Free Markets, Free People

Monthly Archives: February 2009


Symbolism Over Substance

Unimpressed is a word that handily describes my reaction to the Obama cabinet to this point. For instance:

Two years ago, an effort to fix No Child Left Behind, the main federal law on public schools, provoked a grueling slugfest in Congress, leading Representative George Miller, Democrat of California, to say the law had become “the most negative brand in America.”

Education Secretary Arne Duncan agrees. “Let’s rebrand it,” he said in an interview. “Give it a new name.”

Why is the law the “most negative brand in America?” Because Democrats and teacher’s unions have spent 8 years blasting a program written by Ted Kennedy (that part seems to be conveniently forgotten now) but signed by George Bush.

And their solution?

Give it a new name.

There, all fixed.

Sheesh.

~McQ

[HT: Below The Beltway]


The Shape Of Things To Come?

We touched on the fact that there are some tax protests popping up around the country in  last night’s podcast.

William Jacobson says:

The beginning of a protest movement against Barack Obama’s redistributive policies is underway. Though still small, every movement starts somewhere. While called the “Tea Party” after the Boston Tea Party, this movement is similar to movements throughout history where the producers of society refuse to have their property and income confiscated.

We all agreed that at this particular moment the movement is mostly a creature of the right-wing. That’s not to say it will stay that way, but certainly it is partly outrage over the so-called stimulus bill and partly an opportunity to engage in a little payback for the last 8 years of the left’s shenanigans.

Will it gain supporters? Will it gain power? I frankly don’t know at this point. But as Debra Saunders points out, if you think it is bad here, in terms of the financial crisis, you ought to be in Europe.

And what is going on in Europe?  Well if the UK is any indication, things may be heating up rather quickly there:

Police are preparing for a “summer of rage” as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.

Britain’s most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming “footsoldiers” in a wave of potentially violent mass protests.

Interestingly the Brits would be late-comers to the European protest movement:

In recent weeks Greek farmers have blocked roads over falling agricultural prices, a million workers in France joined demonstrations to demand greater protection for jobs and wages and Icelandic demonstrators have clashed with police in Reykjavik.

So, will the burgeoning tax-protest movement here take hold and grow?

If Europe is any indication (you know, the Europe that was supposed to be so much better off than we are according to some?), yes, it might. In fact, if, as promised, the situation here gets worse and worse, I think we can pretty much count on it.

Will it have an effect? Well that’s an excellent question.

I’ll ask one in return.

Have you seen the deficit?

Someone is going to have to pay for all of that.

~McQ


Suddenly We Have Problems (Update)

Funny how this works, eh?  

February, 2005:

Your lack of details is no surprise–an essential component of the government’s PR blitz is the obscuring of details because, in fact, Social Security faces no immediate crisis. President Bush is lying to us, again.Despite the president’s sky-is-falling forecasts, the system’s trustees give Social Security another four decades of soundness; the nonpartisan Congressional Budget Office gives it five. Many independent economists believe the program will stay healthy closer to six or seven more decades.

January of the same year:

It all sounds awful, but is it really so bad? Is there a Social Security crisis?

Most Democrats say no. They contend the president is trying to scare people into supporting his plan for drastically changing the program.

“The future is not as bleak as some people would have the public believe,” says Peter Diamond, an economics professor at the Massachusetts Institute of Technology. “Social security is not bankrupt in the usual sense of the term — not going broke, not going ‘flat bust.’”

[...]

But professor Diamond says, yes, in 2042, benefits will have to be cut, but retirees then would still get more money than today’s retirees.

“We’ve got 35 or more years to phase in very slow changes that people can certainly adapt to and live with,” he says.

And Medicare?

From the majority Democratic Congress of last August:

“The Medicare trigger was cooked up by Republicans behind closed doors as a political ploy to foster an unfounded panic about the strength of Medicare’s finances,” said Rep. Pete Stark (D, Calif.), chair of the House Ways and Means Subcommittee on Health. “We must turn off the trigger and reject Republican attempts to arbitrarily limit Medicare financing.”

Stark and other Democrats argue that Medicare’s trend to require an increasingly larger portion of its funding to be in the form of general tax revenues has no bearing on the program’s long-term solvency. Although Democratic lawmakers support some of the Bush bill’s provisions, they take issue with his proposal to ease the drain on tax dollars in part by charging wealthier seniors more for their Medicare drug benefit premiums.

Yet what is going to happen today?

On Monday, Obama will bring together more than 130 lawmakers, heads of advocacy groups and economists in the White House State Dining Room to lay out the bad news – a federal deficit of at least $1.3 trillion, the largest as a share of the nation’s economy since World War II. The fiscal summit is meant as a first volley in the battle to address runaway costs for Medicare, Medicaid and Social Security.

Runaway costs? But, but … I thought Republicans were trying to scare everyone? I thought Bush had lied? You mean they were right?  My goodness, you mean that it may have been the Democrats who were being disingenuous.

Heh … that can’t be so, can it?

Hope and change.

UPDATE:  Apparently Democrats are still pushing the “there’s nothing wrong with Social Security” meme.  From the Joe Scarborough show, and interview with budget director Peter Orszag, who will be chairing today’s “Fiscal Responsiblity Summit” (yes, it’s okay to laugh):

JOHN HEILEMANN: Peter, it’s John Heilemann from “”New York”" magazine. there’s a report in “”the New York Times”" today, this goes back to a question that Joe kind of hinted at a minute ago, which is that Barack Obama considers doing a White House task force on Social Security reform to announce today and he got pushed back from Democratic leaders in the House and Senate. is that report true? Is the question of Social Security reform still on the table for you guys, how important is it?

PETER ORSZAG: Well, I want to come back to the point that was raised earlier, which is that Medicare and Medicaid are the primary drivers of our long-term fiscal problem. We want to address that first. we want to get health care done this year. Social Security is also an issue and after we’ve dealt with health care I think it probably does make sense to try to get Social Security on sounder ground also, but let’s get the big problem fix first.

HEILEMANN: Peter, did you guys back down or not?

ORSZAG: I don’t think it’s constructive to get into the back and forth of discussions in, you know, in internal discussions. i think the important point is, the president is committed to addressing the largest problem that we face which is Medicare and Medicaid.

JOE SCARBOROUGH: Peter, please understand, it may not be constructive, but it’s an awful lot of fun. Did Nancy Pelosi tell you to back off of Social Security and Medicare and Medicaid reform?

ORSZAG: You guys are wild having fun like that. We want to get — I really want to focus on — SCARBOROUGH: Peter, it’s all we got.

MIKA BREZEZINSKI: He fits the show. Answer the question, Peter. You got an answer for us?

ORSZAG: Again, Social Security is, you know, does face a long-term deficit, it does need to be addressed, but it’s much smaller than the problems than Medicare and Medicaid and the health system. i think it makes sense to focus there first.

It doesn’t take a rocket scientist to see through Orszag’s rather poor attempt to obfuscate the issue. Apparently they did back down. Medicare and Medicaid only remain on the table because they are a means to an end – what the Democrats like to euphemistically refer to as “health care reform”. That, by the way, does not refer to making either Medicare or Medicaid more efficient, less costly or less wasteful, it instead refers to expanding both programs. That, in the era of Democratic rule is considered to be “fiscally responsible”.

~McQ


MYOB

In my last post, I argued that the Seventeenth Amendment should be repealed.  Once upon a time, Americans from across the political spectrum could agree on at least one principle of good governance: federalism, or more generally, localized decision-making.

To put a fine point on it:

  • Your state knows its own values and interests better than the national government does.
  • Your county knows its own values and interests better than the state government does.
  • Your city knows its own values and interests better than the county government does.
  • Your neighborhood knows its own values and interests better than the city government does.
  • Your household knows its own values and interests better than the neighborhood does.
  • And you arguably know your own particular values and interests better than other members of your household do.

Depending on who’s won lately, the people in power at higher levels of organization may approximately reflect your values and interests, but the further away they get, the less likely this is to be the case.  Simply put, the more people you have to represent, and the further they are away from you, the harder it is to faithfully represent them all.

Even if your Congressman is a tremendously intelligent and virtuous man, what he doesn’t know about his constituents’ beliefs and circumstances could fill libraries.

So as a general rule, it makes sense that we should want matters to be decided at the most local level possible.  If you have a personal problem, you have the greatest incentive to fix the problem, your values will determine what trade-offs you’re comfortable with, and the matter probably shouldn’t leave your household — or at worst, your peer groups.  If it doesn’t naturally spill over into other people’s lives, they don’t want you to make it their problem.

Largely because so much power has accrued at higher levels of government, people increasingly turn to the impersonal and ignorant forces of those higher levels to handle their problems.  Today, the federal government has so much power, reaching down to the most local possible decisions, that people focus an inordinate amount of their attention and aspirations on who controls it and what they do with it.  Everyone’s fate is determined by whose collective hand controls the Biggest Lever.

I cannot stress enough how dangerous a development this is. Let’s leave aside, for the moment, how centralized control and planning tend to double down on mistakes rather than correct them.  They have much more insidious effects.

Making everything a national issue has poisoned the national debate.  It is a significant cause of the Culture War (see Roe v Wade, or Defense of Marriage Act).  It has contributed to making politics personal, and it’s why so many people have become emotionally invested in the person of the President.  Think about how much more common it has become for both parties to use the language and imagery of dictators to describe the president — usually when we disagree with him.

Bottom line: it is difficult to tolerate your neighbor’s difference of opinion if his opinion controls your life.  It has become too difficult to mind one’s own business.

Let that marinate for a minute, and I’ll move on to my suggestion for one solution. Continue reading


Podcast for 22 Feb 09

In this podcast, Bruce, Michael, and Dale talk about the first month of the Obama Presidency.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.


BlogTalk Radio – 8pm (EST) Tonight

Call in number: (718) 664-9614

Yes, friends, it is a call-in show, so do call in.

Subject(s): Obama’s first month in office, Hillary Clinton’s swing around Asia and the stimulus, the housing bailout and whatever else strikes our fancy.


Arnold Schwarzenegger: Dope Of the Week

Where to start with this joker:

California Republican Gov. Arnold Schwarzenegger suggested that his party is out of touch with average Americans on the issue of health care.

“You’ve got to listen to the people. If the nation is screaming out loud, ‘We need health care reform. We want to have universal health care. We want to have everyone insured. We want to bring the costs down. We want everyone to have access.’ I mean, that’s what they want; that’s what you do,” Schwarzenegger said on ABC’s “This Week.”

Arguing that California Republicans were out of touch with the majority of Californians who wanted to raise taxes to fix the state’s budget crisis, Schwarzenegger said it is “the same nationwide.”

He said Republicans need to embrace what the people want, even if it means accepting tax increases that go against their party principles:

“Even though it maybe is against your principles or philosophy, you still have to go, because that’s what the people want you to do,” he said.

A) Healthcare: the nation isn’t screaming any of that out loud. A definite minority want it. But just as large a minority don’t want any part of it. A third minority isn’t sure one way or the other.

B) If the purpose of government is to simply give the people everything they want, then there’s no reason for a budget, a legislature or a governor. Just put everything to a direct vote via referendum, write a program that can figure the cost of each “yes” referendum, figure the tax necessary to fund the approved program and assess the tax. If you must have a legislature or governor, they would only write the law and rubber stamp it based on the referendum (per the Schwarzenegger “philosophy” only unanimous approvals allowed) and the “governor” is there to do nothing more than to sign it into law – period. Once taxes reach 100% nothing else can be signed into law and the legislature is in permanent recess and the governor is no longer needed (hey I can be just as absurd as Schwarzenegger).  

Oh, wait, I forgot – you have to have a governor and a legislature to pile up trillions of dollars of debt “giving the people what they want” and drive the state into bankruptcy – my bad. 

C) Why have principles if you’re not supposed to live by them/act on them. Why run on them, tell voters they’ll be your guide and get elected because of them? Schwarzenegger has gone from a somewhat entertaining RINO to an outright idiot.

“Even though it may be against your principles or philosophy” do it anyway because that’s what the people want? This guy would obviously rather be liked than principled (if he ever was really principled). Principles are a hindrance to his pursuit of approval (see what steroids will do to your brain?). And my guess is, he’d label this nonsense as “leadership”.

Lord help California. Schwarzenegger makes Gray Davis look great.

~McQ


Repealing the Seventeenth Amendment

George Will argues we should repeal the Seventeenth Amendment.  I doubt it will happen–too many people are convinced of the Populist notion that the more direct the democracy, the better.  But I’ve been arguing for years that this measure would restore a great measure of federalism to the US, and that we would generally benefit from such a change.

Doug Mataconis of Below the Beltway isn’t so sure.  He writes,

As I’ve noted before, it’s a provocative argument, but I think there’s something missing:

My take on the subject is this — from a procedural point of view the 17th Amendment is certainly one of the factors that has made the expansion of Federal power, and the erosion of Federalism, more easy to accomplish. Returning to direct election of Senators *might* have a positive impact, but that will only happen if the Senators elected have a proper understanding of their role under the Constitution.

And if the state legislators appointing them have that same understanding.

Given the political climate in America today, having Senators who are beholden to the whims and wishes of state legislators is unlikely to produce a better breed in the Upper House than having Senators who are beholden to the whims and wishes of voters.

In some sense, repealing the 17th Amendment involves turning back the clock in more ways than one. We can return to the procedural methods that the Framers first put in place, but that doesn’t mean that the philosophy that will guide the Senate will change in any significant respect.

I can’t comment on whether we’d get a “better breed”, but the procedural change would change the practice, if not the philosophy, of senators.  As I argue in the comments, the purpose of many of the checks and balances in the Constitution of the early republic was to have people in power answer to those who were jealous of their own power. Repealing the Seventeenth wouldn’t cure all ills, but it would help.

For example, the federal government has extended its power over state and local matters by using its superior funding power to provide goodies, and attaching strings to that money.

If we posit that state legislators want to arrogate more power to themselves, then–given the power–they will resist those strings. US Senators, realizing that their appointment to the Senate (and all the attendant benefits) requires pleasing the state legislators, will avoid attaching those strings. They don’t need to understand anything except who’s buttering their bread.

Let’s say that state legislators still like the idea of getting federal money without having to levy their own taxes. Well, if the Senate tries to appropriate no-strings-attached money for the states, naturally the House and President will resist. They don’t want to levy taxes and receive no controlling benefit in return.

A smaller number might be ideologically committed to using the superior federal power of taxation to fund these goodies, but not having strings attached to federal money would dull the incentive.


With Hat In Hand …

Pretty sad when you have the Secretary of State soliciting funds for debt instruments:

US Secretary of State Hillary Clinton has urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.

Ms Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America’s standing abroad.

In Beijing, she called on authorities in Beijing to continue buying US Treasury bonds, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.

“By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together,” Ms Clinton said at the US embassy here. 

Of course, its absolutely necessary that China (and the rest of the world) continue to buy these bonds and fund this spending debacle or taxes will have to be raised dramatically (and not just on the ‘rich’) and/or more money will have to be printed. That’s not to say that both of those won’t be done anyway whether China continues to buy or not.  My guess is it’s only a matter of time. Don’t forget, health care reform legislation and environmental legislation are yet to come. Both may end up taking even more out of the private side of the economy than the so-called “stimulus” did.

~McQ


Obama meets with Harper on “Buy American”

President Barack Obama made a trip to Canada this week to settle fears over the “Buy American” provision in the so-called “stimulus” package:

President Barack Obama on Thursday moved to reassure business and trade partners that the “buy American” provision of the economic stimulus package will not further harm the economy.

Critics of the measure, including foreign trade partners, business groups and even some U.S. industries that use steel and other products, have called “buy American” protectionist and complained it will drive up the cost of business.

Obama, who met with Canadian Prime Minister Stephen Harper for several hours in Ottawa, said he told his counterpart the United States would abide by existing trade pacts.

“I want to grow trade and not contract it,” Obama said. “And I don’t think that there was anything in the recovery package that is adverse to that goal.”

The provision mandates that any construction or infrastructure project in the “stimulus” bill would be required to use American metals, like iron and steel, unless costs were to exceed 25%. This misguided provision has sparked fears of a trade war.

In 1845, Frédéric Bastiat wrote the Petition of the Candlemakers, satire that pointed out the follies of protectionism to French lawmakers:

You are on the right track. You reject abstract theories and little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.

We come to offer you a wonderful opportunity for your — what shall we call it? Your theory? No, nothing is more deceptive than theory. Your doctrine? Your system? Your principle? But you dislike doctrines, you have a horror of systems, as for principles, you deny that there are any in political economy; therefore we shall call it your practice — your practice without theory and without principle.

We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.

We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.

Competition spurs improvements and lower prices. Protectionism is what brought us the Smoot-Hawley tariff in 1930, an interventionist economic policy that exacerbated economic problems which eventually led to the Great Depression.

Policies like “Buy American” will only cause retaliation in other parts of the world. We cannot afford that in the middle of a recession.

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