Questions and Observations

Free Markets, Free People

“Tone Deaf” Obama And Leadership

How does one pound on CEOs and their perks when the same person (who has just run up record deficits and signed a 410 billion pork bill) indulges himself in this sort of waste of the taxpayer’s money?

When you’re the president of the United States, only the best pizza will do – even if that means flying a chef 860 miles.

Chris Sommers, 33, jetted into Washington from St Louis, Missouri, on Thursday with a suitcase of dough, cheese and pans to to prepare food for the Obamas and their staff.

He had apparently been handpicked after the President had tasted his pizzas on the campaign trail last autumn.

I assume Fightin’ Joe Biden will be calling him out on this. And Al Gore will be lamenting the pizza with the huge carbon foot print.

This is what I mean when I smack this guy around for lack of leadership. This is a classic case study of how not to lead. He still doesn’t seem to realize that a real leader leads by example, not by decree.

~McQ

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What’s so wrong with free-lance wealth redistribution?

As a counterpoint to McQ’s post on the pirate incident, a humorist endeavors to predict the Obama administration’s response:

For too long, America has been too dismissive of the proud culture and invaluable contributions of the Pirate Community. Whether it is their pioneering work with prosthetics, husbandry of tropical birds or fanciful fashion sense, America owes a deep debt to Pirates.

The past eight years have shown a failure to appreciate the historic role of these noble seafarers. Instead of celebrating their entreprenuerial spirit and seeking to partner with them to meet common challenges, there have been times where America has shown arrogance and been dismissive, even derisive.

Finally, to all pirates listening to international broadcasts, shortwave services and ship-to-shore radio, let me say this:

Ahoy, me regret arr relationship has set sail in a scurvy manner. Arr people share many mutual ‘alues and concerns on t’ raging main. Perchance, could ye handsomely release the cap’n o’ the ship and I assure that no harm will come t’ ye or ye hearties.

Well, it’s no sillier than thinking you can solve a problem created by too much debt by going a whole lot further in debt.

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Health Care Reform And The Free Market

Ramesh Ponnuru writes one of the better op/eds discussing the push for “universal health care” I’ve seen.

The practical case is that uninsured people raise premiums for everyone else. But such cost shifting raises premiums by 1.7 percent at most, according to a 2008 study published in the journal Health Affairs. Reforms that increase the number of people with health insurance, while stopping short of universal coverage, would presumably make that small percentage even smaller.

The obvious way to take care of that is to directly insure that relatively small group instead of messing with the entire system.

What about portability and pre-existing conditions? As we’ve been saying here, for literally years, remove it from being employer based and you’ve taken care of both as long as a person keeps their payments current. And, to make it more affordable, remove state mandates. Ponnuru says precisely the same thing:

An alternative approach would be to make it easier for people to buy insurance that isn’t tied to their employment. The existing tax break for employer-provided insurance could be replaced with a tax credit that applies to insurance purchased either inside or outside the workplace. At the same time, state mandates that require insurers to cover certain conditions, which make it expensive to offer individual policies, could be removed.

More importantly, it is a free-market approach. As Ponnuru says:

These two reforms would address most people’s anxieties about the health care system. Insurance would be more affordable, especially for people who cannot get it through an employer, so the number of people with insurance would rise. Indeed, this would enable more than 20 million more Americans to get insurance, according to a model created by Steve Parente, a health economist at the University of Minnesota.

More important, people would own their insurance policies and thus be able to take them from job to job. They would no longer need to worry about losing their job and their insurance at the same time, or feel they need to stay with a job they dislike because they need the benefits.

There it is, the same solution we’ve been pushing at QandO pretty much since QandO has existed. It is a common sense solution which actually reduces government’s role, gives people choices and makes coverage more affordable for a larger number of people, portable and negates the concern for “pre-existing” conditions.

Which is precisely why government will reject such a remedy.

~McQ

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Bowing, Boasting And Bloviating

I‘ve pretty much avoided mention of the bowing incident – it’s a distraction from the more serious things going on. But then the White House says we shouldn’t believe what we saw and throws out a couple of the most ridiculous reasons for what the President did that I’ve heard (an “unnamed” White House source claims it was either an adjustment for a short king or he lost a contact – take your pick). My question? Why is the White House bringing this back up? It makes no sense.

Then there’s Joe Biden’s claim of lecturing George Bush. When will this guy figure out that such claims can be checked? There’s not a moment of a president’s tenure that isn’t recorded by someone. Yet Biden seems to think, for he can make stuff up to retroactively bolster his arguments and make himself seem both wise and prescient.

He’s neither. He’s a blowhard who’s rise to the position he’s in was based mostly on his perceived ability to cover a glaring weakness in foreign policy experience from which Barack Obama suffered. But he was not a guy who anyone in the previous administration sought out for advice or council on much of anything.

However both of these incidents are troubling. The first indicates an innate defensiveness within the White House. This is something that should have simply been ignored. It would bang around on the right side of the political sphere for a while and then fade. But to claim something which you can clearly see for yourself is not what you see is foolish. It erodes credibility. “Don’t believe your lying eyes, believe what we say”.

As for Biden, as Karl Rove said, he’s a serial exaggerator – which is a nice way of saying he’s telling a whopper. Biden has a tendency to make up anecdotes which make him sound good and the other guy look bad. It’s sort of like when you have a “I wish I’d have said that” moment. You didn’t say it, but had you said it, it would have been perfect for the moment. Biden tries to make those moments real and claim them for himself. Again, it’s a credibility problem. You can’t believe a thing the man says.

For such a media savvy bunch you’d think the White House would know to leave a story such as the bowing incident alone. And you’d think, by now, that Joe Biden would have realized that what he could skate by on as a Senator won’t be overlooked now that he’s the VP – that and the fact that he should know his claim of lecturing a president is fairly easily checked.

Amateur hour.

~McQ

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Silver Lining?

The big Econo-boys are weighing in on the state of the economy, and providing a consensus opinion on the coming economic recovery.  According to the Wall Street Journal:

Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won’t be until the second half of 2010 that the economy recovers enough to bring down unemployment.

Gross domestic product was predicted to contract in the first and second quarters of this year by 5.0% and 1.8%, respectively, on a seasonally adjusted annualized rate. A return to growth — a modest 0.4% — isn’t expected until the third quarter. In the fourth quarter of 2008, the most recent period for which data are available, the economy contracted 6.3%.

The outlook for employment isn’t quite as good, though.

Just 12% of the economists expect the unemployment rate to fall some time this year. More than a third of respondents expect the jobless rate to peak in the first half of 2010, while about half don’t see unemployment declining until the second half of 2010. By December of this year, the economists on average expect the unemployment rate to reach 9.5%, up from the 8.5% reported for March. They do see the rate of decline slowing, forecasting 2.6 million job losses in the next 12 months, compared with the 4.8 million jobs lost in the previous period.

I’m a bit more negative on the above.  As of today, weekly initial unemployment claims are still at 650,000 per week.  If that keeps up, we’ll continue to see 0.5% increases in unemployment on a monthly basis.  We might be at 9% by next month, nevermind December.

I’m also concerned about the implications of the rabid expansion of the monetary base over the last 7 months, during which it essentially doubled.  If that  impacts signifigantly on inflation by the end of the year, then we’ll be between a rock and a hard place with a weak economy, and signifigant inflation.  Any Fed moves to contract the monetary base will crater the economy, in much the same way that Paul Volcker’s Fed did in causing the back to back recession of 1981-1982.

There are still treacherous shoals to navigate for the economy before I begin to get bullish on economic growth again.

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By A Small Majority, Americans Think Capitalism Is Better Than Socialism

This should disturb a good number of you – it certainly did me. It shows you how effective the indoctrination of our youth has been. Don’t forget the radical students of 1969 are the tenured professors of ’09.  It also demonstrates something else just as disturbing that I’ll get too at the end of the post:

Only 53% of American adults believe capitalism is better than socialism.

The latest Rasmussen Reports national telephone survey found that 20% disagree and say socialism is better. Twenty-seven percent (27%) are not sure which is better.

Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided. Thirty-somethings are a bit more supportive of the free-enterprise approach with 49% for capitalism and 26% for socialism. Adults over 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.

Investors by a 5-to-1 margin choose capitalism. As for those who do not invest, 40% say capitalism is better while 25% prefer socialism.

As you’ll note, the older someone is, the more likely they are to understand what socialism is and how it is inferior to captialism. The under 30 crowd, with no wisdom and little practical experience outside of academia – not to mention having not yet completly traded their utopian fantasies for the best practical system which has been shown to work – have a large group who either believe socialism is better or just aren’t with it enough to have an opinion.

Once past 30, and having put a few years under their belt in the real world, suddenly the utopian scales begin to fall from their eyes and they have a bit of an epiphany. As for those over 40 being so strongly for capitalism, most of them remember the old USSR and how well socialism worked there.

As you might imagine, there’s an ideological divide as well:

There is a partisan gap as well. Republicans – by an 11-to-1 margin – favor capitalism. Democrats are much more closely divided: Just 39% say capitalism is better while 30% prefer socialism. As for those not affiliated with either major political party, 48% say capitalism is best, and 21% opt for socialism.

Compare the results above to a poll taken in December of 2008:

As the incoming Obama administration and the Democratic congressional leadership scramble for ways to right the U.S. economy, 70% of U.S. voters say a free market is better than one managed by the government.

Just 15% say a government-managed economy is best, according to a new Rasmussen Reports national telephone survey. Fifteen percent (15%) are undecided.

Question: In the intervening months, what system and what players has the Obama administration demonized?

Answer: Capitalism and capitalists.

Gee, I wonder why?

~McQ

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Immigration May Detract From Other Issues

President Obama, has decided that in addition to the health care, energy and education debates, he’ll also crank up the immigration debate:

He said then that comprehensive immigration legislation, including a plan to make legal status possible for an estimated 12 million illegal immigrants, would be a priority in his first year in office. Latino voters turned out strongly for Mr. Obama in the election.

“He intends to start the debate this year,” Ms. Muñoz said.

12 million is the low-side estimate. Others estimate the total to be as high as 20 million.

Here is the argument he can plan on seeing prominently pushed from the other side as it concerns legal status for illegal immigrants:

“It just doesn’t seem rational that any political leader would say, let’s give millions of foreign workers permanent access to U.S. jobs when we have millions of Americans looking for jobs,” said Roy Beck, executive director of NumbersUSA, a group that favors reduced immigration. Mr. Beck predicted that Mr. Obama would face “an explosion” if he proceeded this year.

“It’s going to be, ‘You’re letting them keep that job, when I could have that job,’ ” he said.

The argument that the jobs immigrants hold are jobs Americans won’t do rings even more hollow in a recession.

Additionally, starting this emotional issue up now, while he’s trying to push the other issues I mentioned is going to diffuse focus and may cost him critical support on health care, energy or education.

This is not a smart political move. But it is one I welcome.

~McQ

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Ooops

Pirates, operating off the coast of Somalia, have grabbed an American flagged ship. Although they’re rare, it’s just not a good idea to grab American flagged ships because it is likely to bring a response that for which the pirates aren’t looking.   I.e., a crew that fights back, and every available American military vessel in the area.

As it turns out the pirates grabbed the Masersk Alabama off the eastern coast of Somalia yesterday. That’s below the Horn of Africa since the Gulf of Aden, their previous hunting grounds, has been pretty effectively policed by TF-151 – a coalition of 12 navies.

It is assumed, since the attack on the Alabama occurred 350 miles off the coast of Somalia, that the pirates came from a “mother ship”, a larger ship from which they launch their attacks in the small, swift skiffs they use.

The pirates grabbed the Alabama early in the morning but by afternoon, the crew had retaken the ship. All except the captain who the pirates somehow kept in their custody. Apparently they negotiated with the crew for a pirate the crew had captured and agreed to an exchange. But the pirates didn’t keep their side of the bargain and kept the captain while the crew gave up the pirate.

The pirates and captain are now, apparently sitting in a lifeboat near the ship, negotiating with the crew. On site are the destroyer USS Bainbridge and some air assets.

My guess is this will go on a couple more days with the military content to let it continue as long as they don’t threaten to kill the captain or try to move out of the area. In the meantime they’ll gather as much intel as they can and formulate a plan to retake the captive.

Lesson to pirates? When they see that flag with a blue field full of stars and red and white stripes below it – let it pass. Not worth the effort. They don’t play patsy like the others do.

Oh – and too those trying to make this a presidential level “crisis”, it’s not unless he injects himself into it (and I don’t think he will). If the Pentagon needs guidance or permission for something, they’ll ask. Otherwise they should keep the administration informed and be left to do their job (here’s an interesting rundown of the last US ships taken in international waters and the reaction of three different presidents).

However, one has to wonder if the seizure of a US flagged ship might not increase calls for this:

Retired U.S. Ambassador Robert Oakley, who was special envoy to Somalia in the 1990s, said U.S. special operations forces have drawn up detailed plans to attack piracy groups where they live on land, but are awaiting orders from the Obama national security team.

“Our special operations people have been itching to clean them up. So far, no one has let them,” Oakley told the Daily News.

The veteran diplomat, who also was ambassador to Pakistan, said teams of Army Delta Force or Navy SEALs “could take care of the pirates in 72 hours” if given the order to strike.

“They have plans on the table but are waiting for the green light,” Oakley said.

A Special Operations Command spokesman at McDill Air Force Base in Tampa, Fla., declined comment.

A U.S. intelligence official, though dismissive of the pirates having any terrorism links, said “there is a more intense focus” now on these criminal gangs.

We’ll see.  What concerns me about this is the administration may see this as a relatively cheap opportunity to demonstrate its willingness to use military force to protect American interests.  Piracy, while a pain in the rear, is not such a threat that it requires that level of a response (of the 33,000 ships that transit the Gulf of Aden, less that 1% are hijacked).

~McQ

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