 money supply has been growing at a fairly steady rate of 6 to 7 percent. Not an excessive pace.

OK.  What does this mean?  It means that that the Fed is eating up the seed corn but people are trying to save seed corn at the same time.

But let's lay out some bullet points to understand what has happened since the Crash of 2008.

• All debt is an anticipation of future income.  The consumer says: I can buy a house now and pay for it out of my improving income stream in the years ahead.  Government says: I can fight this war now, or promise this glorious entitlement now, and pay for it out of the abundant tax revenues that will accrue after we have won the war.
  
• A big financial meltdown like 2007-2009 means that the consumer's assumption of future income and the government's assumption of future taxes is over confident.  There will be less income and less taxes than we thought.
  
  
• So the right thing to do in 2009 would have been for consumers to deleverage their debt, responding to the fact that they weren't going to get the income they thought.  And the right thing for the government to do would be to cut future spending.  Maybe government keeps going at full for today, but government cuts its promises for the future in e.g. entitlements.  Because there were not going as much tax revenue as we thought.
  
  
• All this would start after the financial system was stabilized, which occurred at the latest in the summer of 2009.
  
  
• What has happened is that consumers have deleveraged, but government has not cut spending.  This has worked so far because government has borrowed the money that consumers have saved, increasing its own debt as consumers have decreased theirs.
  
  
• So the result is a sluggish economy as consumer savings does not get recycled into good investments in the future but wasteful government transfers in the present.
  
  
• If the government had been cutting spending then we would now be looking at a reduced deficit and reducing borrowing and a growing economy, and the Fed could look to stop printing money and to allow interest rates to rise.
  
  
• But in fact the government has done nothing to reduce its future promises and instead has piled on a new entitlement with unknown present and future costs.  It is, in essence, doubling down on its bet that there will be plenty of revenue in the future to fund its debt.
  
  
• So at some point in the future we Americans will have to consume less.  We can do it with higher taxes or more likely by inflation.  Because there is just less to go around than we thought.  That's what happened to Germany and Austria after World War I.  The nations were much poorer but they kept spending the same.  It took a ruinous hyperinflation to persuade the low-information voters that their government stipends couldn't continue.  Later on they took their revenge on the political establishment by electing a charismatic chap that we have all grown to know and love.

It's possible that no president in 2009, Republican or Democrat, could have summoned the political will to cut back on the promises of future spending.  Certainly Democratic politics is based on the notion that "we are owed" irregardless of the economy.  Republicans, supposedly the Sensible Party, are usually embarrassed to talk about economic reality.  You can see the problem as it is working out in Cyprus.  Given the situation of a banking meltdown the policy of giving bank depositors a haircut is probably the least bad option  from a technical point of view.  But who is going to agree to that, especially after the world has been told that deposit insurance takes care of the bank failure problem for all time?

But sooner or later we will have to go under the yoke.  If we increase taxes to maintain the spending we will be reducing the future potential of the economy by wasting it on government spending.  If we cut spending we will infuriate all the people that say that they contributed to their Social Security and Medicare all their lives and now they want the money sitting in those trust funds.  Ah yes, the Trust Funds.

The Cypriots are raging against the six or ten percent haircut on their bank accounts.  Bully for them.  So now probably Cyprus will have to devalue by 50 percent and go off the Euro.  The same thing will happen with the entitlements.  Democrats will rail against cuts until the government goes broke and their voters are reduced to eating the paint off the walls.

Really, government should spend nothing except on wars.  Then a reasonable revenue could be used to fund and pay off the war debt.  And all the essential social functions of any society would be handled by people in their day-to-day lives instead of by rigid, unaccountable, un-adaptable, unreformable, unaffordable government programs.

What Hispanic Vote?

So now, Michael Barone tells us, Republicans must stop turning off the Hispanic vote by talking like Mitt Romney about "self-deportation."

Well, OK.  But the problem that sticks in the craw of Republicans is that immigration "reform" means making Democratic voters out of people who came to the US illegally.

(I know.  Who worried about legality when the Irish were tumbling out of the "coffin ships" of the mid-19th century?)

The point is that every immigrant group in the last 150 years has started out voting for the Democratic Party because, one way or another, the Democrats were offering "free stuff."  It's natural for immigrants just off the farm to respond to patronage politics and look for a strong patron to protect them with "free stuff" as they learn how to swim in the treacherous currents of the city.

Ever since the Republicans gave up on the tariff--a kind of "free stuff" that appealed to native-born workers--in the debacle of the Great Depression, there has never been a time where Republicans were any good at winning the battle of "free stuff."

So why have the Republicans been able to compete in the political arena?  Two reasons.  Frist there were groups that left the Democrats after they got on their feet and tired of the "free stuff" notion.  Second, there were groups that left when the Democrats started dissing them.  When the Democrat-voting GIs became home owners they stopped needing a powerful patron.  When the Democrats turned against Christianity they lost the enthusiastic Christian vote.

Really, through all this, the Republicans just slogged along being the Sensible Party, worrying about taxes and deficits and the Communist Menace.  If there was a magic moment, when the nation was actually interested in Republican ideas, it was in the late 1970s when the economy went south in a swamp of stagflation, when inflation was 10 percent and unemployment was 10 percent.   And even then it was nip-and-tuck as the Democrats successfully framed Ronald Reagan as a mad bomber and an amiable dunce.

The Republican Party is the party of the People of the Responsible Self.  It is for people that don't think of politics as a way to get their hands on the "free stuff."  It is for people that don't believe in the exploitation theory of history.  It is for people that think like Adam Smith, that the first thing to do is to figure out what you can do for other people.  That it's your job to make yourself useful, and then start to worry about how much money you are getting back.  The Invisible Hand.

The Republican Party is for people that think there is a fundamental harmony of interests.  That all government spending is waste, starting with the Pentagon and the police, but that some things--very few--justify the waste.

There is no point in the Republican Party joining the "free stuff" steeplechase.  Democrats have already got all the best mounts, and they know how to ride them.

The immediate prospect for the Republican Party is not in making nice to Hispanics, who probably have half a century of "free stuff" politics left in them.  The immediate prospect for Republicans is white middle-class voters that are feeling sadder and wiser after the Obama debacle.  We will see the first signs of spring, if there is to be a spring, in the Fall of 2014 after a year of Obamacare.  How's that "free stuff" healthcare turning out, voters?  There eventually could be a wave of women disillusioned with a world without marriage, recoiling from the illusion of life as a career in some stupid bureaucracy to discover life as a social human being in a neighborhood community, bearing and raising children and creating the future.

Really, the politics of the Republican Party is an impossible dream, that politics should not be the politics of the armed band marching around in search of booty, but an attempt to create the good society, by inculcating a culture of cooperation and responsibility, backed up, at the limit, by limited and necessary force.

The chief barrier to the impossible dream is not ordinary people and their appetite for "free stuff" but liberals.

It is liberals that think they deserve government grants  to fund their hobbies.  It is liberals that think they should have the right to sit for decades as tenured professors in government universities on the public dime.  It is liberals that think they have a right to taxpayers' money to fund "the arts."  It is liberals that think they have a right to six-figure salaries and bullet-proof pensions in state government because they care about the poor and the marginalized.

There used to be a word for people like this.  They used to call them "hypocrites."

End of the Risk-free Retirement

For about half a century, our ruling class has encouraged the plebs in the idea of "retirement."  The idea is that after a life of work you can retire from daily toil and kick back.  As a right.

Maybe the government would kick in with a pension, as with Social Security.  Or maybe your rich corporate employer would kick in with a defined-benefit pension.  Then there are all those tax-advantaged savings programs like IRAs and 401(k)s.

But the truth is, according to Megan McArdle, is that there is no such thing as a risk-free retirement.  We've seen the corporate pension go the way of the Studebaker.  And now we see that public-employee pensions are in the same mess as corporate pensions of a generation ago.  You get into an economic downturn and suddenly your promises are worth nothing.

McArdle develops a mantra for this problem.  The future is uncertain, she reminds her readers, and you can't make that uncertainty go away.

We shouldn't have been surprised--however much financial planners may boast of reducing risk, it is rare for financial risk to actually disappear.  What we do is move it around, maybe transform it a bit.  But the risk always remains.

You cannot get to age 65 (or whatever), quit work, and say: Now I'mm checking out, so my pension, my Social Security, my savings can take care of me.  The future is uncertain. Period.

Retirement always was something of a fantasy.  It presumably developed out of the idea that a manual worker really is clapped out -- but actually well before age 65 -- and unable to work.  So noble government would propose programs and mandates to take care of the needy and the elderly.

Trouble is that governments are all in the business of looting the world for the benefit of their supporters.  And old people are an obvious source of loot.  So even if you think that everything is hunky-dory, chances are some war, some inflation, some confiscation, some disaster will come along and spoil all your plans.  The government will come and tap your savings like in Cyprus.

Cooler heads are saying that it is time to forget about retirement.  You need to be able to respond to whatever the world throws at you.  Older people like me need, in other words, to be employable and adaptable, just like any other responsible adult.  When you start to decline mentally and or physically so that you cannot take care of yourself then it is time to dip into savings and pensions, and maybe throw yourself on the mercy of your children.

Right now, of course, after a century and a half of Marxism, socialism and progressivism, we have the worst of all worlds.  We have the 47 percent that thinks it is "owed."  And we have numerous special interests with the power to loot the commonwealth.  We built powerful government to help the poor, but most of the time it just helps the ruling class.

Whether or not this is just, it means that the economic relations between worker and employer, between debtor and creditor, between spender and saver, between young and old, are grievously distorted by political meddling and outright looting.  It means that necessary adjustments are very hard to make.  It means that ordinary people will suffer.

Because the future is uncertain.  If you guarantee the future for Bill then it means that you will make the future even more risky for Pete.

And the moment we think that we have figured it all out is the moment that the universe decides to give it to us, good and hard.

Political Portents for Obama's Second Term

You can see why the ancients looked to the heavens for portents of the future.  They had no other way of figuring out the moods and the ambitions of the divine gods that ruled over them.

In the modern era, we look to the media for political portents, because it is hard for ordinary humans to figure out what is really going on in the councils of government behind the political PR and the interminable spin.

In the last couple of weeks there have seemed to be some real portents in the sky telling us that things are going to change.

There's the general malaise pointed out by Peter Wehner in Commentary.  Not only is the president's approval rating in the 40s, but Democrats are starting to "grouse."  When did you last hear about Congressional Democrats "grousing."

Then there is the story of the president dissing Democratic Rep. Dan Kildee (D-Flint) at a closed-door meeting of House Democrats.  You should'ha listened to my State of the Union speech, the president told this freshman Democrat after egregiously insulting the rest of the meeting.   When did we last hear anything negative from a closed-door meeting of Democrats?

Then there is Sen. Patty Murray's (D-WA) stupid budget.  No spending cuts.  No entitlement reforms.  Just a trillion in tax increases.

So the Democrats are running out of gas.  And no wonder.  They have been on a roll since 2006, winning Congress back decisively in 2006 and the presidency in 2008.  But last fall they only won the presidency by a few points.  And now the future of congressional Democrats diverges from President Obama.

The president may be boldly proposing to take back the House in 2014, but most Democrats know better.

Think of an army.  Think of a great offensive.  You prep for it; you build up supplies.  Then you attack and advance.  But eventually you just run out of gas.  It's time to shorten the line and consolidate.

Really.  After you have nationalized healthcare, what is left to do?

The basic problem for Democrats, of course, is told in Patty Murray's budget.  They are out of ideas.  They don't know what to do about all their programs except for increasing taxes.

But more than that is the fundamental error of the administrative welfare state.  It's one thing to propose a nice little pension program to help the poor.  It's one thing to help seniors and the poor with health care.  It's one thing to help the illiterate get their basic three "R"s in government schools.  But when these activities dominate the whole economy, you have a problem.

And the problem is simply "mistakes."  How do you fix mistakes?  Well, we know that with the price system, everyone is on their toes all the time fixing mistakes.  That's what the price system does to you and for you.

But in government mistakes are terribly hard to fix.  That is way Social Security is such a burden.  If everyone were saving for their own pension then the democraphic shift towards longevity and fewer children would simply be solved as people retired later.  But government just sits around and does nothing while the unfunded mandate piles up.  With Medicare the problem is that people don't care what their routine medical care costs.  It's not like reading the supermarket circular for the week's bargains.  So grannie just keeps going to the doctor hoping he'll propose a wonder drug to fix her aches and pains.  So with welfare, and so with education.  They cannot adapt to change and they cannot fix problems.  Because change just isn't what government does well.  That's why "change" usually takes a revolution.

This is no mystery.  It's because of the difference between the price system and the political system.  The political system is a springtime for freeloaders, where politicians are promise free stuff to their supporters.  The price system is a cooperative system.  I think about what you might want to pay for, and produce it.  You think about what I might want, and produce it.  If I am right, I get to collect $300 and pass Go.  If I am wrong then I better figure out a better way to serve you.

That's the problem with Patty Murray and her budget.  It makes absolutely no attempt to "do something" about the federal government's appalling finances.  What about those $1 trillion deficits as far as the eye can see?  Pay no attention to that deficit behind the curtain!  Keep all the programs and pile on the taxes.

Which takes us to Herbert Stein's Law.  If something cannot go on forever, it will stop.

But it sure would be nice to stop before we hit the wall at the end of the box canyon.  You know what that will mean: Minorities and women hardest hit.

Staring at the Obama Apocalypse

What comes next?  That is the question at the back of every conservative mind.

I was triggered to think about this when reading Jennifer Rubin's Right Turn blog at the Washington Post.  That's because of the comments.  They are horribly abusive.

It got me to thinking.  All those liberal trolls: they have absolutely no idea what is coming.  All they hear is that the Republicans are obstructing everything that the president wants to do.  They are not thinking about unsustainable entitlements.  They are not thinking about what happens after the Fed stops its QE.  They are not thinking about what happens to the credit system after it is regulated into the Consumer Financial Protection Bureau.  They just know that the Republicans are scum.

And they think that the way to tame the economy is to subject it to proper regulation by disinterested experts.

But the conservative blogosphere is trying to think about what comes next.  Here is Kathy Shaidle musing about ways to step aside when the day of financial judgment arrives.

Don't save for retirement: the government will probably take your retirement savings like they already did in Argentina.  Don't go to college: start a business.  Don't earn a lot of money: they government will just take it.  Don't have kids, and don't be embarrassed about joining the freeloaders.

Then there is John Ransom musing on the VIX, the fear index.  The fear level is low right now, with the market up.  Which means that fear is low right now because the market it up.  Until it isn't.

Which is why I'm invested mostly in broad-gauge and consumer stocks.  When the crash comes, there will be no place to hide in the short term, and I am pretty sure that dollar assets like savings accounts and bonds will get demolished.  That is not a good place to be because whatever you lose in bonds will be gone forever.  The value of the dollar will not come back.

But if you have stocks then you have a share in the wealth creation of the post-crash America.  At least, that's my fondest hope.  If there is an America.  If there is any wealth.

What is certain is that in a few years the federal government will be desperately trying to get out of a jam.  It will be desperately trying to cut where it can without bringing people out into the streets, and it will be beating the bushes for revenue, starting with the low overhanging fruit.

The only question is: who will be left holding the short straw?

Can Government Correct a Mistake?

Over a century ago, at the dawn of the "common school" era, someone decided to stop teaching reading using phonics and to start teaching using "whole language" approach.  Modern "whole language" is credited to Noam Chomsky and Ken Goodman.

Trouble is that "whole language" makes reading into a job approaching in complexity the acquisition of literacy using the ideographic system of Chinese and Japanese.

Popular opinion for some years has represented the "whole language" approach as a mistake.  Maybe it is, maybe it ain't.  But the question is: how do we tell when the government school system has made a mistake, and if it has made a mistake, how do we get it to change.

That's the problem with government.  It is very difficult -- almost impossible -- to get government to fix a mistake.

Let us call in Thomas Sowell, who attacks the "mistake" problem with great vigor in his Basic Economics.  If you go to Google Books and search for "mistakes" in the 4th Edition, you get  8 snippets on your browser.  Here is his main address to the question.

Humans are going to make mistakes in any kind of economic system.  The key question is:  What kinds of incentives and constraints will cause them to correct their own mistakes?

The answer he gives is that people correct their mistakes consistently and rapidly under the price system.  But in government, mistakes can take years, even decades to get recognized and corrected.

Why is that?  The simple answer is that the price system is a two-way communications system in which producers and consumers signal to each other constantly and unequivocably.  Mainly, they signal what they don't want.

If a producer prices a product and very few people turn up to buy it then he has a problem.  If a consumer wants a product and cannot find it at the price she wants to pay, then she has a problem.  In both cases, the producer and the consumer have made a mistake.  The producer must lower the price, or improve the quality or improve the advertising.  The consumer must either pony up more money or go without.

It's simple.  Either you respond to the signals the price system is sending you or you go broke.

Government is a two-way communications system too, but it is a system with a very narrow bandwidth.  Moreover, like an army, a government does not immediately respond and stop what it is doing when things seem to be going wrong. It bellows "once more into the breach" and decides that more money is needed to solve the problem.

The phonics vs. whole language controversy illustrates the issue.  It went on for decades while partisans argued, and ended up with a qualified victory for "synethic phonics."  Meanwhile generations of kids went through the schools system.  Should generations of kids be sacrificed to a mistake?

If schools were private then they would quickly respond to the demands of parents.  There could even be schools declaring their commitment to phonics in no uncertain terms or to whole language, and let the market decide.

The point is that, in a free market under the price system, producers and consumers are ceaselessly communicating to each other, and products and services are constantly getting adjusted and improved to meet the needs and the price preferences of the consumer.  Under government, not so much.

Of course, the whole point of government is to stop change.  We don't want to change the form of election to suit the partisan advantage of the current ruling class.  We don't want to change the Bill of Rights.

But what about Social Security?  The current system doesn't respond to changes in demographics, in the economy, and in life expectancy.  That is why it is going broke.

What about Medicare?  The president knows the problem, according to the senators who dined with the president last week.

"He said the problem with Medicare is people think that it’s their money,” when in fact "they pay in a buck and get three.”

If Medicare were a private system it would adjust to this and correct it within weeks.

The problem with our national politics right now is that the national myth about the welfare state is a lie.  But nobody dare admit it, because they know that the first person to tell the truth to the American people will get run out of town on a rail.

There has got to be a better way to own up to mistakes and fix them.

There is a better way.  It is called the price system.

Does Obama's Charm Offensive Matter?

According to Peggy Noonan, the Republican senators that dined with President Obama last week had nice things to say about the president.  But one of the senators pointed out his lack of leadership.

At certain points in the conversation the president, according to the senator, said that even if he wanted to agree with the Republicans on certain specific questions there would be a rebellion in his own party: “He said that a few times. But that’s an abdication. You have to lead! You have to educate as only a president can with a bully pulpit, you have to bring your party along.”

At the American Spectator Peter Hannaford talked about Trojan Horses and an invitation to betrayal.  The White House's idea is to get just enough Senate votes to send a bill to the House to undo the sequester.  Then, when the House rejects it,

Obama’s mouthpiece, Jay Carney, will say with a straight face, “He did everything he could. He worked with Republicans in the Senate, but the House just wouldn’t let go of its protection of millionaire and billionaire tax loopholes.”

Well maybe.  But I'd say that any Republican politician in Washington DC knows by now that you cannot trust the president on anything.  Whatever agreement you think you have, the president will change if he thinks he can score a point on you.

I just can't believe that any successful politician (and they are all successful to have made it up the greasy pole to Congress) would want to trust President Obama further than they can throw him.

Naturally, they say nice things to Peggy Noonan, and naturally Peter Hannaford is worried.  But really, here is a president that didn't want to talk to the Republicans until, all of a sudden, he lost a round in the blame game.  You don't think that these veteran politicians can smell weakness?

Michael Barone said it straight out about Obama and the White House.

They're flailing. That's the impression I get from watching Barack Obama and his White House over the past week.

The fact is that Obama is doing what any Democrat president would do.  He is putting off the inevitable day when the Democratic base will have to start eating "give-backs": cuts to their sacred entitlements.  The only way that a Democratic president will be able to sell cuts to the Democratic base is when the city walls are crumbling in a fiscal earthquake.  Until then, don't expect any leadership on spending from any Democratic leader.

Rahm Emanuel is justly famous for his remark that you never want a crisis to go to waste.  But the full truth is that in politics you can never do the difficult thing unless there is a crisis.

Unemployment: The Household Survey Story

Yeah, yeah.  Unemployment was down this month from 7.9% to 7.6%.  Hurray! A robust recovery is finally here!

Only it ain't.  As all red-blooded Americans know, the Unemployment Rate is computed from the Labor Department's Household Survey, using the Labor Force and the Employment Level numbers.

Last month the Employment Level was up by 170,000.  Which is OK, a so-so number.

But last month the Labor Force number was down by 130,000 people.  A bad number.

Here's what the numbers would look like if we got into a real recovery.  You would see the Employment Level going up by 300,000 to 500,000 per month.  And initially, you would see the Labor Force number going up even faster.

Why?  Because when discouraged workers get the word that there are jobs out there they start to look for work.  And then they get included in the Labor Department's count of the Labor Force of people that have jobs and people that want jobs.  So, in a robust recovery, the Unemployment Rate may actually go up for a while.

So the fact is that we are still not in a solid recovery.

No surprise there.  You want a solid recovery?  Then you, the government, need to implement policies that encourage people to produce and consume.  You need to produce a solid monetary policy, not an inflationary monster that merely keeps the government's interest cost down.  You need to curb crony capitalism in all its guises.  And you need to cut government spending.  You need to cut tax rates.

Our liberal friends have lately taken to whining that cuts in government spending reduce the gross domestic product.  So they do, because government spending is included in the GDP.  That's what happens when the indices are designed by people that believe in Keynesianism.

But in reality government spending, all government spending, is a weight on the economy.  It leaches wealth and prosperity out of the economy.  You want to fix a sluggish economy?  Then cut government spending.

Done that?  Good.  Then cut spending some more and while you are at it, cut tax rates.

That, Mr. President, is what I call a balanced program to fix the budget and revive the economy.

The reason we have all this stupid Keynesianism and inflationism is that the people getting government spending handouts screech like banshees when the checks stop coming.  I mean everyone, from Social Security recipients like me to crony capitalists getting lots of lovely green subsidies.

(Golly, who knew that dear old Uncle Warren Buffet was getting green subsidies from his investments in wind and solar?  That guy sure knows how to make a buck on the government's dime.  Right now he is benefiting from the delay of the Keystone pipeline, 'cos the Bakken oil has to move over his railroad instead of environmentally cleaner pipelines.)

Politicians are practical people, so they listen to experts that come up with rationalizations for what comes to them naturally.  The Keynesians give the politicians a reason to delay biting the bullet.  So they do.

People want free stuff, and politicians give it to them.  Until the money runs out.  Then the politicians move on and the people are stuck eating the paint off the walls.

The "Mordida" of Liberal Politics

The problem of all government power is that it tends towards protecting the power and privileges of a ruling class.  Back in the old days, the ruling class of the South ran a racial privilege system to keep the blacks down.  Fast forward to today, and the ruling class of educated liberals run a class and race privilege system to keep minorities and women on the liberal plantation, particularly in corrupt states like California, New York, and Illinois.

Item: Victor David Hanson's lament about the liberal "Mordida", the "bite" you are supposed to pay for the privilege of living in California.  Who would want to live in Texas with its 110 degree summers and "fossil-fuel" air conditioning sneers Gov. Jerry Brown, (D-CA).

Translated, Brown's retort meant that despite California's sluggish economy, high taxes and poor services, it's still worth staying there to enjoy its beautiful climate -- especially along the 1,000-mile-long coast, where most of the state's elites live comfortably without a need for high-priced air conditioning.

Ah yes.  The liberal elite makes sure that it's summertime and the living is easy for educated liberals.  But what about non-liberals living in California?

But it is not such an accommodating a landscape if you are in the shrinking middle class and seeking a good-paying job in energy, construction or manufacturing; a safe daily commute on good roads; reasonable taxes; an affordable house; or a good public school.

But where is the political movement to curb the power of educated California liberals that make life a hell for others so that they can live on the balmy California coast?

Item: Section 5 of the 1965 Voting Rights Act, the one that requires certain southern states to get pre-approval of election practices from the US Justice Department.  It's up before the US Supreme Court right now and the Chief Justice of the United States asked the US Solicitor General about racism in the South. H/T Daniel Henninger.

Chief Justice Roberts: General, is it the government's submission that the citizens in the South are more racist than citizens in the North?

General Verrilli: It is not, and I do not know the answer to that, Your Honor. . . .

Chief Justice Roberts: Well, once you said it is not, and you don't know the answer to it?

General Verrilli: I—it's not our submission. As an objective matter, I don't know the answer to that question.

I see.  So does that mean the South still has to bow the knee to the liberals in the US Justice Department for another 50 years, or not?

I don't know about you, but in my personal experience, the most racist people I know are blacks.  And the most bigoted people I know are gays.

It's no mystery why this should be.  People know when to shut up.  Whites know that they can get into trouble with racist talk.  Ditto gay-bashing.  But liberals condone racism in their black clients and anti-straight bigotry from their gay clients.  There is nothing more delicious than spewing hate out to people that can't fight back, at least if you are a racist or a bigot.

If you go back a century, then if you are a liberal you can pat yourself on the back for helping the working stiff.  But today the low-income working stiff isn't working and the low-income woman isn't married to the father of her children, and liberals should be ashamed.

If you go back half a century, then if you are a liberal you can pat yourself on the back for helping the African American.  But today minorities and women are hardest hit by the worst economy in the last 50 years, and liberals should be ashamed.

Over the past century, Progresssives-liberals-progressives have done some good things.  They have also done some terrible things.

America's agenda for the next 50 years, whether liberals like it or not, is going to be unraveling the tangle, the "bite" of injustice resulting from a century of big-government liberalism.

The sooner we start, the less people will suffer.

Hugo Chavez and Charismatic Leadership

Ding, dong, the wicked witch is dead.  I mean the wicked witch or wizard of Venezuela, Hugo Chavez.

His passing is salutary, because he is a solid example of a charismatic leader.

People turn to charismatic leadership, according to Max Weber, when ordinary political leadership seems to be failing -- in "times of trouble", according to Reinhard Bendix in Max Weber: An Intellectual Portrait.

Hence, in times of trouble the "natural leader" is neither the official nor the master whose authority is based on the sanctity of tradition, but the man who is believed to possess extraordinary gifts of body and mind.

We may disagree about whether Venezuela was really in a "time of trouble" when Hugo Chavez was elected president, but the lower orders certainly felt so.  In the AP's piece,

"Chavez masterfully exploits the disenchantment of people who feel excluded ... and he feeds on controversy whenever he can," Cristina Marcano and Alberto Barrera Tyszka wrote in their book "Hugo Chavez: The Definitive Biography of Venezuela's Controversial President."

 This is the left-wing approach to politics that goes back to Marx and Engels and the Communist Manifesto.  Exploitation, "naked, shameless, direct, brutal", is the core of the Marxist message.  You are suffering because you are being exploited.

No doubt in many South American countries the poor are being exploited.  In The Other Path, Hernando De Soto explained how the exploitation works.  It was basically that everything in the formal economy was decided through politics, through negotiation between powerful special interests.  So if you were a campesino, coming to the city of Lima from the altiplano in the high Andes, you were outside the patronage/clientage system and its constellation of interests, an unwelcome disturbance to the status quo.

Let us admit that for the campesino, the outsider, a charismatic politics is the rational solution to his problem.  He wants a shakeup to the status quo, hoping that, in the fallout, he will get some crumbs.  He wants a leader who will fight for the people against the powerful.

In reality, of course, the charismatic leader is a monster that collapses the entire economy through his endless resort to government force.  Capitalism may be exploitative, but that is because it is inhuman.  It just matches supply and demand through the price system.  If you are a low-skilled campesino, then you don't get to charge a very high price for your labor in the city, particularly if you need to be a member of a union, or need to be worth more than the minimum wage before you can get a formal job. And that, you are likely to judge, is unjust.

But capitalism doesn't care.  Once you get some skills it will mindlessly include you in the system.  Because now you are worth more.  If you really apply yourself and acquire some unique skills in high demand, it will shower you with money.

The trouble is that the charismatic leader is worse than inhuman.  He is demonic.  He delights in upsetting all human relations and resorts to physical force and compulsion, gulags and extermination camps, on principle.  He is a war leader, not a negotiator or a builder.

Which brings us to Barack Obama.  Obviously, Obama is a charismatic leader, but not, perhaps, a great one.  He owes his presidency more to the eagerness of the mainstream media to waft him aloft and to ordinary Americans eager to elect our "first black president" than "extraordinary gifts of body and mind."

And Obama is not only an Affirmative Action charismatic leader; he is also not a nice guy.  Quin Hillyer:

Just the other day at lunch, a friend of mine, a businessman with good connections across the country, recounted a conversation he had with a Democratic insider while Obama was in the midst of his first presidential race. “It’ll take the American people five years,” said the insider, “to realize what Obama’s really about and what he’s really like.” Then, presumably, the public would catch on to his manifold defects.

Yeah.  Now they tell us.

In Venezuela they had a real charismatic leader.  In the US we only have a fake one.  That, if you are looking for it, is merely proof of American exceptionalism.

Because, after five years Americans are beginning "to realize what Obama's really about" and they don't like it.  At least that's what recent opinion polls are telling us.

Conservative Concern for the Poor

Arthur Brooks, he that wrote about conservatives giving more to charity than liberals, is chiding conservatives for not caring enough about the poor.

An April YouGov.com poll—which mirrored every other poll on the subject—found that only 33% of Americans said that Mitt Romney "cares about people like me." Only 38% said he cared about the poor.

Conservatives rightly complain that this perception was inflamed by President Obama's class-warfare campaign theme. But perception is political reality, and over the decades many Americans have become convinced that conservatives care only about the rich and powerful.

So what should conservatives do to change perceptions?  Well, writes Brooks, for a start they should emphasize that out of control Social Security and Medicare is "imperils the social safety net for the neediest citizens."  Never mind the teachers' unions: the problem with education is that "poor children and their parents deserve better schools."

Well, yeah!  That's what conservatives are always trying to say.  The problem is that nobody wants to hear it.  And why is that?  Well, the big thing is that your average middle-class grandma says that "they" had better not touch "her" Medicare.  Then in the next breath she worries about health care for the poor.  And on education, your average soccer mom cares only about the special program that her Asbergers kid qualifies for.  What politician wants to mess with that?

The problem is that, at every turn, Democrats manage to demagogue conservatives onto the defensive, by recklessly promoting more "free stuff."  You can understand that the poor like "free stuff."  When you don't have very much, then you won't foolishly look a gift horse in the mouth.  But we middle-class entitlement beneficiaries are the problem.   It's our addiction to free stuff that legitimizes big government and its waste and injustice.  Worst of all was that obviously middle-class young woman that baited Mitt Romney in the 2012 campaign:

“You’re all for like ‘yay freedom and all this stuff and yay pursuit of happiness,’” the student said. “You know what would make me happy? Free birth control.”

If you want to know what our big problem is, it's right there.

And that's why I say that we can't fix the problem until we are going over the rapids.  Because only then will the allure of "free stuff" finally lose its luster.

There is another way.  It is called religion.  While politics has always offered free stuff to its supporters, religion has been the human way of getting people to be social rather than selfish, to ask first "what am I giving" rather than "what am I getting."

Because the only way you can deal with the young woman that wants her free stuff is by shaming her.  The way that liberals shame conservatives about their lack of concern for the poor.

Why President Obama Keeps Campaigning

The Austrian caped crusader Joseph Schumpeter wrote that, considering that politicians are professional election-winners, it's amazing that they do any governing at all.

And President Obama seems to want to prove his point.  Everyone is writing articles right now about how the president is ignoring governing for the more enjoyable job of politicking. "Do we have a president or a perpetual candidate?" asks Michael Barone.

The conventional wisdom is that the president is amping up the political volume, including the funding of his permanent campaign vehicle, Organizing for America, in order to win back the House of Representatives in 2014.

How could that be?  A president has never taken back the House in his second midterm, nor ever got into a double-digit increase in any midterm.  My guess, though, is that the president and his people are just trying to avoid the usual second-term debacle.  They are fighting hard just to stay even in 2014, and even will be good enough.

After all, their second-term goal is to get Obamacare implemented and beyond the hope of repeal.  For that they need to maintain enough power in Congress to prevent a wrecking crew from getting to work.

And anyway, the Obamis are doing plenty of governing.  They are writing regulations and issuing executive orders to advance the progressive agenda as far and as fast as humanly possible.  When we say that the president is politicking, not governing, what we really mean is that he is doing everything in his power to avoid ever compromising with the Republican agenda.

The main thing for Obama is to get to the next presidential election without the roof falling in.  And how likely is that?

Those of us that want a new and a better America need to understand that it won't come with political reform or with bipartisan deals with the Democrats.  It will only come after the moral and economic collapse of the administrative welfare state.   It will only come after liberals have completely lost their moral and cultural power, and the administrative welfare state has run out of money.

In that sense, President Obama is doing our work for us.  His resistance to spending cuts and his insistence on tax increases only bring forward the inevitable collapse.  A practical and bipartisan president that sat down with Republicans to plan entitlement reform and school-choice reform would be a president that was preserving the welfare state for future generations at a sustainable level.

Instead, the president seems to want to go for broke.  And broke is probably what he will get.

It's a pity, but minorities and women will be hardest hit.

Beyond Sequester

Over at America's go-to website on government spending, we have a little notice displayed in these sequestered times.

usgovernmentspending.com's numbers are based on official budget numbers. Until the president's budget is released in mid-March, we won't be able to show the impact of the sequester. Meanwhile, see budget detail page here.

Actually, of course, if you went to usgovernmentspending.com and created your own custom chart, you probably would need a magnifying glass to see the difference before and after sequester.

You can understand President Obama's situation.  He is sitting on an untenable budget situation.  Unless and until the feds cut spending sharply we are going straight towards debt default and maybe hyperinflation.

But what can a Democratic president do?  The whole of left-liberal politics is founded on "more."  More spending, more programs, more administrative welfare state.  The Democrats just don't do "less." That's why they call spending cuts "austerity."

But how do you do the politics of "less?"  It's a good question, and the answer is not very palatable.

You wait until the wolf is at the door.  The verdict of the 2012 election made that clear.  Yes, the American people know there is a problem.  But they are not ready, yet, for the turn-around artist to come in and fix things.  The moral drama was palpable.  Here you had Mitt Romney, whose entire life has been devoted to turning around "dysfunctional" organizations.  Here you had Barack Obama, who entire life had been devoted to left-wing activism.  The American people chose Obama, by a few percent.  But they kept the Republicans in control of the House of Representatives, just in case.

Let us recall the point of politics, as described by H.L. Mencken.

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

Or take the prophetic words of Rahm Emanuel:

 You never let a serious crisis go to waste.

These are meaty quotes, but they underlie a truth about the human condition.  Politics is for emergencies.  It is for the moment when everything is at risk.  At moment of peril humans come together and look for a leader to lead them out of the land of Egypt.

The eternal problem is to make the politicians go away after the emergency is over.

And so we will never do anything about the welfare state until our nation is threatened with ruin if we don't do something.

In my view, the business of being social animals is characterized by the yin and yang of politics and religion.  Politics is the force end of the animal, and is easily corrupted into a project of freebooting and freeloading.  Its fully corrupted form is the robber band that rapes and pillages.  Religion is the project of converting humans into willing cooperators.  Its means is not the club of force, but the conquest of the mind.  It is easy converted into a battle of orthodoxy against heresy.  Its fully corrupted form is the union of politics and religion in totalitarianism.

The challenge for conservative politics is not so much the politics as the religion.  We all know the systems we need to impose to reduce the degree of political and governmental force in our society: more markets, more civil society.  But we don't know how to build a moral movement to persuade the American people to give up the politics of free stuff for the culture of free-dom, the culture of the marginalized self for the culture of the responsible self.

My guess is that the movement and the moment will come.  But not before a bone-rattling financial Armageddon.