Questions and Observations

Free Markets, Free People

Book Review – Poorer Richard’s America

Have you ever wished it was possible to spend some time with any of those we call our Founding Fathers and ask them about the country they founded and the country it has become?

Would they be astounded?  Shocked?  Disappointed?  Of course, no one knows because such a wish can never come true … until now.

I just finished a very good book entitled “Poorer Richard’s America”, subtitled “What would Ben say”.  The “Ben” in question is Benjamin Franklin and the author, Tom Blair, perfectly – at least in my opinion – captures Franklin’s voice.  He also captures the common sense and logic which made Poor Richard’s Almanac such a hit during Franklin’s time.

So, given the intriguing premise that Ben Franklin was going to discuss our America, the book was irresistible.  From culture to politics to philosophy, this series of short essays captured in 39 chapters discusses most of the burning political issues of today with brilliant discussion of both the past and the present.  In fact, it is the use of the past while pointing out the present problems that makes the book so compelling. 

For instance, a simple example grounded in our US history helps explain our problems in seeding democracy in places like Iraq and Afghanistan.  And why was Iraq actually easier than Afghanistan.  Blair’s Franklin harkens us back to the founding of the country and Jamestown as well.  Jamestown, some 150 years before our Constitution was ratified, was our first settlement in the “New World”.  They almost starved to death and died out.   Franklin wonders where on the priority list of Jamestown the establishment of democracy would have ranked.  He supposes not very high.  In fact, until the priorities of food, shelter and security were satisfied,  and a modicum of prosperity established, “democracy as a form of self-governance” probably wouldn’t even gain a passing thought.

In Iraq it was much easier, in relative terms, to satisfy those basic priorities than it is in Afghanistan, where they still haven’t been satisfied.  Of course there are other cultural problems as well, but I think the basic point makes sense.  And it is that sort of easily understood “sense” that makes the book so compelling.

One other observation I’ll pass you way that resonated with me had to do, of all things, with reality TV.  I find it to be a horrific form of entertainment.  Blair’s Franklin agrees:

“Since I opened this diminutive essay by referencing television, let me return to the great giver of light and noise.  For many Americans, television has become both a pacifier and a false voice of self-worth. I came, after much hesitancy, to this conclusion while considering the great Colosseum in Rome.  A Colosseum where, for the morbid enjoyment of the masses, humanity was discarded and humans were first degraded, then slain.  Many reality TV programs shown today on America’s networks likewise degrade humans for the enjoyment of the masses; but, unlike Rome, the Colosseum is brought to each American’s house – no need to exercise by walking to a great amphitheater.”

A perfect capture of that bit of culture in my estimation.  Grab the book folks – you’ll be glad you did.

“Poorer Richard’s America: What would Ben say?” – by Tom Blair.  Skyhorse Publishing (www.skyhorsepublishing.com), 2010  [Amazon link]

~McQ

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“We are altering the deal. Pray we do not alter it further.”

Over at Instapundit, I see a hard line from a government worker threatened by all this talk of cuts that might be necessary for underfunded pensions:

I’ve been reading your blog for years and I appreciate your nuanced brand of conservatism. But lately, your attack on public pensions has me concerned. Look at it from my perspective:

When I graduated from law school and applied for a job at a Federal agency almost 30 years ago, the deal was simple: “We won’t pay you as much as you might make in the private sector, but you’ll get reasonable pay, great benefits including a generous retirement system, and a reasonable work life.” I took the deal.

{insert various moaning about the sacrifices he has supposedly made here, including such onerous burdens as working at metal desks…}

Apparently though, some people, in and out of government, are no longer happy with the deal. Complaints and warnings about government pensions and pensioners abound. Typically, the narrative is something along the lines of: “Greedy Retired Bureaucrats Still Feeding at the Public Trough as Taxpayers Suffer!”

Well, if you’re concerned about unfunded government liabilities, I agree with you. If you think that government employee pensions are too generous, I’ll listen to what you have to say. But if you just don’t like the deal the government made 30 years ago and want out, I’ll see you in court.

Legally speaking, this guy probably has a point. However, he appears to be missing a much bigger point. The legal right to collect money from a party means nothing if the party simply cannot pay. Both states and the federal government have made promises that they almost certainly can’t pay.

It sounds as though this guy, like many who haven’t thought very deeply about the matter, just assumed that he could find a way to banish such risks from his career. He bought into the fantasy that somehow, some way, government is different.

In the long run, it’s not. Every organization has limits on how it can spend money and the promises it can keep.

Private companies find out pretty quickly when they have reached those limits. For government entities, their monopoly on force and the resultant range of options to collect more money lengthens the feedback cycle, so it takes them longer to realize their mistakes. That just means they get in bigger trouble before the crisis comes.

Employees have been getting shafted by organizations that lost the ability to keep their promises for hundreds of years. I’d like to see this guy tell some Enron folks about his troubles. I don’t think he would get a lot of sympathy.

Yes, legislators have made stupid, stupid promises. In theory, that’s the citizens’ fault because they elected the stupid, short-sighted legislators. However, the citizens are not likely to accept that abstract responsibility. They are going to look at the high tax rates and poor government services in bankrupt states and decide to go elsewhere, as many in California and Michigan have done in recent years.

Almost everybody is going to lose in the debt crisis to come. I’m sorry that someone like Insty’s correspondent, who chose job security over adding value in the more risky free market, now finds out that the security is illusory. That’s life. Those of us in the private sector have always known it. It’s about time government workers understood that you can’t take risk out of life, and that sometimes life isn’t fair.

They also need to prepare themselves for a backlash that’s been building for decades. Government workers, in my experience, work hard and perceive what they do as valuable. This guy seems to be clearly in that camp. However, private citizens have a completely different perception. There’s a reason we have the cliche “good enough for government work”.

When you’ve had a cushy thirty year career with no worries about losing your job, don’t expect a lot of sympathy about your woes from people beset with job insecurity and burdened by high taxes and meddling bureaucrats. Especially when they don’t see what you do as particularly valuable. Drafting and defending new regulations may be hard work, but it doesn’t necessarily add value to society.

This divide in viewpoints is going to come to a head in many places and many ways in the next couple of decades. I know many government workers feel entitled; heck, that kind of entitlement psychology is what leads a lot of them to government work in the first place. However, believing in that entitlement so strongly that you are prepared to thrown your fellow citizens under the bus isn’t going to make the coming conflicts easier.

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Recession cafe: today serving Obama economic hash

CNN has a story about a bike store owner who has retrenched and is weathering the recession. Contained in the story is the kernel of the economics of the problem we face and how the administration still doesn’t get it.

Here’s the quote:

Both then and now, D’Amour said the chief problem for small business owners is access to financing. And lawmakers want small businesses to know this complaint is reaching Washington.

President Obama urged Congress last week to move forward on a bill designed to help small businesses, including a $30 billion lending fund to loosen credit lines and $12 billion in tax breaks.

That will help but it won’t solve the problem, said Anne Mathias, director of policy research at Concept Captial.

"It’s not going to bring a rush of people into stores to buy whatever it is these different small businesses have to offer, but it will help," she said. "It’ll help kind of at the back end."

Republicans say the bill won’t have much effect and are urging the president to extend the Bush administration’s tax cuts.

Todd McCracken, the president of the National Small Business Association disagrees.

"Putting money in the pockets of both consumers and small business people so they can take advantage of the opportunities when they come along is crucial," McCracken said Sunday morning on State of the Union with Candy Crowley.

Access to financing, although important, isn’t the base problem. Consumption is – or the lack thereof. Additionally, payroll taxes will be going up for everyone in January (a little known part of allowing the Bush tax cuts to expire).

Question: if you are charged – both short term and long term – with getting the economy moving by implementing policies/laws at a national level, how would you go about it?

Well, in the short term you can provide businesses with all the financing in the world, but unless consumption steps up, it doesn’t do anything useful.  Until buyers are buying, businesses won’t be hiring.

So what’s the best way to quickly boost consumption?  Obviously it is to put more money in the hands of consumers.  And one such way to do that is to cut payroll taxes, or, as has been suggested, have a payroll tax holiday.

That, of course, has been rejected by the Obama administration which feels it would “cost” the government to much money.  They’d rather government “cost” the consumer too much money and the consumer stay home as a result one supposes. 

Instead, the administration is proposing a $100 billion “research and development” credit for businesses.  A couple of observations – that’s not a short term fix and not all businesses engage in R&D. 

The point, of course, is the administration is more concerned about the government revenue stream than the economy and it is, as John McCain has said, just “flailing around”.  It is much more concerned with the “cost” incurred by government necessary to actually have some impact on the economy than it is the “cost” it will impose on the tax payer for it’s future multi-year deficit fueled budgets. 

It refuses the other side of tax cuts – spending cuts.  Instead, it simply intends to shift the burden of its profligacy to you.  And these tax cuts are for show only – a way of claiming to do what the GOP wants without really doing much of anything.  When this tiny and piece meal approach fails to get the dead weight of the economy moving, the left will claim to have tried the right’s prescription and that tax cuts didn’t work.

Anyway, the administration plans to “pay” for this tax credit (oh, so now PAYGO is important) by increasing taxes through closing “tax loopholes” for multinational corporations and some energy companies. This, dear friends, is simply another much desired wolf from the liberal agenda in sheep’s clothing.

The National Tax Payer Union points out that those taxes being proposed as “closing loopholes” will actually make our domestic oil and gas business uncompetitive.   It will, for instance, tax all the revenue Chevron earns (both here and overseas) because Chevron is an American based company but won’t do the same to BP (or Venezuela or China) because BP isn’t an American based company.  Unilateral nonsense like that will put Chevron in an unenviable competitive situation.

Make sense?  Especially in times of recession? Can anyone guess what a Chevron may decide to do (hello Toronto, any office space to lease up there?).  And, of course, the taxes in question will be passed along to the hard pressed consumer with increased prices.  That’ll spur increased consumption, won’t it?

The rest of the proposed economic package is the usual failed stuff – increased infrastructure spending.  The only laudable portion of the package is the proposed extension of the middle class portion of the Bush tax cuts.  But again – that doesn’t put more cash in the pockets of consumers, it simply maintains the status quo.

But the “rich” – tough noogies.  You may have seen administration flunkies out pushing the canard that the tax will only effect 3% of the small businesses out there.   The Wall Street Journal blows that bit of spin out of the water – first by explaining the smoke and mirrors the administration used to produce that number and then pointing out what the number really is:

According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.

So, the proposal by the administration to get the economy moving is maintain the status quo taxes on the middle class (no immediate impact), provide a limited benefit (at best a long term impact) cut to some business in the area of research and development, more infrastructure spending (long term because of the government project process), an increase in taxes on American oil and gas companies (immediate negative impact) and an increase in taxes for 48% of the small businesses in America (immediate negative impact).

If that’s not a bad tasting hash of ideas, I’m not sure what to call it.  And yeah, you can bet your bottom dollar it will get the economy moving.

Excuse my sarcasm, but obviously this is “rocket science” to the administration, and they’re totally baffled by it.  Someone, anyone, tell me why the GOP should support this?

~McQ

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Why consider the real problem when you can play the race card

Welcome to post-racial America:

CYNTHIA TUCKER, ATLANTA JOURNAL-CONSTITUTION: Well I think it may help the Democrats in some races this time, Chris, because some of the Tea Party candidates are so extreme. But there is another issue. There is, as Norah said, a whole lot of voter anger, discontent out there. We haven’t talked about the elephant in the room, and I don’t mean the Republicans: race. Changing demographics. Fear of a white minority.

CHRIS MATTHEWS, HOST: That’s so interesting.

TUCKER: Obama’s election has suddenly made many white Americans aware of the loss of a white majority.

MATTHEWS: That’s so interesting.

TUCKER: That’s what this crazy summer has been all about. Anti-mosque construction. Anti-immigrant ravings. It, that fear is very difficult for Obama to overcome.

As Noel Sheppard asks, then how do you explain the fact that 43% of “white America” voted for Obama or that he had 78% approval rating in January 2009 according to Gallup?

And, of course, it couldn’t be the rotten economy, the promise that the trillion dollar stimulus would fix it when it actually seems to have made it worse (or at least had no effect), or that the government took over car companies, has proposed trillion dollar deficit budgets as far as the eye can see, rammed an unpopular health care law down our throats and has seen no leadership whatsoever out of the White House could it?

Nope – it’s all about losing the “white majority” isn’t it?

An amazing conclusion that could only be cobbled together by a professional race baiter. And another in a long line of excuses tendered to explain the massive unpopularity of the liberal agenda.

~McQ

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Questions and Observations #7

Lots to comment on, little time in which to do it (it is a holiday weekend after all).  But here are some stories that caught my eye that I may do a more extensive commentary on at a future date.

Thomas Friedman pens a column in which he explores what it will mean if America is no longer the superpower of the world.  Quoting Michael Mandelbaum, the Johns Hopkins University foreign policy expert, he makes the case that our debt and the subsequent frugality it will require is essentially going to make us retrench and probably withdraw much of our foreign aid (not just money, but troops and fleets, etc., which have helped keep the peace over the years).  He notes that when Great Britain gave up its “global governance role”, the US stepped in.  The question is, when the US pulls back and creates the expected power vacuum, what country will try to fill the role? 

After all, Europe is rich but wimpy. China is rich nationally but still dirt poor on a per capita basis and, therefore, will be compelled to remain focused inwardly and regionally. Russia, drunk on oil, can cause trouble but not project power. “Therefore, the world will be a more disorderly and dangerous place,” Mandelbaum predicts.

Cast your eyes toward a the Middle East.  While Turkey and Iran don’t have what it takes to step into the shoes the US has filled, each certainly feel that the withdrawal of us influence presages a much greater leadership role for them in their respective region.   China may feel the same thing about the Far East. Friedman concludes:

An America in hock will have no hawks — or at least none that anyone will take seriously.

That’s true, I believe – at least while a Democrat is in the White House or Democrats control Congress – not because they’re suddenly frugal, but because they’d prefer to spend the money on other things.

But this is my favorite paragraph:

America is about to learn a very hard lesson: You can borrow your way to prosperity over the short run but not to geopolitical power over the long run. That requires a real and growing economic engine. And, for us, the short run is now over. There was a time when thinking seriously about American foreign policy did not require thinking seriously about economic policy. That time is also over.

Some of us Americans have know this was a probable result for years. Welcome on board, Mr. Friedman. It’s about freakin’ time.

————

If you read no other column today, read George Will’s about the global warming industry.

A sample:

The collapsing crusade for legislation to combat climate change raises a question: Has ever a political movement made so little of so many advantages? Its implosion has continued since "the Cluster of Copenhagen, when world leaders assembled for the single most unproductive and chaotic global gathering ever held." So says Walter Russell Mead, who has an explanation: Bambi became Godzilla.

In essence, it’s analogous to something else we discussed not to long ago, the UAW is now "management". Will’s point is the former "skeptics" – environmentalists – are now the establishment. Funny how that works.

———

According to the New York Times, Democratic leaders are in the middle of doing what can only be characterized as “political triage” concerning the upcoming House mid-term elections.  Reality, as they say, has finally penetrated the happy talk and leaders are taking a brutal look at the chances of all their House members:

In the next two weeks, Democratic leaders will review new polls and other data that show whether vulnerable incumbents have a path to victory. If not, the party is poised to redirect money to concentrate on trying to protect up to two dozen lawmakers who appear to be in the strongest position to fend off their challengers.

My guess is the Blue Dog contingent is about to be cut loose.  The leadership probably figures that losing those seat isn’t as big a problem as losing seats in which automatic votes for whatever the leadership puts forward are assured.  That would be members of the Progressive caucus and the Congressional Black caucus for instance.  The good news for Democrats is most of them are found in what are considered “safe” districts.  So they’ll go in the “will live with minimal treatment” category. 

The Blue Dogs will most likely go into the “mortal” category and receive little money or backing.  They’ll simply let them die, politically  It is those in the big middle, in perhaps marginal districts that could go either way or those who’ve survived tight races previously in districts that may lean slightly to the Democratic side which will get the money.  These “critical but can be saved” members will get the lion’s share of the money and support allocated for the mid-terms. 

Whether they can save enough of them to avoid the magic 39 seats the GOP needs, however, remains to be seen.  My guess is it would require a miracle – and possibly that would require some of the Blue Dogs to squeak out a victory.  But if those patients are left to pass quietly away when some might have been saved, the Dems may rue the day they decided to pitch them outside the tent and leave them to be brutalized by the political elements.  Or said another way – the Dems may outsmart themselves, this strategy could easily blow up badly in their faces and it may be they that assure the 39th seat by not fighting for all of them.

~McQ

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Ezra Klein’s rather silly defense of the 17th Amendment (updates)

Ezra Klein seems to be bragging somewhat about something that frankly makes him look foolish.  Apparently he appeared on C-SPAN with Heritage’s Brian Darling.  Darling made the point that the Senate, by design, was supposed to be a voice of the states.  Klein disputes that, I assume, because he apparently doesn’t know his history. 

Responding to a questioner, [Brian Darling] went so far as to say he’d consider repeal of the 17th amendment, which would mean that senators would again be elected by state legislatures rather than voters.

I’ve never understood this sort of thing, and said so in the panel. The Founders didn’t wisely orient the Senate around states. They pragmatically oriented the Senate around states. But now that we’ve been the United States of America for a while and none of the states seem likely to secede, the fact that California has 69 times more people than Wyoming but the same representation in the Senate is an offensive anachronism, at least to Californians.

Secession?  Where did that come from?

It is certainly true, given that remark, that he doesn’t understand  Darling’s argument. Here’s Klein’s argument at the link in the cite:

In Philadelphia in 1787, the smaller states favored the New Jersey Plan — one chamber with equal representation per state — while James Madison argued for two chambers, both apportioned by population, which would benefit his Virginia.

The delegates finally settled on the Connecticut Compromise, or the Great Compromise. Seats in the lower chamber would be apportioned by population (with some residents counting more than others, of course) while seats in the upper chamber would be awarded two per state.

The idea was to safeguard states’ rights at a time when the former colonies were still trying to get used to this new country of theirs. But the big/small divide was nothing like what we have today. Virginia, the biggest of the original 13 states, had 538,000 people in 1780, or 12 times as many people as the smallest state, Delaware.

That version, I assume, is one he’s cobbled together to support his view that it was all a  pragmatic compromise.  But, of course, it wasn’t.  It was instead, a very carefully designed system of government.  And he misrepresents Madison’s view on the subject completely. 

How do I know? Because I’ve read Madison’s writing on the subject in the Federalist papers.

The debate at the time, the concern I should say, was transitioning from the Articles of Confederation to government under the Constitution.  All knew it meant a more powerful government at a national level and all were quite wary of that. Remember, those writing the Constitution were state delegations.  THAT was the great concern of theirs given the oppressive yoke of imperial England they had just removed from their necks.  All, while they may have differed on the structure – and that’s where the arguments took place – wanted a a more FEDERAL government than a NATIONAL government.

After outlining what a republican form of government is, Madison notes the concerns of those who think the Constitution will make it a NATIONAL government vs a FEDERAL government by outlining the differences between the national and federal types.  Here’s Madison in Federalist 39:

"But it was not sufficient," say the adversaries of the proposed Constitution, "for the convention to adhere to the republican form. They ought, with equal care, to have preserved the FEDERAL form, which regards the Union as a CONFEDERACY of sovereign states; instead of which, they have framed a NATIONAL government, which regards the Union as a CONSOLIDATION of the States."

So there, in the hand of the man who drafted the Constitution, are the working definitions of the two terms as they understood them.  Note how the FEDERAL form is defined.  As you read through the rest of Federalist 39, you’ll find Madison discussing both the NATIONAL model and the FEDERAL model and pointing out some of both are necessary.  They had a purely FEDERAL form under the Articles of Confederation.  It didn’t work well.  They knew that had to put some national powers into the hands of the new government, but they feared such a type of government, so they wanted to limit the scope of that power.  He specifically addresses the Congress and how it was purposely designed to limit the power of a national government while importantly preserving some federalism:

The House of Representatives will derive its powers from the people of America; and the people will be represented in the same proportion, and on the same principle, as they are in the legislature of a particular State. So far the government is NATIONAL, not FEDERAL. The Senate, on the other hand, will derive its powers from the States, as political and coequal societies; and these will be represented on the principle of equality in the Senate, as they now are in the existing Congress. So far the government is FEDERAL, not NATIONAL.

That one paragraph, in its simplicity, points out for those who will take the time to read and understand it – something Klein may wish to do – that the Constitution wasn’t some “pragmatic” compromise.  Klein seems unable to understand that the purpose of the Senate is to provide coequal political representation to the states.  That representation was to act as a brake on both the national government and the people (another “national” entity) who were represented in the House.  The equal representation of the states in the Senate was also meant to prevent the larger states from running roughshod over the smaller states, something which happens quite frequently in the House.  What Klein seems to want is another House in the Senate.  He seems totally unfamiliar with why the Senate was designed as it was.  Just read his thoughts on how he’d structure it and you’ll see what I mean.

Madison considered the final product to be a necessary mix, not a pragmatic compromise, of federal and national power conferred on the government in order to make it work properly but keep the national power in check.  The mix of both was designed to give the government the necessary powers it lacked under the Articles of Confederation while also, and this is critical to the success of that design, preserving the rights and power of the states.  

The proposed Constitution, therefore, is, in strictness, neither a national nor a federal Constitution, but a composition of both. In its foundation it is federal, not national; in the sources from which the ordinary powers of the government are drawn, it is partly federal and partly national; in the operation of these powers, it is national, not federal; in the extent of them, again, it is federal, not national; and, finally, in the authoritative mode of introducing amendments, it is neither wholly federal nor wholly national.

The 17th Amendment destroyed that design and balance. Look at the mess that has wrought.  Repealing the 17th Amendment would begin to walk the national government back to this mix of government designed by the founders.  Since the amendment’s passage, the government has shifted to a wholly national government and states have essentially lost their sovereignty and their rights.  We have paid the price and suffer the consequences.

There are certainly other contributors to that situation, but the 17th Amendment is one of the biggest contributors.  Klein needs to acquaint himself with the actual design of the Constitutional government built by the founders like James Madison.  There’s an entire book that will do that for him – “The Federalist Papers”.  If he’d read them, he might not look quite so foolish the next time he attempts to pontificate on what the founders thought.

UPDATE: Great minds think alike, I suppose – Brian Darling’s rebuttal (replete with Federalist 39 reference).

UPDATE II: James Joyner and Steven Taylor join the fray. I’d only say to Dr. Taylor’s assertion that Madison’s writings in Fed.39 were a "post-hoc rationalization", that they could just as easily represent a "post-hoc realization" that they had in fact designed a very good model for government and thus the "eloquent" argument. Personally I’ve never been able to argue eloquently for anything in which I didn’t believe in passionately.

~McQ

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20 months after taking office, Obama considers tax breaks to stimulate economic growth

All sorts of things to talk about under that title.  So that calls for a bit of a ramble.

First and foremost, the title tells the story.  Why is it we’re 20 months into this administration and we’re just now considering tax breaks to stimulate the economy?  Note the word – considering.  According to POLITICO, there’s been no decision at all made on doing such a thing – if you thought the administration dithered about its strategy change in Afghanistan, this makes that look like a snap decision.

Let’s review:

Last November, Obama announced that he would turn his attention to unemployment, calling it "one of the great challenges that remains in our economy." He declared the same intent two months later, telling House Democrats he would focus relentlessly on job creation "over the next several months." Senior aides went on television pledging that the mantra would become "jobs, jobs, jobs."

But other matters – health care, the BP oil spill – continually stole the limelight, creating the impression, some Democrats complain, that the president was barely focused on the economy at all.

And now, “suddenly”, two months before an election, he’s “focused like a laser beam”.  A soft weak lit laser that sort of doesn’t do much but emit, well, words a bit of light.

I mean, read this explanation and tell me those who offered this as proof of his attention to the economy aren’t both tone deaf and just plain politically stupid:

His advisers described his attentiveness – noting, for example, that he discussed the economy with New York Mayor Michael R. Bloomberg (I) for 15 minutes before golfing – but got little traction.

Really? What in the freaking world has NY Mayor Michael Bloomberg got to do with anything to do with the economy. I mean, oh, goodie, he spent 15 minutes being "attentive" before they hit the links. That’ll fix everything. Oh, and what “traction” was he seeking?

In reality what happened was Obama was sold a bill of goods by his economic advisors about the effect of government stimulus.  Congress got a hold of the idea and larded it up with pork.  Result: spectacular FAIL.

They’re reduced to justifying the stimulus like this:

Many economists say Obama’s policies have been reasonably effective at pulling the nation back from recession. Last year’s stimulus package – now estimated to cost $814 billion – protected as many as 3.3 million jobs, according the independent Congressional Budget Office.

“Many” economists say his policies have been “reasonably effective” because some computer model says it may have “protected” – note the new word – “3.3 million jobs”?  Really?

Back to the “this ain’t rocket science” theme, but even if that’s true (and it’s very suspect) that’s about $250,000 deficit funded dollars per job.  And most of those, if I were to guess (oh, wait – “according to my model”) would be found in the non-productive government sector.  Result?  9.6% unemployment, no growth and no jobs.

So why, you ask at this late juncture, is he and his economic staff finally considering tax cuts?

Well, common sense says that the way to immediately impact spending and consumption is to give consumers more money with which to consume.  Make sense?  Yeah, it made sense 20 months ago too.  And there’s another reason that finally has seemed to penetrate their thinking:

All the talk about taxes—whether to raise them to address the deficit or cut them to stimulate the economy—may be having its own effect on growth. Allan Meltzer, an economics professor at Carnegie Mellon University, said the economy wouldn’t fully revive until Washington resolved uncertainty surrounding business costs, including taxes.

"Companies are cutting their expenditures and not hiring because they’re very uncertain" about these costs, he said.

Precisely.  Why in the world – as we’ve been saying for months here – would any business hire and expand in the face of this government made market uncertainty?

Meanwhile the political battle rages with the expected blame-game in full swing:

"Obviously it’s going to be hard to get anything done before the election, but it’s really important for him to try, and to make the case to the American people that he’s trying to do something and the Republicans aren’t letting him," said Steve Elmendorf, a Democratic strategist. "We are at the final moments here."

What the GOP isn’t “letting” them do is wildly throw another huge amount of money we don’t have at the problem.

David Axelrod piles on:

"We’ll continue to do everything we can, understanding that recovery will require persistent effort. There are no silver bullets," senior Obama adviser David Axelrod said in an interview Thursday. "At the same time, we have to make clear our ideas and theirs, and the fact that the Washington Republicans, having helped create this recession, have attempted to block our every effort to deal with it."

Yet the bar to passing any of this may not be “Washington Republicans”.  POLITICO reports:

But the administration will have a tough time selling nearly any package to some Democrats who increasingly blame the president and his ambitious legislative agenda for their own dismal prospects this November. And further states:

White House press secretary Robert Gibbs has repeatedly said the administration would go small-ball with any plans to boost the economy — and that the Democrat-controlled Congress had no appetite for costly, sweeping measures two months before what promises to be a difficult election cycle for the party. >

Emphasis mine, but you get the picture.  Democrats aren’t sure they want anything but if they do, whatever it is it has to work and work quickly.  Reality, however, is much more stark for the Democrats:

"Substantively, there is nothing they could do between now and Election Day that would have any measurable effect on the economy. Nothing," said the Brookings Institution’s William Galston, who was a domestic-policy adviser to President Bill Clinton.

Indeed.  As I continue to watch the economic three-ring circus this administration has created, I’m reminded of the words of one of my favorite funny men, Oliver Hardy: “Well, here’s another nice mess you’ve gotten [us] into."

Next up, the Three Stooges do ObamaCare.

~McQ

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A phone call to Republican Air Conditioner Service Company

“Hello, Republican Air Conditioner Service. How can I help you?”

“Hey, my air conditioner is almost completely gone. It uses ridiculous amounts of electricity, hardly cools at all, has long pipes running through the yard to neighbor’s houses, and it sounds like it’s about to blow up. I need you to fix it.”

“Do you have a current repair company you’ve been working with?”

“Yeah. The incompetent boobs at Democratic Air Conditioner Repair. I called them two years ago and they promised to fix it. It was pretty bad off then because it’s been getting progressively worse for a long time. After paying them to fix it, and watching them scramble around doing stuff for two years, it’s worse.”

“Fine, just accept us as your repair company, and we’ll get right on it.”

“Yeah, well, I’ve heard that before. What exactly are you going to do to fix it?”

“Well, we’ll clean it up. It will be nice and shiny.”

“I don’t care about that. I want it to work.”

“Ah, but we are specialists in cleaning out a Culture of Corrosion. We think a nice, shiny air conditioner makes everyone feel better about how it’s working.”

“Listen, I don’t care. What are you going to do to make it work?”

“We’ll replace the other guys. You’ll see all new trucks in your driveway.”

“You’re not getting the point. What are you going to do to fix my air conditioner?”

“Well, that will take a lot of study. We might have to increase the power consumption so it works better.”

“What?!? The power consumption is already more than I can afford! And I don’t see how more power is going to keep it from blowing up. In fact, I think feeding in more power is more likely to make it blow up!”

“Yes, well, you are simply not acquainted with the rules of Keynesian electrical power consumption. Trust me, we’ve been doing this for decades.”

“Yeah, I know. My air conditioner has been getting worse the whole time. Why can’t you just work off the basic laws of electrical physics?”

“That’s way too complex to discuss. Besides, all the best people in the air conditioner industry have agreed that Keynesian electrical power consumption principles really work, so you don’t need to bother your head about it. The real issue is that you need to switch to us to take care of your air conditioner. After all, you certainly don’t want those other guys, after what you’ve been through, do you?”

“No. But I want somebody who’s going to fix my air conditioner. And there are no other repair companies in the whole state.”

“Of course not. Why would you need more than two? That gives you a choice. Isn’t that enough?”

“Not when neither choice can get the job done!”

“Oh, trust us. We should definitely be your air conditioner company. Are you ready to switch to us?”

“Will be you be sending the same people that came the last time I used your company?”

“Sure. They’re trained air conditioner repair people. You want experienced people, don’t you?”

“No! I want competent people! I want people who will fix the problem!”

“Well, that’s us!”

“You didn’t fix it the last time I called you. I gave you years to do it, and you just made it worse. You didn’t fix anything, but you did add on more pipes to neighbors’ houses and an air-filter thingy I didn’t want and don’t need. That’s why I switched to the other guys, hoping they could do something about the stuff you messed up.”

“And see what that got you! Those guys are just awful. They’re out of touch, and they’ll never be able to fix anything. Why, I hear they added a stereo and a set of speakers to your air conditioner. Don’t they deserve to be thrown out in favor of us?”

“Wait, I thought you guys were good pals. Don’t you play golf with them all the time?”

“Sure. They’re our colleagues. Plus, we often take over repair jobs from them, and we even use them for subcontracting sometimes. So we have to stay on good terms with them. Besides, we’ve known them a long time. We went to air conditioner school with them. Of course, they chose to go with the company that distributes Left of Left of Center Air Conditioners, while we distribute Right of Left of Center Air Conditioners.”

“Yeah, well what exactly did you learn in air conditioner school?”

“Oh, the usual. Telephone sales techniques, like I’m using with you right now. How to select the best polish to make the air conditioner shiny. Fundamentals of Keynesian electrical power. How to drive the truck that we use to get to your house.”

“But did you take any courses on HOW TO FIX AIR CONDITIONERS?!?”

“We took courses on how to WORK ON air conditioners. And how to keep working on them forever. Because they need constant tinkering you know.”

“No, they don’t! They just need to work!”

“You clearly don’t understand the purpose of air conditioners.”

“I though they were to keep my house cool.”

“Well, nominally, yes, but that’s a small part of their purpose. They’re supposed to do lots of other things too, such as pump cool air through long, uninsulated pipes to neighbors who can’t afford the electricity to cool their houses.”

“That’s going to be me soon! Assuming this thing doesn’t blow up before then and kill me in the process!”

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Voters “for” GOP or “against” Democrats?

If Gallup is right about this poll, the GOP needs to understand much of the basis of its so-called” support, because it will be critical to their success in the next 2 years:

The Republicans’ lead in the congressional generic ballot over the past month may be due as much to voters’ rejecting the Democrats as embracing the Republicans. Among voters backing Republican candidates, 44% say their preference is "more a vote against the Democratic candidate," while 48% say it is "more a vote for the Republican candidate."

This is very important to understand, because, in my estimation, this is precisely the scenario that played out when Democrats took a majority in both houses of Congress and the Presidency.

Then the vote wasn’t so much a validation of the Democrats and their agenda as it was a rejection of all things Republican.  The majority of the nation was sick of Republicans and their agenda as much as anything.

In politics the pendulum swings.  Democrats were given a chance because the populace was unimpressed with what the GOP had done with its chance.  And, given the way the two parties have essentially ensured no real competition from a third party can ever really upset their chances, the only viable choice was Democrats.

It is one reason you see these “purges” within the parties going on influenced by the more radical elements of their movement – such as the Kossaks and “progressives” on the left, and the Tea Party on the right. 

In both cases, each movement has taken what is available and attempted to shape it in its own image (and focused on its own agenda).  This is a natural polarization driven by dissatisfaction with the status quo on both sides, obviously. 

As we’ve seen in the last 20 months, the “progressive” agenda has failed spectacularly.  Not in the amount and type of legislation they’ve managed to pass – when you have majorities like they had, it’s no surprise at all.  But in how the public has received those laws.  That’s because the left misread the election of 2008 as a mandate given by an electorate that they thought had embraced their “progressive” agenda.  As the polls tell us now, that wasn’t at all the case.  The proof of that is the mass movement of independents away from the Democrats and the rise of the Tea Parties.

The GOP faces the same dilemma.  It is going to win in November, but what is it going to win?  A mandate?  For what?  Answering those questions is akin to stepping through a minefield blindfolded.  What are Americans looking for in the coming Republican legislative wave?

If Republicans don’t have answers to that question and don’t realize that they’re getting as much the “anti-Democrat” vote as the “we want Republicans” vote, they’re in for a short tenure as a majority in the House.

Let me lay out a few things that I don’t think the people want:

1.  They don’t want endless partisan “investigations”.  I’ve seen reports that claim that one of the GOP priorities in the House will be all manner of these.  There are certainly instances where certain things should and must be investigated – but such investigations should be limited and also obviously issues in need of investigation.

2.  They don’t want just “no” as an answer to everything.  Look, there are definitely principled stands that must be taken concerning fiscal matter where the appropriate and only answer is “no”.  But there are plenty of things which need a “yes”.  Standing up and saying “no” to everything the administration advances only hands the Democrats a tool to use against the GOP in 2012.  The GOP must advance some sort of legislative agenda that is clear, limited and founded within the principles the party espouses about cutting spending, limiting government and being fiscally conservative.  Anything that the administration advances that fits these principles should be embraced.

3.  They don’t want endless politics.  I.e. the political theater.  My goodness, some of these people get more camera time than many Hollywood stars.  They need to shut up, do their job, and effectively tell their story at the appropriate time and in effective and generally understandable way.  They don’t have to have an opinion about everything everyday.  The more time they spend in front of a camera the more time they have to say something foolish and have that become the story of the day vs. discussions of issues that are actually important.  Take a break – enforce a little self-discipline – and stick with topics in which you may have some actual expertise.

If I read what I’m hearing and seeing out there, there is a sense among the general population that government – not just Democrats – has been headed in the wrong direction for quite some time.  If you follow the trends of the “is the country on the right track” polling, you know it hasn’t changed significantly since Democrats have taken power from the Republicans.

The conventional wisdom was that once the Democrats swept into power, all would be fine and we’d be on the right track.  That CW was, of course, pundit and media driven.  However the majority of Americans blew that out of the water fairly quickly.  But that finding supports the polling Gallup has above.  Republicans are going to get another chance because they’re the only viable choice left after voters kick out the Democrats – not because the voters are significantly in love with or necessarily excited about the GOP.

So, fair warning to Republicans – don’t misinterpret this coming vote as did Democrats in 2008.  It’s no mandate, it’s a “lesser of two evils” vote – unfortunately a common vote in all elections anymore.  Understand that and understand that the GOP is a getting another 2 year trial to see if they’ve learned their lessons.  Voters are angry, fearful and unsatisfied with the direction of the country.  Much of that is wrapped up in the size, scope and cost of government.  They understand that if they ran their household as the government runs its business, they’d be bankrupt, homeless and in the street.  They’re looking for some common sense in DC, a dial-back of the size and scope of government and budgets that reflect sanity, reduce the deficit and help unshackle their grandchildren from the financial slavery this present bunch is selling them into.

Do that and Republicans may get an extension in 2012 to continue their work.

~McQ

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The folly of green protectionism

Here’s a formula for you to study:

Green groups want less forestry in the developing world. Industry wants green protectionism to cut the volume of competitive imports. Unions want green protectionism to stop imports to ensure they can keep workers in high-paying jobs.

So using the environment as an excuse, we have these three groups colluding to further their own agendas. Call it “green protectionism”.

In a recent case it has been to keep toilet paper made in foreign countries out of Australia.

That’s right, toilet paper.

Can anyone now figure, based on that formula, what the missing part of the equation might be? The part that is necessary to make such collusion pay off?

Yes, government. Certainly green groups can want less forestry in the developing world, and industry can wish for a way to cut the volume of competitive imports. And unions always hope to ensure high paying jobs.

But only one entity can actually make all those wishes, wants and hopes come true. If government becomes involved it has the power to fulfill the wishes and hopes of these three disparate special interest groups.

That’s what happened in 2008 when two Australian toilet paper manufacturers, Kimberly Clark Australia and SCA Hygiene as well as the Construction Forestry, Mining and Energy Union (CFMEU) and the World Wildlife Fund essentially colluded to keep foreign manufactured toilet paper, primarily from Indonesia and China out of the country. Their ostensible complaint was those countries were “dumping” their product in Australia.

For a short time they succeeded in getting imports restricted by the Australian Customs Service, until, it seems, the ACS did a study to determine the validity of the complaint. Their findings were significant. The Australian Customs Service report calculated that the potential downward pressure of imports could be as high as 42 percent of the price.

In other words, the collusion would cost consumers in Australia 42% more because the competitive pressure that kept prices low would have been removed. In addition, a recent report commissioned by the Australian government found that “illegally logged material” – one of the prime reasons these groups claimed Australia should ban imports of foreign wood products – only comprised 0.32 percent of the materials coming into Australia. In other words, the threat was insignificant.

That’s Australia, but what about here? Well, we’re hearing the same sorts of rumblings concerning “green protectionism”.

Sadly these campaigns appear to be part of a spreading green protectionist disease, where industry, unions and green groups work together. In the United States the disease was brought to life by the Lacey Act, which imposes extra regulation on imported wood and wood products to certify their origin and make them less competitive.

The Lacey Act is actually an update of a 1900 law that banned the import of illegally caught wildlife. It now includes wood products (2008). And that means, since extra steps and cost are incurred by foreign manufacturers, that consumers are stuck with the increased cost.

While the reasons for protectionism may sound good on the surface – save the forests, higher wages, less competition to ensure jobs – it isn’t a good thing. If freedom is defined by the variety of choices, what protectionism does is limit those choices and impose an unofficial tax on consumers. They end up paying the cost of collusive action between government and special interests.

So, each time your government announces that it is doing you the favor of limiting the imports of this commodity or that, based on “green” concerns, hold on to your wallet. Whatever the government is protecting you from, you can rest assured that the price of the domestic variety is headed up, since the other product of government intrusion is limiting competition. Rule of thumb: restricting free trade is rarely a good thing. And the only entity that can do so is government. “Green” is just the newest color in an old and costly game – protectionism.

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