Free Markets, Free People
Reality is a great test of belief. Sometimes, the things you believe are confirmed by experience. Sometimes they aren’t. And sometimes, reality is so at odds with what people believe, they have to be complete dolts to keep believing it. But, I constantly see people who believe things that simply can’t be true, and it bothers me.
Ultimately, reality tells you whether what you believe is true or not. And if reality conflicts with what you believe, it isn’t reality that’s got it wrong.
The Stimulus Cheerleaders
Basically, it’s the unreconstructed Keynesian crowd. Popularly led by Paul Krugman—who is a Nobel Laureate economist—they continue to argue that the problem with the economy is that the government simply didn’t spend enough to properly stimulate the economy.
There’s so much wrong with that, it’s hard to know where to start.
First, let’s accept that in a range of circumstances, it actually is true that the government can stimulate the economy via deficit spending. As long as there’s not too much debt in the economy as a whole, you can prime the economic pump through deficit spending, especially if you have a fiat currency. We’ve done it lots of times since WWII.
So, up to a point, even if you have a credit bubble that collapses, you can re-inflate it by essentially transferring that debt to the Government via deficit spending.
Up to a point.
As I’ve mentioned previously, the newest ECB research indicates that, in developed economies, once you reach a government debt load of about 100% GDP, it begins to drag on the economy, reducing economic growth by about 1% annually. So, what should be 3% annual GDP growth becomes 2%. And as the debt gets bigger, the drag gets bigger, faster.
Now, ever since Reagan and Congress began serious, constant deficit spending in the 80s, there have been worries that the government debt would begin to crown out private markets, and slow the economy. But it never happened.
Well, until now, as we crossed that 1:1 GDP to debt ratio.
Moreover, the idea that we haven’t spent enough to stimulate the economy is simply farcical. In 2008, the total national debt was less than $10 trillion. Now it’s over $16 trillion. So no matter whether or not we spent X amount of money marked "stimulus", we’ve spent so much money that we’ve added more than $6 Trillion in debt in just 4 years. That’s a lot of stimulus.
Arguing that we needed to spend more is…counterintuitive. If $6+ trillion won’t do it, then it probably can’t be done.
Besides, we already learned there was a fundamental problem with Keynesian economics when we had stagflation in the ’70s, which was supposedly impossible.
Here’s the thing about looting the system. Once you’ve looted it…it’s been looted. The Greeks seem utterly incapable of understanding that the system can’t continue to dole out benefits once you’ve looted it. It’s not the Germans that are making life difficult for the Greeks, by refusing to give them more money. It’s the Greeks that have made life difficult for themselves by spending themselves into a 1.28:1 Debt to GDP ratio.
Austerity, of course, isn’t pleasant—at least not the way they’ve implemented it. What they needed was public sector austerity, i.e., spending cuts, not private sector austerity, i.e., tax increases. Instead, they got both. What they needed were massive spending cuts, and debt repayment.
But, of course, in a country where practically every cop, teacher, and fireman is a unionized employee of the state, and half of the private citizens get some sort of cushy government benefit payment, much public sector austerity was a political non-starter. So they gave themselves a little public austerity and a lot of private austerity…and the economy collapsed. I mean, no matter what they did, they were in for a tough time, but they chose the most destructive path possible, then blamed it on the Germans.
The thing is, the Germans are historically…impatient with foreigners that they find troublesome. But the Greeks have decided that, having looted their economy completely, it’s the Germans’ fault somehow. The Greek position is, "We want to stay in the euro without worrying about our deficits, borrow money from Germany, never pay it back, and tell anyone who questions this to go screw."
The Germans, as are their wont, are unamused.
The list of odd things Californians believe that are directly contradicted by observable reality is, of course, far to long to be described here. A representative sample, however, includes:
- Maintaining a permanent class of illegal immigrants in modern-day helotage will not reduce employment among the minority citizenry. Giving them full access to state benefits and education will not strain the schools, medical system, or state budget.
- California must have the strictest environmental, tax, and employment regulation possible. This will not result slower economic growth, or a business exodus to another state. Similarly, stringent environmental regulation for the benefit of small fish or birds, and significantly reducing the water available for irrigation, will have no effect on farming in the central valley, and, hence, agricultural prices paid by consumers.
- It is completely possible to allow state employees to retire as young as 50, with an annual pension payment 85% of their highest salary, and fully meet our pension obligations, because the Dow will be at 24,000 by 2009, and 24,000,000 by 2099, thus making the latest round of pension increases perfectly sustainable through investment.
- If we’re taxing California workers 10% of their income, and we have a $16 billion budget deficit, the problem is that we obviously aren’t taxing enough. We should, therefore, tax higher income earners much more, because they can never leave California and move to Arizona. Or Texas.
California is just Greece with movie stars.
I could go on and on, but, you probably get the point.
The problem with reality is that it doesn’t care what you believe. It just is. The longer you ignore it, the more forceful it is when it re-asserts itself. But if I could point to one thing as the worst modern problem we have today, it would be an absolute refusal to acknowledge reality, accompanied by a steadfast refusal to recognize any of the warning signals it obligingly gives before its assertion becomes horrific, rather than merely unpleasant.
If you make the decision to ride this thing down in flames, reality will be perfectly happy to let you do it.
I’m sometimes amazed at the depth of the narcissism this President suffers under, but this particular example has to take the cake:
The Heritage Foundation’s Rory Cooper tweeted that Obama had casually dropped his own name into Ronald Reagan’s official biography on www.whitehouse.gov, claiming credit for taking up the mantle of Reagan’s tax reform advocacy with his “Buffett Rule” gimmick. My first thought was, he must be joking. But he wasn’t—it turns out Obama has added bullet points bragging about his own accomplishments to the biographical sketches of every single U.S. president since Calvin Coolidge (except, for some reason, Gerald Ford).
Even the biographies of other Presidents aren’t sacrosanct to this guy if there’s a glimmer of political gain to be collected by inserting himself. Examples:
- On Feb. 22, 1924 Calvin Coolidge became the first president to make a public radio address to the American people. President Coolidge later helped create the Federal Radio Commission, which has now evolved to become the Federal Communications Commission (FCC). President Obama became the first president to hold virtual gatherings and town halls using Twitter, Facebook, Google+,LinkedIn, etc.
- In a 1946 letter to the National Urban League, President Truman wrote that the government has “an obligation to see that the civil rights of every citizen are fully and equally protected.” He ended racial segregation in civil service and the armed forces in 1948. Today the Obama administration continues to strive toward upholding the civil rights of its citizens, repealing Don’t Ask Don’t Tell, allowing people of all sexual orientations to serve openly in our armed forces.
- President Lyndon Johnson signed Medicare signed (sic) into law in 1965—providing millions of elderly healthcare stability. President Obama’s historic health care reform law, the Affordable Care Act, strengthens Medicare, offers eligible seniors a range of preventive services with no cost-sharing, and provides discounts on drugs when in the coverage gap known as the “donut hole.”
- On August 14, 1935, President Roosevelt signed the Social Security Act. Today the Obama administration continues to protect seniors and ensure Social Security will be there for future generations.
- In a June 28, 1985 speech Reagan called for a fairer tax code, one where a multi-millionaire did not have a lower tax rate than his secretary. Today, President Obama is calling for the same with the Buffett Rule.
I’ve been hesitant to buy into the label "narcissistic personality disorder" that many attribute to this guy, but it is getting harder and harder to resist.
I’m not a psychologist or a psychiatrist, but I can read and analyze. When I look at the symptoms, a lot of things jump out at me that ring true.
The symptoms of Narcissistic personality disorder can be similar to the traits of individuals with strong self-esteem and confidence; differentiation occurs when the underlying psychological structures of these traits are considered pathological. Narcissists have such an elevated sense of self-worth that they value themselves as inherently better than others. Yet, they have a fragile self-esteem and cannot handle criticism, and will often try to compensate for this inner fragility by belittling or disparaging others in an attempt to validate their own self-worth. It is this sadistic tendency that is characteristic of narcissism as opposed to other psychological conditions affecting level of self-worth. 
In children, inflated self-views and grandiose feelings, which are characteristics of narcissism, are part of the normal self-development. Children are typically unable to understand the difference between their actual from ideal self, which causes an unrealistic perception of the self. After about age 8, views of the self, both positive and negative, begin to develop based on comparisons of peers & become more realistic. Two factors that cause self-view to remain unrealistic are dysfunctional interactions with parents that can be a lack or excessive attention. The child will either compensate for lack of attention or act in terms of unrealistic self-perception.
The CNS, Childhood Narcissism Scale, measurements concluded that narcissistic children seek to impress others & gain admiration but do not have any interest in creating sincere friendships. CNS researchers have measured that childhood narcissism has become more prevalent in Western society: any types of activities that focus on overly praising the individual, can raise narcissistic levels. More research is needed to find the reasons that promote or protect against narcissism.
Yes, that’s a Wikipedia definition, but it conforms with most others you’ll find on the net. Examination of the symptoms should give pause. I’m not saying he might be the only politician with this problem or that he’d even be diagnosed with NPD. I’m not a doctor and I don’t play one on TV (although I have stayed in a Holiday Inn Express before). However, there are so many examples of similar behavior in his past that it is hard to ignore what is right in front of your eyes. And while he may not personally do everything (this probably being an example) he has a staff which knows their President and does what he would approve. That’s why they’re where they are. They play into the personality and feed it.
This is the “me and I” President. There is rarely a time he isn’t trying to praise himself, even if no one else will. Make of all of this what you want, I’m just sayin’ …
The week’s economic calendar kicks off today, which also brings us the largest crop of the week’s releases.
ICSC-Goldman reports mixed retail sales, with a weekly sales decrease of -0.8%, but a sharp increase of 4.5% in the year on year rate. Meanwhile, Redbook reports a year on year retail sales increase of 3.7%, the strongest in six weeks.
The Consumer Price Index was unchanged for April, as energy prices declined. Ex-food and energy, the core rate of inflation rose 0.2%.
The government’s report of retail sales shows a 0.1% sales increase in April. The same rate holds ex-autos and ex-autos and gas.
The New York Fed reports the Empire State Manufacturing Survey’s index on general business conditions rose more than 10 points to 17.09.
March business inventories rose a bit slower than in February, rising by 0.3%. A rise in sales trimmed the stock-to-sales ratio to 1.27, making March inventories look quite healthy.
The Treasury reports net capital inflows of $36.2 billion in March on foreign purchases of $22.3 billion of US securities and $13.9 billion in sales of foreign securities.
There’s a report out that Wisconsin Democrats are furious with the DNC for not supporting their efforts to recall Gov. Scott Walker.
Walker, the target of unions since he tried to curtail their power in the state, is in a runoff election with the former mayor of Milwaukee, Tom Barrett. This is a race the unions have made a “national election”. They’ve poured money, time and effort into this recall election that has been unmatched in recent electoral history. But it seems it isn’t enough. At this point, with 3 weeks to go, Walker leads Barrett by 9 points.
Some of the strength of the base supporting Walker was evident in the primary. Ace fills us in with some numbers:
You know those 626,000 Republicans who turned out in Wisconsin yesterday? Go higher. A LOT higher.
Big number, but if the Marquette Law poll released last Wednesday is to be believed . . . that number is actually low.
MU found that of the voters confirming they would be voting in the Democratic primary, 17% were Republicans.
We will never know the actual numbers per party since there was no exit polling.
Assuming that even HALF of that number stuck by their decision to cross over to cause some mayhem, that means that over 50,000 votes on the Democratic side were just devilish Republicans, bringing the total turnout to over 676k for our side.
If you go by the Marquette number, those "hidden Rs" swell to an additional 110k, bringing total turnout to 736,000: nearly matching Prosser’s share in 2011 for a primary.
There is no way to spin turnout Tuesday in the Democrat’s favor. . . .
Dane County gave the Democrats a massive edge in votes of about 80,000, but proportionally that did not materialize in Milwaukee, which is a big concern for anyone trying to unseat Walker. If you remember earlier discussions here at the AOSHQDD, depressed Democratic turnout in Milwaukee county relative to the rest of the state actually saved Justice Prosser. The Madison vote will show up. The pro-Walker vote will show up from the Milwaukee burbs. Will traditional Presidential-race Democrats in Wisconsin’s largest city bother for a special election, even one as hyped as this? So far, the little evidence we have points to a big fat nuh-uh.
Walker won the largest uncontested share of a primary vote for governor last night in 40 years. His base is behind him when they really didn’t need to show up at all.
If you don’t recognize the name “Prosser”, he was a Republican justice who most felt would fall to a pro-union Democrat. But the election results most desired by the union didn’t materialize. Prosser won. The key graf in Ace’s analysis is the last one. Walker was uncontested. Yet, his base demonstrated their strength and intent. And, if the Marquette poll is to be believed, you can add up to 17% more in June.
It looks like union effort is faltering. How badly? Well, they couldn’t even get their preferred candidate elected in the Democratic primary:
Kathleen Falk’s drubbing in Tuesday’s Democratic primary has some political insiders questioning the decisions, and influence, of the state’s major public labor unions.
Falk, 60, was the first Democrat to enter the recall election, announcing her candidacy even before the race was official. Major labor unions, including AFSCME and the Wisconsin Education Association Council, quickly endorsed her and then went on to spend nearly $5 million to help her win the nomination.
But on Tuesday, Milwaukee Mayor Tom Barrett — a candidate for whom the unions initially showed very little love — defeated the former Dane County executive by 24 percentage points; a margin of victory all the more startling given that he entered the race late and was outspent 5-to-1. Barrett’s victory was even more pronounced in Dane County, Falk’s backyard, where he won by 30 points.
As Jim Geraghty asks:
So if the AFSCME and the Wisconsin Education Association Council couldn’t move votes in a Democratic primary, why should we expect them to move more votes in the general election?
That’s why they’re now whining about the DNC. My guess is if they lose, the DNC will be the fall guy, the “if but for the DNC’s failure to throw good money after bad, we’d have won” assertions. It’s time to become a victim. Gov. Walker has returned Wisconsin to at least a semblance of fiscal sanity with a budget surplus this year. His program of changes is working. The voters in Wisconsin aren’t blind or stupid. So victimhood is about all the recall proponents have left at this point.
In a last desperate attempt to salvage the effort, Wisconsin Democrats are trying to rewrite a little history:
“Scott Walker has made this a national election,” the Wisconsin Dem tells me. “If he wins, he will turn his victory into a national referendum on his ideas about the middle class. It will hurt Democrats nationally. The fact that [national Dems] are sitting on their hands now is so frustrating. The whole ticket stands to lose.”
Scott Walker had nothing to do with initiating a recall election, throwing collective temper tantrums in the state capitol or bussing in union members (and buckets of money) in from out of state. Democrats and unions did. It is they who have been appealing nationally. It is they who have elevated the Wisconsin recall election a “national election”. And, to this point, it is they who are fumbling the ball.
But they’re right about one thing. Thanks to them, it has been turned into a national referendum of the sort they don’t want to lose. And, unfortunately for them, at this point, they are.