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The Campaign and Rick Perry

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With this post, I continue a short series consisting of my analyses of the Republican candidates for the nomination for President.  To recap, I’m limiting my discussions to three candidates: Mitt Romney, Rick Perry, and Herman Cain.  The structure of this series consists of a collection of posts concerning what I don’t like about the candidates and then a series of what I do like about them.  I’ll conclude with my endorsement of a single candidate.  In this post, I’ll talk about what I don’t like about Governor Rick Perry.

Economy: Perry’s economic success may well have stemmed largely from Texas’ blessings of energy wealth: oil and gas.  To the extent that this is true, it’s a model that won’t play well nationally, even though similarly freeing, and acting on, other national regions’ energy wealth would be important to a national recovery.  The real problem here, though, is his lack of experience with a diversified, or a national economy.  The Texas economy has enormously diversified since the oil bust of the ’80s, but it beyond mineral wealth and ranching, it’s really only added in significant degree a technical capacity for telecommunications, computers, and networking.  This is an important component, but the Texas economy still lacks the diversity of the nation’s economy.  The other problem here, though, is Texas’ low government support for research and development.  In an environment needing reduced spending, and in an environment with a growing popular recognition of the need for downsizing government generally, government support for R&D remains a legitimate component of government support for infrastructure.

Policy: Many of Perry’s policies are sorely lacking, and they carry overtones Big Government Knowing Better that are indistinguishable from President Obama’s.  His view that Medicare should be gotten rid of and the matter turned over to the states is one.  The question of government support, at any  level, for medical insurance is a national question and must have a national answer—even if the answer is to get rid of Medicare and privatize health insurance altogether.  Further, leaving Medicare to the states does not provide a market solution for reducing the cost of either health insurance or health services; on the contrary, it prevents both industries from entering a free, competitive market.

Perry’s response to sexually transmitted diseases—in this case Human Papillomavirus (HPV)—was nothing but Big Government in action.  His decision to require school girls to be vaccinated against this cancer-causing virus, to be vaccinated without allowing parental input, and to require it by diktat—by Executive Order—was reprehensible.  He says he regrets that error and has learned that lesson, and he acknowledges that he should have gone through the Texas legislature to achieve that.  But two things about this incident remain unclear to me: for all his words about that having been a mistake (and I believe him to be sincere), he made the mistake, and I worry that he might make a similar mistake on the national level.  The second thing that’s unclear to me is his view of the legislature.  Does he believe he should have gone to the legislature on this matter (or any other) because he recognizes that body as the people’s representatives and that it speaks with their voice, or does he view the legislature as another arm of Big Government, to tell the citizenry what they may do?

Perry’s handling of immigration is…uneven.  He does have a very good record of providing security to the Border Area, despite tacit, and active, Federal obstacles to security there.  His provision of schooling to illegals, at in-state tuition rates, and so on the taxpayers’ dimes, is misguided at best.  Those who decry this as just making the area a magnet for illegal immigration are right.  That it’s children of illegals that are affected adds to the heart-wrenching nature of the situation but does not alter the failure of the policy.  But to defend this by insisting that those who disagree with him are heartless is no different than Progressives accusing Tea Partiers who disagree with Obama of being racist.

Communication Skills: Tossing off sound bites like “Social Security is a Ponzi scheme,” or Bernanke’s behavior “borders on treasonous” makes for good copy, but it doesn’t communicate well the problems he sees with those matters.  Also, recall his defense of his higher education for illegals policy just above.  In the end, what’s the value of sound principles and good ideas for implementing them, if they can’t be explained to a skeptical (at best) opposition in the public and in the Congress?

The Campaign and Mitt Romney

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With this post, I’ll begin a short series of posts consisting of my analyses of the Republican candidates for the nomination for President.  Keep in mind that you’re getting these analyses for free; it’s entirely possible that you’ll getting your money’s worth.  The structure of this series will consist of, first, a collection of posts concerning what I don’t like about the candidates, then I’ll have a series of what I do like about them.  I’ll conclude with my endorsement of a single candidate.  To be sure, my endorsement will have enormous value for the lucky pick; he’ll be able to take it to a famous coffee chain with a few bucks and get a truly adequate cup of coffee.

With Governor Christie confirming that he’s a man of his word and will honor his commitment to his fellow New Jerseyites by remaining their governor for the rest of his term, the Republican list of candidates is narrowing and sorting out.  The serious candidates are beginning to look like Mitt Romney, Herman Cain, and Rick Perry.  Other members of the field, who once had a chance, include Michelle Bachmann, Newt Gingrich, Ron Paul, and some others, but they’ve all made too many gaffes, or exposed too much ignorance in key areas, or have too much baggage, or simply haven’t been able to gain enough traction to be taken seriously.  Rick Santorum and Jon Huntsman, I hope, will be back in 2012 or 2016; they deserve a more serious look than the current season is giving them.  There’s something to like about each of those top three, though, and something to dislike.

I’ll kick off this series with a discussion of ex-Massachusetts Governor Mitt Romney.

There are two key areas in Romney’s history that give me considerable disgruntlement.  His position on the environment is…uncertain.  He favors, apparently, cap and trade limits to carbon emissions, and so to economic growth—based on pseudoscience from anthropomorphic climate warming priests—until he turned against them.  He stood outside a coal-fired power plant and accused it of, if not outright murder, at least of killing people.   In an Obama-esque blame shift, Romney insists that his carbon emissions limits program was actually the work of prior administrations, but here’s what he did on his watch to block them: “These carbon emission limits will provide real and immediate progress in the battle to improve our environment,” then-Governor Romney said in a December 2005 press release, in which he also bragged that Massachusetts was then the first state to set CO2 limits.  He worked for a regional agreement among nearby states set up an area-wide carbon cap and trade régime, until he bailed on it in 2005 when he decided not to run for governor of Massachusetts anymore and instead look for the Presidency.

Health care.  Governor Romney insists that Romneycare is right for Massachusetts, but it’s not a national plan, and cannot be: each state is unique and has its own environment.  That last part is pretty good, but let’s look at the first part.  Was it right for Massachusetts?  Romney insists that he’s enrolled more citizens of Massachusetts in health insurance coverage than had been “possible” before Romneycare.  But at what cost?  He claims that every citizen of Massachusetts, while required by state government to buy health insurance, does so in a competitive market.  Set aside any argument about whether the State’s insurance markets truly are competitive—it’s irrelevant.  The problem is that we have a government requiring a free citizen of the United States to turn his property to government purposes, rather than for that citizen’s purposes.  We have a government dictating to a free citizen what he must buy, solely as a condition of his status as a citizen of Massachusetts.  This may be legal for a State to do to its citizens under the 10th Amendment, but it’s still wrong.

On the matter of Obamacare, most of the candidates have vowed to repeal it at the earliest opportunity and to work “from day one” to do so.  Romney, too, has vowed to defang Obamacare on his first day in office: via Executive Orders granting every state waivers against compliance with the state mandates organic to Obamacare.   But these  Orders will leave intact the individual mandate, taxpayer-funded exchange subsidies, a huge taxpayer-expensed Medicaid expansion, the robbery from Medicare, and Obamacare death panels.  In fact, while every other Republican candidate has vowed to push repeal from the start, Romney has not.  He’ll only implement those Executive orders (which any subsequent President can rescind), while he’ll “try real hard” to get repeal.  He won’t try at the expense of pushing a vote in the Senate, though.  Why is he avoiding a fight in the Senate?  Because a Democrat minority might remain strong enough to maintain a filibuster.  It seems that Romney will surrender control of the Senate to a Democratic Party minority, rather than fight for repeal.  Certainly it’s true that one should pick ones fights carefully, but there comes a time when you have to fight even when you know you’ll lose because the principle is that important.  If you don’t have any principles worth fighting for, what principles do you have?

Progressives and Taxes

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Some of our friendly wealthy have been saying that they want to pay more taxes, and that because they’re willing to do so, everyone else who’s “rich” (i.e., individuals with $200k and couples with $250k of annual income) should be required to pony up, too—even though these other  folks aren’t rich: most in this income range are the small businesses that are the job engines that would run on all cylinders if government would only get out of the way.

Progressives are awfully willing to spend other people’s money; let’s see what would happen if they (voluntarily) spent their own, instead.  But before we get to that, let’s look at who actually gives what to, oh, say, charity.

According to the GivingUSA Foundation, Americans donated over $300 billion to charity in 2008, of which individual Americans gave nearly $230 billion.  This total breaks out rather interestingly.  According to Arthur Brooks, President of the American Enterprise Institute, as reported by him in a The Wall Street Journal column in January 2009, folks who considered themselves conservative or very conservative, donated between 3.5% and 4.5% of their income, while those who considered themselves liberal or very liberal donated between 1.2% and 1.5% of their income.  And these rates were pretty constant over all income levels—including the poor.  No wonder these skinflints want to spend everyone else’s money—they don’t want to have to spend any of their own.

Since Warren Buffet made his plea in the New York Times article at the link in the first paragraph above, he’s been invited to just write a big check to the US Treasury, if he thinks the government needs his money so badly.  Of course, he demurred (and, also of course, as The Wall Street Journal noted a few days after Buffet’s column in the NYT, he omitted mention that most of his income is in forms only the Buffet super-rich can access).  Other Progressives also have been invited to make donations to the US Treasury, but they deflect the suggestion, insisting it’s ridiculous to ask them just to write their own checks; individuals can’t do this alone; it has to be a collective thing.

Okay, let’s look at the Progressive collective and do some back-of-the-envelope calculations.  According to a Gallup poll in 2010, about 31% of all American registered voters were members of the Democratic Party.  According to a Pew poll in the same year, about 47% of registered voters were members of the Democratic Party, or leaning that way (one supposes something like a registered Independent with Democratic Party tendencies).  For this calculation, I’ll use 40% Democrats to sort of cut a middle ground between the two polls and pick up some of those leaners.  And because the round number makes the arithmetic a bit easier.

For 2010, the Federal government collected some $1.1 trillion in personal income taxes from all individual taxpayers.  Actually, this estimate bounces around a bit, depending on whether we use Census Bureau aggregations, revenue collections as a per cent of GDP, and so on, but we’ll use this figure; it’s pretty much in the middle of the range, which isn’t all that broad.

If we naively assume that all Americans, registered voter, leaner, or otherwise, sort out roughly along the lines of those two polls, we can use 40% of all Americans as Democrat in some way, and these 40% of Americans paid around $440 billion of those $1.1 trillion of taxes.

Progressives are all quite dedicated to our country’s welfare, and they want our Federal government to have more money so our country can be even better off.  So, what if they all chipped in a bit more for Uncle Sam’s Treasury department, in the form of a donation to Treasury?  If they donated, over and above their ordinary tax bill, just an amount equal to 10% of that tax bill, they’d donate in their aggregate an additional $44 billion to the Feds.  That’s a drop in the ocean of the Obama Debt, but that ain’t walkin’ around money, either.  That’s still serious change.  And 40% of Americans aren’t the onesies and twosies that Progressives insist would defeat the purpose of these individual donations.  Except in the eyes of these Progressives: since 40% isn’t everybody, it is just trivial individual effort.

On the other hand, they aren’t far wrong, either, about the triviality of their donations.  If these Progressives gave to Treasury as generously as they do to charity, they’d only be donating about $6.6 billion.  And given the spread between current revenue and current Federal spending, that would be an empty gesture.

Greed and Envy

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Caution: long post….

Greed is wanting more than we have, not because we need more, but simply because we’re dissatisfied with what we have.

While Dante defined envy as “a desire to deprive other men of theirs,” modern usage stems from another meaning: a painful, even resentful, knowledge that someone else has something that we lack, and we want it, too.

But “Greed is good,” Gordon Gecko said, and he wasn’t far wrong.  More accurately, we should never underestimate the power of greed to do good in the world.  Envy is a part of this, in a way; it’s another aspect of greed: it can give a focus to what it is we want that’s more than what we have: sometimes we want that specific thing that he has, if only because he has it already.  Adam Smith understood this; these are his invisible hand.

To greatly oversimplify things, here’s how that invisible hand works.

A man wants something he doesn’t have; he may not be entirely clear on what it is, but he can describe his shortfall at least to some extent.  Another man offers to develop and then make a widget which he says will generally satisfy the first man’s shortfall.  He’ll then sell it to the first man if he will pay for the labor, materials, and a little extra for a profit.  The two agree on the terms of the transaction, and in short order, one man has a widget he didn’t have before, and the other man has some money he didn’t have before.

Another man sees the first man’s widget and tells the second man he wants one like that.  A conversation occurs, and in short order the third man has a widget, too, and the second man has a bit more money.

Soon a fourth man approaches the second and says that if the second will make a bunch of widgets, the fourth man will buy them all and resell them elsewhere.  Now lots of people have widgets, the widget maker has much more money, and a seller is making money.

A fifth man comes along and says this to all those who’ve bought widgets: “All your widgets look alike.  I have a fine selection of gee-gaws that you each can add to your widget to make it a truly unique possession, which no one else has.”  And others see the gussied up widgets and want—and conclude transactions to obtain—widgets that are just like this man’s, or just like that man’s.

A sixth man says he can improve on the widget: he can make a Widget DeLuxe, or a wodget, either of which is better than even a gussied-up widget.  And so on.

All of those original players—buyers, developers, manufacturers, sellers—are better off for these free exchanges: each has, as a result of the exchanges, something of value to him that he didn’t have before, and he got it at a price he considered worth paying—whether in labor or in money—in order to get that thing.  On top of that, additional jobs were created—additional sellers; manufacturer helpers; after-market developers, manufacturers, and sellers—and these new job holders are all better off than they were before: they have jobs, now, and the wherewithal to buy widgets, if they wish.

In all of this economic growth, in all of this wealth increase, greed and envy played their roles in driving the system.  Every participant acted on his own self-interest, every participant did what he did to satisfy himself alone.  Yet as a result of the interactions of these individual self-interests, these individual greeds and envies, everyone in the system became better off.

It’s true that the wealth distribution was uneven.  In this simple scenario, the original widget maker seems to have the largest gain, and the sellers seem to have the next largest.  But even the meanest widget buyer is better off now than he was before, and he’s better off in a way that would have been impossible without this commerce: he has a widget he couldn’t even contemplate before because it didn’t exist before, and he has options for a better widget or a wodget, as well.

Notice a critical aspect here, though.  This system was a free market, within which participants to an exchange were able to come together and reach their agreements along parameters that were entirely agreeable to them, and to them alone.  No one was forced into an exchange he didn’t want, no one was barred from an exchange in which he wanted to participate, and each one was free to act solely on his own desires.

Greed and envy are two-edged swords, though, and they certainly can overwhelm a free market.  There is a role for government intervention, and it is to protect all of us from the plainly rapacious.  But that intervention must work to preserve free market mechanisms—the very mechanisms that channel our venalities and convert them to accidental strengths for our common good. This kind of government intervention must enforce contracts, and it must ensure transparency so that every participant can readily understand what it is he is getting—or selling—when he enters that market for his own selfish purposes.  But it must leave each participant free to act in his own self-interest.

When the market isn’t free, when the market is centrally controlled—even when the market is nominally free, but government intervenes too much—the capacity of commerce to turn greed and envy to our common betterment is overwhelmed.  When government intervention favors this or that selected group, for instance—one group didn’t get as wealthy as another, let’s say—then our greed and envy are simply channeled away from functional (if accidental) cooperation for the common good toward simple, resentful, isolated greed and envy: “Why do they get special treatment?  Why can’t I, too?”  Members of the other groups—whether government-designated groups or self-styled (now that government has set a precedent of special groups for special treatment)—stop working to gain the wherewithal to buy, they stop working to produce.  These groups insist, instead, that government intervene in their favor, too.  In short order, the market is no longer producing, and wealth and well-being deteriorate.

Thus, government intervention too easily suppresses the essential cooperative nature that is men and women acting in our own self-interest—including our own greed and envy—to arrive at exchanges voluntarily between those of us who want and those of us who have, or can produce, or can create.  Intervention cannot look to control the forces of the free market, to control by government fiat our greed and envy, without destroying that free market.

“If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary,” James Madison wrote.  But we’re not, and they don’t; we must limit government’s market interventions, as we must government’s power generally.  Greed and envy are part of our nature, but only a free market has the capability of channeling those base parts to our collective benefit.

Jobs

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Jobs is Job One in America, or ought to be, so how’s that working out, exactly?

We’re not in a recession anymore—that ended two years ago.  The economy is growing, too—at a 1.4% rate for the second quarter of 2011, and it’s expected to grow at less than 3% for all of next year (the Fed had been projecting, as recently as last April, a 2012 growth rate of over 4%).  Never mind that it sure doesn’t feel like that to the 14 million Americans who are out of work, or who are badly underemployed.

Let’s review the bidding.  After the debt ceiling agreement was concluded in August, President Obama pivoted to generating jobs, after two years of one of the highest unemployment rates our country has seen since the Great Depression, two years during which he pushed his pet projects at the expense of putting Americans back to work.  His first move was admirable, on the surface: he called on the private sector to hire or train 100,000 unemployed veterans or their spouses by the end of 2013.  His incentive to business was a couple of temporary tax credits for the purpose.  Then he proposed to pay for this with some permanent cuts in Defense: a $400 billion cut in the Defense budget passed that same month (yes, by the Republican House, as well as the Democratic Senate).  That this will force the discharge of still more sailors, soldiers, marines, and airmen is unimportant: they’ll just queue up for Obama’s 100,000.  And he wants reductions in the GI Bill, which has educated countless veterans.  However, at the time of Obama’s proposal, unemployment nationally was over 9%, unemployment among Black Americans was over 15%, and unemployment among military veterans was in the neighborhood of 8.5%.  Was the President serious here, or was he just vote pandering?  One might ask Rep Maxine Waters (Dem, CA).

This is only one example of the failure of trying to give special treatment to select groups.  It doesn’t work, but it does angrify other special groups, who get jealous.

But there’s a larger problem here, and to grow jobs, the entire current set of policies must change.  Government spending is not stimulative, Obama’s claim to the contrary: “So then you get the argument…this is not a stimulus bill, this is a spending bill.  What do you think a stimulus is?  That’s the whole point.”  Government spending is inhibitive of growth: it directly crowds out private sector spending; it drives up prices, which crowds out private sector spending; to the extent that government spending is funded by government borrowing, it crowds out private sector borrowing, which reduces private sector spending; and on and on.

Government spending to stimulate the economy was known to be a failure as far back as FDR’s administrations.  FDR’s Secretary of the Treasury Henry Morgenthau finally figured out, writing in his diary,

We have tried spending money. We are spending more than we have ever spent before and it does not work.  I want to see this country prosper.  I want to see people get a job.  I want to see people get enough to eat.  We have never made good on our promises.  I say after eight years of this administration, we have just as much unemployment as when we started.  And enormous debt to boot.

Sound familiar?

Keynesian “stimulus” spending does not work.  And even Keynes didn’t intend “stimulative” spending to be a permanent régime, but only a temporary bump.

On the other hand, temporary tax cuts don’t work, either.  All such temporary tax “stumuli” do is bring future consumer and business spending forward to the present.  When that spending is done, and the temporary tax cuts expire, spending falls off a cliff, as the spending that would have been done (that future having become the present) has already been done.  On top of this, there is no new spending to take its place—especially in an economic environment like today’s, with our high unemployment, few consumers able to afford more than the bare necessities and struggling to afford these, and few businesses willing to increase spending in the face of falling consumer demand.

More than just these two examples exist, though.  It’s hard to run economic experiments; there are no labs in which to try ideas.  But our history has empirical data from additional efforts at stimulation both with spending and with temporary and permanent tax cuts, together with their results on economic growth and accompanying job growth.  This article from The Wall Street Journal summarizes that history.  It’s a history of the failure of government spending and of temporary tax cuts to stimulate and of permanent tax cuts to foster private sector growth and job growth—by leaving private money in the hands of the experts at money handling: those who earned the money, the private citizen and the private business.

Or we can just go with this President’s same old same old: all those unemployed/underemployed Americans are just getting soft.  They just need to take off their bedroom slippers.  Put on their work shoes.  Shake it off.  Stop complainin’.  Stop grumblin’.  Stop cryin’.  They have work to do.

Somewhere.  Over the rainbow, maybe.