Free Markets, Free People
One of the most useful things I’ve learned about communication is the importance of stating things plainly and concretely.* But thinking about that lesson frequently makes politics maddening.
Euphemisms are the health of politics. If a government really wants to get away with murder, even secrecy can be less useful than making that particular murder sound unremarkable, justifiable, sensible, or even dutiful.
And, of course, I say that facetiously. As it stands now, it has fostered more government regulation, more bureaucrats and more intrusion in epic proportion:
"There’s already 13,000 pages of regulations, and they’re not even done yet," Rehberg said.
"It’s a delegation of extensive authority from Congress to the Department of Health and Human Services and a lot of boards and commissions and bureaus throughout the bureaucracy," Matt Spalding of the Heritage Foundation said. "We counted about 180 or so."
So, minimally (we all know they’re not nearly done) 13,000 new pages of regulation, 180+ boards, commissions and bureaus and, of course, scads of bureaucrats to fill them.
Then there are the new broad powers granted HHS and the IRS.
Yes, friends, that’s right, this is how you make health care less expensive and better, not to mention making government less intrusive.
Probably the funniest thing, in a sad and ironic way, is the fact that there are still millions of people out there who believe the propaganda that sold this crap sandwich to the public. Someone among them I’m sure will someday be able to explain how adding costly regulations and layers upon layers of bureaucracy somehow helps reduce the cost of health care delivery.
According to James Capretta of the Ethics and Public Policy Center, federal powers will include designing insurance plans, telling people where they can go for coverage and how much insurers are allowed to charge.
"Really, how doctors and hospitals are supposed to practice medicine," he said.
Wait, wasn’t one of the primary problems with the old system, per the Democrats, a problem of insurance companies telling doctors how to practice medicine?
See, solved by government, right?
In fact, one master has been replaced by another one, the newest master being the most inept, inefficient and corrupt of the two. And, of course, no one has yet explained how all of this is going to ensure people have better access to a doctor. Why? Because, quite simply, having insurance doesn’t guarantee care. And with the disincentives provided by massive increases in regulation (and the increase that will cost for compliance) and oversight via these board, commissions and bureaus, my guess is there will be fewer doctors in the future.
So prepare to enjoy the dawning of the age of ObamaCare and the attendant disappointment, shock and anger it will eventually engender among the public. There are some things that one shouldn’t mess with, and people’s health care is one of them.
If it’s not painfully obvious by now, the Obama campaign is banking on women voters being the key to re-election. Running on “Hope and Change” isn’t going to work this time around, and the specter of George Bush will only get about as many miles as a Chevy Volt on a full charge. The usually reliable grievance groups, identity cohorts and college students are not as enthused this time around, and the Obama campaign is apparently worried about that $1,000,000,000 in cash won’t be enough to get it past the finish line. So, naturally, some voting bloc must be pandered to and manipulated in order to secure a second term.
Enter the Contraception Wars (a major battle of the General War on Women). Relying on the various Democratic identity politics to get your voter base out is tedious, time consuming, and requires a lot more vote-buying to pay off the different interest groups. Seeing as how they may not be a reliable base anyway, then why not go for the largest voting bloc out there: women!
In recent elections, voter turnout rates for women have equaled or exceeded voter turnout rates for men. Women, who constitute more than half the population, have cast between four and seven million more votes than men in recent elections. In every presidential election since 1980, the proportion [of] female adults who voted has exceeded the proportion of made adults who voted.
The one thing that all women have in common is that they alone have the necessary biological equipment for having babies. If they were made to feel that their equipment was under attack (“Republicans are coming to steal your ladyparts!“), and that only Obamamagne can defend their honor, then perhaps they will race to the polls in support of their hero. Of course, there will have to be some “free” stuff thrown in to sweeten the pot and make women feel as if they are losing something unless Obama is re-elected. Accordingly, what follows is the multi-step process for ensuring the women vote goes solidly for Obama in November:
1. Raise awareness: Subtly introduce the subject of contraception from out of left field at a Republican debate. This will get the tongues wagging and foreshadow who the villains are.
2. Free Stuff: Using your arrogated powers, mandate that all employers who provide insurance must include contraception (including abortifacients and sterilization) in their plans, regardless of conscientious objection, the First Amendment or, y’know, any of that freedom nonsense. By giving women “free” contraception, etc., you necessarily pit them against those who would deny them their grant. Executing this step is vitally important to framing the villains and carrying out Step 3.
3. Create the wedge issue: Because certain quarters will predictably howl at the intrusion upon their liberties, this Step is almost self-executing. Once the villainous voices are set to wailing, pretend to show concern for their plaints and then offer an “accommodation” that changes nothing but highlights your Solomonic wisdom (aided, of course, by a compliant media). The results of this Step are two-fold — (a) it politicizes the issue so that people will have to choose sides, and (b) it creates the illusion that you are fair and just, while your opponents are rigid and uncaring.
4. Flip the issue: Up to this point, the issue has been “I want to give you free stuff, but the greedy bastards don’t want to pay for it.” That may raise legitimate concerns among a sizable portion of the voting bloc you are courting. So, instead, change the narrative to “I want to protect your ability to get the free stuff, but they don’t want you to have it at all!” In flipping the issue from “don’t want to pay for” to “want to ban” you have neatly cleaved your intended voting bloc from your political enemies. Under this telling of the story, the villains are out to get women and only you will stand up to protect them.
5. Generate sound bytes: This Step is a bit tricky and must be followed carefully. The basis for any campaign is a good PR strategy. There will be plenty of older sound bytes out there already, but those will be generally stale and unhelpful. What you need to properly execute this Step is a current controversy. In order to do that you will need a public forum (such as Congressional hearing) in which to force the issue. Start by finding someone to represent your voting bloc and push her presence at the forum in a way that is sure to keep her from actually appearing. (As an added bonus, falsely claim that no representative of the voting bloc was allowed to appear.) Be sure that this speaker will be a sympathetic victim such as a lowly “college student” (regardless of whether she is or not). Now, and this part is very important, have your willing victim draw enemy fire by testifying about activities that perfectly fit the definition of “slut”, all but openly daring your opponents to use the word. Don’t worry about someone taking the bait — someone always rises to occasion.
6. Profit: Now that you have created a wedge issue, identified victim and villain, and staked out your claim to your voter bloc, all you have to do is pound the wedge home. Using your newly generated sound byte(s), you are firmly on the path to political nirvana. Your friends and allies will eagerly disseminate, distort and decry the outrageous outrageousness of your political opponents, firmly ensconcing your coveted voter bloc on your side. It will be the talk of the town for quite some time, ready to be refreshed at the right moments. In addition, it will provide a welcome distraction to your pathetic record, a flailing economy, and impending dangers that show you unequal to the task.
Or maybe, just maybe, women aren’t as manipulable as you believe, and they actually care about their families, their jobs, their home budgets, and their liberties. If that’s the case, then you might just be screwed no matter what you do.
A man. A plan. A Super Bowl ad promoting the re-election of Barack Obama masquerading as a Clint Eastwood promotion for Chrysler.
I’m not sure what I’m more appalled by: the fact that Josey Wales is supporting crony capitalism, or the fact that the American taxpayers are funding a Super Bowl ad for the sitting president. How is this even possible?
I can understand that Clint Eastwood is just making a buck, and that perhaps he didn’t understand the ramifications of a bailed-out company spending $3 million per 30 seconds to send a special love note to its benefactor. But “Halftime in America”? Anyone even slightly cognizant of the 80′s would have to recognize the parallels to Reagan’s “Morning in America” campaign. Obama is half way through a potential two terms, thus this is his “halftime”. Ergo, supporting Obama in the next election equates to better times ahead.
In other words, we were fed blatant propaganda via our tax dollars.
Think about this for just a second. A company that was formerly held by a well-heeled hedge fund, and which was bailed out by the current administration, just spent gobs of money (that we provided it) to promote the re-election of its savior. On the most watched television event in the world. Starring one of the most respected actors in history. How is this not a disgusting display of crony capitalism?
Just to be clear, I’m not one to say that these sorts of ads should be illegal (although, I certainly question how — keeping in mind that money is fungible — taxpayer funds can be used to make this sort of ad). Let people say and pay for whatever message they want to broadcast. The more speech the better, IMHO.
My problem here is that we were milked by this company, and that we’re paying for the ads to glorify the guy who milked us.
A lot of fools decided to (sort of) camp out in various parks around the nation in order to protest this very behavior. Will any of them stand up and decry this ad? Of course not. Instead, the few of them who make it to the polls will vote to re-elect Obama, and therefor to further crony capitalism so that people better-connected than themselves can have worry-free employment at far greater than the market rate, and the national average.
We can have a country of laws, in which we are all treated equally with respect to individual rights protecting autonomy, or we can have a rule of man in which the favored make all of our decisions for us and reap the benefits of everyone’s effort. We are long down that second road.
I just hope that, unlike the Super Bowl, it is not the patriots who lose. I fear that there is no other possible outcome when we are forced to pay for the very propaganda that laces our wrists in chains.
Brian Dimitrovic, writing in Forbes, is another who takes a shot at Obama’s speech in Kansas (this is almost becoming a series considering the number of people ripping the speech on its economic ignorance) and posits that it is an example of abysmally incorrect economic history. The most obvious reason for the rewriting of that history by President Obama is centered in his ideology. If the history doesn’t prove what he says, President Obama doesn’t have a case. Dimitrovic, using the actual history of the periods Obama cites, shows Obama’s grasp of the history of those eras is as poor as the ideology he touts. Here’s the passage from the speech that Dimitrovic cites. We’ve cited it in previous posts, but Dimitrovic’s demolition of the premise is important:
[T]oday, we are a richer nation and a stronger democracy because of what [Teddy Roosevelt] fought for in his last campaign [of 1912]: [including] political reform and a progressive income tax.
Now, just as there was in Teddy Roosevelt’s time, there is a certain crowd in Washington who, for the last few decades, have said, let’s respond to this economic challenge with the same old tune….If we just cut more regulations and cut more taxes – especially for the wealthy – our economy will grow stronger….
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government….And that theory fits well on a bumper sticker. But here’s the problem: It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade. I mean, understand, it’s not as if we haven’t tried this theory.
Now there are lots of opinions about economics, but like it or not, facts are facts. Those facts are readily available to those who seek them. By the way, Dimitrovic is a Harvard PhD and an economic historian, so this is right in his wheelhouse.
First is his contention that Roosevelt’s “progressive” ideas are what essentially saved the nation. That the intrusion it represented was necessary. Dimitrovic pretty much says that’s nonsense. In fact, he says, what happened then may be the reason we’re suffering now.
Let’s look at the past as it actually was.
There is one major inflection point in U.S. economic history. Before this point, growth was high, at about 4% per year for a century. Also in this period, there was remarkable price stability and so little unemployment that the nation had to import tens of millions of workers from abroad.
After this point, growth was moderate, at about 3% per year for the long term, with variations in the form of major depressions and recessions and a 23-fold inflation which had no like in the previous epoch.
This inflection point was 1913 – the very year which the reforms TR plumped for in his last campaign, the income tax and the Federal Reserve, came into being. 1913 marks the one secular shift in American economic history toward lower growth and more economic unpleasantness in the form of unemployment, inflation, and serial recession.
Had this nation grown at the 4%-rate achieved in the pre-1913 period, we would be twice as well-off today. As for inequality, unemployment and inflation are scourges to the working class, but not so much to the rich, and these are 20th- and 21st- century innovations.
That’s the actual history coupled with the economy’s real performance. The economy here worked pretty darn well before 1913 and we saw consistent growth that continued to lift all boats. After 1913, not as much. An entire percentage point of growth was, on average, was lost. The only real and significant difference – income tax and the Federal Reserve. What does economic history show happened after this inflection point where government intruded significantly?
As Dimitrovic points out, “lower growth and more economic unpleasantness in the form of unemployment, inflation, and serial recession.” And again, this isn’t a claim that government has no role in the economy as Mr. Black and White would like to claim. This is to point out that what he is attempting to sell with his rhetoric and in support of his premise that it is capitalism that has failed (and thus government is the answer) has no basis in fact. In fact, it appears the opposite is probably true.
Dimitrovic then turns to the 20th and 21st centuries and their history:
Now about that 20th-century, the only reason its record came in even respectably is that at certain junctures, decided efforts were taken to withdraw the impress of the institutions of 1913, the Federal Reserve and the income tax.
He lists a number of facts that contradict Obama’s contentions about the market. In fact, as Dimitrovic says, it was decidedly anti-progressive ideas which saved the 20th Century, for example:
The President says, “It didn’t work when it was tried in the decade before the Great Depression.” These would be the years 1921-1929, when on account of a tax cut put together in 1921, the economy boomed at 4.8% per year as unemployment and inflation (the latter recently on a 100% run) both collapsed. How does a president, in a major, prepared speech make such an indefensible factual error?
Next: “It’s not what led to the incredible postwar booms of the ’50s and ’60s.” No? The trough of the recession at the end of World War II was 1947, when the Republican majority in Congress conspired to win a tax cut over President Truman’s veto. Result: a 6-year run of 4.8% growth.
Note the question Dimitrovic asks in the last sentence off the first example. This isn’t something that would be difficult to find for a research staff. These numbers and facts exist and are out there. But they don’t fit the ideology. You either have to assume they didn’t research the claims or that they rejected the facts because the were inconvenient to the premise. It is hard to believe the didn’t research the claims, isn’t it? They’re pretty definitive claims. One would assume, listening to a President of the United States, they’re anchored in fact. Obviously they’re not. The question is whether this is true economic historical ignorance or willful economic historical revisionism?
Dimitrovic also includes an example of where tax cuts were resisted, and the result, and where they were instituted afterward and that result. Again, the facts seem to refute the President’s premise:
In 1953, when recession came, President Eisenhower resisted calls for another tax cut, and recessions came again and again such that Eisenhower left office in 1960 with a record of 2.4% annual growth on his watch. John F. Kennedy followed, as every schoolchild should know, with another big tax cut. The great 1960s boom ensued, with 4.9% growth from 1961 to 1969.
Also interesting are the parties of the presidents. The numbers, however, aren’t controversial at all. This has been a fact with which almost all of those who’ve followed politics for any length of time and have been interested in the effect of tax cuts on our economy are familiar. These aren’t obscure, little known facts. But they certainly have been facts that one side of the ideological spectrum have tended to ignore when trying to spin more government and not less. That is precisely what President Obama’s object was in his Kansas speech.
The reason for Dimitrovic’s rebuttal of the contentions and claims made in the speech is fairly easy to discern:
Two years ago, I happened to publish a book, Econoclasts, canvassing all this history. I also happen to know that the White House library has a copy.
It also explains his disbelief in what was said:
I have to wonder what historical scholarship the president and his speechwriters are consulting as they come up with their strange counter-narrative of American economic history. I truly don’t know what the books could be.
After all, when the major library bibliographical service, Choice, reviewed Econoclasts, it said the book “fills a gaping hole in the literature.” Has there been some new revisionist history of the effects of tax cuts since 1913 that validates the president’s new narrative? If so, no one’s ever heard of it.
Then again, you can find the stuff the President reiterated in Kansas here and there in left wing redoubts, Berkeley, California and the like – on bumper stickers.
But not in the history of the actual eras in question. In fact, precisely the opposite of the claims made by the President seem to be true. Government intrusion is what has dampened our economic growth. You can see the percentage amounts for yourself. The cycles of recession, unemployment and inflation are a result of more government, not the failure of the market. In fact, per Dimitrovic’s examples, every contention made by the President, which Dimitrovic highlighted, are demonstrably wrong.
The reason for the claims is obvious, however. The ideology of market failure and the demand for more government requires that history, whether it is accurate or not.
We have an old word for that – propaganda. The dishonesty being employed ought to make the current purveyor of that propaganda ashamed of himself. But there is certainly no sign of that being the case.
The valuable James Pethakoukis weighs in with some new numbers to again shatter one of the myths that surround the “income inequality” nonsense that OWS and its ilk (*cough* Democrats *cough*) are pushing. One of those myths is that middle class income has “stagnated” in the last 40 years. And that’s because, per the OWS crowd, the rich have basically
stolen taken ended up with the money generated. Those pushing that premise are citing economists Thomas Piketty and Emanuel Saez study which claims the taxable income of the bottom 99 percent increased by just 12 percent from 1970 to 2008.
That premise and those claims are under serious assault. In fact, the University of Chicago’s Tino Sanandaji finds that there has been pretty significant growth in middle class income. His summary of what he found:
My simple method is combining the best income-distribution estimate (from Pickety&Saez) with the best income-growth estimates (from GDP numbers). This method shows that that between 1970-2008 the real per capita income of the “Bottom 99 Percent” grew by 80%, and the income of the “Bottom 90 Percent” grew by 60%.
80%? Last time I looked that was a bit higher than 12%. Oh, and plenty of charts, etc., to explain the difference at Pethakoukis’ site.
And there is statistical backup for Sanandaji’s findings:
From 1975-2009, real per capita GDP increased by 90 percent vs. 17 percent growth in real median household income, as measured by the Census Bureau.
On top of that:
These calculations are in line with new research from University of Chicago’s Bruce Meyer and Notre Dame’s James Sullivan, who find that “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”
Conclusion? If the premise is that one of the reasons that upper income increased in that period is because middle class income stagnated, the premise just isn’t supported by reality. Income is not a zero-sum game. And one of the points on the pro side of capitalism is it lifts all boats – as demonstrated here.
If you listen to those who are semi-coherent in the Occupy Wall Street crowd, they blame Wall Street for the financial straits we’re in. They’ve been convinced (and I’m sure for most it didn’t take much convincing) that it is the greed and recklessness of bankers and Wall Street tycoons which caused the housing bubble and subsequent financial collapse.
However Peter Wallison has taken the time and made the effort to lay out the entire sequence of government actions (and their subsequent consequences) which drove both the housing bubble and its collapse which put us in the financial position we’re in today.
As usual, it was government intrusion – in the name of social justice – that distorted the housing market and created incentives that otherwise wouldn’t have been there. Social engineering, with the best of intentions, that led to catastrophic unintended consequences.
The irony, of course, and what Wallison points out, is the OWS crowd is clueless at best or mendacious at worst. But the fault for our condition should be laid squarely in government’s lap. Where these protests should be taking place is in front of Congress, the White House, Fannie Mae and Freddie Mac and the Federal Housing Administration – not Wall Street.
Beginning in 1992, the government required Fannie Mae and Freddie Mac to direct a substantial portion of their mortgage financing to borrowers who were at or below the median income in their communities. The original legislative quota was 30%. But the Department of Housing and Urban Development was given authority to adjust it, and through the Bill Clinton and George W. Bush administrations HUD raised the quota to 50% by 2000 and 55% by 2007.
It is certainly possible to find prime borrowers among people with incomes below the median. But when more than half of the mortgages Fannie and Freddie were required to buy were required to have that characteristic, these two government-sponsored enterprises had to significantly reduce their underwriting standards.
Fannie and Freddie were not the only government-backed or government-controlled organizations that were enlisted in this process. The Federal Housing Administration was competing with Fannie and Freddie for the same mortgages. And thanks to rules adopted in 1995 under the Community Reinvestment Act, regulated banks as well as savings and loan associations had to make a certain number of loans to borrowers who were at or below 80% of the median income in the areas they served.
So there are the required guidelines – by law – enforced by government. And note, it wasn’t just Democrats. It was Republicans too. But the impetus and driving force behind all of this wasn’t Wall Street. It was government.
Research by Edward Pinto, a former chief credit officer of Fannie Mae (now a colleague of mine at the American Enterprise Institute) has shown that 27 million loans—half of all mortgages in the U.S.—were subprime or otherwise weak by 2008. That is, the loans were made to borrowers with blemished credit, or were loans with no or low down payments, no documentation, or required only interest payments.
Of these, over 70% were held or guaranteed by Fannie and Freddie or some other government agency or government-regulated institution. Thus it is clear where the demand for these deficient mortgages came from.
The huge government investment in subprime mortgages achieved its purpose. Home ownership in the U.S. increased to 69% from 65% (where it had been for 30 years). But it also led to the biggest housing bubble in American history. This bubble, which lasted from 1997 to 2007, also created a huge private market for mortgage-backed securities (MBS) based on pools of subprime loans. [emphasis mine]
Subprime loans, required by law to go to a certain percentage of applicants who otherwise wouldn’t get loans, built to half of all loans closed. Bubble created. Why? Because you’re talking about government “guaranteed” loans – safe money. That created a private market for MBS because the subprime loans in question would have been a poor risk on their own, but were a good risk with the government guarantee.
Demand grew, the bubble grew. But this was a foundation built on financial sand:
As housing bubbles grow, rising prices suppress delinquencies and defaults. People who could not meet their mortgage obligations could refinance or sell, because their houses were now worth more.
Accordingly, by the mid-2000s, investors had begun to notice that securities based on subprime mortgages were producing the high yields, but not showing the large number of defaults, that are usually associated with subprime loans. This triggered strong investor demand for these securities, causing the growth of the first significant private market for MBS based on subprime and other risky mortgages.
Again, because of who was holding or guaranteeing the loans, the real risk was masked, thereby triggering demand for these high-yield securities. How risky could they really be if they’re backed by the full faith and credit of the US, right?
And so the MBS market continued to grow:
By 2008, Mr. Pinto has shown, this market consisted of about 7.8 million subprime loans, somewhat less than one-third of the 27 million that were then outstanding. The private financial sector must certainly share some blame for the financial crisis, but it cannot fairly be accused of causing that crisis when only a small minority of subprime and other risky mortgages outstanding in 2008 were the result of that private activity.
And there is the salient point. No government intrusion, no government guarantees, no laws which “encouraged” or put quotas on loans with a certain percentage in the subprime category and no housing bubble, no demand for risky MBS, no financial crisis.
People, as they have for centuries, would have actually had to meet much stricter criteria for a loan and fewer would have owned homes. The market would have stayed stable, no bubble would have developed and we’d not be in the shape we’re in today. Oh, don’t get me wrong – government would still be out of control and on it’s eternal spending spree – but we wouldn’t have the added financial stress of a recession caused by government.
When the bubble popped, the inevitable happened:
When the bubble deflated in 2007, an unprecedented number of weak mortgages went into default, driving down housing prices throughout the U.S. and throwing Fannie and Freddie into insolvency. Seeing these sudden losses, investors fled from the market for privately issued MBS, and mark-to-market accounting required banks and others to write down the value of their mortgage-backed assets to the distress levels in a market that now had few buyers. This raised questions about the solvency and liquidity of the largest financial institutions and began a period of great investor anxiety.
The government’s rescue of Bear Stearns in March 2008 temporarily calmed the market. But it created significant moral hazard: Market participants were led to believe that the government would rescue all large financial institutions. When Lehman Brothers was allowed to fail in September, investors panicked. They withdrew their funds from the institutions that held large amounts of privately issued MBS, causing banks and others—such as investment banks, finance companies and insurers—to hoard cash against the risk of further withdrawals. Their refusal to lend to one another in these conditions froze credit markets, bringing on what we now call the financial crisis.
And there’s the real litany of how what happened happened. Market distortion by government is the real cause of this debacle. We’ve been pointing this out for quite some time. The problem, of course, is the unintended consequences of such intrusion seem never to be understood by the lawmakers and technocrats who come up with these sorts of grand social justice schemes. And again, understand that it wasn’t just the Democrats who helped this all along.
The bottom line however, as Wallison points out, is that while Wall Street isn’t blameless in all of this, their role, in comparison, is minor. The entire scenario was government inspired. However, that’s not what has been sold to the public. Instead we’ve gotten propaganda and class warfare in a blatant attempt to shift the blame to private concerns:
The narrative that came out of these events—largely propagated by government officials and accepted by a credulous media—was that the private sector’s greed and risk-taking caused the financial crisis and the government’s policies were not responsible. This narrative stimulated the punitive Dodd-Frank Act—fittingly named after Congress’s two key supporters of the government’s destructive housing policies. It also gave us the occupiers of Wall Street.
Indeed. If anyone needs to be in jail it is the perpetrators of the government policy that encouraged/required the market distortion that led to the bubble and ultimately collapse of the housing market.
That wasn’t Wall Street. What happened in the financial community is they reacted to an incentive created and supposedly guaranteed by government. But it was unsustainable. And it finally came to a head, dealing financial destruction all around.
Here’s the bottom line – no government intrusion, no incentive/requirement to push subprime loans. No subprime loans (especially in the amount required by government), no housing bubble. No housing bubble, no financial crisis. No financial crisis, no OWS, who simply have it all wrong.
But then, given the government propaganda effort to this group who want to believe what government is claiming, is anyone surprised?
Well now we know why, at least for some, Hurricane Irene was so hyped. It gave apologists for big government a chance to spin the response into plaudits for big government and a claim it is still necessary. Missing, of course, is any context or proportion. Those, like Dana Milbank and Steve Benen, just use the opportunity to bash small government conservatives in general and the Tea Party in particular.
And they brilliantly erect giant strawmen and then just flat tear them apart.
Tea Partyers who denounce Big Government seem to have an abstract notion that government spending means welfare programs and bloated bureaucracies. Almost certainly they aren’t thinking about hurricane tracking and pre-positioning of FEMA supplies. But if they succeed in paring the government, some of these Tea Partyers (particularly those on the coasts or on the tornadic plains) may be surprised to discover that they have turned a Hurricane Irene government back into a Katrina government.
Tea Partiers have a very specific notion of what government spending means to them and it certainly isn’t just centered in the canard of “welfare programs and bloated bureaucracies.” In case Mr. Milbank hasn’t noticed, his big government now owes more in debt than our economy produces in a year. That is the problem the Tea Party has with “big government”. And, frankly, that’s a problem Milbank should have with it too. Instead he spends a column touting big government using the pretext of a natural disaster (and government’s response to it) to attack those who object to the continuing deficit spending of big government. Instead, if had in sense, he’d be leading the charge to rein it in.
Stipulated, there are things that government can do because of government’s orientation. Wage war, for instance. But that doesn’t then excuse the excesses elsewhere. Nor does it justify its intrusion in areas it has no business being in. And it certainly doesn’t justify it spending more than it takes in. Those are the Tea Party’s objections to big government’s spending, Mr. Milbank. Please try to present them properly the next time you attempt the subject.
Of course nonsense like Milbank’s above lead to absurd conclusions in order to attempt to persuade:
The other model is to have a weak federal government, without the funds to forecast storms or to launch a robust emergency response in time to do any good. You might call that the Tea Party model.
Really. Who said anything about a “weak federal government”? I believe what the Tea Party is more interested in is a Constitutionally structured federal government that does its job, stays out of areas it doesn’t belong, and spends no more than the revenue it takes in. Oh yeah, and the real pesky part – doesn’t engage in social engineering.
As for Benen he seconds Milbank:
That Tea Party model, by the way, isn’t a hypothetical scenario — congressional Republicans are not only unwilling to provide emergency disaster relief without offsetting spending cuts, they’re also eager to cut the resources NOAA needs to track storms, while also slashing the FEMA budget.
This week, federal agencies are winning generally rave reviews, but if the public expects equally competent disaster response efforts in the future, Americans will have to hope the GOP agenda is rejected.
Oh, the horror – those dastardly Republicans want to actually not spend in a deficit mode. They want to live within the revenue stream that the federal government has coming in. Imagine wanting to offset spending in one area to ensure payment in another without borrowing money? Those simple Tea Partiers! Don’t they know that sometimes you just have to spend, spend, spend?
Uh, gee Mr. Benen, isn’t that what has gotten us into this mess in the first place? The fact that the government actually got something right for a change doesn’t then justify “big government”. What it does is demonstrate nothing more than every now and then a blind squirrel will find an acorn. Lord knows the fed has had enough practice it’s certainly something it should be getting right. But then, our military has been “getting it right” on disaster relief missions outside the country for years, decades even. It’s not like there wasn’t precedent. Yes, again stipulated, sometimes it takes a big organization to do what is necessary in a disaster to provide aid where needed. That said, that doesn’t excuse “big government”, spending excesses, waste, fraud, abuse, intrusion into areas the government doesn’t belong, social engineering via the tax code and other means and bankrupting the nation.
What is it about these types of apologists for big government that they don’t seem to ever be able to quite grasp those points?
Ron Klain, former Chief of Staff for Joe Biden (and a Bloomberg View columnist) gives you a peek at the plan. Klain has a piece in Bloomberg where he puts the outline of what the administration needs to do to spin the car bailout properly if it hopes to make it a campaign positive. Klain’s suggestions are offered to form the basis of a narrative which will be polished and become a center-piece of the record of Barack Obama. The reason for beginning now is obviously an attempt to condition the public, which was very much against the bailout (and mostly remain so), to the supposed positive aspects of the takeover by government.
Of all the policy challenges I saw Obama tackle in my two years in the White House, none was more complex than turning around the U.S. auto industry. When the president took office, the industry was in free fall. Sales of cars and trucks, which had topped 17 million in 2006, fell to 10.6 million in 2009. Two of America’s three major automakers were insolvent, kept alive by weekly inflows of federal cash. U.S. automakers had an unsustainable cost structure, were badly trailing their foreign competitors in the production of fuel-efficient and electric vehicles, and seemed unable to make the hard choices needed to arrest their downward spiral.
The course the president chose was unexpected and risky. Most Americans remember that the administration decided to "bail out" the car companies — and indeed, the president did extend more loans and support to the industry. But he attached to the aid a series of controversial and painful conditions that ended business as usual in Detroit.
Call it “gutsy call II” if you will, but in reality, it is far from the picture that Klain ends up painting. Both the car companies were headed toward bankruptcy – a financial condition they had earned by their poor practices and sellouts to unions. Obama’s bailouts certainly ended “business as usual” for those two companies but not in a positive way.
One of the consistent memes is that had Obama not acted, GM and Chrysler would have gotten the equivalent of a death sentence by having to go into bankruptcy. By death sentence I mean the administration and its bailout supporters imply millions would have been thrown out of work and those two companies would have forever disappeared.
Uh, no. As Jim Manzi at NRO explains:
First, in the event of a bankruptcy, you don’t burn down the factories, erase all the source code on all the hard disks, make it illegal to use the brand name Chevrolet, and execute all of the employees. Others take ownership of the assets, and the employees go on with their lives. Some of these assets will be put to use generating revenues, profits, and taxes, and some of these former employees will get jobs or start businesses, and generate revenues, profits, and taxes. In order to measure the effect of the bailout over, say, five or ten years, you have to compare the actual taxes collected to what would happened over this same period in the counterfactual case where the bankruptcy was allowed to proceed. What owners would have bought the factories and IP assets, and what would they have done with them? What businesses would the former employees have started? Who would have moved to Arizona and retired? What new industry clusters will evolve in Arizona because of this transfer of people?
And what would have come out of the bankruptcy? Leaner companies better equipped to address the market and turn a profit. What wouldn’t have come out of the bankruptcy are the level of union pensions and benefits the administration preserved. Obama, through his bailout and modified bankruptcy made sure those were weren’t destroyed. Consequently you have pretty much the same conditions that existed prior to the bailout still in existence today with the added twist of more union control.
GM, for instance, just before it announced it had “paid off” its government loans, lost 3.4 billion dollars. Hans Bader, of the Competitive Enterprise Institute destroys the myth of GM’s loan payback with an extensive investigation into the real story. It is a story of known falsehoods being tacitly approved by the White House and the Treasury Department because the administration was desperate for some good news at the time. The Chrysler loan payback, as I noted recently, is of the same stripe. More smoke and mirrors from the “transparent” administration.
But back to the bailouts and the reasons. The defense offered for the bailout is this:
The White House report said the money invested in GM and Chrysler ultimately saved the government tens of billions of dollars in direct and indirect costs, including the cost of unemployment insurance and lost tax receipts that the government would have incurred had the big Detroit auto makers collapsed.
Again, that assumes nothing comes out of any bankruptcy proceedings. Nothing. And, as Jim Manzi of NRO explains above, that’s simply not how it works. It is an assumption without any real world foundation. We’re talking a zero sum assumption by the administration where no assets are bought, no one goes back to work, everyone is unemployed and no one can find a job. That’s just not the way bankruptcies (or the real world) work.
Second, some of the profit GM makes today would have been made by other companies that picked up some of the slack if the company lost market share after a bankruptcy. They would pay taxes on these profits, and as far as government receipts are concerned, money is money. How would auto industry structure evolve over time given whatever changes happened to the assets currently owned by the legal entity GM, or the employees currently paid by it?
Anybody who tells you they can answer all of these questions reliably is full of it.
Indeed. Again, the White House and its cronies must push the black and white version of this to make it saleable. If they can’t make you believe in their “either/or” scenario, then they can’t sell the lie. They’re banking on a large degree of economic ignorance to sell this. But they know that if they rely on the fact and figures they’re going to end up on the wrong side of the argument. So Klain says, break out the smoke and mirrors once again – sell it on emotion:
First, tell the story with fewer numbers and more emotion; less prose and more poetry. Rescuing the auto industry isn’t just a matter of saving jobs and factories — it means preserving a uniquely American manufacturing tradition. Cars are more American than apple pie or hot dogs (which, unlike the automobile, were both invented in Europe). We couldn’t have won World War II without this "arsenal of democracy"; as Walter Reuther famously said, "England’s battles were won on the playing fields of Eton, but America’s were won on the assembly lines of Detroit." The president needs to jujitsu Republican critics who accuse him of failing to understand American exceptionalism by pointing out his success in saving this exceptionally American industry.
You have to love the fact that even Klain doesn’t believe his own nonsense, but has no problem advising the president to use it. Note too that Klain seems not to remember that one of the reasons that GM and Chrysler were on the ropes had to do with the American public choosing competitive foreign cars over the American cars from those two companies (and with the VOLT, we see GM again in the same condition. But he feels if he wraps it all in emotions and not facts (a variation on “hope an change” that worked so well in 2008), they can fool enough voters into accepting the narrative or at least, not caring about it.
Second, equally emphasize the pain that was imposed as a condition of support, and the hard and unpopular choices the president made. It was a plan of “shared sacrifice,” in which executives were fired, workers lost jobs, benefits and pay were cut, and dealers were shut down. The story of the tough choices the president made along the way must be told to convince the public that this wasn’t a handout.
Of course, this plays into the part of the narrative in which you must believe their “either/or” scenario – that is had the government not acted, millions of jobs would have just vaporized. Of course, what Klain describes above would most likely have been the result of normal bankruptcy proceedings minus the $50 plus billion government money injected into GM. They don’t what that known though. And, naturally, they don’t want any speculation about what would have emerged, how many jobs would that would have entailed, etc.
If you start down that road and use the history of bankruptcies and the emergence of companies from that situation as a basis, you’ll have a very difficult time swallowing the administration’s story. So avoid those facts at all costs and concentrate on “emotion” and “pain”.
Finally – Klain advises the White House to crank up the propaganda:
Third, let the people of the auto communities tell their own stories — encouraging homegrown viral videos and other uses of social and new media. This is a lesson I learned the hard way during the 18 months I was part of the White House team that struggled to explain the benefits of the Recovery Act. We used visits by the president and vice president, videos posted on WhiteHouse.gov, as well as endless statistics and charts and maps and graphics on Recovery.gov — and yet nothing got the job done. Finally, two ice-cream shop owners made an iPhone video that told the story better than we ever had, by showing how a single small business loan rippled across their area to create jobs in countless other businesses.
The White House needs a similar personal narrative to tell the auto rescue story, or it will risk being denied a return to Victory Lane in 2012.
So there is the plan – “emotion, pain and propaganda” – that Klain claims the administration should use to sell something that is about as un-American as the internment of Japanese/American civilians during WWII. The most interesting part, of course, is Klain understands that if they get into the specifics of this “deal” and the facts come out, it ends up looking like a very poor decision. And Klain knows that the opposition, once it finally settles on a candidate and its own narrative, is going to seize on this subject as a part of their attack on the Obama record.
He instinctively knows that any chance of blunting that, or making it a non-issue, requires that the administration’s narrative be out there actively being pushed now and that it has to be spun properly for it to work.
How do you counter this? With facts. And the facts are aplenty. There is no shortage of factual information that can gut these arguments and show them for what they are – emotion and propaganda. The opposition also has to use “American exceptionalism” in its proper way and point to the fact that the administration misusing “exceptionalism” in its version.
And that doesn’t even start to get to the really long-run considerations of what effects this has on rule of law and moral hazard (or if you want to make the case for the bailout, social solidarity and degradation of the working class).
One of the things America prides itself on is “rule of law”. That is a large part of our exceptionalism. We also founded a country that attempts to avoid the moral hazards that abound in this sort of a situation. We are and for the most part always have been a meritocracy. You get what you earn. We don’t buy into exceptions because they’re “too big to fail”. We understand that freedom means the freedom to fail and we don’t bail out –selectively- failures. We don’t throw good money after bad, and we certainly don’t expect our government to interfere in that process.
You perhaps recall that the AGW doomsayers, via the UN, announced in 2005 that by 2010 there would be 50 million “climate refugees” driven from their homes by the adverse effect of global warming.
It’s always nice to check up on the accuracy of such predictions to gauge how well they jibe with reality.
In this case, it’s a complete miss. As most of us know, the measured “global temperature” has been steadily going down (as the natural cycles of the earth again do what they’ve done for billions of years). So what’s the status of all of those refugees?
Well, Gavin Atkinson gives us a nice little update based on the recent census data from various “at risk” places. Remember, we were supposed to see the first effects of warming on the “very sensitive low lying islands of the Pacific and Caribbean”.
Nassau, The Bahamas – The 2010 national statistics recorded that the population growth increased to 353,658 persons in The Bahamas. The population change figure increased by 50,047 persons during the last 10 years.
The island-nation of Saint Lucia recorded an overall household population increase of 5 percent from May 2001 to May 2010 based on estimates derived from a complete enumeration of the population of Saint Lucia during the conduct of the recently completed 2010 Population and Housing Census.
Population 2002, 81755
Population 2010, 88311
The latest Solomon Islands population has surpassed half a million – that’s according to the latest census results.
It’s been a decade since the last census report, and in that time the population has leaped 100-thousand.
How about all those cities that were going to be underwater because of melting glaciers and ice packs?
Meanwhile, far from being places where people are fleeing, no fewer than the top six of the very fastest growing cities in China, Shenzzen, Dongguan, Foshan, Zhuhai, Puning and Jinjiang, are absolutely smack bang within the shaded areas identified as being likely sources of climate refugees.
Similarly, many of the fastest growing cities in the United States also appear within or close to the areas identified by the UNEP as at risk of having climate refugees.
When it all comes down to it, AGW increasingly appears to fall in the category of the usual lefty doomsaying that never lives up to the fear factor with which its proponents attempt to radically change the way we live in order to supposedly save us from ourselves. Think the population bomb with fossil fuel as the target instead of government mandated population control.
Of course the unfortunate thing is many of our politicians on the left and a whole raft of politicians throughout the world (and particularly in the UN) continue to push this farce. The reason is simple. There’s a whole lot of money to be extracted from this scare. World governments can cash in on a “problem” they’ve literally invented out of thin air.
So don’t look for it to go quietly into the night. All that crap about putting science first is just that. They’ve picked their side for obvious reasons and intend to push it all the way to the bank.
That’s one of the reasons stories like this need to be highlighted – so when they inevitably try to get in you wallet again, you have something to fight back with. This is the reality of their predictions – and it is completely the opposite of what their “science” told them would happen.