Saturday, February 28, 2009
Some years ago when I worked at the libertarian Cato Institute, we used to label any new hire who had not yet read "Atlas Shrugged" a "virgin." Being conversant in Ayn Rand's classic novel about the economic carnage caused by big government run amok was practically a job requirement. If only "Atlas" were required reading for every member of Congress and political appointee in the Obama administration. I'm confident that we'd get out of the current financial mess a lot faster.
Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.
Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.
In the book, these relentless wealth redistributionists and their programs are disparaged as "the looters and their laws." Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the "Anti-Greed Act" to redistribute income (sounds like Charlie Rangel's promises soak-the-rich tax bill) and the "Equalization of Opportunity Act" to prevent people from starting more than one business (to give other people a chance). My personal favorite, the "Anti Dog-Eat-Dog Act," aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn't Hank Paulson think of that?
These acts and edicts sound farcical, yes, but no more so than the actual events in Washington, circa 2008. We already have been served up the $700 billion "Emergency Economic Stabilization Act" and the "Auto Industry Financing and Restructuring Act." Now that Barack Obama is in town, he will soon sign into law with great urgency the "American Recovery and Reinvestment Plan." This latest Hail Mary pass will increase the federal budget (which has already expanded by $1.5 trillion in eight years under George Bush) by an additional $1 trillion -- in roughly his first 100 days in office.
The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."
When Rand was writing in the 1950s, one of the pillars of American industrial might was the railroads. In her novel the railroad owner, Dagny Taggart, an enterprising industrialist, has a FedEx-like vision for expansion and first-rate service by rail. But she is continuously badgered, cajoled, taxed, ruled and regulated -- always in the public interest -- into bankruptcy. Sound far-fetched? On the day I sat down to write this ode to "Atlas," a Wall Street Journal headline blared: "Rail Shippers Ask Congress to Regulate Freight Prices."
In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.
The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."
Ultimately, "Atlas Shrugged" is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand's political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear -- leaving everyone the poorer.
One memorable moment in "Atlas" occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:
Galt: "You want me to be Economic Dictator?"
Mr. Thompson: "Yes!"
"And you'll obey any order I give?"
"Then start by abolishing all income taxes."
"Oh no!" screamed Mr. Thompson, leaping to his feet. "We couldn't do that . . . How would we pay government employees?"
"Fire your government employees."
Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax "for purposes of fairness" as Barack Obama puts it.
David Kelley, the president of the Atlas Society, which is dedicated to promoting Rand's ideas, explains that "the older the book gets, the more timely its message." He tells me that there are plans to make "Atlas Shrugged" into a major motion picture -- it is the only classic novel of recent decades that was never made into a movie. "We don't need to make a movie out of the book," Mr. Kelley jokes. "We are living it right now."
Mr. Stephen Moore is senior economics writer for The Wall Street Journal editorial page.
Friday, February 27, 2009
Thoughts from the Right Side
Blind Men In A Dark Room
by R.C. Blogger Christian Stockel
President Obama’s first five weeks has included a poorly orchestrated and less than competent effort at addressing the principal issue for which he was elected to address. In fact, President Obama’s approach has been to outsource the whole affair to Nancy Pelosi and Harry Reid and play the role of pitch-man for a legislative monstrosity. Apparently, the only requirements President Obama provided to Congress could be framed in the phrase – “make it big and make it quick”. In fact, the whole approach outlined by President Obama and the Democrats in Congress is to jolt demand so that the U.S. does not enter a ‘lost decade’ like Japan did in the 1990’s. The mammoth economic stimulus package has been followed up with a $275 billion mortgage assistance program, and a $410 billion budget Omnibus bill. We are only in the fifth week of an Obama administration. Unfortunately, Obama and Congress are ignoring the lessons learned from Japan’s experience in the 1990’s and are jeopardizing America’s financial future in the process.
The American people expected that President Obama would come to the White House with a plan in hand (as he repeatedly said his team was preparing since his election victory) crafted with specific, targeted, and effective plans to address the core economic problems facing the nation. Instead, Obama’s promised change took the form of spending bills no different from the pork laden bills passed in Congress’ past. In addition, these bills include hidden foundations for an aggressive expansion of the federal government into healthcare, education, and energy. The American people voted for a brand new type of politics, a cool image, and an idea that was neatly packaged and delivered by an adoring media. Instead, they got Harry Reid and Nancy Pelosi. The term ‘buyer’s remorse’ does not do the situation justice. When asked to defend the particulars of the Congressional stimulus plan, the only defense Obama could provide was that “stimulus is spending – what else could you expect?”
The unfortunate truth is that no amount of spending, tax cuts, or any combination of the two can get us out of this mess quickly or painlessly. Our current economic situation is the not the result of Bush tax cuts or even a failure of capitalism. It is the result of over 15 years of lax monetary policy, here and abroad, and reckless fiscal policies that has resulted in an over exposure to real estate investments in the U.S., shoddy loans to corporations in the EU, and over extension of consumer credit in the UK. The broad spectrum of poor asset quality on bank balance sheets and the overhang of corporate and personal debt have set off a deflationary cycle across all of the major economies resulting in slowing or declining economic growth. It is the price to be paid for individuals, companies, and governments living beyond their means. There is no sound logic that supports a stimulus program relying on the very fiscal and monetary policies that got us into trouble in the first place. The sheer scale of the financial crisis precludes any effective Keynesian policy coming out of Washington.
Japan’s lost decade was a single country’s experience with deflation in the midst of a global economy that was expanding at a fairly torrid pace. Japan issued multiple stimulus plans similar to the ones we are proposing now – roads, infrastructure, studies, industrial plans, etc. The result was unneeded roads and “bridges to nowhere”. Japan’s stimulus programs during the 1990’s were very large, quadrupled Japan’s national debt, and yielded little to no results. If the United States were to enact programs of a similar scope – we would have to spend $19 trillion – an amount that makes the current stimulus package seem paltry. So, what makes the administration think this bill – as ill formed as it is – will work? Recent historical precedence indicates it will do nothing except add to our national debt and risk future potential growth. It also ignores the dire situation our largest trading partners are experiencing.
The Scope of this Problem Precludes Any Quick Fix
The situation facing the United States and the western world is larger in both depth and scope than what Japan experienced in the 1990's. Japan could leverage world wide economic growth to help inflate its economy. Unfortunately, the United States is only one of many countries facing a shaky banking system, frozen credit markets, and decreasing demand. The EU has a reported $16 trillion in toxic loans sitting in its bank’s balance sheets approaching almost 95% of the EU GDP – and this does not include government or consumer debt. There are signs of weakening demand in the EU zone and a large financial meltdown in the UK. In fact, personal credit card debt in the UK exceeds its annual GDP. China is also impacted since its primary export markets are all in the same boat. China can look to internal demand for its primary industries, but even astronomical growth in Chinese demand cannot reverse the inertia in the broader global economy. A large number of the largest corporations in Europe have loans that cannot be paid because of falling demand for goods and services. Japan is also starting to re-experience what it had in the 1990's. More importantly, the EU and Japan are in the throws of an extreme demographic decline. They are both aging rapidly and having fewer and fewer children. In the long run, the EU and Japan will not have any large body of consumers buying or producing goods or services. So where in the world is there enough pending demand to reverse this current cycle of deflation? There is none.
Doing Nothing is An Option
The Obama administration is throwing old thinking at a new and unprecedented problem. A world-wide deflationary cycle with structural problems in major trading partners that point towards a long term economic slow down. The President explains that the current situation requires swift, immediate, and substantial action. According to him, doing nothing is not an option. Well actually it is an option and it is the only feasible option for the U.S. government to pursue. There is no stimulus package that the U.S. Congress can craft – regardless of content – that will be sufficient to counter-act the inertia in the world economy. Some will counter-argue that doing “something” is better than nothing. This argument ignores the fact spending all this borrowed and/or printed money in a vain effort to counteract worldwide economic trends will have real and substantial negative impacts on the long term prospects of the American economy that will greatly outweigh any short term benefits. It also ignores a simple fact that President Obama, Democrats, and liberals have never been able to accept. The government does not control the economy. It is merely one of many actors in the economy and is still subject to the same laws of economics that govern every business, household, and individual. It has size and the ability to print money on its side, but over time economic constraints and reality will impose themselves on the government’s capacity to impact the economy.
The U.S. government, the EU, the UK, and even Japan has increased borrowing and spending to stimulate their economies, support failing banks, and aid hurting industries. This constant flow of currency and bonds into the market will result in a flight of capital from monetary assets damaging the value of fiat currencies. Investors and institutions will move wealth to hard assets like gold, silver, copper, metals and other commodities. The result will be sudden inflation. However, it will not be demand-pull inflation, but monetary inflation. We will revisit the stagflation of the late 1970's as the major currencies drop in value and the price of gold, silver, metals, oil, etc go up and people's wages stay the same. We could quickly face a situation that makes our current one look mild. More importantly, the damage done to the world economy by out of control spending and a relentless growth of government will take at least a generation to reverse. The social impact on our Republic will be more profound than the financial impact. We have reference within American history that can provide an idea of the dangerous territory we are entering.
As counter-intuitive as it may seem, the federal government should let the markets work through this recession. Poor performing companies need to go through bankruptcy and restructuring. People who over-extended themselves should face foreclosure and learn how to rent. Congress and the Administration should look to securing the value of our currency, cut back on government spending, address regulatory failings that contributed to this crisis, and improve the condition of the nation's public finances. More importantly, President Obama should stop handing out candy to his political constituents and speak plainly to the American people as if we were adults. Explain to them that we are paying the price of financial and fiscal profligacy at all levels of our society. The United States, and the rest of the west for that matter, has been living beyond its means for two to three generations. He can offer real hope by implementing real and constructive solutions that while painful in the short term – will lead to real long term stability, growth, and prosperity. It will also go a long way to reversing the growing mentality of entitlement that has taken hold of the American people. As a free people, we should be looking to friends, family, and community to address the challenges in our lives – not look to the government.
I am not holding my breath.
Tuesday, February 24, 2009
Thursday, February 19, 2009
Wednesday, February 18, 2009
Want a good laugh?? After more than doubling the size of the deficit in just one month, President Obama will host a “fiscal responsibility summit" some time next week.
By the way, where does the Obama Team find the puppets they bring in for the President's announcements, press conferences, and townhall meetings??? They (men and women) look like the young girls who used to scream and faint over Elvis in the 50s and 60s. Quite pathetic...
For the last 35 years, educators and analysts at The Heritage Foundation have been intimately involved in the nation's great public policy debates. In all that time, we have never encountered legislation with such far-reaching and revolutionary policy implications as the American Recovery and Reinvestment Act currently before Congress. And never have we seen a bill more cloaked in secrecy or more withdrawn from open public exposure and honest debate.
In addition to being the single most expensive bill ever proposed, this measure calls for a massive expansion of the federal government's reach into the day-to-day life of virtually every citizen, business and civic organization in the nation. That, in itself, should be the subject of an extensive public conversation and thoughtful debate. Instead, we have seen Congressional leaders schedule snap votes on a 1,434-page bill that no one—repeat, no one—has had a chance to read in its entirety, much less digest and deliberate.
This bill has been advertised as an economic stimulus bill—despite the fact that the Congressional Budget Office estimates it will actually weaken our nation's long-term economic growth. While the stimulative utility of the bill is, at best, questionable, it would unquestionably rewrite the social contract between the American people and their government. For example:
(1) The bill reverses the bipartisan and highly successful welfare reforms of 1996 and drastically expands the welfare state. For instance, it will start rewarding states for adding people to their welfare rolls, rather than for helping them find gainful employment. And contrary to long-established practice, it will entitle able-bodied adults without children to receive cash assistance.
(2) It does extreme violence to the concept of federalism—bailing out states that have spent irresponsibly at the expense of taxpayers in states that have been fiscally prudent.
(3) It greatly shifts the responsibility and power over health care delivery and decision making from individuals to government. Among other things, it would create a new federal health board to decide which medical services are "effective" in America, paving the way for government effectively to overrule the clinical decisions of private physicians.
(4) It deliberately censors religious speech and worship on school campuses by prohibiting use of any "stimulus" funds for facilities that are used for sectarian instruction, religious worship, or a school of divinity.
The list goes on. These and similar provisions will mean fundamental changes in our society. In many instances, the bill would establish policies that directly challenge widely held American values.
We are appalled that Congress is even contemplating such profound changes with so little openness and due diligence. In the past, major policy changes in our welfare system, or health care, or trade policies, etc., were always, quite properly, preceded by extensive public conversation and full debate. That is how a democracy should make important decisions.
The failure of Congress and the Administration to allow that debate is damaging to our democracy. Both chambers of Congress suspended their budget rules to push it along. And both the President and the leaders of the House and Senate have violated their solemn promises that the bill would be available for several days of public review prior to voting, so that the American people might have a chance to learn what is in the bill and to make their views known to their elected officials.
This reckless approach to governance can only undermine public faith in our elected officials and our government as a whole. We call on Congress and the Administration to live up to their promises and stated ideals, and give the democratic process a chance to work.
Ed Feulner is president of The Heritage Foundation
Sunday, February 15, 2009
Saturday, February 14, 2009
Outgoing President George W. Bush quietly boards his helicopter and leaves for Texas, commenting only: “Today is not about me. Today is a historical day for our nation and people.”
January 20, 2001
Outgoing President Bill Clinton schedules two separate radio addresses to the nation, and organizes a public farewell speech/rally in downtown Washington D.C. scheduled to directly conflict with incoming President Bush's inauguration ceremony.
January 20, 2009
President Bush leaves office without issuing a single Presidential pardon, only granting a commutation of sentence to two former border patrol agents convicted of shooting a convicted drug smuggler. He does not grant any type of clemency to Scooter Libby or any other former political aide, ally, or business partner.
January 20, 2001
President Clinton issues 140 pardons and several commutations of sentence on his final day in office. Included in these are: billionaire financier, convicted tax evader, and leading Democratic campaign contributor Marc Rich; Whitewater scandal figure Susan McDougal; Congressional Post Office Scandal figure and former Democratic Congressman Dan Rostenkowski; convicted bank fraud, sexual assault and child porn perpetrator and former Democratic Congressman Melvin Reynolds; and convicted drug felon Roger Clinton, the President's half-brother.
January 20, 2009
The Bush daughters leave gift baskets in the White House bedrooms for the Obama daughters, containing flowers, candy, stuffed animals, DVD's and CD's, and heartfelt notes of encouragement and advice for the young girls on how to prepare for their new lives in the White House.
January 20, 2001
Clinton and Gore staffers rip computer wires and electrical outlets from the White House walls, stuff piles of notebook papers into the White House toilets, systematically remove the letter "W" from every computer key-pad in the entire White House, and damage several thousand dollars worth of furniture in the White House master bedroom.
Headlines in January 2001
"Republicans spending $42 million on inauguration while troops Die in unarmored Humvees"
"Bush extravagance exceeds any reason during tough economic times"
"Fat cats get their $42 million inauguration party, Ordinary Americans get the shaft"
Headlines in January 2009
"Historic Obama Inauguration will cost only $170 million"
"Obama Spends $170 million on inauguration; America Needs A Big Party"
"Everyman Obama shows America how to celebrate"
"Citibank executives contribute $8 million to Obama Inauguration"
Friday, February 13, 2009
THERE ARE ongoing discussions and debates among conservatives about the kind of president Barack Obama will prove to be, and about how they should react to him. But there is a larger and more important debate going on within conservatism—a debate about what conservatism is. Remarkably, we are hearing from a lot of people who are thought to be conservatives that conservatives need to "get beyond Reagan." After all, these people say, "The Reagan era is over." And the liberal media love to print their articles and broadcast their pronouncements to this effect. My response is, well, yes, the Reagan era is over in the sense that it has been 20 years since Reagan was president. But the funny thing is, I never heard the liberals saying that because the era of FDR was over-it ended in 1945-that they needed to "get beyond FDR." They didn't say that 35 years later when Reagan was first elected, or when he was reelected in 1984. They didn't say that when the liberals lost Congress in the 1994 election. Nor did they say it after the 2000 or 2004 elections. Instead, they kept arguing and fighting for the ideas they believe in. And now Mr. Obama is plausibly promising to revive the era of FDR.
Tuesday, February 10, 2009
Yesterday the Pew Research Center released a new poll on the economic stimulus debate. Like every other poll taken so far, the Pew poll showed again that support for President Obama's Trillion Dollar Debt Plan has fallen since it was first announced. While 92% of those polled viewed Obama as a good communicator, those Americans that were paying the most attention to the stimulus debate also were the most opposed to the plan. The more that Obama's lofty rhetoric is tested against fact and common sense, the less support his policies have. Below are just the five most audacious sales pitches Obama employed to gin up support for his Trillion Dollar Debt Plan.
No Earmarks: "What it does not contain, however, is a single pet project, not a single earmark, and it has been stripped of the projects members of both parties found most objectionable." - This is a clever semantic ploy by Obama. While it is true that no individual Congressman stuffed a Bridge to Nowhere in the bill's conference report, when Speaker Nancy Pelosi (D-CA) and Rep. David Obey (D-WI) wrote the bill, they included billions of line-item spending elements to payoff leftist interest groups, including: $450 million for NASA "climate-research missions”, $600 million for NOAA “climate modeling”, $2 billion for a single power plant in Obama's home state of Illinois, and on and on.
4 Million Jobs: "My bottom line is to make sure that we are saving or creating 4 million jobs." -Obama is not creating 4 million jobs. According to the Congressional Budget Office, under the most optimistic models Obama's Trillion Dollar Debt Plan would create only 3.6 million jobs and could produce only 1.2 million jobs. And one in five of these jobs will be a government job.
Spending: "Look, I would love not to have to spend money right now. This notion that somehow I came in here just ginned up to spend $800 billion, that wasn't -- that wasn't how I envisioned my presidency beginning." - Obama's chief of staff exposed this lie when he said;" Never allow a crisis to go to waste…They are opportunities to do big things." But the bill itself is all the proof you need to know that Obama and his leftist allies thoroughly love their chance to blow a trillion dollars. The Obama Trillion Dollar Debt Plan doubles the size of the Department of Education and creates 32 brand new government programs. Worse, it sneaks in a major down payment on Obama's health care plan creating the bureaucracy and tracking systems necessary to force socialized medicine on the American people.
Free Lunches: "Once the economy stabilizes and people are less fearful, then I do think that we're going to have to start thinking about how do we operate more prudently, because there's no such thing as a free lunch." - Obama's Trillion Dollar Debt Plan is founded on the belief that government's can provide endless free lunches to the American people. Does Obama believe the trillions he wants to spend grows on trees? Nobel laureate Gary Becker writes: "There are no free lunches in spending, public or private. The increased federal debt caused by this stimulus package has to be paid for eventually by higher taxes on households and businesses. ... The burden from higher taxes down the road has to be deducted both from any short-term stimulus provided by the spending program, and from its long-run effects on the economy."
Japan: "We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough, and as a consequence they suffered what was called the "lost decade" where essentially for the entire '90s they did not see any significant economic growth." - This statement is audacity defined. Since 1992 Japan has spent $6.3 trillion in stimulus spending, racking up the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy. And this massive borrow-and-spend splurge did nothing to help the economy. And Obama thinks this is evidence in support of his Trillion Dollar Debt Plan?
No wonder support for Obama's economic stimulus plan is sinking like a rock.
Friday, February 6, 2009
As Americans, we should reflect on the tremendous impact President Reagan had on our country in terms of patriotism, economic conditions, taxes, defense, and leadership. It is quite remarkable how far we have fallen in terms of Presidential leadership and economic "solutions" since Reagan's election in 1980.
To think that just yesterday, we witnessed the U.S. Senate debating a pork-filled "stimulus" bill worth nearly $1 trillion and listened to a President who gave a very unpresidential speech at a Democrat retreat in Wiliamsburg, Va. engaging in petty partisan politics and name-calling. When one becomes President of the United States, you need to demonstrate leadership, maturity, confidence, and a willingness to listen to others with different points of view.
It is simply another example of tye hypocrisy exhibited by Dems/Libs time and time again. Most notably, they claim to be the party of compassion and against corruption and bigotry, but in fact, they are the party that most represents those traits. So far, the only "Change" I've seen with President Obama is the nomination and appointment of tax cheats. Each passing day of the Obama Administration makes it that much clearer that the Reagan Revolution was the greatest political era of the second half of the 20th Century.
Happy Birthday, President Reagan!
Tuesday, February 3, 2009
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