Free Markets, Free People

Freedom and Liberty

Dissent and Hate Speech

Apparently signs equal threats to some of our police:

An Oklahoma City police officer wrongly pulled over a man last week and confiscated an anti-President Barack Obama sign the man had on his vehicle.

firstamendment-757857The officer misinterpreted the sign as threatening, said Capt. Steve McCool, of the Oklahoma City Police Department, and took the sign, which read “Abort Obama, not the unborn.”

Chip Harrison said he was driving to work when a police car followed him for several miles and then signaled for him to pull over.

”I pulled over, knowing I hadn’t done anything wrong,” Harrison said in a recent phone interview.

When the officer asked Harrison if he knew why he had been pulled over, Harrison said he did not.

”They said, ‘It’s because of the sign in your window,’” Harrison said. 

When did cops start pulling people over for political bumper stickers or signs?

Anyway, Harrison tried to explain what the sign meant, they disagreed and he was issued a a slip of paper that said he was a part of some sort of investigation. They took his sign. Later, he’s contacted by the police saying the policeman misunderstood and asking him if he wanted his sign back. They had contacted the Secret Service about the sign, and they had told the police it wasn’t a threat. Except apparently they were blowing smoke:

”The Secret Service called and said they were at my house,” Harrison said.

”When I was on my way there, the Secret Service called me and said they weren’t going to ransack my house or anything … they just wanted to (walk through the house) and make sure I wasn’t a part of any hate groups.”

Harrison said he invited the Secret Service agents into the house and they were “very cordial.”

”We walked through the house and my wife and 2-year-old were in the house,” Harrison said.

He said they interviewed him for about 30 minutes and then left, not finding any evidence Harrison was a threat to the president.

Walk through my house? Uh, get a warrant.

Hate groups? They knew what the sign was about, what was the rest of this about?

Which segues nicely into the next portion of the post – hate speech.

Eugene Volokh has a very interesting post up about a UCLA Chicano Studies Research Center study titled Hate Speech on Commercial Talk Radio.

It’s a fascinating post which demonstrates how hard certain groups are working another angle aimed at talk-radio (and read the comments, where commenters take the study’s assertions aparat). Hate-speech is a lever that various groups on the left have been trying to enable for years. From the study, here’s their definition of hate speech:

Types of Hate Speech

We identified four types of speech that, through negative statements, create a climate of hate and prejudice: (1) false facts [including “simple falsehoods, exaggerated statements, or decontextualized facts [that] rendered the statements misleading”], (2) flawed argumentation, (3) divisive language, and (4) dehumanizing metaphors (table 1).

Hate speech or controlled speech

Hate speech or controlled speech

 

Then the examples:

Table 1. Analysis of Hate Speech from The John & Ken Show

EXAMPLE
“And this is all under the Gavin Newsom administration and the Gavin Newsom policy in San Francisco of letting underage illegal alien criminals loose” (from the July 21, 2008, broadcast).

TARGETS
Vulnerable group: foreign nationals (undocumented people).
Social institutions: policy and political organizations (city policy and mayor’s office).

FALSE FACTS
The sanctuary policy preceded Gavin Newsom’s tenure as San Francisco’s mayor, and neither Newsom nor the sanctuary policy supports “letting underage illegal alien criminals loose.”

FLAWED ARGUMENTATION
Guilt by association is used to make the hosts’ point. Undocumented youth and those who are perceived as their endorsers at the institutional level are stigmatized by being associated with criminality.

DIVISIVE LANGUAGE
Criminalized undocumented youth and their perceived validators (Gavin Newsom and the sanctuary policy) are depicted as a threat to San Francisco citizens, setting up an “us versus them” opposition.

ANALYSIS The language depicts the hosts’ targets (undocumented people, city policy, and Mayor Gavin Newsom) as dangerous, criminal, and collusive. In addition, the focus of that policy (undocumented people) becomes reduced to “underage illegal alien criminals.”

Talk about over-analysis. The bottom line is this matrix of assessment is based in pure biased opinion disguised as objectivity. Hate speech, in this case, is nothing more than saying “letting underage illegal alien criminals loose” is wrong.

As Volokh says:

The vagueness and potential breadth of the phrase “hate speech” is a pretty substantial reason — though just one among many — to resist the calls for a “hate speech” exception to the First Amendment. And the vagueness and potential breadth is also a reason to be skeptical of uses of the phrase even outside the law: It’s very easy to define “hate speech” as you like (or leave it undefined, as some arguments do), and use it to condemn people who express a wide range of views that you disapprove of.

One of the most defining phrases in the history of America free speech is “I may not agree with what you say, but I will defend to the death your right to say it.”

It has never been “I don’t like what you say and it sounds like “hate speech” to me so you should be silenced”.

~McQ

Foreclosure Imminent? Call ACORN

Of course part of the huge and porky “stimulus” bill was billions to Community Development Block Grants (CDBG) program. Of the the past beneficiaries of that program has been our old buddies at ACORN. But, you say, the election is over – ACORN can’t collect taxpayer money for fraudulent voter registration anymore.

Never fear, ACORN has found itself a new line of work. Civil disobedience:

The community organizing group Acorn unveiled the campaign with a spirited rally on Friday at a Brooklyn church and will roll it out in at least 22 other cities in the coming weeks. Through phone trees, Web pages and text-messaging networks, the effort will connect families facing eviction with volunteers who will stand at their side as officers arrive, even if it means risking arrest.

“You want to haul us out to jail? Fine. Let the world see how government has been ineffective,” Bertha Lewis, Acorn’s chief organizer, said in an interview. “Politicians have helped banks, but they haven’t helped families in the way that it’s needed, and these families are now saying, enough is enough.”

Yes friends, your hard earned money (or that which has been borrowed from the Chinese or printed on that nifty little printing press the government has) is now going to fund ACORN’s civil disobedience shenanigans.

While no one likes to see anyone lose their home, if you’re a believer in private property, then you understand the concept that you have to pay for someone else’s property or they have recourse. ACORN, dealing on emotion and your money, have unilaterally decided that’s just wrong and intends to demonstrate that by attempting to disrupt lawful procedures to foreclose homes. Instead of using the money to help the family that is losing the home to find other accomodations and by doing so ameliorate the trauma, ACORN has decided to add to the trauma instead.

Acorn’s strategy is modeled on a movement the group led in the 1980s, when squatters occupied and set out to renovate thousands of abandoned city-owned buildings in New York, Philadelphia and Detroit, among other cities. The motivation was to solve what Ms. Lewis has called “the working family’s housing crisis.”

In cities like Orlando, Fla., which has one of the nation’s highest foreclosure rates — and Boston, Houston, Baltimore, Oakland, Calif., and Tucson, Ariz. — Acorn organizers have been creating networks to alert a homeowner’s neighbors when an eviction has been scheduled or deputies are on the way. Some volunteers will summon friends and relatives to converge at the home, while others will be in charge of notifying the news media. Organizers are also recruiting lawyers willing to defend for no fee those who are arrested.

The campaign, called Home Defenders, enlisted about 500 participants during meetings held Friday and Saturday in New York and five other cities. Ms. Lewis and other organizers said that they believed the number will reach into the tens of thousands within weeks.

Yessiree, just what we need – a taxpayer funded organization with obvious socialist roots attempting to deny the proper property owner’s rights while a sympathetic press looks on. ACORN’s model isn’t even a righteous model. As noted, the buildings in question in the ’80s were abandoned. The foreclosed houses aren’t abandoned, just empty. The quickest way to get in one, beside taking it unlawfully, is to buy it or rent it.

ACORN, however, would much rather spend its funds making a splash than a difference. But I’m not sure what else you’d expect from a bunch of marxist community organizers.

~McQ

Why Government Intervention In Recession Won’t Work

Well, the “stimulus” monstrosity has been signed and all the words of praise it doesn’t deserve have been said.  Now, here’s why it won’t work all in a succinct four paragraphs:

Most economists agree that America has enjoyed unprecedented prosperity, based primarily on excessive debt. Thus, any healthy correction would necessarily involve serious deleveraging and a severe recession. After a lot of pain, the economy would rebuild with healthier fundamentals. Infrastructure improvement would aid, but not cause, the eventual recovery.

Recession is the natural cure for the politically inspired profligacy that America has enjoyed for almost 40 years. Unfortunately, the side effects of this medicine, namely the rapid reallocation of labor resources and deflationary damage to debtors, are still unpalatable to pandering politicians.

The Washington regime, particularly members of the Democrat persuasion, leans towards a socialist solution of avoiding recession at any cost. After all, the bills are paid by others, such as taxpayers and holders of US dollars. This results in an increasing amount of other people’s money being spent on “public” works that would in other times carry the label “pork barrel”.

Washington is choosing to pursue the policy of continued and ever-increasing false prosperity, financed eventually by hyper-taxation, hyper-debt and hyper-inflation accompanied by a gradually eroded standard of living. The jobs created by the bill are by and large non-productive and will divert resources from the private sector and rob consumers of their power to make free choices in the marketplace.

Pain avoidance drove the call for stimulus.  Politicians are naturally for that because it ensures their future.  But in reality it isn’t pain avoidance at all, but simply a form of pain management.  And since that management will be spread over many years, those who will lose under it will be less likely to notice that loss over the years than they would if that loss happened all at once.  But there’s a price for that, and it will become apparent eventually.  That gradual loss won’t allow the recovery to the previous standard of living because government will have supplanted much of the private sector and many of those options (and resources) for regaining that level are no longer available.

Of course, the good news for the present crop of politicians is that realization of loss won’t happen on their watch.  And as far as the political class is concerned, that’s all that matters.

Let the good times roll!

~McQ

Beef Consumption – The Hummer Of Food

Nice biased environmentalist metaphor, isn’t it?

You know we see these sorts of stories all the time, and because they’re just people using causes to attempt to change our behavior, we don’t pay them the attention they deserve. But, if any of the things associated with what you’re about to read were to become law, suddenly choices and amounts of beef could easily be rationed to “save the planet”. Add a little health care legislation and it’s a lock.

When it comes to global warming, hamburgers are the Hummers of food, scientists say.

Simply switching from steak to salad could cut as much carbon as leaving the car at home a couple days a week.

The "Hummer" of food

The "Hummer" of food

That’s because beef is such an incredibly inefficient food to produce and cows release so much harmful methane into the atmosphere, said Nathan Pelletier of Dalhousie University in Canada.

Pelletier is one of a growing number of scientists studying the environmental costs of food from field to plate.

By looking at everything from how much grain a cow eats before it is ready for slaughter to the emissions released by manure, they are getting a clearer idea of the true costs of food.

The livestock sector is estimated to account for 18 percent of global greenhouse gas emissions and beef is the biggest culprit.

Even though beef only accounts for 30 percent of meat consumption in the developed world it’s responsible for 78 percent of the emissions, Pelletier said Sunday at a meeting of the American Association for the Advancement of Science.

That’s because a single kilogram of beef produces 16 kilograms carbon dioxide equivalent emissions: four times higher than pork and more than ten times as much as a kilogram of poultry, Pelletier said.

If people were to simply switch from beef to chicken, emissions would be cut by 70 percent, Pelletier said.

Another part of the problem is people are eating far more meat than they need to.

“Meat once was a luxury in our diet,” Pelletier said. “We used to eat it once a week. Now we eat it every day.”

If meat consumption in the developed world was cut from the current level of about 90 kilograms a year to the recommended level of 53 kilograms a year, livestock related emissions would fall by 44 percent.

The way things are going it wouldn’t surprise me one day to see PSAs like the Chik-fil-A commercials saying, “Eat More Chikin” and cut emissions by 70% – it’s the law!

~McQ

Redefining “Fascist”

So public speaking classes aren’t so much about how you argue a point but what point you argue?

A college student has filed a lawsuit saying a public speaking professor berated him in class for making a speech opposing same-sex marriage.

In the federal court suit filed last week, student Jonathan Lopez said that midway through his speech, when he quoted a dictionary definition of marriage and recited a pair of Bible verses, professor John Matteson cut him off and would not allow him to finish. He said Matteson also called him a “fascist bastard.”

A student evaluation form included with the lawsuit lacks a score for Lopez’s speech, and reads “ask God what your grade is.”

Exceptional levels of tolerance in academia, these days, no? A tremendous diversity of opinion is apparently welcomed and encouraged. Good to know, eh?

“Basically, colleges and universities should give Christian students the same rights to free expression as other students,” David J. Hacker, an attorney for the Alliance Defense Fund, a Christian legal organization that is representing Lopez, told the Los Angeles Times.

Amazing such a thing even needs to be said in this day and time. You have to wonder if Professor Matteson even knows what “fascist” means, much less that it was he who was acting like one.

~McQ

The Farce Of A “Free Market”

We here at QandO are big fans of the free market.  But there are lots of enemies of the free market and they’re not just ideologies or governments.  Sometimes – no, many times – corporations or associations go into cahoots with government to use the power of government to limit competition.  Here’s an example of that:

A lot of focus has been directed toward the destruction of the world’s forests during the past few decades.  The truth is that deforestation is happening with alarming frequency.  Millions of acres of forest land are harvested illegally throughout the world every year, which contributes significantly to global warming and the destruction of wildlife habitat.  Because this activity adversely affects our environment, the National Wood Flooring Association worked diligently with several key organizations to promote the illegal logging ban with Congress. The ban was passed this past summer as an amendment to the US Lacey Act, which originally was mandated more than 100 years ago to prohibit the illegal trafficking of wildlife.  This new amendment has expanded the Lacey Act to include wood and wood products.  Specifically, the ban prohibits the import, sale or trade in the US of wood and other forest products that are harvested through illegal means.

This legislation is significant for a number of reasons.  First, and most importantly, it protects our world’s forests from irrecoverable loss of trees and wildlife habitat.  Second, it protects lumber buyers who verify the origin of lumber when importing wood into the United States from other countries.  Third, it eliminates the influx into the US of low-cost, low-quality wood flooring produced from illegally harvested forests.

The penalties for noncompliance with this new legislation are severe.  Penalties can include the forfeiture of the illegally harvested material, fines of up to $500,000, and jail time of up to five years.  From a consumer’s perspective, however, the ban helps you have confidence that the wood you are buying is not depleting our world’s forests.

This is classic stuff. Let’s look at their three “benefits”, shall we? First this ban no more “protects our world’s forests from irrecoverable loss of trees and wildlife habitat” than a gun ban keeps guns out of the hands of criminals. That’s because those who do actually engage in what this association would label “illegal logging” will simply sell to someone else. It’s not like wood isn’t in huge demand throughout the world or something.

The second “benefit” is a “join our club or pay the price” benefit at best. The obvious implication is if buyers don’t “verify the origin” to the satisfaction of the association (and the law), they’re open to accusations that what they’re bringing in are “illegal” whether true or not.

And, of course, in reality it all boils down to the last “benefit”. In fact it is a benefit only for the industry at the heart of writing this legislation. You the consumer, on the other hand, won’t get what the NWFA considers to be “low-cost, low-quality wood flooring” because, well, they’ve decided it just isn’t a decision which should be left up to you.

This is what passes for a “free market” these days. In this case, restricting the flow of goods to you in the name of a greater good, when, in fact, the greater good is just an excuse not to have to compete in the market place. It places the consumer’s right of access to such goods in second place to the association’s desire to “benefit” from special legislation which restricts that right.

When the price of that flooring you have been planning to buy goes through the roof, you’ll now know why.

~McQ

How To Build A Dictatorship

Venezuelan voters approved a referendum to end term limits on Sunday, paving the way for Hugo Chavez to perfect his dictatorship:

President Hugo Chavez says a referendum victory that removed limits on his re-election is a mandate to intensify his socialist agenda for decades to come. Opponents warn of an impending dictatorship.

Victory!  Enslaved at last!

Victory! Enslaved at last!


Both sides had called the outcome of Sunday’s vote key to the future of this South American country, split down the middle between those who worship the president for redistributing Venezuela’s oil riches and those who see him as a power-hungry autocrat.

“Those who voted “yes” today voted for socialism, for revolution,” Chavez thundered to thousands of ecstatic supporters jamming the streets around the presidential palace. Fireworks lit up the Caracas skyline, and one man walked though the crowd carrying a painting of Chavez that read: “Forever.”

[...]

The constitutional overhaul allows all public officials to run for re-election as many times as they want, removing barriers to a Chavez candidacy in the next presidential elections in 2012 and beyond.

“In 2012 there will be presidential elections, and unless God decides otherwise, unless the people decide otherwise, this soldier is already a candidate,” Chavez said to applause. First elected in 1998, he has said he might stay in power until 2049, when he’ll be 95.

Hmmm. Maybe those “critics” are onto something, eh?

At their campaign headquarters, Chavez opponents hugged one another, and some cried. They said the results were skewed by Chavez’s broad use of state resources to get out the vote, through a battery of state-run news media, pressure on 2 million public employees and frequent presidential speeches which all television stations were required to air.

With the courts, the legislature and the election council all under his influence, and now with no limits on his re-election, officials say Chavez is virtually unstoppable.

“Effectively this will become a dictatorship,” opposition leader Omar Barboza told The Associated Press. “It’s control of all the powers, lack of separation of powers, unscrupulous use of state resources, persecution of adversaries.”

As the article notes, however, everything is not peaches and cream for Chavez. Venezuela’s economy, which is so heavily dependent on oil revenues, lies in shambles, beset by low oil prices, rampant inflation, and little prospect for relief. According to Michael Shifter of the Inter-American Dialogue in Washington:

… the global financial crisis and the plunging price of oil, which accounts for 94 percent of Venezuela’s exports and nearly half its federal budget, will limit Chavez’s ability to maintain the level of public spending that has fueled his popularity.

Without oil revenues to prop up the socialist spending regime, Chavez will have to resort to other means of stabilizing the economy. Because producers of wealth are so politically disfavored in Venezuela, and there are myriad obstacles to successfully operating any businesses, Chavez’s options for economic recovery are limited:

Empty shelves in Venezuela.

Empty shelves in Venezuela.

“Venezuela faces serious problems no matter what today’s results were. Later this year, economic problems are going to be felt more acutely.”

Venezuela, the fourth-largest supplier of crude oil to the U.S., depends on oil for 93 percent of export revenue and half the government’s budget. Prices for crude have plunged 74 percent since touching a record in July.

[...]

“Now we’re going to see what’s beyond this campaign and what he does when he takes the economy into account,” [Enrique] Alvarez, [head of Latin America fixed-income research at IDEAglobal in New York] said.

The adjustments to economic policy will probably include raising taxes and devaluing the currency to cover a public deficit now that his marathon political campaign is out of the way, said Alberto Ramos, Latin America economist at Goldman Sachs Group Inc. in New York.

Raising taxes is de rigueur in such circumstances, but not likely to generate much revenue. After all, the government has taken over the most lucrative part of the Venezuelan economy, and people and businesses who don’t earn much don’t have much to pay to the government. Taxes are not going to solve any problems.

Without any real economic engine to fund socialist programs, therefore, Chavez won’t be able to buy votes anymore. Instead he will have to find another way to garner (or manufacture) public support if he wants to remain in power. And there isn’t any doubt that he wants to remain in power.

The most obvious way for Chavez to accomplish this feat to convince the country that his leadership is indispensable to the country’s fortunes. That line of argument is already a staple in his rhetoric — i.e. that success of the Bolivarian Revolution depends on Chavez exercising ever increasing power — so the foundation has been laid. However, it was much easier to sell that idea when the oil revenues were pouring in. With a looming fiscal crisis at hand, and the prospects of economic improvement looking dim, a call for new leadership will likely grow louder.

Ironically, the path to permanent power for Chavez was described by socialist activist Naomi Klein in her book “Shock Doctrine: the Rise of Disaster Capitalism.” In what has become the bible for the anti-capitalist/ant-globalization movement, Klein

… explodes the myth that the global free market triumphed democratically. Exposing the thinking, the money trail and the puppet strings behind the world-changing crises and wars of the last four decades, The Shock Doctrine is the gripping story of how America’s “free market” policies have come to dominate the world– through the exploitation of disaster-shocked people and countries.

Her theory rests on the premise that democratic obstacles to corporate domination are swept aside in times of severe crisis (e.g. Iraq war, Katrina, tsunami in Sri Lanka), allowing global moneyed interests to swoop in and take control of the economy. She often cites Milton Friedman and the “Chicago Boys” dealings with Pinochet as an example of how capitalist forces purposely, and sometimes violently, undermine the will of the people when they are at their weakest in order to introduce reforms that actually serve the interests of the elite rather than the people. In spite of her historically challenged maunderings (Friedman only met Pinochet once for an hour, and wrote him a letter), Klein does hit on an important point: crises are routinely used to further the power of the elites. Klein just identifies the wrong parties. It is typically the government elites who profit from these crises.

Take, for example, how our own government has seized upon the current fiscal crises to shove a giant social spending bill down our throats, plunging future generations into massive debt, and centralizing control over the lives of individual Americans:

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is “an opportunity for us”. After all, he said: “You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before” such as taking control of the financial, energy, information and healthcare industries.

That’s just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think.

Of course, that isn’t how supporters of free markets behave at all. It is, however, exactly how someone like Hugo Chavez operates.

With the Venezuelan economy shrinking, and real suffering occurring on a growing scale, the opportunity is ripe for Chavez to further “reform” the country, and complete the Bolivarian Revolution as he has promised. That won’t save the nation from economic ruin, and indeed will probably hasten such an outcome, but it will provide the impetus for perpetual Chavista rule.

The economy is doing poorly? That’s because the revolution has not advanced far enough. Economy doing well? The revolution is working its wonders! Rinse and repeat.

Thus the keys to Chavez’s Bolivarian kingdom lie in the propagandistic message that only centralized and powerful leadership can provide adequately for all. Principles such as “fairness” and “equality” are used as bludgeons against any who dare step out of line. Individual achievement is sneered at as “selfish” and “against the common good.” The redistribution of any wealth created outside the government system (as all wealth created inside is confined to the governmental leaders) is touted as the only means of ensuring a safe and productive future for all. Capitalism is deemed the language of the oppressor, and blamed for any and all ills that befall the nation. Yet, despite all this rhetoric, things will never seem to get any better.

Poor, poor Venezuela. Thank goodness we won’t such stifling of economic welfare and individual freedom here.

Buyer’s Remorse? Have Obamacons Been Obamaconned?

I‘ve spoken before about the political brilliance that running on nebulous catch phrases can accrue for the politician. Lay them out there, let the voting public decide what they mean to each of them and then ride the wave to elected office.

Obama did precisely that. And many who are marginally on the right, were fooled by that. Those who voted for him projected their “hope” for “change” on the blank screen he provided. But, as you’ll see in this example, the reality of who Barack Obama really is may be clearing up, and it appears it is a huge disappointment to many of his more conservative/libertarian supporters.

Silicon Valley, where I live, is home to both political liberals and conservatives–more liberals of late, but not by a huge margin. The lopsidedness occurs on the freedom-statist divide. An overwhelming majority of Valley residents would place themselves on the freedom side and against the state. This should not surprise anyone. Silicon Valley is a land of immigrants, both foreign and from other American states. What draws people to Silicon Valley is the freedom to go out and commit industrial revolution and make the future.

Thus it was always odd that Silicon Valley voted for the most statist-inclined presidential candidate since FDR. Silicon Valley fell in love with Barack Obama. His youth and multicultural cool, along with the Web superiority of his presidential campaign, had Silicon Valley going googly for Obama.

In the eyes of Silicon Valley, Obama was like the Apple Macintosh. John McCain was like Windows.

Now comes the reckoning. Obama may be the coolest guy ever to hold the office of U.S. president. He may be the personification of an Apple Mac, iPod and iPhone. But this week Obama proved he is a big-state liberal, through and through.

My Silicon Valley friends who supported Obama are weirdly silent about this. I suspect they are in denial, still hoping for the closet libertarian Obama to emerge. Throughout the 2008 campaign, Silicon Valley Obama voters would tell me that Obama was really an economic centrist. Forget his liberal Senate record and Saul Alinsky-conditioned career as a community organizer. Forget the Chicago-style thug politics. That was in the past. Obama did what he had to do to rise. Once in the Oval Office, Obama will really govern more like John F. Kennedy, Bill Clinton or Tony Blair.

Say it enough times, and you can almost believe it. Well, sorry about that, you Obamacons. You just got thrown under the bus.

The $790 billion stimulus headed for Obama’s desk is statist. It is also backward looking. Sure, there are some forward-looking initiatives, such as a few billion for broadband. But the bill is overwhelmed by “shovel-ready” projects aimed at school building improvement, road repair and so forth, and by bailouts to profligate state governments.

Very disturbingly, the bill has the stench of protectionism in it. This is antithetical to the interests of trade-happy Silicon Valley.

What is becoming clear is the Obama we can expect to govern is the big government statist liberal and not a “closet libertarian” as they hoped. Note the word. They fooled themselves into thinking that was actually a possibility. Yet as I pointed out below, this huge and unfocused spending plan being touted as a “stimulus” is nothing more than a massive expansion of government. It is also just the prelude for further intrusion, essentially a down-payment which paves the way for massive intrusion in health care and the energy sector.

For those who cast a jaundiced eye on the candidate and his blank slate campaign, none of this comes as a surprise. A creature of the most liberal political machines in America, a student of Saul Alinski’s method and someone who consistently saw government as the answer and not the problem during his political rise, the Barack Obama the folks are suddenly discovering in Silicon Valley and other parts of America is precisely the guy we expected.

His “youth and multicultural cool” may have been part of sales job, but now it comes down to performance. Thus far his performance has been directed at expanding government. Two of the first three bills passed in his administration have massively increased government. And as I’ve noted, he promises even more.

In less than a month, Obama has signaled that there isn’t a libertarian leaning bone in his body. The question remains as to how people, like those in Silicon Valley, managed to fool themselves enough to vote for a candidate who so obviously didn’t fit their “hope”. And are they, as this particular piece seems to indicate, feeling a little buyer’s remorse?

~McQ

Spinning The Census Move

I guess this is “excitable Andy” day, but Andrew Sullivan is engaged in some pretty poor spin today. Calling it a canard, Sullivan has this to say about the proposed census move to the White House by the Obama administration:

Again, this is not a real issue. It’s an issue driven by the paranoid GOP base. The census has not been removed from the Commerce Department’s purview, as Ambers explains below. And past censuses have long been conducted with coordination from the White House staff.

The explanation Sullivan offers says:

“This administration has not proposed removing the Census from the Department of Commerce and the same Congressional committees that had oversight during the previous administration will retain that authority.” …

Kenneth Prewitt, who served as Census director from 1998 to 2001, said he worked with White House staff during the 2000 Census on budgeting, advertising and outreach efforts.

But as Jeff Zeleny of the NYT reminds us, that’s not at all what the White House proposed:

The White House signaled last week that it would exert greater control over the Census Bureau, in part because of a concern among minority groups over Gregg leading the Commerce Department. Then, in response to complaints by Republicans, the administration said it would work closely with the director of the census, but it would not be under the direction of the White House.

Those “minority groups” were the Congressional Black and Hispanic caucuses. So it was political pressure that precipitated the move. Additionally the move was to have the director of the census bureau work with and report directly to Rahm Emanuel, President Obama’s chief-of-staff.

Now the claim is that nothing different was planned, and it all was a misunderstanding and that it will be business as usual (now that it appears a Republican isn’t going to be running Commerce).

A "Spinorama" Adventure

A "Spinorama" Adventure

Of course, that’s nonsense. But not to excitable Andy. He, with his fine tuned discrimination antenna says:

This issue was championed by Republicans for the usual “the-darkies-are-taking-over!” reasons.

Lost in his sloppy analysis is the fact that the announcement by the Obama administration was very specific about the move and why – complaints from the CBC and Hispanic caucus. Also missing is the fact that the move was overtly political and meant to placate the complaining political special interest groups. For a guy who constantly complained about the politicization of the Justice Department, he seems fine with covering an attempt to do the same thing with the census. Coordinating budget and outreach with the executive department isn’t at all the same as proposing a move of the entire census bureau out from under the Commerce Dept. – where it has always been – to the White House.

Sullivan will be fun to watch as he becomes part of the effort to backtrack and coverup for the new administration.

~McQ

Free Market Bashing

Since the inception of the current downturn, free market capitalism has taken quite the bashing. Supporters of significant government involvement in the economy deride the horrors of “unfettered capitalism” and a “free market run amuck.” Frequently, deregulation of capital markets is singled out as the most dastardly culprit, to which Pres. Obama seems to be alluding when he blames “relying on the worn-out dogmas of the past,” and “too little regulatory scrutiny.” Yet, after the last eight years in which we witnessed Sarbanes-Oxley, No Child Left Behind, Medicare Part D, and numerous attempts to reign in Fannie Mae and Freddie Mac shoved aside by legislators, evidence of unregulated economic activity being the source of our crisis seems rather scant.

The idea that “deregulation” was somehow responsible for the mortgage meltdown is a particularly shaky proposition. Shannon Love explains why:

Leftists have to answer a question: if greedy, irresponsible, unregulated etc. capitalism caused the housing bubble, why didn’t we see a similar bubble in commercial real-estate markets which operate under even less regulation than the residential markets? Why does the politically neglected and unregulated commercial real-estate market exhibit much milder swings?

[...]

The differences between residential and commercial real estate provide the means to test the hypothesis that government intervention or the lack thereof caused the housing bubble and subsequent collapse of the financial system. We can compare the two markets because the same institutions ultimately make residential and commercial loans. They make loans in the same communities and regions. Changes in the economy affect both types of real estate at the same time and to the same rough degree. The only major difference between the two markets lies in the degree of government intervention.

After dispensing with some obvious questions about the comparison, Love highlights how the residential market was essentially turned into a Lemon’s Market:

More than any other policy, the creation of Freddie Mac and Fanny May distorted the residential mortgage market in a way that the commercial market escaped. The FMs exist solely to induce lenders to make residential loans that the free market judged too risky. The FMs buy up residential mortgages from primary lenders and bundle them together in securities. They do so precisely in order to short-circuit the free-market feedback system that communicates to banks when the financial system as a whole has lent out as much money as it safely can. That feedback system worked like a governor on an engine. It kept the system from running away and lending more money than it could recoup, but also prevented people with poorer credit from getting loans.

Politicians who wanted the engine to run faster created the FMs to bypass the governor in order to get higher performance in the short run. Since the FMs would buy up almost any mortgage, lenders could make riskier and riskier loans without suffering any negative consequence. The FMs replaced the self-interested secondary-market buyers with people playing with government money and a mandate to induce more and more lending. Special dodgy accounting rules allowed the FMs to hide the risk behind the securitized mortgages they sold.

Deregulation caused the residential mortgage meltdown?

Deregulation caused the residential mortgage meltdown?

As Love points out, the commercial real estate market has no such mechanism muddying its waters, and information is comparatively less asymmetric. Without the government interference, commercial mortgage lenders let the potential for bad outcomes drive their decision making:

Tellingly, no such intervention occurred in commercial markets. The FMs’ charters expressly prevented them from buying commercial mortgages. As a result, the commercial mortgage market functioned with a free-market governor. When lenders made too many risky loans, free-market secondary buyers stopped buying their mortgages and the system cooled down. As a result, commercial markets saw no runaway boom and subsequent colossal bust.

Although I think that laying the crisis solely at the feet of the residential mortgage market is overly simplistic (for example, what was up with the ratings agencies?), Love does point to a very apt comparison as to how government intervention in the market changes incentives and behavior. If you guarantee risks against bad loans, and subsidize the debtors, then more of such loans will be made. Remove such a guarantees and subsidies and market forces will severely punish improperly compensated risk taking.

The trade off, of course, is that free markets do not allow much opportunity for rent-seeking. Which is why Love’s final lament is so true:

Sadly, experience suggests that mere empiricism has no place in political economics.

That’s because empiricism does not buy votes.