Best Wishes for 2009

Happy New Year and my very sincere wish to everyone for the best possible 2009. Given that the state of things is far less than ideal right now, that may sound like a very low threshold. But there will still be, I'm sure, the clever, lucky, or extremely strong-willed and talented few who continue to achieve great things. May you be one of them.

Two Bridges - Erasmus and Ling-Tie

It's easy to see why the locals call the Erasmus Bridge in Rotterdam "The Swan." But it may be too timid a metaphor. The structure's grace and beauty far outshine that creation of nature.

(Photo by Lars Mathiassen)

The Erasmus is a design known to bridge aficionados as 'cable stayed'. A series of thick, ultra-strong steel strands reach from the tip of the pylon (the swan's 'neck') to the roadbed below, looking like nothing so much as a set of taut piano wires. Like a cross-beam on a swinging gate, those cables resist the downward forces on the road.

Designed by Ben van Berkel and completed in 1996, the bridge is 800 meters (2,600 feet) long, about 10% of which raises to allow ships to pass under.

Bridge building has undergone something of a renaissance in recent decades, thanks in no small part to the work of Dr. Tung-Yen Lin of Berkeley.

During his seven-decade career he taught or was directly responsible for numerous innovations, not the least of which was his promotion of pre-stressed concrete in building structures, now ubiquitous. He used the technique in building his own home, which featured a 1,000 square foot interior space free of supporting beams. (He used the area as a ballroom to dance with his wife.) Dr. Lin passed away in 2003 at the age of 91.

One of his most beautiful creations is the stunning Ling-Tie bridge in Nanning, China, completed after his death. Resembling a rounded harp, it provides a fascinating design variation that combines an arch with cable stayed features.



Only two out of dozens of spectacular monuments to genius, these bridges demonstrate that the great age of building is far from over. While they get less fanfare than in generations past, they remain some of man's greatest achievements.

U.S. Treasury Officially Criminal?

Well, well, well. The Treasury has decided to throw still more money at GM, to the tune of an additional $6 billion. Why not make it $60? Or $600? Keynesians assure us that public spending stimulates the economy. So why not make it positively orgasmic in scope?

I have just one question for the lawyers out there. Is there any precedent for charging a sitting Treasury Secretary with embezzlement of public funds?

I guess it doesn't apply in this case since the way HR 1424 was written Paulson can do pretty much as he pleases. Ironic, given how even Progressive Democrats reacted with horror at his three-page "Free me from all legal constraints" original suggestion. While the bill expanded to hundreds of pages, the essence remains the same and it's worked out just as anyone with any sanity left said it would.

Unfortunately, with Geitner coming in to the post in a few weeks - and by all accounts a virtual clone of Paulson - we're likely just to get more of the same. As Bette Davis wisely observed in All About Eve, "Buckle up. It's going to be a bumpy ride."

Still, some with a taste for sheer fantasy are more hopeful.

"This will restore liquidity in the auto market and help Americans purchase a car,” said Steve Bartlett, President and CEO of the Washington-based Financial Services Roundtable. “This, combined with the deal announced with automakers, will strengthen the entire auto market from manufacturing all the way to the consumer's driveway."

Oh, how I envy the ability of some to disconnect from reality with such aplomb.

Enemies of the People

Keynesian columnists never tire of being a crowd of Ibsenian villagers, offering the same irrational solutions that have failed before.

Paul Krugman, in his latest bit of lunacy, chastises the governors of the 50 states for tightening their belts amid budget shortfalls. He calls them Herbert Hoovers, as if Hoover's most egregious error was attempting to balance the Federal budget. Instead, he proposes that now is exactly the time when they should spend, spend, spend.

These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.

California, not noted for fiscal conservatism, is facing a several billion dollar budget deficit already, despite having an economy to rival many European countries and some of the highest taxes in this one. If now is not the time for the profligate pols there to cut back, one wonders when it ever would be.

This foolish suggestion of Krugman's is bad enough when applied to the Federal Government, whose outrageous spending of the past eight years has outpaced even that of typical Democratic administrations. But at least, the Feds can print money and borrow on a huge scale, not to mention taxing everyone in the country. The state governments can do none of these things.

His justification for this absurd idea?

Think about it: is America — not state governments, but the nation as a whole — less able to afford help to troubled teens, medical care for families, or repairs to decaying roads and bridges than it was one or two years ago? Of course not. Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact. Why can’t we keep doing good things?

Er, maybe it's because over a trillion dollars in net worth has recently been wiped out? Maybe it's because inflation, thanks to ethanol subsidies and much more, have raised food prices 20% over the past year, leaving less disposable income? Maybe it's because unemployment has risen by 50% over the past year, creating a smaller tax revenue base? Maybe it's because all the things Krugman names — which the state government should not be doing in the first place — cost money?

You have to wonder where in the world — when states can't create it by fiat like the Feds and there are laws on the books requiring them to have balanced budgets (which, admittedly, they blithely ignore) — all that money to 'do good' is supposed to come from.

Martin Wolf of the Financial Times has an answer for Krugman. Adopting the same impractical Keynesian philosophy, despite proudly asserting his 'pragmatism', he cheerleads Obama's huge stimulus package proposal. (Variously pegged between $850 billion and $1 trillion.)

Reviewing three ambiguous lessons he claims the prophet Keynes left us, number two suggests:

[T]hat the economy cannot be analysed in the same way as an individual business. For an individual company, it makes sense to cut costs. If the world tries to do so, it will merely shrink demand. An individual may not spend all his income. But the world must do so.

So where, besides in all those individual companies (and personal) bank accounts is that wealth? If they don't spend it, will all those dollars simply wind up in millions of mattresses? Parked in a bank, as most people (and companies) do, those funds are available for investment. At the very least, even if the bank tapers off lending, as the Feds both insist and complain the banks do, it raises their capital ratio. I.e. their balance sheets grow stronger and they are less likely to fold in these tough times.

So, damned if you do, destitute if you don't. You can never win with a Keynesian. Ibsen would have a few wise words for these mad villagers.

Woody Allen, The Anti's Darling

Woody Allen released a new film a few months ago, Vicky Christine Barcelona. I haven't seen it and don't intend to; every Woody Allen film I have seen — about a half dozen or so, more in parts — has been pointless, plotless, and not particularly funny or interesting. But I have to give the filmmaker credit where it's due. He is one of the cleverest guys around.

He's made a healthy living doing what he wants for more than 40 years now by producing pointless, plotless, and not particularly funny or interesting films. They usually star very dishy damsels, too. Not bad for a guy who's not insightful, handsome, or talented. (Except as a musician. He does play a mean clarinet.)

This latest incarnation, an unadmitted rip-off of Henry James' Wings of the Dove, shows every sign of being more of the same. That is no doubt why he's the darling of the Anti crowd. Since anything with a hint of moral or mental health (not to mention a movie with an actual story) is anathema to them, Allen is their perfect artist.

That's the only possible explanation for why he continues to get the funds to make films. They've never made much money. (I used to work for Orion Pictures, his long-time distributor before they folded; I know first hand.) They make even less now. Yet, he continues every couple of years to make another. He's 72. If the gravy train stopped now he could still call his career a big success.

He's not likely to have to worry. Producers have demonstrated for decades now that they're willing to finance a film that a moment's thought would make obvious will certainly bomb. They will, provided it projects their putrid view of life, of course. Allen's dove-tails nicely with their own.

As an LA Times reporter put it: "This is, after all, Woody Allen's universe, no matter what continent it takes place on, or how many laughs are to be had. Nobody gets what he or she wants."

So, he continues to get the cash, year in year out. And why not? His philosophy is perfect for the Anti(s). "There is no plan or agenda to it or anything. It's luck. It's random. ... My way of coping with the horrors of existence is to put my nose to the grindstone and work and not look up."

Well, everyone has his method, I suppose. The backers' one consists of financing Allen's work. A rich Anti has to do something with all that dough, after all. Where better to park it for a nice tax loss than in "biting nihilistic satire-dramas that examine whether evil ever gets punished."

Apparently evil doesn't, not often enough since the world continues to be inflicted with Woody Allen films.

Progressives and Human Nature

A random thought.

Odd how Progressives point to Ponzi-scheme scam artists like Madoff and say: "human nature!" "Must be constrained!" Yet, when someone works hard for years, takes risks, exercises creativity, and makes himself and thousands of others rich without fraud or so much as wanting government favors, no such inclusion in the nature of humans is announced. The only response is: "They can afford higher taxes."

That sounds a lot like "Heads I win, tails you lose."

The Newest Deal

Lawrence Summers, tagged by Obama to head the National Economic Council, is showing his skill once again. Few can pack so many ignorant and destructive ideas into such a small space. In a woozy-minded editorial in the Washington Post he gives us ample reason to hang on tightly to our wallets over the next few years.

Among others, he gives us this opaque helpful warning:

[E]conomists across the political spectrum recognize that it is far less risky to stand firmly against the forces propelling our economy downward than to be timid in the face of a mounting crisis.

Er, right. We have nothing to fear but fear itself. Unless perhaps it's the coming of Lawrence Summers. But rest assured, all will be well. The incoming administration intends to be very careful with our confiscated income public investments.

The president-elect has insisted that investments proposed in the recovery plan meet standards much higher than has been traditional. There will be no earmarks.

Investments will be chosen strategically based on what yields the highest rate of return for the economy and monitored closely not just by officials but also by the public as government becomes more transparent. We expect to evaluate and to be evaluated rigorously to ensure that Washington is held accountable for how tax dollars are spent.

Whew, that's a relief. Chosen strategically. Glad they're not going to be careless with all that cash. For a while there I feared they might throw billions down useless ratholes like, oh I don't know, 'green' jobs building dangerous and useless wind or solar power infrastructure. As people in hundreds of towns across the country scrape snow off their solar panels, I'm glad the pols will dodge that bullet. As some ranchers stand far away from their turbines lest the shooting icicles pierce an eye, we can be grateful Obama will choose to forego that option.

No, indeed. For our stolen invested trillion dollars we'll get:

Investments in an array of areas — including energy, education, infrastructure and health care — [that] offer the potential of extraordinarily high social returns while allowing our country to address some long-standing national challenges and put our economy on a solid footing for years to come.

Gotta love those "social returns" doncha know. Cuz, otherwise, you might be getting an actual financial return on your invested savings. How much better to get a warm glow by contributing to the public good than the petty little selfish satisfaction of increased personal wealth.

Perhaps you thought the President's team was going to waste taxpayer dollars on public works programs. Scoffer! What we'll really get is this: "The Obama plan represents not new public works but, rather, investments that will work for the American public."

You can rest easy knowing that "his economic team is crafting a broad proposal, the American Recovery and Reinvestment Plan, to support the jobs and incomes essential for recovery while also making a down payment on our nation's long-term financial health."

They're crafting A Plan! Excellent. Good to have a plan. Otherwise we might wind up with that chaotic mess called the free market in which private individuals have the liberty to trade voluntarily. We all know what that led to... um... the 19th century when the population of Europe rose 300% (as opposed to 3% in all previous ones), when trains, electrical infrastructure, industrial steel and oil production, modern finance and agriculture, and thousands of other innovations useless things came into being by the efforts of free individuals.

Deutschland, Deutschland, Uber Alles (Germany, Germany Above All!)... oh, sorry. Wrong song. For a minute there I thought the U.S. government was going to be led by Progressives Liberal Fascists FDR Jr. and his band of Newest Dealers. Silly me.

Teddy Roosevelt, First Steps to Dictatorship

Ronald Pestritto has published a superb editorial in the Wall Street Journal about Teddy Roosevelt (POTUS, 1901-1909). The entire article is well worth a read. He demonstrates clearly with abundant examples Roosevelt's Progressive philosophy — which started the ball rolling on all the ills of the 20th century and which is now reaching a climax. Among other helpful content, he writes:

[T]he national government, in TR's view, was not one of enumerated powers but of general powers, and the purpose of the Constitution was merely to state the narrow exceptions to that rule.

This is a view of government directly opposed by Alexander Hamilton in Federalist 84. Hamilton explains there that the fundamental difference between a republican constitution and a monarchic one is that the latter reserves some liberty for the people by stating specific exceptions to the assumed general power of the crown, whereas the former assumes from the beginning that the power of the people is the general rule, and the power of the government the exception.

TR turns this on its head. In his New Nationalism speech he noted how, in aiming to use state power to bring about economic equality, the government should permit a man to earn and keep his property "only so long as the gaining represents benefit to the community." The government itself of course would determine what represented a benefit to the community, and whether society would be better off if an individual's wealth was transferred to somebody else.

For anyone interested in learning some of the important factors that have brought us to where we are today, and which are about to be put on steroids, this piece is a great place to start.

[Mr. Pestritto is the Shipley Professor of the American Constitution at Hillsdale College and a senior fellow at the Claremont Institute. Among his books are "Woodrow Wilson and the Roots of Modern Liberalism" (Rowman & Littlefield, 2005).]

The Two Titanics, Hollywood Then and Now

Films ain't what they used to be.

I recently watched the 1953 tragic film Titanic with Clifton Webb and Barbara Stanwyck. It was superior to the 1997 version in one important respect. It briefly soared, rather than merely sank.

I enjoyed the more recent blockbuster. It was made at a time when I could still stand to listen to Leo DiCaprio, before he advertised his Green-ness 24/7. Also, Kate Winslet was fresh off the stunning Sense and Sensibility and a fine Hamlet, two standouts from a career that favors the kind of murk passing for a serious film these days. It also had an engaging, albeit lightweight, love story. Of course, the special effects were spectacular, ground-breaking.

Technically, the 1953 version couldn't come close (although, for the time, it wasn't bad). The acting, it'll come as no surprise, was head and shoulders above the newer model, though. No one ever did arrogance better than Mr. Webb or Miss Stanwyck.

But what's most notable is how different are the approaches of the two screenplays during the sinking. The earlier film focuses on the heroism, the contemporary one, the horror. That difference encapsulates the contrast between the two eras, and points up starkly everything wrong with our current one.

In the 1953 Titanic, for example, the cold-hearted Webb melts as the ice nears and the young lover (Robert Wagner) survives while the male passengers stand calmly on deck singing a hymn. In the newer film, DiCaprio's character dies needlessly as thousands of panicked passengers jump to their icy doom like fleeing rats.

Saving Private Ryan is another good example. Even though it had some good aspects, the focus of the opening is on the horror, the bloodshed, the chaos, and the overwhelming fear of the D-Day landings. By contrast, very sharp contrast, the ending of D-Day the Sixth of June (1956, with Robert Taylor and Joan Collins) focused on the extraordinary achievement (tacked on to what is otherwise a pleasant period love story).

Perhaps the best example is The End of the Affair, 1955 and 1999. Both are faithful adaptations of Graeham Greene's dreary novel of the same title. Both star superbly talented actors. Both are well directed. Yet, the earlier one manages, even while dolling out plenty of the frustration inherent in the story, to give you something to cheer. The newer one is pure depression from start to finish.

In each case, the filmmakers convey their contrasting views of life. It's much more than just the difference between a happy ending or not. None of these three have happy endings (nor beginnings, nor middles). It's the difference between projecting a world in which happiness is possible through pluck, versus a temporary escape from pain as a lucky accident. In the case of the older films, we see a world where, even in tragic circumstances, people strive for dignity and important values. In the newer versions, the struggle is for sheer animal survival in a world set against us, or where we have little choice or reason to hope.

Hollywood today is different night and day, or more accurately sunshine and muck; that's been pointed out many times before. There's no such thing as Tinsletown anymore -- even in rusted form. The problem is the philosophy, or lack of it, of the anti-human producers and filmmakers who wield authority there now. Daryl Zanuck (20th Century Fox), Harry Cohn (Columbia), and Jack Warner (Warner Brothers) all had a taste for darker films, many of them outstanding. But nothing they ever green lighted comes close to the senseless grim or silly dreck given a hundred million bucks without thinking about the odds of a return nowadays.

That's more than a sad ending. It's tragic.

Merry Christmas, And a Message of Optimism

Merry Christmas to one and all, and may the New Year be everything you hope for, provided you hope for nothing amiss. I want to sincerely thank my regular readers and to extend special gratitude to those who've recently begun visiting Shaving Leviathan.

There's so much bad news to struggle against right now that Christmas presents a golden opportunity to remind ourselves of some of the many good things still extant.

Wealth is one, though that may seem counterintuitive just now. It's certainly true that much is headed south in the economy, and will likely get worse before it gets better with the Feds spending like crack-addicted sailors.

It remains true that most Americans (and most in other Western-style countries) live better than we ever have materially. The average home size is larger than it was 40 years ago. Families have two cars, on average. Phones, are ubiquitous, as are digital TVs, computers, and much else.

Beyond the material ease and comfort such things bring, there is a spiritual dimension to wealth that's often overlooked or even chastised. The variety of books, magazines, entertainment, and information is astounding. If you're fascinated by ancient Chinese pottery or the cuisine of Iceland, there's a publication tailor-made for your interest.

Money doesn't buy happiness. But it definitely provides opportunities that allow us, still living in relative freedom, to pursue the values we cherish to make ourselves happy, provided we're wise enough to cherish something. Foreigners from China, the Middle East, and elsewhere who embrace American ideals recognize this at once. It's good for natives to remember it from time to time, yours truly included. And America is far from the only country where these ideals are still valued and pursued.

We still have freedom of speech, despite the efforts of too many university professors and politicians who would like to see much less of it. We have the material means via the Internet and blogs to broadcast our opinions to a potentially large audience for only the cost of our time and a cheap connection. Unlike times past, it will prove increasingly difficult for the control-hungry to impose any kind of orthodoxy by force.

Those in power aren't listening much right now to the right voices. But the sharp and spirited reactions when gas prices rose above $4 a gallon a few months ago, which helped (at least temporarily) kill off a vicious cap-and-trade bill, show that evil can be defeated.

It's also true, despite frequent evidence presented by mainstream news outlets, that the majority of people in the country are not evil, far from it. They're not dedicated to the enslavement and robbery of their fellow citizens. That type is still a minority.

There is a great deal of confusion — even among those who genuinely desire more freedom, justice, and prosperity — as to how to navigate to bountiful land. That presents an opportunity to provide clearer critiques and better solutions to all and sundry. Ideas continue to drive the trend of choices and the better arguments can eventually win. There are literally dozens of prominent voices with more or less the right views. They can become dominant again and now is no time to let up or become discouraged.

Shaving Leviathan is proud to be a part of that effort, and I'll be eternally grateful to all those who make it possible. Happy holidays and my very best wishes for your continued flourishing in every respect.

Jeff Perren

Why Stimuli Fail - Keynesianism Explained

The Center for Freedom and Prosperity (whoever they are) have produced a fine 7-minute video explaining why the current economic stimuli plans will necessarily fail.



The speaker outlines clearly, both theoretically and with ample historical data, why such ideas are always counter-productive, for everyone except the meddlers, of course, who get the thrill of taking and spending our money without our consent.

Pragmatism and the New Slavery

The rallying cry of the new meddlers is that it's a sin to be an 'ideologue'. They claim this leads to dogmatism, ignoring facts in favor of 'ideology'. Naturally, they give no examples, i.e. fail to cite any facts, to support their contention.

In fact, by this normative prescription, they mean one should have no guiding philosophy, other than their own, of course: the philosophy of Pragmatism. I.e., anything goes, so long as it 'works'. How we are to even guess what might 'work' in advance of actually trying it without some kind of guiding philosophy (since we obviously can not try contradictory policies at the same time, try as Washington will), they do not say. What they do say is that Pragmatism isn't a philosophy. Dewey, one of its inventors and a lifelong professor of philosophy, would be very surprised to hear it.

Look to history, the more rational among them will advise. It remains unexplained how or what lessons we're to draw from past experience without a consistent set of basic views to interpret the data. As if "X more liquidity," "Y lower interest rate," and "Z lower home prices" came tagged with what those data points represent in terms of desirable values and how they're to be achieved. As if, "higher income" were somehow an invariably desirable end-in-itself for everyone but 'the rich', regardless of how any particular person gained it.

They give no guidance about what values we ought to pursue in deciding public policy. They simply assume that them's that gots should give to them that ain't. More accurately, the issues of rights and justice never come up. Dictatorial power is the only valid means and maximizing the bank balance of "the little guy" the only valid end. But, of course, there's no philosophy implied in any of that. Sorry, guys, discussions of public policy and economics are inescapably suffused with philosophy, in particular questions of ethics.

Some of them get quite emotional about it, too, for people who apparently want to keep passion out of arguments for fear it will lead to dogmatism. I speculate they secretly know that giving free reign to their own emotions would eliminate any personal objectivity. If so, I take them at their word. If they intend to make a statement about human nature in general, well, that sounds a lot like ideology philosophy to me.

That's the excuse for the advocacy of pragmatism, of course. That anyone who adheres to a broad, coherent set of principles must necessarily be willfully blind to any facts that would tend to undermine it. But my guess is that the underlying motivation — yes, I'm no doubt being paranoid here — is that it helps to stifle all reasonable dissent.

Raise a principled objection? You're being rigid. Argue on the basis of a general idea. You're refusing to look at facts which throw doubt on your position. Try to explain how those putatively undermining facts don't actually undercut your case? You're an idealogue. Debate over.

Little noticed here is how rigid, fact-averse, and ideological the opponent is himself being. Let's take their idea serious for a moment, though, to see where it leads.

Two physicists are debating whether Einstein's General Relativity is solid as it stands or needs modification to fit newly discovered data. (That's actually happened a few times over the past 90 years.)

One of them uses an experimental result that apparently casts doubt on a general physical principle (such as the conservation of energy) to argue his case. The other points out the violation of this rock-solid principle. "You're being rigid and ignoring any data that doesn't suit your theory," the pragmatist physicist claims.

A week later, someone shows how the experimental result was either a mistake or actually supports General Relativity. Of course, there is some quark-sized probability that the conservation of energy principle has exceptions. But such a well-grounded and explanatory law would need some serious data to raise reasonable suspicions. A few years of Bush parroting the sounds "free market, free market, free market" while acting like the Progressive Herbert Hoover just doesn't cut it. And, even then, exceptions don't disprove the more general rule, they strengthen it. Otherwise, why would we call them "exceptions?"

But then, this is in Physics. In political discussions, the objector would cling to the fact and discard the principle of conservation. Physics, you see, allows for general rules. Political economy, since it studies human choices and actions, can play it deuces wild.

At this point, a pragmatist will raise the straw man of "Government has a place in society, get over it." This prescription conveniently ignores the fact that only a very small percentage of even libertarian anarchists would deny this obvious point. The issue is whether government should be limited to the protection of individual rights, or be encouraged to go beyond that to attempt to engineer certain 'desirable' social outcomes.

As a result of this, dare I say it, philosophy, we see praise heaped on FDR not necessarily for what he did right or wrong, but simply for being willing to engage in "bold, persistent experimentation." Those same voices are encouraging Obama to do the same, which is about like paying a junkie to take heroin, and will have similar results.

10 Things Blamed on Global Warming

Fox News reports on 10 Things Blamed on Global Warming

My personal favorite is from that ever-entertaining loon Ted Turner.

In April, media mogul Ted Turner told PBS's Charlie Rose that global warming would make the world 8 degrees hotter in 30 or 40 years. "Civilization will have broken down. The few people left will be living in a failed state, like Somalia or Sudan, and living conditions will be intolerable," he said.

Turner blamed global warming on overpopulation, saying "too many people are using too much stuff."

Crops won't grow and "most of the people will have died and the rest of us will be cannibals," Turner said.

Don'tcha wish this was just humor!?

Egalitarianism and The Rich

Larry Summers, Obama's pick for head of the National Economic Council, floated a proposal to tax the top 1% of taxpayers to the tune of $800,000. The money would be used to write a check for 10 grand to each household in the bottom 80%, those making less than $120,000 per annum.

You know what? I don't want the money. Apart from being a crazy idea from a practical perspective (as Dr. Reisman points out, imagine if you made $388,807 and suddenly found yourself over $411,000 in the red), it's grossly immoral even to suggest it.

It's important to remind everyone how immoral it is because when these ideas are criticized only from a practical angle they get tinkered with until they don't sound so crazy anymore. But they remain dead wrong.

The idea is based at bottom on one of the most evil philosophies ever devised: egalitarianism, the view that all people are or should be made equal. One middle-of-the-road version complains about "income inequality."

It sounds attractive to some ears at first blush because they conflate equal rights and equality under the law with equal results, which can only be attempted by government force. But even deeper than the evil of introducing the strong-arm of government into the picture, that idea has a still more scurrilous aspect. It treats superior ability as something to be ashamed of and in need of correction.

I've got news for Larry Summers. Steve Jobs and Bill Gates have no reason to apologize for being smarter than him. Now, from what I hear (through reliable personal acquaintance, not just newspaper reports), those guys are real jerks. I don't care. They earned what they have and they're entitled to keep it, every penny.

I've known a great many well-to-do people in business and almost all of them have been real jerks. Almost without exception, they were appallingly vain and much more interested in increasing their authority than solving business problems creatively. Political correctness runs rampant among that crowd. But you know what? I hope they all get even richer. Much, much richer. Because, jerks or not, their increase in income helps me in numerous ways.

Poor people rarely give others jobs. The higher income of the rich is a major source of the demand for labor, and the higher the demand (other things equal) the higher its price. I'm always happier when my labor costs them more.

Beyond that practical and economically elementary principle, there is the much more important moral one. Provided no one introduces coercion, I'm free to work for them or not and they're free to hire me or not. That freedom is worth more than all the 'social justice' in the world.

Whether or not rich guys deserve all they have, a system of voluntary exchange protected by the rule of law undergirding individual rights is our best chance of material well being. It's also a major contributor to our spiritual well being, in virtue of the freedom it provides and protects. No slave was ever serene. Above all, it's an outgrowth of inalienable rights recognized by the Constitution.

That system is worth defending and should be restored, post haste.

The idea that all injustice is a fit subject for government policy is bad enough. Acting on it necessarily leads to all sorts of increased injustices. But the underlying moral belief that drives it — that no one should have much more than another whether in wealth, responsibility, or even opportunity is vicious.

That last item in particular will raise some eyebrows. It shouldn't. No one starts out with equal opportunity in every respect.

Those raised in more well-to-do families have one type of advantage of opportunity. So be it. Provided their parents didn't defraud anyone, they have a derived right to the advantage. In a free society, it will quickly come to naught in the face of competition from a smart, ambitious kid from the poor side of the tracks. History is replete with examples.

Those who have inherently superior ability have different advantages in opportunity denied to others by nature. So be it. To ask for it to be otherwise is either to engage in fantasy or to dally with dictatorship, both of which are dangerous. Whether blessed with high intelligence, rapid muscle-twitch fibers, or just an extraordinary creativity, no one can justly complain that nature's gifts are not distributed equally.

The only equality we all have a right to require is that provided by freedom, protected by a system ever-vigilant against encroaches upon it. Clearly, that's not what Larry Summers has in mind.

Footfalls and Bailouts

Well, it didn't take long for the other shoe to drop. A Wall Street Journal editorial talks about real estate developers lining up at the D.C. feed trough.

With a record amount of commercial real-estate debt coming due, some of the country's biggest property developers have become the latest to go hat-in-hand to the government for assistance.

This is madness on a pogo stick.

There's no general principle I could expound on that would add anything new to what I've written a dozen times already demonstrating how this is immoral and impractical. On the other hand, given that everyone else has his hand out, why should they not? Oh, maybe a little thing like self-respect, but that's a pretty weak motivator these days compared to the lure of cheap money.

There is one point worth repeating, though. As I said the other day, one of the worst aspects of the bailout action is the precedent it sets. It creates a bailout mentality. Get in financial trouble? Run to the Feds for help.

Not everyone has this option. You have to fail in a very big way. You have to be "too big too fail." A business with annual sales of $1 million that provides a good living to some entrepreneur and the few he or she employs can go under. His or her loss doesn't threaten "the system" and hence will get no attention. (They also have no political connections.)

But there really is no such thing as "too big to fail" and it's irrational to "save the system" by giving it more of the same poison that is killing it now. If every big business in the country went belly up tomorrow, the fallout would be horrific. But, if the Feds stayed out of it, which of course they never would these days, others would eventually come in and pick up the pieces — assuming there was a potential market for what those businesses provided. If not, they would and should stay failed.

Tragically, since the Feds have been so active for so long in so many ways, everyone is now both victim and victimizer. This is exactly the kind of class warfare about which the Progressives complain and simultaneously pine for. (They just want different 'winners'.)

The real system that needs to be saved is the system of voluntary exchange, protected by the rule of law, i.e. capitalism. Every reality-grounded economist and knowledgeable political observer knows where this road ultimately leads: dictatorship. The Feds and their cheerleaders would too if they were willing to look beyond the next 72 hours. When, or if ever again, they will, there's no way to know on the present evidence. And, I admit, many of them may want just that.

Waiting for the sound of that next shoe...

New York Times Bold Lies About Crisis

Say what you will about the New York Times, it is nothing if not bold. In one of the most dishonest stories editorials in recent memory Jo Becker, Sheryl Gay Stolberg and Stephen Labaton argue that the White House Philosophy Stoked Mortgage Bonfire.

Let's pass over quickly the fact that the White House has no philosophy and never has. A hash of tradition, panic, and sporadic grit does not make up a coherent set of beliefs. That aside, to blame the current mortgage-based economic crisis chiefly on Bush and the Administration is to have the point of view of an ant.

In an unusually long article there is no mention whatsoever of ex-President Clinton beefing up the CRA. When Fannie Mae and its crooked-as-a-dog's hind leg ex-CEO Franklin Raines is discussed it's only to say how pleased he was with his meetings with Bush. Nary a word about how Raines has been cozy with Dodd, Frank, and the Democratic Party for decades. Not a line about Greenspan, at the Fed through Republican and Democratic administrations alike, jerking around interest rates and the money supply for years.

Instead, we get the usual transparent bull about "Hands-Off Regulators." That's a joke. A very bad one. Keynesian Ben Bernanke hands off? Fascist Henry Paulson hands off? The thousands of regulations that have been distorting the housing, and every other, market for generations represent laissez-faire? Nonsense. On flea circus stilts.

The only significant regulatory loosening during the past 10 years was a modification of the Depression-Era Glass-Steagall Act in 1999. The major difference before and after was a repeal of the provision forbidding investment banks and commercial banks to play in the same sandbox. Apart from having nothing to do with causing the crisis, it actually helped, making it legal for Bank of America to buy tottering Merrill Lynch and Countrywide.

If we're to lay any blame at Bush's doorstep for this, remembering his (and Greenspan's) dozen attempts to get Congress to act to rein in Fannie and Freddie, it is only justified in that he did so little to actually push for free markets.

Obviously, to this type of mentality, until the U.S. is a virtual copy of the Soviet Union circa 1921, we will still have unregulated markets. Maybe not even then. Lenin had his NEP, after all.

Bad enough to have the memory and research skills of a gnat. But to have the soul of one, too, is beyond the pale, even for reporters at the New York Times.

Fred Thompson Explains D.C.'s Plans

I really wish this Fred Thompson video lesson


On the Economy

were not so danged accurate. Really.

Helicopter Bush Saves Automakers

Well, it looks like a done deal. Bush will throw 17 billion more taxpayer dollars down the drain, using TARP funds to bailout GM and Chrysler after only a few weeks earlier vowing he would not.

Mr Bush announced on Friday the government would provide $17.4 billion in emergency loans to financially strapped General Motors and Chrysler LLC to prevent them from failing. Ford decided it did not immediately need similar loans.

His reason?

US president George Bush said today that offering government loans to US car manufacturers was the only option left to prevent the industry from collapsing after alternatives were ruled out or failed.

We have no way of knowing what alternatives were ruled out. My guess is that relieving some of the conditions that made those two U.S. automakers uncompetitive were not among them. Did he suggest repealing Sarbanes-Oxley? Doubt it. Did he push for removal of CAFE standards? Never heard so.

It might be argued that repealing onerous legislation (apart from debates about their 'social value') would take too long to have a positive effect. Fine, how about some short term, big boost options.

Did Bush ever suggest relieving the Not-So-Big 2 of all corporate taxes for two years? I never heard that. Did he recommend suspending capital gains taxes for two years on investors who might thereby be incentivized to loan them funds? I'm pretty sure both Democrats and Republicans would've gone along. The Republicans often side with proposals to lower taxes and the Democrats would not want to be seen as the party that let the UAW workers become unemployed.

Ok, let's get really creative here. Did he call a meeting of the 170 richest Progressives in the country and ask them to pony up $100 million each in short-term loans to save their beloved UAW? I doubt it. By the way, if you think none would have agreed, what does that say about the estimated odds that GM and Chrysler will pay back the Federal loans? (Not to mention the standard hypocrisy of limousine liberals.)

No, Bush did none of these things. The only reasonable conclusion we can draw is that either he has zero understanding of economics, or his fealty to the free market is as wobbly as his commitment to winning the Iraq war was solid. Whichever is the case, we can be certain of one thing. It will turn out badly.

The amount of money is really small change at this stage, compared to the nearly $8 trillion already promised for various measures. But the plan triggered a request by the Treasury for the second half of the $700 billion of TARP funds. No one knows what plan may be afoot to spend the remaining $346B. (There was $13 billion left in the first half.) It's bound to be a doozy.

That's one truly horrific aspect of this plan, the precedent set. Not that there haven't been plenty already, but this just unleashes a whole new round. The TARP funds were intended to prop up ailing financial institutions. When that failed, the Feds went looking for other 'helpless victims' to help, in the process victimizing the rest of us. It soon extended to automakers because heaven knows we couldn't have them fail. Why, people might have to find other jobs!

There's no telling who or what will be next on the list of the distressed to save, "in order to save the system" (as if saving the capitalist system could be accomplished by eroding it faster than at any time since the 1930s). It makes one wish a Progressive would please come along soon and save us from the saviors of capitalism.

Oh, yeah... That's due to happen in another month. Goody. Just when I thought things were about to get boring.

Update: George Will has written an excellent commentary on Bush's brazen disregard of the law and Congress (the latter, admittedly, much less morally questionable as ignoring goes). Among other superb insights he says,

"If TARP funds can be put to any use the executive branch fancies because TARP actually is a blank check for that branch, then the only reason no rules are being broken is that there are no rules."

And,

"The expansion of government entails an increasingly swollen executive branch and the steady enlargement of executive discretion. This inevitably means the eclipse of Congress and attenuation of the rule of law."

TANSTAAFL Revisited

People who breezily espouse one government fix after another often forget that there ain't no such thing as a free lunch. One that's given to another has to be paid for by someone. Governments, despite their recent behavior suggesting otherwise (and happy commentators cheering them on), can not produce free money by waving a magic wand.

A Times column by Jamie Whyte makes the point well.

Learning that cost-free transfers are impossible is an important part of growing up, and parents usually make sure it happens quickly. Most of us learn that there is no such thing as a free lunch long before we have ever picked up a bill.

Except when it comes to public policy. Encouraged by politicians, many adults indulge the infantile fantasy that the Government can bestow gifts on us while imposing costs on no one.

There are those, of course, on different points of the political compass who already realize this. Some take positive glee in imposing those costs on others. Progressives argue that 'the rich' deserve to have their money taken because in their view they obtained it illegitimately. They find satisfaction when Peter is robbed taxed to pay Paul... and Juan, and Shavelle, and...

Most people still retain a vestige of justice and see there's something wrong in this. Regrettably, many of those still think that it's pragmatically necessary. As a painter I recently hired, an Obama supporter, put it: "Someone's gotta pay for all this mess!"

Indeed, someone will. He will. Though he intended it to be someone else, he'll pay for it in the form of higher prices, a weaker dollar, higher unemployment, lower productivity, and years of economic and social malaise. He'll also pay for it, as will we all, in the form of a more morally degraded society. It's increasingly accepted that it's not wrong to rob 'the rich' (while 'rich' continues to be defined ever downward), so long as the money goes to 'the right people' or for the right cause.

In feudal times, aristocrats believed (with many serfs agreeing) they had a divine right to tax and enslave those over whom they had power. Now, the roles have flipped with the serfs (and quite a few 'aristocrats') believing it's okay to tax the Lords in compensation for a generation of looting and pillaging.

Except there are no aristocrats and serfs here today. There are only those who produce and those who take from the producers, while making it ever harder for anyone to make anything. Not only is there no such thing as a free cracker, once the one Peter made has been consumed — and he's unable to make another — everyone will begin to starve.

Of course, the present view wasn't always dominant and it doesn't have to be now. But to overcome it will require more than believing there's no such thing as a free meal. It will require an unbending re-commitment to the idea that what's mine is mine and what's yours is yours, no matter what crisis may be around at any given moment.

One Third Favor Socialized Medicine

According to Rassmussen,

Fifty-one percent (51%) of U.S. voters oppose the creation of a single-payer national health insurance plan overseen by the federal government... Thirty percent (30%) favor a government-run health plan, and 19% are undecided.

At the risk of sounding glass-half-full (ok, technically 30% full), what are nearly a third of my fellow citizens thinking? Are there really that many people in the U.S. now who believe that everyone else owes them medical services? Or, are they just ignorant enough to believe that government pulls money for health care out of a big magic pot supplied by cooperative leprechauns. (I confess, the way the Feds have been behaving lately, that view isn't entirely irrational.)

On the other hand, 52% of voters chose Barack Obama to be the next President of the United States, so perhaps I should — in a glass-not-quite-half-full way — be thankful that the number is less than a third.

Federal Reserve Officially Insane

The Federal Reserve has loosened all ties to reality. Swallowing Keynesian economic theory whole, it has decided to lower the Fed Funds rate to effectively zero for the foreseeable future. As if that weren't crazy enough — apart from everything else it makes money market accounts almost worthless — it is now going to inflate the money supply like the U.S. was Germany, circa 1922.

The mid-term consequences of all this are obvious to any right-thinking economist. (Forget long-term consequences. Concern for those was discarded long ago.) They are less obvious, but no less true, for anyone who has given the subject some amount of thought and study. To both parties the principles are simple: you can't create wealth by printing money; you can't solve an existing credit crisis by creating a new one.

Thomas Sowell has written another fine article on the related subject of bailouts, titled Postponing Reality. No one could say it better. What even the perspicacious Dr. Sowell doesn't mention, perhaps because it's so obvious, is that a great deal of reality will continue to happen while parts of it are postponed.

Interest-bearing instruments will be worth squat, discouraging savings/investment. Prices will be artificially propped up, distorting the market and harming millions. Worst of all, politicians will be encouraged to believe that their tweaking of the economy is legitimate.

But if years of teaching college have left you with a habit of ignoring any inconvenient facts of history and science, not to mention producing the morals of a dictator, none of that matters. The economy is in crisis. Something must be seen to be done.

Unfortunately for those of us who still live in the real world, there is little hope that these policies will be reversed anytime soon. There is lots of talk of Obama keeping Bernanke on at the Fed. Even if he were replaced, we'd almost certainly get someone very much like him.

Forget trying to hold onto your wallets. Try holding onto your sanity.

Melting Ice, Sounds Good

More than 2 trillion tons of land ice in Greenland, Antarctica and Alaska have melted since 2003, according to new NASA satellite data that show the latest signs of what scientists say is global warming.

Now, I make no claim to being a geologist nor a climate scientist. But in my lowly ignorance, this sounds like very good news to me. Assuming NASA has it right this time, not a given, who wouldn't want Greenland to be green again? Would the Alaskans freezing their buns off right now really be disappointed if it were warmer there?

The story goes on to report, "Scientists studying sea ice will announce that parts of the Arctic north of Alaska were 9 to 10 degrees warmer this past fall"

So, is that from, say -20F to -10F, or 0C to 10C, or what? Neither sounds like a bad thing, but it would be helpful to know.

But the most curious part of the whole report has to be this:

"The pace of change is starting to outstrip our ability to keep up with it, in terms of our understanding of it," said Mark Serreze, senior scientist at the National Snow and Ice Data Center in Boulder, Colo., a co-author of the Arctic amplification study."

Now, that I definitely believe. Get back to me when the pace of your understanding has caught up. Maybe then I'll be alarmed. Right after I've finished typing up that "Thank You" note to the grape growers in Greenland.

As always, we have to remember that even if the mean temperature of the Earth (if such a thing can be defined) is rising over the longer term, that doesn't provide evidence that human activity has much if anything to do with it. So, I'm still not sure whether to be grateful to Exxon or old Sol.

NRDC Opposes Arctic Exploitation

Now viros are worried that oil and gas companies might find a use for the Arctic. You have to give them credit for one thing. These people never rest while there's still a resource left somewhere in the world that's not legally off-limits.

What a difference a 100 years makes. Almost within the living memory of thousands, the culture has gone from praising the exploitation of previously unusable land to fretting that someone might be clever enough to do so.

That attitude is nowhere better represented than in the NRDC's Transition to Green recommendations for the incoming Administration.

The new Administration should take a precautionary approach to any new industrial activities in the Arctic, including pursuing natural gas hydrates or allowing new oil and gas leasing or activities offshore or in priority conservation areas onshore, until a thorough scientific assessment is completed and a comprehensive plan in place.

That "assessment" — to be carried out by you can guess what type of investigators — you can bet would take 10 generations and at the end recommend that business leave things entirely alone. The "comprehensive plan" would consist solely of one sentence: let no one do anything to extract any natural resources in the Arctic.

No facts discovered that suggested it could be done safely in an 'environmentally benign' manner would matter to them in the least. Proof? The continuing opposition to development of both Alaska's oil fields and areas far off the coast of Louisiana. Dozens more examples could easily be cited. There's simply no amount of data that will convince them.

So, as a result (since Obama and the majority of Congress side with the viros), promising fields of natural gas hydrates will lay fallow until their anti-human philosophy is finally put to rest. That's toxic waste that should definitely be left deep underground.

The Day the Earth Stood Shrill

I haven't seen the new The Day the Earth Stood Still, and I may never, based on a few reviews.

I rarely see a film produced after 1965 anyway. So many of them today, while technically polished, are so morally and aesthetically loathsome I just don't want to waste my time. They tend to fall into one of two categories: murky grim or utterly mindless. I don't have a taste for either.

But the recent "re-imagined" version of that SF classic is far worse than even most contemporary films. It's evil. I don't even have to see it to know that with high confidence.

For those of you who haven't read any reviews, the salient change from the fine 1951 original is that in this one the alien arrives to spank the global population for mistreating the globe. In other words, it's a viro's wet dream.

In the original, at least the premise — while questionable — made some sense. If humans were too irrational to control their impulses, they were too dangerous to trust with atomic weapons and spaceships. That threatened the peace and safety of beings on other planets and one such was sent as an emissary to do something about it before things got too far along. Fair enough; self-defense is a legitimate premise.

Here, the alien is acting like some Gaian avenger, if not a symbol for Gaia 'herself'. Harm the planet and Big Brother from the Sky will come and wipe you out.

The original had numerous philosophical and aesthetic flaws. But it was rescued by a serviceable script and some interesting characters, not to mention the always highly watchable Michael Rennie and Patricia O'Neal. (Hugh Marlowe was always a treat, too, though in that film his character was a schmuck.)

But this remake, bad enough for the presence of the always-wooden Keanu Reeves — an actor whom one could never in a million years B.C. accept as a super-intelligent being — is absurd and vicious. Not a compelling combination for someone who sees on average five films per week.

Two thumbs down.

Bailouts In History: The Railroads and J.J. Hill

Transportation bailouts have been tried before in the U.S. and failed miserably.

During the 19th century, few businesses were considered as vital as the railroads. In a developing country that stretched 3,000 miles wide and over 1,000 miles from North to South with no major highways, cost-effective long-haul transportation was essential. Then, as now, many in the Federal Government decided that if it was essential, it was essential the Feds have a hand in it.

Railroad subsidies were common. Land, capital, and much else was on the table for the asking, provided the right palms were greased, of course. The result: lines started but never finished, route selections made on the basis of politics not potential return, bankruptcy, and endemic corruption.

One entrepreneur, aided by his partners, eschewed government subsidies: James Jerome Hill. Beginning in the 1878 Depression with the purchase of the St. Paul and Pacific Railroad (renamed the Great Northern in 1890), Hill built a transcontinental railroad with all private capital. It was worth $725,000 and had 10 miles of track. By 1885 it had grown to a value of $25 million and tied together half the country. Often laying track at the unheard of rate of a mile per day, by 1893 he reached Seattle, prompting the transformation of that small town into a metropolis.

Granted, he had some advantages over businessmen today. While his competitors tried very hard to put him out of business, the legislative and social environment presented only modest barriers. He had no UAW to contend with. Best of all, unlike the majority of corporate executives today, he genuinely knew how to create and run a business. He didn't become a success the Peter Keating way, by flattery, political correctness, and politicking.

During several economic downturns, Hill's businesses stayed afloat, and even turned modest profits — all with no government handouts. Where no markets existed, he created them. Among many innovations, he bought up thousands of acres of timber land and sold them to Frederick Weyerhauser, starting a huge wood and paper business that continues today. He lowered rates 50% below other railroads.

By contrast, his coddled competitors — with subsidized lines through highly populated areas — went belly up right and left.

It's a pity that today's auto executives and politicians have probably never heard of J.J. Hill and wouldn't approve of him if they did. The lessons his life and work provide are the only thing that could save them and us from the destructive decisions now being made in Washington.

[Hat tip: Gods of the Copybook.]

The Founding Fathers on 'Bailouts'

In 1794, when Congress appropriated $15,000 for relief of French refugees who fled from insurrection in San Domingo to Baltimore and Philadelphia, James Madison stood on the floor of the House to object saying:

“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” — James Madison, 4 Annals of Congress 179, 1794

“[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.” — James Madison

“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” — Thomas Jefferson, First Inaugural Address, March 4, 1801

“Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.” — Thomas Jefferson

“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” — James Madison in a letter to James Robertson

“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson, letter to Joseph Milligan, April 6, 1816


[Hat Tip David Elmore at Sidereal Messenger]

Bush Aims to Be More Progressive Than Teddy

After the Senate effectively blocked the steamroller toward a bailout for the Not-So-Big 3, the White House has signaled its intention to push ahead. One can only conclude that George W. Bush is determined to win away the prize from Teddy Roosevelt for most Progressive Republican President in History.

"It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation," Perino said in the statement. "Given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program -- to prevent a collapse of troubled automakers." She said that allowing the economic harm caused by such a collapse would be "irresponsible."

No, what's irresponsible is pretending the government has the right to take money from the taxpayer to give to failing businesses to continue failing. What's disappointing is that this allegedly pro-free market administration has zero real understanding of, or affection for the free market.

Worse than irresponsible or disappointing, there is an equally troubling issue here, a Constitutional one. Why is the President in his waning days trying so hard to defeat the clearly expressed choices of Congress, not to mention the will of the people?

Polls consistently show a majority opposed to the automakers bailout (as they have been to all the others). Congress isn't shy about giving out our money, either, so clearly some members are listening. When are the other elected officials going to start acting as representatives, not rulers?

The answers to all these questions are both rhetorical and, probably, unanswerable.

I never thought I'd read myself writing this, and I'll probably regret saying it, but I can't wait for Obama to take office. At least he admits freely to being anti-free market and shows some awareness of what he is for and against.

All You Need to Know About Bailouts

Those superb men at the Pittsburg-Tribune Review are at it again...

Obama's New Deal, Worse Than the Original

Apparently determined to offer more bad ideas per week than any prior President-elect, Obama's been touting a massive new public works program. Pretty ambitious for a guy who isn't even in office, yet. But what else has he to do for the next six weeks to keep his name in the papers than continue to campaign?

He describes his proposal thus:

First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won't just save you, the American taxpayer, billions of dollars each year. It will put people back to work.

Second, we will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s. We'll invest your precious tax dollars in new and smarter ways, and we'll set a simple rule - use it or lose it. If a state doesn't act quickly to invest in roads and bridges in their communities, they'll lose the money.

Third, my economic recovery plan will launch the most sweeping effort to modernize and upgrade school buildings that this country has ever seen. We will repair broken schools, make them energy-efficient, and put new computers in our classrooms. Because to help our children compete in a 21st century economy, we need to send them to 21st century schools.

As we renew our schools and highways, we'll also renew our information superhighway. It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the Internet, every child should have the chance to get online, and they'll get that chance when I'm President - because that's how we'll strengthen America's competitiveness in the world.

I've already written ad nauseum that any public works program is inherently impractical and immoral. Impractical because it commits the Broken Window fallacy. Not technically a fallacy, it's nevertheless a serious error.

Here's how the great French author Bastiat first described it:

Have you ever been witness to the fury of that solid citizen, James Goodfellow,*1 when his incorrigible son has happened to break a pane of glass? If you have been present at this spectacle, certainly you must also have observed that the onlookers, even if there are as many as thirty of them, seem with one accord to offer the unfortunate owner the selfsame consolation: "It's an ill wind that blows nobody some good. Such accidents keep industry going. Everybody has to make a living. What would become of the glaziers if no one ever broke a window?"

Now, this formula of condolence contains a whole theory that it is a good idea for us to expose, flagrante delicto, in this very simple case, since it is exactly the same as that which, unfortunately, underlies most of our economic institutions.

Suppose that it will cost six francs to repair the damage. If you mean that the accident gives six francs' worth of encouragement to the aforesaid industry, I agree. I do not contest it in any way; your reasoning is correct. The glazier will come, do his job, receive six francs, congratulate himself, and bless in his heart the careless child. That is what is seen.

But if, by way of deduction, you conclude, as happens only too often, that it is good to break windows, that it helps to circulate money, that it results in encouraging industry in general, I am obliged to cry out: That will never do! Your theory stops at what is seen. It does not take account of what is not seen.

It is not seen that, since our citizen has spent six francs for one thing, he will not be able to spend them for another. It is not seen that if he had not had a windowpane to replace, he would have replaced, for example, his worn-out shoes or added another book to his library. In brief, he would have put his six francs to some use or other for which he will not now have them.

All public works programs, since they take money from one group to spend on another (though they sometimes overlap) suffer from this problem.

That, too, is the reason they're inherently immoral. If any private citizen forcibly took money from one man to give to another, we would not hail his actions as "bold, persistent experimentation," as were FDR's.

Obama, acting like FDR, Jr. and trying to outdo dad, is making the same mistakes. Even one of his own chosen senior economic advisors, budget chief Peter Orszag, said so.

Practically speaking, however, public works involve long start-up lags. Large-scale construction projects of any type require years of planning and preparation. Even those that are "on the shelf" generally cannot be undertaken quickly enough to provide timely stimulus to the economy. For major infrastructure projects supported by the federal government, such as highway construction and activities of the Army Corps of Engineers, initial outlays usually total less than 25 percent of the funding provided in a given year. For large projects, the initial rate of spending can be significantly lower than 25 percent.

Some of the candidates for public works, such as grant-funded initiatives to develop alternative energy sources, are totally impractical for countercyclical policy, regardless of whatever other merits they may have. In general, many if not most of these projects could end up making the economic situation worse because they would stimulate the economy at the time that expansion was already well under way.

In this case, Obama's proposal is even more ridiculous in some ways than Roosevelt's disaster.

First, the idea that, even apart from the Broken Window problem, there is much cost savings to be had by changing light bulbs and replacing aging heating systems in public buildings is beyond absurd. This is 'make work' at its finest, or lowest, if you prefer.

Second, there's no question that America could use some new roads and good bridges. But creating jobs for new highways is, sadly, predominantly a State matter, not a Federal matter. (Sad because roads should be privatized.) And, as we know too well by now, the track record for States using Federal money wisely is not so great. Even Federal highways won't benefit much from new 'investment' when (a) no one can afford to drive long distances on them these days, and (b) there remain the endemic problems of cronyism, four men watching while one works, and the rest.

Modernizing schools with public funds is equally misguided. To believe that education today suffers chiefly because it lacks high-speed Internet lines and the newest computers is simply false. The average school child was infinitely better educated a hundred years ago, decades before even radio was available. If you doubt this, the proof is simple. Read a mathematics test such a child was required to take in order to get a diploma. Its test problems would give most college graduates, nay most college professors today a very stiff challenge.

But then, when did identifying a proposal as flawed ever stop a politician from mouthing it? After all, so what if it entails robbing some to give to all — and is impractical to boot? That's a small thing when it comes to the need to be seen offering "a plan," and a 'bold' one at that. We can only hope that, like so many of his ideas, this one is abandoned in a week. In this case, I fear that will turn out to be a vain hope, faced as we are with a man determined to be FDR II.

Progressives, Totalitarians NOT in Disguise

Several prominent conservative commentators recently have expressed surprise, sometimes cheer, that Obama has made 'centrist' appointments. Their views are sadly mistaken and their cheer premature. Obama is a Progressive and will govern as such. He has neither said nor done anything that would make a careful observer think otherwise.

It's baffling how anyone could think that Hillary Clinton, one of the prime movers of socialized medicine in the 90s, is a 'centrist'. Her stance on Iraq does not disqualify her. Even Progressives can be in favor of military action. They're not all now, and certainly historically have not all been 'peaceniks'. Wilson and his henchmen were the biggest warmongers around in 1915. FDR urged the country repeatedly to go to war with Germany. B. Clinton was happy to send planes to bomb Serbia.

It's equally silly to suppose that someone like former Federal Reserve Chairman Paul Volcker is an advocate of capitalism. According to the New York Times when Greenspan replaced Volcker, "The main philosophical difference between Mr. Volcker, a Democrat, and Mr. Greenspan, a Republican, appears to be in their views of the structure and regulation of the banking system. Mr. Volcker has tended to resist deregulation of banks while Mr. Greenspan is more favorably disposed to it."

Christine Romer is another Keynesian technocrat and no friend of the free market. She wrote, for example, that "The recovery from the Great Depression was spurred largely by the abandonment of the gold standard and the ensuing monetary expansion." And, "The fundamental cause of the Great Depression in the United States was a decline in spending (sometimes referred to as aggregate demand), which led to a decline in production as manufacturers and merchandisers noticed an unintended rise in inventories."

Eric Holder, appointee for Attorney General is no fan of individual rights. He was Deputy AG under Janet Reno, one of the most anti-liberty Justice Departments in the 20th century. He was also a member of Obama's Vice-Presidential selection team. No friend of freedom would recommend Joe Biden for the slot.

So, the commentators alluded to above are simply wrong on the facts. There's nothing centrist about people who propose that every social or economic problem should be solved by government involvement.

Worse, those commentators misunderstand the nature of the Progressive threat. A Progressive by nature is a totalitarian. He invariably advocates plans to control individuals in every sphere of life, for the sake of whatever happens to be his cause du jour.

Health care system less than ideal? Advocate universal health care, mandated by government. The fact that this has failed abysmally everywhere from Britain and Canada to Massachusetts is of no concern to a Progressive. It will work nationally here, somehow, now that we have a 'smart' President and a progressive-dominated Congress.

That such programs intrinsically abrogate the rights of voluntary trade between doctor and patient is of less than no concern to a Progressive; it's a positive problem, to be solved by still more government control.

Global warming 'threatening the planet'? Control CO2 emissions from every business, and require ranchers to cap methane output from cows while you're at it. That the AGW hypothesis, always weak, is increasingly weaker with every passing month is no problem. Simply assert that all the counter-evidence is either non-existent or a smoke screen put up by shills for the oil companies. That all cap-and-trade schemes are inherently impractical and pointless is no concern.

That, here again, the proposal would swamp the property rights of everyone concerned isn't just unimportant, it's mandatory. The pursuit of material well-being, or as Progressives prefer to phrase it "consumerism" and the 'greed' that drives businesses to satisfy it, is the basic problem. We have to drag people into the future, they declare — by force, since they won't listen to reason.

Economy in the pits? Bailout. Stimulate. Create public works programs. Tax the ever-defined-down rich to give to the ever-defined-up poor. The evil rich guys did it, so they deserve it. And anyway, we have to 'save the system' not for the rich bastards but for 'the common man'.

Compromise here and there. We don't want to frighten the masses who haven't yet had their consciousnesses sufficiently raised. But keep the progressive eyes on the prize: ever increasing government control.

With all these examples, you would think that sooner or later induction would prompt conservatives to see that Obama and his cohorts in Congress really mean it. We can only hope. Time is running out.

Progressives Invade Wikipedia

Can anyone explain why Wikipedia has been taken over by the Anti(s), who infect like a virus?

I've become used to seeing Green garbage, even in such incongruous places like the Swiss Re page. (As the name suggests, Swiss Re is a giant reinsurance company in Switzerland.)

Now, I'm seeing progressive propaganda, even in the unlikely spot of the page discussing the 90's business boom in Ireland. Among other disgusting nonsense, we find this:

"Many people in Ireland believe that growing consumerism during the boom years eroded the country's culture, with the adoption of American capitalist ideals. While Ireland's historical economic ties to the United Kingdom had often been the subject of criticism, Peader Kirby argues that the new ties to the U.S. economy, however, were met with a "satisfied silence". Nevertheless, voices on the left have decried the "closer to Boston than Berlin" philosophy of the government parties. Writers such as William Wall, Mike McCormick and Gerry Murphy have satirised [sic] these developments."

"Growing wealth was blamed for rising crime levels among youths, particularly alcohol-related violence resulting from increased spending power. However it was also accompanied by rapidly increased life expectancy and very high quality of life ratings (indeed, the country ranked first in The Economist's quality of life index)."

This sort of thing, particularly the absurdity about wealth, crime, and alcohol abuse, isn't even worth refuting.

As if that weren't bad enough, it also contains this gem: "Ireland's new wealth is not evenly distributed." Yeah, so? Is there anywhere in the world that wealth is evenly distributed? Would it be good if it were? The obvious answers are no, and most emphatically no.

It would be bad enough if Wikipedia were a leftist rag like The Nation. It's putrid, given that the stated goal of the world's largest online encyclopedia is a type of neutrality. But, when you consider that it was founded by the allegedly free-market friendly Jimmy Wales, it's positively revolting. You have to wonder who is at the wheel these days.

It reminds me of the way in which Times Square evolved from a family-friendly area in the 1940s to the depths of drug-dealer filth in the 1980s. Where is Wikipedia's Rudy Guiliani when you need him? Man, you just can't walk anywhere these days without stepping into the feces left by the Left.

Union Tomfoolery

It's union lunacy day here at Shaving Leviathan. Tune in and have some laughs.

First up we have a sociology professor proving that you don't have to be a trade unionist (a type of communist 75 years ago, and apparently still) to teach humanities, but it clearly helps.

Channeling Norman Thomas, six-time socialist candidate for president in the Depression era, he argues that the problem with the Big Three automakers is the UAW didn't go far enough. They should have, in his view, organized the foreign automakers plants in the U.S. too.

[T]here is nothing inherently unsustainable about employing a high-priced, unionized workforce. The crisis of Detroit's wage bill is entirely relative. Specifically, their labor costs far exceed the low-cost, nonunion American workforce at the U.S.-based, foreign-owned plants of competitors Toyota, Honda, Nissan and Subaru.

If the UAW really is to blame at all, then, it is because of the union's utter failure to unionize any of the transplants. What has the UAW been doing all these years? Isn't it the responsibility of any good union to protect union employers from competitive labor disadvantages by organizing wall to wall, throughout the industry? How could it have left these transplants unorganized?

By all means, let's have still higher priced cars and greater injustice in the form of higher wages for those who do less work in comparable tasks, along with arm-twisting of the employers. Let's enforce it by the descendant legislation of the Wagner Act that amplified government coercion in labor relations. Apparently it's not required to have any knowledge of economics — or ethics — to teach sociology.

A laugh a minute.

Then we have this joke from one of the chief thugs himself, Andy Stern, head of the SEIU (Service Employees International Union). Arguing in a similar vein, Mr. Stern suggests the U.S. should be still more like Europe — as if going down that road culturally for the past 40 years hasn't caused enough damage already.

Here's a tidbit from a WSJ editorial that will tell you all you need to know about Mr. Stern's views:

The SEIU targets private equity firms, shames business leaders, and competes with other unions to build up its membership. Mr. Stern is unapologetic. "We like to say: We use the power of persuasion first. If it doesn't work, we try the persuasion of power." [emphasis added]

For something more particular, feast on this (and hope you don't choke):

Universal health care, widespread unionization, stronger regulations on business, profit-sharing for employees, higher taxes — all that sounds like Western Europe. Mr. Stern considers that a worthy model. "I think Western Europe as much as we used to make fun of it has made different trade-offs which may have ended up with a little more unemployment but a lot more equality."

The equality of the grave as one wag famously put it. As some other brilliant wit recently observed, with friends like this who needs friends?

History Lessons That Resonate

The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. H.L. Mencken

A recently explored source provides fact and moral from the 1930s.

A superb volume of historical source material called The Great Depression, Opposing Viewpoints is an anthology of speeches and essays from the period of the Great Depression. They were written by those actually involved in making policy or by major commentators.

The book contains pro and con contemporaneous writings by Rex Tugwell (a Roosevelt senior adviser and member of the laughably titled Brain Trust) opposed by H.L. Mencken, the great pro-freedom editorialist of the period. There are entries from Henry Wallace, Secy of Agriculture from 1933-1941 and therefore one of the chief villains of the period, as well as Huey Long on the 'virtue' of redistributing wealth. There are many others, equally well known then.

The following will give you a flavor of the content...


From Mencken's essay Notes on the New Deal:

The turning over to the President, by a subservient Congress, of the powers which, under the Constitution, could only be exercised properly by Congress, upon the plea of the President that the emergency made it necessary, is of such vital importance to the nation that the voters must pass on it.

Written as if it were only two months ago, I for one don't remember voting on HR1424, the Paulson bailout bill which the President urged on the country.

Mencken continues: "...who could have foreseen what use would be made of the powers given in the National Industrial Recovery Act?" This echoes the laments now being made about the lack of oversight provided in the hastily-passed bill.

Henry Wallace took a very different view of the New Deal, arguing it would help farmers. He said of one major component, the Agricultural Adjustment Act (passed by Congress in May 1933, two months after FDR took office): "This act provides for controlled production. Without that, no price-lifting effort can possibly work." About that, Wallace was most decidedly correct.

The aim of the AAA was to reduce production, in order to maintain or increase prices for agricultural products, such as cotton, wheat, and hogs. The method was to legally force reductions in cultivated land and animal output.

What was the result?

Farmers learned to produce more product on less land, valuable efficiency but at a terrible cost. And, in response for their heroic efforts, new legislation was passed in order to control them more directly.

In addition, millions of pigs were slaughtered and given to the unemployed. Or, in less polite language, one group of men were robbed in order to feed others who were hungry, made hungry in part by legislation like the AAA.

Quoting Wallace's Declaration of Interdependence, a speech broadcast May 13, 1933, (the title alone enough to send a chill up the spine)

In adjusting our production of basic foods and fabrics, our first need is to plant and send to market less wheat, less cotton, less corn, fewer hogs, and less of other basic crops whereof already we have towering surpluses, with no immediate prospect of clearance beyond the sea. [emphasis added]

Setting aside the paradox of millions of hungry people in the middle of "towering surpluses," let's ask ourselves why there was "no immediate clearance beyond the sea"? Might that not have something to do with the passage of the Smoot-Hawley Act, enacted in 1930 under Hoover's administration, that raised the price on over 20,000 traded products at least 50%?

The result?

Imports fell from $4.4 billion in 1929 to to $1.5 billion in 1933, a drop of 2/3 (the GDP fell by 50% during the same period). Exports fell from $5.4 billion to $2.1 billion.

The AAA didn't just control agricultural prices and quantity, either. In the words of Henry Wallace, "Second, is an accompanying authorization to refinance and readjust farm mortgage payments."

One has to wonder just how close the parallels have to be in order to wake up those in Washington. They can't claim ignorance of history, either. Several reports have outlined that Obama has been studying the period of the FDR administration. Progressive Paul Krugman of the New York Times has been pushing the idea that the New Deal was fine, except it didn't go far enough.

As if those parallels aren't spooky enough, we can read the words of Huey Long, then-Senator from Louisiana:

The theory of the Share Our Wealth Society is to have enough for all, but not to have one with so much that less than enough remains for the balance of the people.

We can move on without extensive comment on the view that this regards the economy as a static pie (created how and by whom?) to be carved up by the beneficent hand of government for all those millions of hungry stomachs. We simply note here Obama's casual "I think when you spread the wealth around, it's good for everybody."

Among the gems that formed part of Long's program were these:

1. Every family to be furnished by the Government a homestead allowance, free of debt, of not less than one-third the average family wealth of the country, which means, at the lowest, that every family shall have th reasonable comforts of life [to be provided by whom?]... No person to have a fortune of more than 100-300 times the average family fortune... [to be restricted how?]

2. The yearly income of every family shall not be less than one-third of the average family income... [this miracle to be created how?]

The questions in brackets are answerable either by realism or fantasy. In real terms, only robbing the ever-defined-down rich to give to the ever-defined-up poor can offer even a hope of achieving such goals. The fantasy consists of believing that the pie won't continue to shrink while the fantasy is pursued.

Similar fantasies are being considered or pursued today. There are still ongoing discussions in Congress about relieving struggling homeowners of mortgage debt; Paulson has recently given billions to bailout consumer credit debt, etc. All the while, they're worried about a few overpaid dunderheads who managed to con a Board of Directors into overpaying them.

I leave you today with a pair of quotes from David Lawrence's Beyond the New Deal, written in 1934.

"I wonder how many people begrudge Henry Ford his success. Not many. He rose from a mechanic's bench to be the head of a billion dollar industry. He did not float public loans or stock issues. He steered clear of Wall Street. He did not exploit labor — he paid higher wages than his competitors. He made transportation at a price that came with the reach of the average man. He opened up by his low-priced automobile a vast inland territory."

and

"Confiscation of wealth may satisfy the vengeful in us... but it is the path of national suicide."

The lessons of history are alternately enlightening or irritating, or both. But they're always there, inescapable.

Russians Jail Pessimistic Financial Analyst

RIGA, Latvia -- Hammered by economic woe, this former Soviet republic recently took a novel step to contain the crisis. Its counterespionage agency busted an economist for being too downbeat.

"All I did was say what everyone knows," says Dmitrijs Smirnovs, a 32-year-old university lecturer detained by Latvia's Security Police. The force is responsible for hunting down spies, terrorists and other threats to this Baltic nation of 2.3 million people and 26 banks.

Now free after two days of questioning, Mr. Smirnovs hasn't been charged. But he is still under investigation for bad-mouthing the stability of Latvia's banks and the national currency, the lat. Investigators suspect him of spreading "untruthful information." They've ordered him not to leave the country and seized his computer.

Hmmm... maybe I'd better be more careful, or more grateful that I live in the U.S. But then, given that the Obama campaign wrote not-so-subtle threatening letters to a radio station airing views he disliked -- and to the FCC to investigate it -- maybe that gratitude should be tempered.

Paulson Plan (v6.3) Wobbly

I'm not fond of snark, and "I told you so" is never an attractive-sounding phrase. But one can't help but elicit no surprise at this, an auditors report on TARP, the infamous Paulson Plan:

Treasury has not yet set up policies and procedures to help ensure that (taxpayer dollars) are being used as intended... Treasury also has no policies and procedures in place for ensuring that the institutions are complying with these requirements or that they are using the capital investments in a manner that helps meet the purposes of the act... Treasury cannot effectively hold participating institutions accountable for how they use the capital injections or provide strong oversight of compliance with the requirements under the act.

What did Congress, or anyone else, think was going to happen after the ill-considered, hastily passed, near blank check that was HR 1424? Alas, the question contains its own answer. The results of thinking is the one thing this panic-induced plan never contained.

But there's a more fundamental flaw in both the plan and the criticism contained in that auditor's report and news story: its pragmatic, piece-meal approach, as if had these gaps been filled it would have been a good plan. Au contraire. The Feds had no right to remove capital from private hands to dole out to (resistant, in some cases) banker's hands in the first place. It was bound to be impractical and immoral. The Federal Government has no business trying to 'save' the financial system, no matter what happens.

Imagine, for a moment, that your neighborhood police force decides — in the name of 'saving' you — to remove money from your dresser and give it to your neighbors. Does it matter whether your neighbors (or you) are crack addicts or the most upstanding of citizens? Does it matter if the sudden infusion of funds results in your neighbor becoming the most assiduous gutter trash remover within 10 blocks or if it just feeds his habit? You've still been robbed and the police have behaved like thieves when they're supposed to be protectors.

The size and status of the Federal Government introduces no new principles to the scenario, they only make the misery bigger. Keep in mind, after all, what kind of town has a police force that takes money from one neighbor to give to another.