Thursday, October 30, 2008

The Real Barack Obama

People often wonder who is the real Obama: the Machiavellian power-luster who only uses liberal-statist ideas and people to advance himself, or the sincere altruist who wants to use power to help the needy. In the end, does it matter?

Last night, Barack Obama delivered his manifesto. His 30-minute video focused on the plights of several families around the country and his recommendations for helping them and others like them. All of them, no doubt not by accident, live in states and within demographics that Obama badly needs to win and where he has had the toughest slog starting as far back as the primaries.

Still, the ad provided enough evidence that, whether he is a lying manipulator or whether he is completely sincere, the 2008 Democratic nominee for President is the most dangerous man to run for the office on that ticket in several generations, perhaps ever.

Given that the list of his predecessors includes such modern liberals as Wilson, FDR, LBJ, Carter, and Gore, that is a large claim. Here's the argument to support it...


It's bad if Obama is a cynical liar whose real goal is simply to acquire personal power.

The world economy, which follows the U.S., is in a parlous state. There is an ongoing jihad against the West. History shows that such men are often too busy protecting their flanks and making themselves look good to actually address any problems. Experience also shows that such men have an unscratchable itch to acquire still more power. His desire to push for yet more Federal control over health care, education, and the economy in general isn't a matter of speculation. He has said as much many times, and repeated it very clearly last night.

You don't have to be an advocate of pure laissez-faire economics, as I am, to believe that increased government control of those sectors can only lead to worsening conditions. A fair assessment of history will suffice. Look at all the knees in the curve toward greater control — the Wilson terms, the Hoover/FDR era, the LBJ administration, the Carter presidency. All pushed harmful economic legislation. Each was a foreign policy disaster. One needn't be a consistent advocate of individual freedom, like me, to believe that autonomy and respect for individual rights would erode still further under Obama.
  • We have Wilson to thank for the FTC and the Federal Reserve, and his Attorney General was diligent in suppressing political dissent.

  • Hoover strong-armed businesses into higher wages and ordered troops into action against American citizens.

  • There were such stringent controls by the FDR administration during WWII that the black market was big business and he expanded public works programs like no one in U.S. history, not to mention appointing environmentalists like Douglas to the Supreme Court.

  • LBJ created Medicare/Medicaid and employed a military draft to fight a war having nothing to do with American self-interest.

  • Carter's cowardly inaction bequeathed us the jihad we're fight today, with theocratic Iran at its core. He also gave us the Department of Energy and contributed heavily to producing several years of stagflation and high unemployment.
[None of this is meant to imply that Republican Presidents in general have been friendly toward freedom or good for the economy. Nixon imposed wage and price controls and founded the EPA. Bush Sr. refrained from taking out Saddam at the end of the Gulf War, leading to the Iraq War. Bush Jr. pushed for the prescription medicine entitlement, cozied up to CAIR and did nothing about Iran, and has semi-nationalized the financial markets. On all that, another day.]

Yet, with all these disastrous policies to learn from — ones which made economic conditions worse and decreased liberty — Obama advocates still more control. Perhaps that bespeakes an unquenchable lust for power. Or, it could signal something far worse. It's just possible that Barack Obama is a true believer in his vision for America.

What is that vision?


Forget for a moment all of Obama's questionable alliances and mentors, past and present. Set aside, just for now, his early Communist education by Frank Davis and Saul Alinsky. Never mind for the nonce his willingness to work with Socialists/ex-terrorists William Ayers and Bernadine Dohrn, his relationship with Chicago criminal Tony Rezko or PLO spokesman Rashid Khalidi, and his adoration of the Marxist racist, Rev. Jeremiah Wright.

After all, there are much more powerful and equally fervent Anti(s), Statists, and gangsters in Illinois and Washington D.C. where Obama has spent his mature adult years. Chicago Mayor Daley is much more of a gangster than Tony Rezko. Ted Kennedy has done more to achieve socialized medicine than the Reverend Jeremiah Wright ever could. Joseph Biden has harmed the judicial system more than William Ayers ever will. Barney Frank impoverished more Americans by far than Saul Alinsky, Frank Davis, and the entire leadership of ACORN combined.

No, we don't need to look at Obama's alliances old or new to understand what he believes or wants. The half-hour program broadcast last night is by itself enough to reveal what a sincere Obama is like.

The ad presented one hard luck story after the next: an elderly couple struggling to stay afloat amid rising health care costs and declining health and income, a single mother and "educator" working two jobs while attending classes at night, a blue-collar couple once employed at Ford laid off or nearly so.

Let us assume for the sake of argument that Obama is genuinely focused on helping these people. After all, he was a community organizer. He did do legal work for ACORN. He was the Chairman of the CAC and allocated educational funds to 'the needy'.

Clearly, this is a man whose prime focus in life is on the sick, the poor, the ill-educated, the 'powerless'. To Barack Obama, America is a giant hospital emergency room and he has striven hard to rise from bed pan orderly to triage nurse to physician and is now seeking to be chief administrator.

What Senator Obama, who has asked many questions of Americans over the past 20 months, has obviously never asked himself is: why should we care about any of these people?

No doubt to be ill and lack health insurance is a worrisome situation — for that person, and her friends and family. To have a low-paying job and live in squalor is unpleasant, to say the least. To see the Ford plant that has employed three generations of your family disappear must be gut-wrenching.

But, outside those who know them and perhaps as far out as their local citizens, is there anyone who should care about the problems of those people? Everyone I've ever met has his own set of goals and the inevitable, often enormous, challenges to achieve them. A healthy-souled person is focused on achievement and overcoming the challenges themselves.

The Barack Obamas of the world focus on the disease, the poverty, the lack of personal ability or resources to overcome the challenges. As Ayn Rand wrote so insightfully in The Fountainhead: "Ellsworth, you are a maggot. You feed on sores." He replied: "Then I shall never starve." Barack Obama seems to thrive on his diet.

But such people are never satisfied to assist others themselves. They endlessly exhort others to assist, too, on the premise that the individuals and those nearest them are inadequate to the task. "We are all in this together," they perpetually whine. To Obama, it is the cripples in life that should command our attention. As he often says: "We are our brother's keeper."

I have news for Mr. Obama. I am nobody's keeper, nor do I ask them to be mine. I got my own troubles, brother.

For those whose value system is such that they feel compelled to focus their life on helping others, so be it. I don't regard it as particularly noble, but far be it from me to stand in their way. But when that mentality turns to government to compel my assistance, then I'm no longer sanguine about his plans.

Such infectious plans always lead to selective economic harm, sacrificing the productive to the parasites, until the host either counteracts the virus or dies. It leads to large-scale violation of individual rights — forcibly redistributing money, curtailing individual choice, and pitting neighbor against neighbor in an endless low-level civil war.

Those plans — whether it involves welfare disguised as tax cuts, increased Federal intrusion into health care, subsidizing 'alternative' energy, or any other of the endless stream of now-common modern liberal schemes — should be opposed with all possible vigor.

Beyond the clearly predictable disastrous practical effects, there are more fundamental reasons. That approach to government is based on a false view of life and a heinous ethical principle. Life (in America, at least) is not a hospital ward, and we should not be forced to carry another's bed pan. Let Obama go tend to the downtrodden in Detroit or Africa, if that's his desire. Leave the rest of us free to get on with living.

Summing Up

So, Barack Obama might be as some paint him — a cynical, power-hungry con-artist of the first order. Or, he could be a garden-variety altruist, driven by his parasite's philosophy to use the strong arm of government to enslave the able to care for the needy. In the final analysis, it really doesn't matter. Either way, he'll be a serious threat to every productive person in America if he gets elected.

Update 11/3/2008 Out of his own mouth:
So this idea, that somehow everybody is just on their own and shouldn’t be concerned about other people who are coming up behind them, that’s the kind of attitude that I want to end when I am president.
I'm not concerned with every random stranger, and no one has any good reason to be. But if, contra reason, Obama is so concerned the last organization and method he should want to employ is the Federal government. Their track record ain't so good. Given how little he spends of his own money on charity, I'm doubtful about his sincerity. But, giving him the benefit of the doubt, he should seek instead to join a recognized private charity.

Wednesday, October 29, 2008

FDR the Second

Barack Obama has recently cozied up to several of FDR's policies as prescriptions for curing what ails us.

It's safe to assume that Obama is probably saying what he actually believes when that will help his campaign. And, since FDR is generally (though with zero justification) thought to have been a great President, espousing his ideas is safe for Obama.

Unfortunately for the rest of us, those policies were a disaster 70 years ago. They'll be a disaster if they're implemented now. Despite common accolades like "bold, persistent experimentation" and "cured the Depression," the fact is that FDR's approach not only lengthened and deepened the Depression, it was immoral from the outset.

Raising taxes on those in upper income brackets in the teeth of an economic downturn isn't just impractical, it's wrong. Taking from the 'rich' to give to the not-so-rich is wrong. The money belongs to those individuals, not to the State to distribute according to the warped value system of a chameleon who succeeds in fooling a plurality of voters in swing states.

It's no accident, of course, that the policy also happens not to lead to prosperity, even for the not-so-rich. It's Economics 99 (the idea doesn't even qualify as Econ 101) that if you reduce the amount of capital available for investment, fewer goods and services will get created and unemployment will rise. That doesn't help anybody, least of all the middle class.

"Spreading the wealth" is bad policy and bad ethics.

It's also immoral to create public works programs, another vote-getting ploy Obama has recently employed. Obama declared last weekend before an adoring crowd in Colorado:
I'll put 2 million more Americans to work rebuilding roads and bridges, setting up a new electricity grid so renewable energy can get to people.
This, too, is just another form of welfare, since clearly those who already have viable employment don't need a public works job. It's another form of coercively taking private capital to buy votes or approval. It's also the lowest form of engineering: social engineering. His goal is to create the false impression of a beneficent State who supplies all things good for 'the people'.

It doesn't occur to FDR the Second to question whether it's appropriate for the head of the Executive Branch to act like the head of Fluor Engineering. I don't recall that Presidential authority being enumerated in the Constitution, but we know by now what Mr. Obama thinks of that document. He chafes at its "essential constraints."

Ethics aside for a moment, again, it's no accident that such programs invariably do more harm than good economically, i.e. they're impractical. True, some get employment who might not otherwise, or at least at a higher wage than they might in the private sector. But if a local area needs a road, a bridge, or a new organization that produces energy infrastructure, the free market could create one — when it's economically viable — if it were free to do so.

After all, governments feel impelled to act only when the market hasn't, proving by that fact alone that the project is economically unwise (absent being legally constrained). Of course, that principle can't be accepted by those who think the government is better at determining what is economically wise than the free market.

There are various words for such people. They might be called unreconstructed socialists. They might be economic naifs. But whatever description fits best, there is one thing they all most certainly are: wrong. The evidence on that score is overwhelming, recent nattering that "capitalism has failed" to the contrary.

So, if the practicality argument fails, they have to fall back on moral ones. "It may not be profitable, but it's fair." Oh? Fair to whom? To those whose money has been taken to fund an enterprise they didn't choose to invest in or whose goods or services they may not have wanted enough to pay for?

The only way to accept that argument is to believe that an Obama administration would have superior morals. Then, the person espousing the view is no longer called economically foolish; he's called willfully delusional. Enough more years of that and we'll all be called something else: slaves.

Monday, October 27, 2008

The Two Candidates: Judicial Appointments

One aspect of the Presidential campaign has gotten very little attention: judicial appointments. Perhaps it's because the courts seem remote from most people, the subject a little too esoteric. Most likely that's because most voters are unaware just how much impact the courts have on their individual daily lives.

The Supreme Court gets the most attention, no doubt (though that amount is hardly overwhelming), but the President appoints Federal judges as well, and, like SCOTUS, their appointments are for life. Apart from the effect Federal judges have on precedent and other legal matters, the positions are often a stepping stone to the Supreme Court itself. Justice Ginsburg served (13 years) on the U.S. Court of Appeals in D.C., as did Justices Thomas, Scalia, Roberts, and others before them. Justice Breyer served 14 years on the First Circuit.

There has been no end of Supreme Court decisions that do, indeed, have a considerable impact on the daily lives of everyone in America. Roe v. Wade is one of the most well-known in recent times, followed perhaps by the decision that gave Bush the election in 2000, or Kelo v New London. There have been dozens more. The Supreme Court has heard cases on the income tax, the right to bear arms, the legality of sodomy, private property and eminent domain, and dozens of other issues that affect Americans on all points of the political compass.

So, to my mind, one of the most critical aspects of choosing a President this time around is to consider what sort of court appointments he will probably make. Over the next four years there may be one and possibly two appointments made. Justice Stevens is 88; Justice Ginsburg is 75. Whoever wins the 2008 contest has a good chance (at least now, before we know his actions) of serving two terms. That span increases the odds of two additional seats coming open. Justice Scalia is 72; Justice Breyer is 70.

Who is elected this November could be as significant in terms of judicial appointments as when FDR packed the court in the late 1930s. There are numerous cases revolving around FDR's socialist policies that were decided by the courts then. Early on the Court largely opposed his New Deal plans, for example invalidating the National Industrial Recovery Act of 1933 in May of 1935.

With the Congress set to gain a filibuster-proof majority of Democrats this winter, there is only one branch left to act as a counterbalance. Of course, the Supreme Court and the other Federal Courts being staffed as they are is no great comfort. But the situation could still be far worse than it is now.

We know, since they said so explicitly, the type of judges that Obama and McCain would not appoint. At the Civil Forum at Saddleback Church last August, the moderator asked them point blank.
REV. WARREN: Which existing Supreme Court justice would you not have nominated?

SEN. OBAMA: I would not have nominated Clarence Thomas. (Applause.) I don't think that he was a strong enough jurist or legal thinker at the time for that elevation, setting aside the fact that I profoundly disagree with his interpretations of a lot of the Constitution. I would not nominate Justice Scalia, although I don't think there's any doubt about his intellectual brilliance, because he and I just disagree.
There you have it. Obama acknowledges Scalia's brilliance, but wouldn't nominate him because he disagrees with his philosophy. Thomas, he claims wasn't experienced enough (that criteria apparently doesn't apply to the Executive Branch), and he disagrees with his views on the Constitution. Thomas is widely regarded as the most 'libertarian' (I would argue, Classical Liberal) justice on the court.

And Senator McCain's choices?
REV. WARREN: Which existing Supreme Court justices would you not have nominated?

SEN. MCCAIN: With all due respect, Justice Ginsberg, Justice Breyer, Justice Souter, and Justice Stevens.

REV. WARREN: Why? Tell me why.

SEN. MCCAIN: ... This nomination should be based on the criteria of proven record, of strictly adhering to the Constitution of the United States of America and not legislating from the bench.
Whom does he prefer? "Justices Alito and Roberts are two of my most recent favorites."

None of these justices are my favorites, but I'm not on the ballot. Anyway, what does it say about their respective selection criteria?

In the case of McCain, we can read it right off the quote above: Strict adherence to the Constitution. And what is Obama's? As with everything this wily candidate says, you have to dig. But there are lots of hints.

In a 2001 discussion on the Chicago PBS station, Obama had this to say about the Warren Court (universally considered to be liberal and 'activist'):
If you look at the victories and failures of the civil rights movement and its litigation strategy in the court. I think where it succeeded was to invest formal rights in previously dispossessed people, so that now I would have the right to vote. I would now be able to sit at the lunch counter and order as long as I could pay for it I’d be o.k. But, the Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society. [emphasis added]

To that extent, as radical as I think people try to characterize the Warren Court, it wasn’t that radical. It didn’t break free from the essential constraints that were placed by the Founding Fathers in the Constitution, at least as it's been interpreted and Warren Court interpreted in the same way, that generally the Constitution is a charter of negative liberties. Says what the states can’t do to you. Says what the Federal government can’t do to you, but doesn’t say what the Federal government or State government must do on your behalf... [emphasis added]
It doesn't get any clearer than that with Barack Obama.

What does that say about Obama's judicial philosophy? Even that he has thoughtfully provided in more detail, in a recent interview with the Detroit Free Press.
DFP: You voted against confirming both Justice Alito and Chief Justice Roberts (for the U.S. Supreme Court). You said you want justices who are passionate. ... You taught constitutional law for 10 years, so I'm wondering if you can tell us, outside the context of the current court, what justices would you use as models for your pick?

Obama: Well, it depends on how far you go back. I mean, Justice (John) Marshall was pretty good ... but those were some different times. There were a lot of justices on the Warren Court who were heroes of mine ... Warren himself, Brennan, (Thurgood) Marshall. But that doesn't necessarily mean that I think their judicial philosophy is appropriate for today.

Generally, the court is institutionally conservative. And what I mean by that is, it's not that often that the court gets out way ahead of public opinion. The Warren Court was one of those moments when, because of the particular challenge of segregation, they needed to break out of conventional wisdom because the political process didn't give an avenue for minorities and African Americans to exercise their political power to solve their problems. So the court had to step in and break that logjam.

I'm not sure that you need that. In fact, I would be troubled if you had that same kind of activism in circumstances today. ... So when I think about the kinds of judges who are needed today, it goes back to the point I was making about common sense and pragmatism as opposed to ideology.

I think that Justice Souter, who was a Republican appointee, Justice Breyer, a Democratic appointee, are very sensible judges. They take a look at the facts and they try to figure out: How does the Constitution apply to these facts? They [his kind of judges] believe in fidelity to the text of the Constitution, but they also think you have to look at what is going on around you and not just ignore real life. [emphasis added]

That, I think is the kind of justice that I'm looking for -- somebody who respects the law, doesn't think that they should be making law ... but also has a sense of what's happening in the real world and recognizes that one of the roles of the courts is to protect people who don't have a voice.

That's the special role of that institution. The vulnerable, the minority, the outcast, the person with the unpopular idea, the journalist who is shaking things up. That's inherently the role of the court. And if somebody doesn't appreciate that role, then I don't think they are going to make a very good justice.
Let's revisit one sentence: "They believe in fidelity to the text of the Constitution, but they also think you have to look at what is going on around you and not just ignore real life."

Translation: If the Constitution doesn't permit the kind of social engineering the Justices think is suitable (and Obama would like to see), why they can just go right ahead and override it. Exaggeration?

Consider a portion of the first quote: "Says what the Federal government can’t do to you, but doesn’t say what the Federal government or State government must do on your behalf..."

Worse, review this: "I mean, Justice (John) Marshall was pretty good ... but those were some different times."

Translation: There are no fixed principles. The Justices can (and should) make it up as they go along, with the overarching goal of achieving the desired social engineering outcome.

If you doubt that, read Justice Breyer's book Active Liberty (the man whom Obama names favorably). In it, he says:
Why should courts try to answer difficult federalism questions on the basis of logical deduction from text or precedent alone? Why not ask about the consequences of decision-making on the active liberty that federalism seeks to further?
What is he seeking to further? Obama might well be channeling Breyer when he said in the third 2008 Presidential debate
"...the most important thing in any judge is their capacity to provide fairness and justice to the American people." And "I will look for those judges who have an outstanding judicial record, who have the intellect, and who hopefully have a sense of what real-world folks are going through."
"Going through"? Such as? He made his meaning (for once) surprisingly clear when he added:
"I think that it's important for judges to understand that if a woman is out there trying to raise a family, trying to support her family, and is being treated unfairly, then the court has to stand up, if nobody else will. And that's the kind of judge that I want."
That is what is known as legislating from the bench for the purpose of social engineering, the very thing McCain disdained in the Civil Forum last August. This is in stark contrast to the view of Montesquieu (quoted in an excellent article by Rep. Tom Feeney (R-Florida):
"Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator. Were it joined to the executive power, the judge might behave with all the violence of an oppressor."
As Northwestern law professor Steven Calabresi put it in a Wall Street Journal editorial:
Nothing less than the very idea of liberty and the rule of law are at stake in this election. We should not let Mr. Obama replace justice with empathy in our nation's courtrooms.
McCain v Obama. You be the judge.

Saturday, October 25, 2008

Melanie Phillips on Barack Obama

Quote of the Day

I haven't run across a column before by Melanie Phillips, a UK columnist for the Daily Mail. This one struck me as the most accurate, concise summary to date of Barack Obama and the current election out of the over 1 million words I've digested this past year.
You have to pinch yourself – a Marxisant [sic] radical who all his life has been mentored by, sat at the feet of, worshiped with, befriended, endorsed the philosophy of, funded and been in turn funded, politically promoted and supported by a nexus comprising black power anti-white racists, Jew-haters, revolutionary Marxists, unrepentant former terrorists and Chicago mobsters, is on the verge of becoming President of the United States. And apparently it’s considered impolite to say so.
I'll be reading a lot more Melanie Phillips in the future. I hope I won't be reading much about Barack Obama in the future.

I have to add, though, that it isn't myself I want to pinch so much. I'm more inclined to want to pinch the heads of the millions of Americans who are lined up to vote for him.

Sure, Barack Obama is worse than radioactive virus-laden puke. But who has made him the leading contender for the office of President of the United States? About half the American electorate who are apparently either too lazy to read widely available material, or actually want socialism, or who are simply so disgusted (rightly so) with the Republican administration and Congress of the last 6-8 years that they have deluded themselves into believing that anything would be better.

Frankly, I'm half expecting civil war within the next 20 years if things continue as they have been.

Thursday, October 23, 2008

Robin Hood Economics, The Moral Dimension

There's a type of evil that has no name. It's clearly represented by a recent statement by Congressman Barney Frank (D-MA, wouldn't you know):
I think at this point, there needs to be a focus on an immediate increase in spending and I think this is a time when deficit fear has to take a second seat. I do think this is a time for a kind of very important dose of Keynesianism. I believe later on there should be tax increases. Speaking personally, I think there are a lot of very rich people out there whom we can tax at a point down the road and recover some of this money.
At a period in our history when government spending has nearly doubled in just over 10 years (from $1.6T in '96 to a projected $3.1T for 2009), and thereby severely hindered the economy, this is beyond stupid. It's evil. No educated adult — and Frank is a Harvard law grad so whatever else he may be, he is no dummy — can innocently make an error of this enormity.

Huge Federal Government spending is a major evil for a half dozen reasons.
  • All the money taken by taxes is taken by force, an evil large enough to damn the practice from the outset. Raising the money through inflation is worse, since it amounts to fraud.

  • Spending encourages Federal debt, which burdens future taxpayers with unasked-for programs and also has to be repaid with interest, adding further to the burden. That borrowing distorts market interest rates, making it more difficult for productive enterprises to fund operations and advances.

  • Over 40% goes to Social Security and Medicare, two major Robin Hood programs that rob from the rich to give to the 'poor'. Here the term poor is used loosely, since SS in particular steals from everyone up to a point (which rises often) and gives back a portion on retirement (at least until it goes bankrupt 40 years from now). But the original intent has been retained and is one of the prime reasons that reducing or altering it has always been a third rail of politics. No one dares say that there should be no retirement 'safety net' provided by the government.

  • Government spending also funds a thousand other evil programs, enabling the innumerable harms done by the EPA, the Department of Education, et al.
But the worst aspect of all that taxing — and the aspect most clearly brought out by Frank's statement — goes beyond the immediate harm it does to the general economy. It is that such actions are a deliberate attempt to cripple the rich in order to cripple them.

Frank and his ilk use 'the poor' and other politically useful demographic groups to get away with their schemes. But the programs they spend the money on — when they aren't mere sops to ease their conscience — are a way of punishing those who made a lot of money. On the most generous interpretation, one could say he was indifferent to the injustice done to the productive who supply the money — the top 1% pay 60% of the taxes — which might even be worse.

Unlike many defenders of capitalism, I have no romanticized view of rich people in general. Not those in the real world outside literature, at any rate.

Some of them deserve every penny they made and then some. Men like Henry Clay Frick (early president of Carnegie Steel), Henry Ford, and Robert Noyce (founder of Intel, inventor of the integrated circuit) revolutionized entire industries. They also, by most accounts, were men not only of great vision, courage, and independent thought, but stellar human beings in general. They could never be properly repaid for all the good they've done for the rest of us.

Others, too many others, are not the sort of people you would want over to dinner. They represent a significant reason that creeps like Frank can get away with their bash-the-rich rhetoric. When the average person sees, time after time, up close and personal, how big an asshole is the 'rich guy' from the VP of the department on up, it leaves an impression.

But, decent or jerk, so long as they make their money through voluntary exchange with others and commit no fraud, they have a right to every penny. The government has a right to none.

The desire to rob these men — not merely to coercively fund one inefficiently run Federal charity after another, but to bring them down because they rose — this is the evil with no name.

Philosophically, it's a species of egalitarianism. But that evil creed is broader and this is more specific. Advocates of egalitarianism decry any difference in intelligence, ability, wealth, or any other aspect that creates a hierarchy with some on a higher step than others.

The closest description was probably given by Rand when she declared it "the hatred of the good for being good." But that, too, is a little too broad. It applies to all manner of despising, envying, or otherwise being disturbed by a person of virtue, simply in virtue of his being virtuous.

(Yes, it's often difficult for decent individuals to imagine that such people exist. It strikes them as an exaggeration at best. But, being objective, one can't escape seeing that there are many such people, certainly far too many in politics.)

Here, the emphasis of the evil-doers is on removing any financial superiority from anyone possessing it, on the grounds that no one has a right to be rich when others are not, regardless of how they got that way. In all likelihood, vermin like Barney Frank also resent individuals with profound intelligence, stellar engineering creativity, or dozens more forms of superior ability. But asserting that would be going beyond the present evidence and I could never take enough interest in a loathsome politician to verify the bet.

So, this particular form of evil may have to go without a name until someone comes up with something more accurate. In the meantime, it pays to be on the lookout for it, and to shun anyone who exhibits it. Would that the voters of Massachusetts had been so particular the past 30 years. We'll soon see whether the voters this November 4th will make the same mistake vis-à-vis his brother in spirit, Mr. Barack "Spread the Wealth" Obama.

Tuesday, October 21, 2008

Connections, Diagnosing Contemporary Society

Culture today is infected with a virus. And just like many viral diseases, the symptoms can be all over the map, making it difficult to diagnose the underlying problem.

The difficulty is even greater in this case because the disease has no name, even though the symptoms are widely recognized by people with no education or training whatever. The man in the street, on all points of the political compass, is fully familiar with the symptoms. Sometimes he even glimpses the underlying disease. Some may embrace it; others are repelled. But everyone who isn't completely brain dead knows the temperature.

To give an example, take the movie critic who praises an obscure 1941 film noir piece like Moon Tide with Ida Lupino — a film about two highly dysfunctional wharf rats having a drunken love affair in a dilapidated fish bait shack. That quasi-intellectual praised it, not on the basis that it's a dramatic, well-made depiction of how low humans can sink if they're not careful, but because "it's bizarre."

The odds are about 90-10 that the film critic is also an Obama supporter. Yet, what has an interest in old movies about losers got to do with a man and a campaign that is about as far from losing right now as one can have nightmares over?

Consider another example. Those on the far left of the political spectrum absolutely drool over Africa. It's their favorite country, at least the parts that are wholly diseased in every sense of the word. (The few healthy parts, they ignore.) They worry about the genocide in Darfur, yet ignore jihadist incursions in Somalia.

The Lefties are intensely interested in helping the diseased and downtrodden there, but are largely indifferent to similarly distressed people in Basque, so their compassion rings hollow. These same concerned citizens are the most vocal proponents of environmentalism. But what has genocide and health crises to do with clean air and a changing climate?

Or, still one more example, a longish one.

Consider people who think that Oprah Winfrey is a literary critic of unsurpassed acuity. They will happily investigate (and often buy) anything she recommends, such as the — thanks in part to her — best-selling "A New Earth," by Eckhart Tolle.

For those blissfully unfamiliar with this tripe, the book is a standard mish-mash of 70s New Age nonsense, a derivative of that era's Eastern mysticism as it became popular in America during that period. [Blurb from the book jacket: "In A New Earth Eckhart shows how transcending our ego-based state of consciousness is not only essential to personal happiness, but also the key to ending conflict and suffering throughout the world." The book was first published in 2005.]

These same fans — of both Oprah and the book — form a demographic encompassing housewives, university professors, TV actors, and dozens more groups. They eagerly campaign for Barack Obama, endure icy cold mornings to watch 25-mile Breast Cancer Awareness jogging marathons in person, and think a Japanese statue of a teenage boy twirling a lasso made of semen ejected from his tumescent member probably is worth $15 million. Or, at least, they find no objection to the work or the price tag, even if it isn't their particular cup of, er, tea. [Warning: Link not safe for work. I just couldn't make this stuff up if I tried.]

Yet what could that book, Obama's politics, and that statue have in common? What links all these seemingly disparate phenomenon?

At first glance, the average conservative — or anyone of any social or political persuasion who still hasn't completely lost his mind — would just declare: "Well, all you're describing is the now-too-familiar standard liberal, or a caricature of one."

Well, first of all, I'm not making any of these examples up, so there's no caricature involved. There not only are such people, there are a whole lot of them. About 10% of the adult population in America, at least. More than 20 million people is hardly an esoteric splinter group.

More importantly, one still has to ask the central question: "Ok, fine. They're liberals. But what has their social outlook or voting preference got to do with all those other things? Or, stronger still, what has any one of them to do with any of the others?"

In an important sense, the answer is: nothing.

What they have in common doesn't become clear until you ask not what binds them together, but what are they all a reaction against. The answer is: life. Or, more accurately, anything and everything that makes human flourishing possible — reason, egoism, individual rights, and the pursuit of material, intellectual, and emotional well-being.

The group of people I've been describing are the Anti(s).

Of course, they don't accept this evaluation. They argue that reason destroys human relationships, or the ego is the source of brutality and war, or that 'too much' freedom leads to indifference to the downtrodden and the dominance of rich, evil men, etc. But the evidence that all this puke is destructive is overwhelming and obvious, nonetheless. The more honest Anti(s) not only admit this, they celebrate it.

[Note: Many use the term "nihilist" to describe them. I don't, since that word has a somewhat different meaning. Nihilism, in one form, is the doctrine that objective values do not exist. The two are related, but they're not the same thing. Hence, there being no word to describe what I mean as I said above, I had to invent one. More on nihilism another day.]

None of this is new, of course. These characters — such as that shyster pseudo-sculptor who takes in rich bubbleheads willing to pay $15 really big ones for something worse than trash, or the (apparently) sincere yet insane author of that execrable book — are only the latest incarnation of creatures who have been walking the land of the once-free since the early 19th century. It was during that period that the U.S. saw the rise of dozens of irrationalist cults. The '60s didn't invent the thing, it just made it commercially popular with the masses.

But new or not, this philosophy and its adherents are the chief villains responsible for all the different forms of destruction we see today — in the arts, in education, in politics, and in life in general. It and they are poisoning everything not firmly protected by a healthy philosophical shield. It's past time their influence came to an end.

I'm not suggesting there's anything particularly deep or insightful about this analysis. I just think it's a good idea to have a name — even a bad one — for the thing one wants to fight. I admit, being anti-Anti sounds a little silly, but the phrase "pro-life" had already been co-opted.

Anyway, the important thing is to identify instances of Anti, expose their nature, and mock them mercilessly, then present a positive alternative. The hope is that, over time, the result will be fewer of the first and more of the second. Considering how fast and how far things have retrogressed in the past 40 years, the opposite is a little too scary to contemplate.

After the election, I plan to write a lot more on the subject. But, then, come to think of it, writing about the Presidential campaign is already an example of fighting the Anti and proposing something better.

Monday, October 20, 2008

Bernanke Recommends More Economic Insanity

Fed Chairman Ben Bernanke has just recommended more of the economic madness that has so-drastically harmed the nation.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by Congress at this juncture seems appropriate," Bernanke told the House Budget Committee.
In trying to explain why he thinks this will help, it's hard to know whether Bernanke is too thoroughly imbued with Keynesian economic theory or just plain insane. Lest I be accused of exaggeration, I point out that the fundamental characteristic of insanity is a cognitive break with reality so severe that the person can't distinguish reality from fantasy.

There is considerable reality by which to judge whether such a plan is feasible as a method of curing recession and preventing depression. It's not as if Federal 'stimulus' hasn't been tried before, after all. Hoover tried it. FDR tried it in a larger way than any President before him. LBJ tried it and Bush has tried it on a scale larger than anyone before him. In fact, in some way or another, the Feds have been trying it for almost 100 years.

All such attempts have not only failed to solve the problem of an economic downturn, they've only made it worse. It doesn't take a background in economics to equal that of the eminent Professor Bernanke's to see why it must be so. Simple common sense will do.

Government has no money of its own. All it gets, it gets from the citizens, either by way of taxes or by creating money out of thin air.

The first method proportionally reduces the amount private citizens have to spend and invest — the very people the plan is supposed to help and who are proportionally impoverished by the plan. Remember, the top 5% of income earners pay 60% of the taxes. The bottom 50% pay only 3%.

The second method is even worse, since it destroys the money supply. It reduces the value of dollars already held and distorts economic planning. If you think your dollars are going to be worth less in the future, you're more likely to spend them now than later.

But spending does not create wealth, it consumes it. Can you make yourself wealthy by spending half your savings now? No. Obviously not. But, you have a chance to increase it (at least somewhat, given the ridiculously low interest rates the Fed insists on championing), if you save it and invest it — unless the government reduces the value of your savings/investment by inflation faster than you can earn a return. If you can't create more wealth for yourself that way, there's no reason to believe the government can create more wealth for others following the same principle.

There is a third alternative. He may, in fact, be aiming at transferring wealth from one party to another.
"If Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," Bernanke said. "Such actions might be particularly effective at promoting economic growth and job creation."
As Mises explains it in Chapter 31 of Human Action (quoted by Peter Creswell on Not PC):
If the government taxes the citizens or borrows from them, it does not add anything to what the Keynesians call the aggregate amount of spending. It restricts the private citizen's power to consume or to invest to the same extent that it increases its own. If, however, the government resorts to the cherished inflationary methods of financing, it makes things worse, not better. It may thus delay for a short time the outbreak of the slump. But when the unavoidable payoff does come, the crisis is the heavier the longer the government has postponed it.
So, if he transfers it to the wealthy, so they can invest more or faster, he is simply removing their own wealth and giving it back to them (minus the government's cut, of course). Or, he can steal from everyone and transfer it to his preferred group. But he can only do that one of two ways, either by taxing (which he doesn't control, but can aid Congress to do by appearing as a leading economic expert), or by the printing press. In any case, it's easy to see that this third alternative reduces to the ones discussed above.

It simply beggars belief that Bernanke could fail to know these simple economic truths. Hence, it must be the case that he has either been brainwashed out of recognizing them by Keynesian theory — which employs sophistical arguments to 'prove' that governments can create wealth out of thin air — or he is simply insane.

But whatever his motives, or psychological status, he is radically mistaken if he believes that a government fiscal stimulus will, in general, create jobs and promote economic growth. It never has and never will. It will only continue to distort investment and exacerbate the problems we now face as a result of all the previous attempts.

This enlarged resurgence of the idea that large-scale economic problems can be solved by huge amounts of government spending is simply insane, even if its advocates are not. Or, it's bad theory, theory that will lead to harmful effects the opposite of their intentions. Outside the fantasy world of Keynesians like Bernanke, there's very little practical difference.

Sunday, October 19, 2008

Good Mood Day

I have on tap several highly critical essays, including:

Why the Pro-Freedom Forces Are Losing
Robin Hood Economics
Hitler's Reincarnation

and others.

I'm just in too good a mood today to delve into them. After completing a major book project, emailing invoice #200 in two years for one major client, getting some very pleasant feedback from my film review on Atlasphere, and — far from least — listening to Ella Fitzgerald sing Cole Porter, this is no day for negative thoughts.

(Buddy Bregman really is one seriously overlooked swing arranger, as he eminently proves on such numbers as Anything Goes, Too Darn Hot, Always True to You Darlin', From This Moment On, and the finest recorded version ever of Begin the Beguine. He definitely belongs in the pantheon with Billy May and Nelson Riddle. Ok, that's as close as I'll get to a critical comment today.)

I'll be crabby some other time. Hope you all are having just as fine a day.

Friday, October 17, 2008

The Two Candidates, From a Moral Perspective: John McCain

I'm convinced that John McCain loves America. Apart from his having said so every week for a year on the campaign trail, he fought hard to push the surge in Iraq, which saved us untold grief. Unfortunately, he loves America like a man loves his invalid wife. He would do anything to cure her illness, while having no clue how to do so.

Maybe he's getting a lot of mixed advice, and doesn't know which doctor to believe. Maybe his physicians studied at European universities during the Middle Ages and all they know is more leeches and blood letting. It's hard to tell because his prescriptions have been all over the map.

Mostly, it consists of railing against the "greed on Wall Street" with the occasional recognition that somehow our economic woes had something to do with Fannie and Freddie running amok. Here and there he sometimes still talks about Afghanistan and the need to fight the jihadis. Not a word about Iran for months. Once in a while, he throws in some scary jabber about the need to "deal with climate change."

Underlying all this is... nothing. No stable plan, no basic principles, no understanding of how this connects to that. And that is the essential problem with John McCain, from a moral perspective. He certainly does cling to a certain view of life. Everyone has one. But as for intellectual self-guidance, and therefore any consistent recommendations for guiding the country, nada.

Still, defying all expectations, a ray of sunshine sometimes peeks out through his fog. Recognizing, however vaguely, that "spreading the wealth" is no way to make anyone wealthy is a good thing. Having the perspicacity to look into the eyes of Vlad the Impaler Putin and seeing "K-G-B" is also good. Displaying the courage to sing "Bomb bomb bomb, bomb bomb Iran," is outstanding... if only he had the courage and perspicacity to be singing it now when we really need it.

But Obama is right about one thing (and only one thing, so far as I've ever heard), McCain is erratic. Yet even on that one thing Obama isn't right in the way he thinks he is. For, he was referring to McCain's policies and the Republican's main randomness lies deeper down. He's ethically erratic.

Sometimes he recognizes (though he can't formulate it this way) that, indeed, greed is good. When a man wants to invest to achieve a better material standard of living, he is driven by greed, and thank god for that. Without greed, life would be stagnant.

Sadly, McCain can't distinguish between that type of greed and the sort that makes a man willing to put his wife into a wheelchair, in order to impress himself in the boardroom. I have known many such men personally and McCain is right, they are revolting because they lack any sense of honor.

Once in a rare while, he rises to the level displayed at the third Presidential debate. On that occasion he came very close to declaring that freedom is moral. He argued for school vouchers, a weak but good step in the direction of obsoleting the public school system, not just to improve education but because choice is good. He advocated lowering taxes, not merely as a practical fix for the current economic mess, but because people have a right to their income. He said the country needs less government, not more, because people should be free.

Tragically, he didn't say any of this as clearly as I just have. But, even so, his basic theme was clear, however sporadically. For once. If he did, consistently, he would be 10 points ahead. But then, inconsistency — the hallmark of the pragmatist — is the root problem in McCain's case.

If in the coming days leading up to the election he can continue to hammer that theme, he might just have a chance to win. The odds are still about 50-50 in all the key states and I remain convinced that most voters in Colorado, Ohio, etc. currently embracing socialism are doing so without understanding what they will really get. If they did, Obama wouldn't merely lose, he'd be run out of the country.

Whether the Senator from Arizona can attain, even for two weeks, the moral clarity to do so remains to be seen. Which is pretty much what one always is forced to say about John McCain.

Thursday, October 16, 2008

The Two Candidates, From a Moral Perspective: Barack Obama

One of the most telling aspects of Barack Obama hasn't yet been mentioned: his moral authoritarianism.

If anyone had any doubts that he is as 'liberal' as he pretends not to be, consider his moral view of other people. Like all of his kind, (since this is one good way to actually distinguish them), he is convinced that he (a) unerringly knows better than individuals themselves what is good for them and "society as a whole", (b) is perfectly willing to initiate force to achieve the ends he prescribes.

This was brought out clearly in his now-famous conversation with Joe the Plumber and the discussion about it that followed at the Presidential debate. He blithely offered that Joe's money actually belonged, though he didn't say it this way, to 'society', free for Barack Obama as future Emperor of the Federal Government to spread as he thought best, Joe's wishes aside. This is how a moral authoritarian acts.

There are people on all points of the political compass. But far from some of the common criteria for delineating "the Left" from "the Right" — such as being pro-choice or anti-abortion, embracing religion or inclining to atheism, or preferring a latte to a Budweiser — the two points listed above are enough to capture the essence of the moral authoritarian, at least as it concerns his view of the proper role of government.

There are, after all, plenty of genuine liberals who believe in judging a person by his individual values and actions, rather than his inclusion in a certain group. There are sincere conservatives who support the public school system. There are religious Democrats and secular Republicans. There are conservatives who believe in government-sponsored charity and so-called liberals who support U.S. war efforts in the Middle East. None of these positions is definitive.

In some cases, these apparent paradoxes result from lack of consistency. But, in the main, a person's fundamental philosophy drives them to adopt a whole range of views that cluster together. It's no accident that faux liberals who support social welfare programs are also strong believers in environmentalism, though the two subjects would seem to have little in common. It's not a coincidence that pro-war conservatives are anti-'make it up as you go along to accord with your moral outlook, the Constitution be damned'- judges.

These two (moral dogmatism and, hence, government intrusion) are some of the fundamental criteria for deciding what constitutes a person's 'political essence'. It is an outgrowth of his overall view of the proper relationship of individuals in society, and therefore what is the proper purpose of governments, what actions it ought or ought not to take.

By these criteria it's easy to see how some 'conservatives' opposed to genetics research are essentially similar to rabid environmentalists, however much they may differ on some issues. Both are happy to initiate force to get others to comply with their ethical choices, even in the absence of violations of anyone's rights, simply because their dogmatic moral outlook demands it.

From this perspective, it's easy to identify and classify Barack Obama, no matter how many mirrors he holds up against the sun to blind those observing him. Quite simply, he believes a socialist government should control personal decisions because he sincerely believes, as sincerely as he can hold any belief, that it knows best and is justified in using political power to achieve those ends because it has that knowledge.

But, since government in the real world is not a disembodied entity, this necessarily evolves at once to King Obama and his parliament deciding for everyone else, or so he hopes. Scratch a moral authoritarian's thin skin and you will at once draw the diseased blood of a totalitarian.

It is no surprise, then, that he can with all sincerity and no sense of shame whatever tell a plumber from Ohio that "things work best when the wealth is spread around."

Never mind that wealth is not a collective object, owned by society as a whole, but the property of some individual. Never mind, therefore, that it is inappropriate for Federal representatives to confiscate it and decide how it will be dispensed. Never mind that the only way for that all-knowing body to carry out its decisions, though it is willing to compromise (for a while) and submit to democratic elections, is by initiating force against innocent victims. Never mind the irrevocable laws of economics that teach us that removing wealth from the wealthy will necessarily soon impoverish everyone.

If money has to be taken from some and given to others by the government acting as intermediary, that's alright — because (in Obama's view) this is what justice demands. More, he knows this beyond a doubt and is fine using the government's power to effect the ends he sees as just.

It's this all-fired certainty without any basis in fact, indeed contrary to it, this smugness in their infallible moral powers that conservatives are groping to identify when they call such people elitist. But there is nothing elite about wanting to dictate the choices of other people. It is, rather, the lowest form of being.

That describes to a T the 2008 Democratic candidate for President, the moral authoritarian, Barack Obama.

[Next time: John McCain.]

Wednesday, October 15, 2008

Non-Drowning Bankers Rescued Against Their Will

More evidence emerges that, as I thought, even those banks who did not want the government's largesse from the $250 billion bailout were pressured into accepting it.
The chairman of JPMorgan Chase, Jamie Dimon, was receptive, saying he thought the deal looked pretty good once he ran the numbers through his head. The chairman of Wells Fargo, Richard Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages, and did not need a bailout, according to people briefed on the meeting.

To give you an idea of the size, setting aside for a moment the immorality, of this coercion, consider:

All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks.
Why, you might reasonably ask, would the government twist executive arms when they know that several around the table had no need of the money? For the simple reason that the dictators are concerned that if the stable banks didn't accept the money, the weak banks would be revealed for what they are: weak. That, they fear, would upset their plans.

There is a scene in Atlas Shrugged in which the hero, John Galt, is being forced to appear in front of a TV audience to create the illusion he is going along with the Fascist government's unworkable plans.

In a scene nearly as dramatic, but much more frightening for being real,

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry Paulson Jr. said they must sign it before they left.

In a brilliant dramatic choice, Rand has her hero merely step aside a few inches at the right moment, revealing the gun in his back for all the world to see. By doing so, the author eloquently conveys the idea that reality can not be faked and that to overthrow evil all that is necessary is to expose it.

By contrast, the Chairman of the Bank of America said,

"I don't think we need to be talking about this a whole lot more," Lewis said, according to a person briefed on the meeting. "We all know that we are going to sign."

A pity the bankers around the table with Paulson and Bernanke lacked Galt's understanding and so displayed none of his courage.

At base, there are two basic moral failings represented by this latest assault on freedom.

Paulson and Bernanke, and the Supreme Court who are silently allowing them to get away with this blatantly unconstitutional act, are substituting force for choice. Any plan they conceive, the economic czars believe, is justified on the grounds that the government has to "do something" even if that something involves — surpassing irony and moving at light speed to ludicrous — forcing money on men who don't want it.

No plan not involving severe government control — many of which that have been suggested by such well-credential economists as Jeffrey Miron of Harvard — is even being considered. It's my way or the highway, according to Paulson and Bernanke, and on that highway lies the hangman's gallows.

The other failing is a hidebound pragmatism that considers all economic principles, not to mention moral ones, as dispensable in an 'emergency'.

"I've always said to everyone that ever worked for me, if you get too dug in on a position, the facts change, and you don't change to adapt to the facts, you will never be successful," [Paulson] said in the interview.
To such a man, reality is infinitely flexible because it consists only of what he can force other men to do. There are no iron-clad causal relations in economic affairs to a mind like this. There is only an endless Heraclitean flux of facts, constantly streaming past his unfocused eyes. It is this pragmatist philosophy, this rejection of reason and substitution of force that is the terra not-so-firma at the base of all the tottering foundation stones of the current crisis.

Tuesday, October 14, 2008

Bush on the Bernanke Plan

George Bush today confirmed a $250 billion plan by the US government to buy shares directly in the nation's leading banks.

The President said the drastic steps were "not intended to take over the free market but to preserve it."

[Shaking head...] That's exactly what the Republicans have been saying for generations. (Democrats, too, often. FDR claimed to be attempting to preserve capitalism. Contemporary Democrats are, in an odd quirk of fate, more honest.) From the anti-trust laws to Sarbanes-Oxley to the present horrific endeavors, always the 'solution' is more government interference.

It is with a cry from the heart, then, that I have to agree with Zingales and others that we must save capitalism from the (faux) capitalists.

History Repeats, With Depressing Results

For a man who is supposed to be an expert on the Great Depression, Ben Bernanke appears well on his way to repeating the same mistakes made then. I don't claim to possess the professor's credentials, but clearly he and I have drawn very different lessons from that debacle.
If the Federal Reserve had an inflationist attitude during the boom, it was just as ready to try to cure the depression by inflating further.

It stepped in immediately to expand credit and bolster shaky financial positions. In an act unprecedented in its history, the Federal Reserve moved in during the week of the crash-the final week of October-and in that brief period added almost $300 million to the reserves of the nation's banks.

During that week, the Federal Reserve doubled its holdings of government securities, adding over $150 million to reserves, and it discounted about $200 million more for member banks.[From Rothbard's America's Great Depression, Chapter 8.]
Why was this program of spending the taxpayers money undertaken?

"This enormous expansion was generated to prevent liquidation on the stock market..." (ibid)

That sounds familiar. Stock market down 2,000 points in a week or so. Bernanke announces plan. Stock market rallies (for a few hours).
By mid-November, the great stock break was over, and the market, falsely stimulated by artificial credit, began to move upward again. Standard and Poor's stock price monthly averages, which had climbed from 56 in mid-1921 to 238 in September 1929-more than quadrupling-fell to 160 in November, a one-third drop in the course of two months. By the end of the year, stock prices had risen by several points.

The stock market emergency over, bank reserves declined to their pre-crash levels. In two weeks-from November 13, when stock prices hit bottom, to November 27-member bank reserves declined by about $275 millions, or to almost exactly the level existing just before the crash.

The decline did not come in securities, which increased in the Federal Reserve portfolio from $293 million on October 30 to $326 million a month later-a rise of $33 million. Discounts fell by about $80 million, and acceptances by another $80 million, while money in circulation embarked on its seasonal increase, rising by $70 million. Thus, from the end of October to the end of November, controlled reserves were reduced by $111 million (including miscellaneous factors not itemized here); uncontrolled reserves, which were more important, fell by $165 million. (ibid) [emphasis added]
The long-term result?
Instead of going through a healthy and rapid liquidation of unsound positions, the economy was fated to be continually bolstered by governmental measures that could only prolong its diseased state. (ibid)
Time for Chairman Bernanke to go back to school.

Bernanke Takes Over

Unlike the perennially cryptic Greenspan, who had an unmatched mastery of making statements no one could decipher, Bernanke has no problem making himself understood. In a Wall Street Journal column today, he said:
Our strategy will continue to evolve and be refined, and we will adapt to new developments and the inevitable setbacks.
Of that, I've no doubt. He's been winging it for over a year now. I don't expect that to end with this latest insane plan. Moving seamlessly from Fascism to open Socialism, he and Paulson plan to take a direct equity stake in several banks, to the tune of about $250 billion.

Oddly, the ones he has chosen as showpieces are those that — according to all evidence to date — need it the least: Bank of America, Wells Fargo, Goldman Sachs, and several others. B of A swallowed Merrill Lynch with no apparent problem (after buying Countrywide earlier in the year), and Wells Fargo had enough cash to enter a bidding war (which it won) with Citicorp over Wachovia.
Treasury will buy $25 billion in preferred stock in Bank of America — including Merrill Lynch — as well as J.P. Morgan and Citigroup; between $20 billion and $25 billion in Wells Fargo; $10 billion in Goldman and Morgan Stanley; $3 billion in Bank of New York Mellon; and about $2 billion in State Street.
In fact, if the report is to be believed (always a needed qualifier in these times), the banks themselves don't particularly want the money. Rather, they're being pressured by the Feds to accept the deal. What gives? Clearly, there is something we're not being told.

Still, what we are being told is pretty appalling.
The Congress and the administration acted at a time when the great majority of financial institutions, though stressed by highly volatile and difficult market conditions, remain capable of fulfilling their critical function of providing new credit for our economy.
Whoa. Haven't they been maintaining for weeks now that the 'emergency measures' were vital because credit markets were frozen? Now, he's saying the banks "remain capable of fulfilling their critical function."

Nevertheless, he intends to act.

"[T]he tools are in place to respond effectively and with force." I'm sure he didn't intend to use the word "force" in the sense of "coercion." Yet, that is what it is. Plain, naked, government coercion — against the taxpayers funding the debacle (either through explicit taxes or, worse, debasing the currency via inflation) against their express will and against the banks who don't want to participate.

Not content with forcing this plan on the American people, we are expected to take comfort owing to his confidence in the use of force.
These tools will bolster the capital of our financial institutions, restore confidence in their debt, and offer increased access to funding for businesses.
Yeah, uh huh. Pardon me if I don't hold my breath.

Monday, October 13, 2008

Obama on 'Wealth' Redistribution

And the hits just keep on comin'...

As if the present situation in the country weren't depressing enough, we have this gem from Mr. Obama:
Plumber to Obama: “Your new tax plan is going to tax me more. Isn’t it?”

Obama: “It’s not that I want to punish your success, I just want to make sure that everybody that is behind you, that they have a chance for success too. I think that when you spread the wealth around, it’s good for everybody.”
This guy has a 50-50 chance of becoming President in January? Could someone please explain that to me? I mean, I know America has dipped somewhat since 1790, but has it come to this?

Enough questions. Time for some answers.

[Via: Michelle Malkin]

Sunday, October 12, 2008

The Feds Change the Plan

Well, well, well, that plan was short lived.
Two weeks after persuading Congress to let it spend $700 billion to buy distressed mortgage-backed securities, the Bush administration has put its original idea on the back burner and is trying to come up with a new plan over the next several days.

The new approach, which would have the government inject capital directly into the nation's banks, is one that administration officials had publicly opposed until just a few days ago.
Clueless doesn't begin to describe the clowns that can't seem to get it out of their heads that governments don't possess magical powers. Aided and abetted by pundits across the political spectrum, they still think the Administration can do something the free market can't.

It's impossible to tell when, or if, they will give it up. Following Bush's Herbert Hoover act, Barack Obama has already promised a whole slew of FDR-style fixes. Some of us know how that turned out.

Frankly, I'd rather the American people not have to learn that lesson anew. The Feds seem determined to see that they do.

Saturday, October 11, 2008

The Naked Emperors — Honorary Member: Warren Buffett

I've finished the series, and he is not in government, but I couldn't let pass some comments by Warren Buffett that make him an honorary member of the Naked Emperors club.

In a recent Investor's Business Daily editorial, Buffett is quoted as saying:
"The market isn't so good at making sure that the wealth that's produced is being distributed fairly or wisely," Buffett told Obama. "Those of us who've benefited most from the market should pay a bigger share."
Buffett is no doubt a genius at investing. No one makes $50 billion by luck and he didn't suck at the government teat to do it. But as a moral philosopher, he's an idiot. Who the hell is he to decide for others where they ought to spend their money? Worse, who is he to decide it's ok for the Feds to take it?

If Buffett feels compelled to give half his wealth to Bill Gates's wife so she can feel noble by providing diseased Africans with medicine to keep them alive three months longer, that's his right. He has no right to ask Congress to compel the rest of us to go along.

Not to mention, as is usual with so-called liberals, he's even wrong on the facts. The top 5% of income earners already pay over 60% of the income taxes in this country*.

Lest anyone think that's because they make such a huge amount of money, note that the ranking starts at about $153,000 annual income. I wouldn't mind having that income, but I've got news for the 'soak the rich' faux liberals. Anyone who lives in a major urban area and makes $153,000 a year ain't exactly livin' large, especially if that's combined family income. Even where I live (rural Northern Idaho), it wouldn't enable you to buy a house around the lake.

Since income taxes should be abolished anyway, though, let me not rely on any sort of "they pay their fair share" argument.

If they paid none at all, that would be the situation of greatest practical advantage to me and everyone else. Even as a purely practical matter, the less that's coercively taken from the wealthy by the government the more there is to invest in wealth-creating enterprises.

However, that is all morally irrelevant. Despite Buffett's snickering comment to the contrary it is their money. Note, I did say above "income earners." If they earned it, they have a right to dispose of it as they please. Otherwise, it is mere pretense to called it theirs. Justice requires that those who earned their income be left free to do with it what they choose, and justice consists of granting what is deserved.

That's the trouble with fellows who think like Buffett and his friends, though. They never think rich people deserve their money because they don't believe they earned their money. There is always the suggestion, now breaking out virulently into the open in the current election campaigns, that the money was obtained illegitimately.

Well, in this country, a person is (at least in theory) innocent until proven guilty. So far, the only individuals of whom we have evidence that fraud has taken place are certain Congressmen like Frank and Dodd and their benefactors at Freddie and Fannie, et al, who decided to cook the books. If someone has specific charges about a specific private citizen, he's welcome to bring them to the attention of the authorities.

Still, if Buffett wants to give more of his money to the government, he's free to do so. They do accept voluntary contributions. If instead he prefers to piss it down onto the rat-infested huts of Africa, that's his privilege. Far be if from me to attempt to dictate to Warren Buffett where he has to spend his money. I not-so-politely demand he allow me the same choice. Schmuck.

(*An amount, I note, over $600 billion dollars in 2006 alone. I also note that the total for that year was over a trillion dollars. If Buffett wants to wag his finger at someone, let it be the spendthrifts in Congress who, with the country over $10 trillion in debt, want still more.)

Friday, October 10, 2008

The Naked Emperors — The Mystery Guest

I've written over the past two weeks about some of the actors who bear varying degrees of guilt for the present situation and/or who are or will soon be charged with taking action to cure it. But there is one central character who bears more of both guilt and responsibility that I've not yet mentioned: the American people.

Naturally, it's difficult, and to some it may seem unfair, to lay blame on those now suffering for actions taken by the government, who are most immediately responsible for the mess. But it is inescapable that in a democracy and a relatively free country still, the voting public gets the government it votes in.

I recognize, of course, that the majority of each state elects its representatives. As such, there are a great many — almost all of my meager audience, I'm sure — who have protested every step of the way against the increasing encroachment on their freedom.

Yet, only a small percentage pay much attention to the daily events that will foreseeably affect their long-term futures. That, for example, is precisely how a creature like Barney Frank can get away with dismissing any concerns about the growing problems with Freddie Mac and Fannie Mae that were seen as far back as 2003.

Fewer still exert much effort to educate themselves about the more fundamental ideas that so strongly influences those daily events. The names of Mises and Hazlitt are unknown to the majority. Very few have read the Constitution carefully or spent time understanding its meaning. They pay little attention to Supreme Court arguments. The study of history is considered a pastime for dullards or those with an interest in battles.

The result, predictably, is that America gets the government it allows, in the main. Also predictably, apart from the tiny population of Objectivists, a few of the more rational libertarians, and an unknown percentage of conservatives, the electorate trusts political power more than individual freedom, especially when times are uncertain. There are, in the midst of this crisis caused by government policies, dozens of conservative pundits, for example, still pushing for the Feds to come to the rescue.

And those exceptional individuals bear some of the blame for having singly failed to persuade their fellow citizens not to vote all of us into ever-encroaching slavery. It is not enough to try. Our future depends on succeeding.

It has now been 50 years since the second renaissance of the freedom movement. Yet in all that time, despite some bright signs along the way and, indeed, some pointing to a better future, the trend has been a bad mixture. Those who see farther than the rest have not succeeded in explaining what they see in ways that compel others to agree.

Only one major piece of legislation birthed during the first three and a half decades of the 20th century has been significantly modified. Tax rates have been lowered here and there, sometimes to great effect. But none of the basic ground rules of the mixed economy has changed for the better. As a result, little of the renewed acceleration of the 1970s toward a Fascist-variety socialism has been slowed. The limited pushback of the 1980s and 1990s has now stalled or reversed.

Can the situation be much improved? Yes. But it will require a radical re-thinking of the methods used to date to advance individual freedom. It will require somehow reaching those who have not yet been reached, to change their minds, or form young ones better.

From where those new, more effective methods will come to persuade others that freedom is good and practical, I do not yet know. But find them we must, or circumstances will get much worse. Ideas drive history, over the long haul. But, it is not enough to just have the right ideas, they must be communicated correctly, and accepted by those exposed to them.

How to accomplish that remains one of the most important outstanding questions of our day. There are many, many people who are aware of what it takes to sustain a free country. Several of them are well-known in the public sphere. But it has not proved to be enough. Not yet, anyway.

It will soon have to be enough, or we face a dire future.

We stand at the precipice, as Germany did in 1932, and it is too soon to tell whether the country will draw back — as Reagan managed to help it do in the 1980s — and let a relatively free market dig our way out of the disaster, or goose-step ahead into the abyss, or, perhaps, even jump over into a still brighter future of more freedom than we have ever known.

Clearly, if we rely chiefly on either of the two presidential candidates, decreasing freedom is all we can expect, albeit with the younger one rushing us faster toward Fascist slavery than the other.

Neither is Hitler, to be sure, and Americans are still far from the Reich-worshiping Germans of the Weimar Republic. But the people are concerned and uncertain, unsure how to proceed. A populace who has not yet adequately learned how to value and protect freedom is all but destined to lose it, given the current climate.

Fortunately, "all but" is not "certainly" and we have several advantages the Germans never did.

Wealth is one. Despite the government doing its very best over the past year and more to impoverish everyone equally, America still has a huge quantity of capital. The amounts of money in the bond markets, money market funds, etc. — not to mention gold, silver, property, and thousands of other assets — is staggering. To even the well-to-do of the 1920s, the wealth of average Americans today would appear astounding.

History, is another. Contemporary Americans exist in a culture long-imbued with the idea that freedom is good. They are now facing an onslaught of pundits across the political spectrum, with rare exceptions, trying very hard to persuade them that it is impractical, even harmful. But there is ample historical evidence to the contrary, if people will but look with independent eyes.

Philosophy is yet one more, and the most important. The ideas needed to sustain and even grow a free society are now more developed and better articulated than at any time in history. Locke and a handful of other great thinkers before him gave birth to the philosophy we now use to defend our rights. Those following him have honed it. Mises and other pro-free market economists provided numerous superb practical arguments. Rand generated a moral code that undergirds and combines with them to create an unassailable position.

Yet, there is another stage of intellectual evolution required to create the new revolution we need to protect and expand freedom. A new understanding of how to advocate and apply those ideas has yet to be fully sculpted. The second tier of idea creators and communicators — intellectual activists, columnists, bloggers, and others — have not yet fully discovered how to reach the general populace in terms that will show them how their well-being depends on those ideas.

That task, difficult as it may be, is paramount. Just as one example, we have seen yet again just recently that a determined minority in Congress can kill a bad bill. But those temporarily brave souls couldn't sustain their opposition in the face of millions of voices tugging them in two directions.

On the one hand, many of them no doubt genuinely believed that the bill was dubious at best, at worst a disaster in the making. Yet, they caved. A slew of pork drove some. But, I remain of the view that the majority of those who wanted to vote no honestly believed (as honest as a politician can believe) that the bill was a practical necessity and that its benefits outweighed the dangers. Showing them a better way is mandatory.

But teaching them that freedom is precious, and is most needed when times are toughest, requires first teaching the larger group of voters to whom they are beholden. People often cry out for leadership in Congress, but politicians are almost never leaders, almost always followers.

Leadership, a concept of mixed-value itself since those who need it are more likely to follow power-lusters, must come from those who can generate and communicate effectively new ideas.

Notice, for example, how Newt Gingrich breathed into life two recent phenomena: the Drill Here, Drill Now movement and what opposition to the bailout bill there initially was, however briefly. While not an intellectual leader I'd support in general, he did succeed in lighting a fire that blazed for a while and created beneficial heat.

Someone, or some multiple individuals, who can succeed in sparking a similar conflagration for freedom more broadly, will be imperative if the Republic is to survive this latest crisis.

Freedom works. Freedom is good; freedom creates prosperity; freedom is essential to having a just society. But convincing the majority of our fellow citizens of that — indeed, explaining what that actually means in practice — and neutralizing those who know it already but want to kill freedom precisely because of its virtues, remains an incomplete program.

Tuesday, October 7, 2008

Feds to the Rescue

But who will rescue us from the Feds?

The passage of HR 1424, known by various names including the unintended ironical Emergency Economic Stabilization Act of 2008, prompted me to expand this 7-part series to eight. I promised a Mystery Guest, and I'll cover that one after this unpleasant interlude on "the bailout bill."

Normally it takes months or even years to pass major legislation. HR1424 and the Senate bill which gave birth to all glorious 451 pages of it was cobbled together (in part from pre-existing floated bills) in under a week.

I hate to lean on tired clichés in such parlous times, but I can't help bringing to mind the one about "Act in haste, repent at leisure." The actions of the stock market since the passage of the bill last Friday seem to be validating the truth of that hoary bromide.

However, it's here. What does it direct the government to do now?

I honestly don't know and the reason is simple. Try as I might, I can't find anywhere in the bill itself that details — or even sketches — how Paulson and his legions of helpers are supposed to actually solve the problem.

The basic idea, of course, is to buy up assets (in particular, mortgages and MBSs, but extending to credit debt, school loans, and anything else the Secretary deems fit) that the present owners no longer want. Some of the assets are unwanted because they're 'under water' as the saying goes or, at best, no one knows what they're worth and therefore there is no active market for them.

How the Treasury is supposed to divine what they're worth without that market is anybody's guess. The idea of having a reverse auction — in which sellers offer goods that the government then buys (in theory, for later resale) — on items which no one knows how to price is beyond absurd. It is more Marxist fantasy of the sort that envisions the government possessing magical powers somehow denied to the accumulated intelligence of individuals in the private sector.

If, instead, somehow buyers and sellers in the marketplace could arrive at a price, what need for the government? It's not as if there isn't $700 billion in private capital floating around. B of A swallowed up Countrywide and Merrill Lynch with no problem, and there is something of a bidding war going on for Wachovia.

Then there is the problem of how the government is to pay for the "toxic assets." Even apart from an $11 trillion debt, a $400-$500 billion deficit this year alone, and falling tax revenues due to an economic slump, it's inescapable that the U.S. government has no money of its own. All it has is gained either through taxation or created out of thin air by the official printing press.

So, common sense forces one to ask: how is spending money it doesn't have, for assets that are worth who knows what, going to solve the current problem without creating an even larger one down the road? I daresay, though it be blasphemy in an election year, no one in the government or the major news outlets egging them on knows the answer to that question.

Still, if you think that inescapable chaos is as bad as it can get, think again. It takes no financial savvy whatever to realize that — in the absence of at least an outline of how the TARP (Trouble Asset Relief Program) is supposed to be carried out — the situation presents the perfect storm for political corruption.

Somehow the existence of the FOSB, created by the bill to oversee the Treasury and its actions during this period, brings shallow comfort. After all, the Treasury Secretary openly acknowledges that he has neither the expertise on staff nor the resources to carry out the program alone. He will outsource as much as possible.

Even those most resistant to cynicism can't help but think this will attract hoards of eager beavers ready to make a taxpayer buck. These are not the sort who typically care much about making sure that much-put upon character gets his money's worth. But even if they were saints, how can they do what they have to do when they are making it up as they go along?

Lest I appear to be exaggerating, consider this passage from Sec. 101
AUTHORITY.—The Secretary is authorized to establish the Troubled Asset Relief Program ("TARP") to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.
In other words, Paulson (or whoever replaces him after the election) can do anything he wants. Period. So much for the rule of law.

Exaggeration? Here's more.
TROUBLED ASSETS.—The term "troubled assets" means—
  • (A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

  • (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
About as close as the bill comes to constraining the Secretary's actions is a list of "considerations" in Sec. 103, only one of which is even meaningful:
(4) in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents the most efficient use of funds under this Act;
But it lays out no criteria for determining that, obviously leaving it up to the experts the Treasury will hire. (Sec. 105 does require the Secretary to report to Congress and provide "a description of the pricing mechanism for the transactions." But Congress has no authority, in the bill or otherwise, to do anything but complain or pass yet more legislation after the fact if they dislike what's provided.)

Unlike Paulson's original 3-page grab for unlimited power, the bill does contain one paragraph addressing the subject of legal review.
(1) STANDARD.—Actions by the Secretary pursuant to the authority of this Act shall be subject to chapter 7 of title 5, United States Code, including that such final actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.
Somehow, though, I'm not relieved. How any court would determine objectively that his actions had not been arbitrary or capricious, I leave to the legal scholars in the audience to inform me. Looking at the relevant passage in the Code, which includes: "(B) contrary to constitutional right, power, privilege, or immunity;" I find no answer, the Constitution having been ignored in this Act.

Some may take comfort in the following, which might appear to head hustlers off at the pass.
PREVENTING UNJUST ENRICHMENT.—In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing the sale of a troubled asset to the Secretary at a higher price than what the seller paid to purchase the asset.

This subsection does not apply to troubled assets acquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.
The Treasury taketh with one hand and giveth with the other. Care to imagine how many assets will be squeezed in through that loophole? Nothing in the bill even attempts to curtail the jockeying that will take place. On the contrary, it explicitly says,
(c) SALE OF TROUBLED ASSETS.—The Secretary may, at any time, upon terms and conditions and at a price determined by the Secretary, sell, or enter into securities loans, repurchase transactions, or other financial transactions in regard to, any troubled asset purchased under this Act.
That only underscores the Secretary's complete authority to do as he wishes.

There is a section that claims to deal with conflicts of interest.
(a) STANDARDS REQUIRED.—The Secretary shall issue regulations or guidelines necessary to address and manage or to prohibit conflicts of interest that may arise in connection with the administration and execution of the authorities provided under this Act, including—
(1) conflicts arising in the selection or hiring of contractors or advisors, including asset managers;
(2) the purchase of troubled assets;
(3) the management of the troubled assets held;
(4) post-employment restrictions on employees; and
(5) any other potential conflict of interest, as the Secretary deems necessary or appropriate in the public interest. [emphasis added]
How, one may ask, can one expect the Secretary to issue such guidelines when the major source of such conflicts of interest is the man himself? A frightening increase of Executive power in this country has been going on for some time. But who knew that power would devolve, not to the President, but one of his appointed officials?

Personally, the fact that the bill terminates the authority of the Secretary to carry out all this by Dec. 31, 2009 leaves me unsatisfied. How in hell he could possibly get all this done in little over a year beggars the imagination.

But we need not punish ourselves by reviewing any more of the bill. There is only so much insanity one has to examine before concluding that any further time spent is pointless.

We could fantasize that, in the end, some brave soul will inspire the Supreme Court to take a look at all this and insist on a re-boot. But knowing the actions of the Court for the past few generations, I'm doubtful there, too.