Daily Archives: 12 October 2011

The Campaign and My Choice

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With this post, I conclude my short series consisting of my analyses of the Republican candidates for the nomination for President.  To recap, I limited my discussions to three candidates: Mitt Romney, Herman Cain, and Rick Perry.  The structure of this series consisted of a collection of posts concerning what I didn’t like about the candidates and then a series of what I did like about them.  This is my endorsement of a single candidate.

None of the candidates have adequately addressed the matter of illegal immigration and of illegal aliens.  Some have taken a hard line toward sealing and controlling our borders, and this is entirely appropriate.  However, controlled borders are only half the problem.  The vast majority of the illegal aliens are present in the United States because they want a chance to participate in the American dream, to avail themselves of the benefits of America’s exceptional culture.  They would be highly productive and valuable citizens were they given the chance.  Yet we throw up roadblocks after barriers after obstacles to impede them.  It can take a couple of months to get a non-immigrant visa; B-1 visas can take a month, H-1B visas as long as six months, and the H-1Bs have very low annual quotas. It shouldn’t be that hard to enter the United States legally.  There should be border crossing stations every mile along our border (which, just incidentally, would put the human traffickers—the mules, and worse—immediately out of business).  Visa approval should occur in days, not months (in today’s computerized world, it shouldn’t take months to run a background check), and there should be no quotas.  With none of the candidates addressing this aspect of illegal immigration, their handling of immigration generally is, in this context, I think a wash.

Perry: Perry’s attack ad campaign is tactically foolish and so calls in to question his judgment.  The Republican candidates should be running against Obama and touting their own superior qualities for that task; they should not be attacking each other and giving the Progressives ammunition for the Presidential campaign.

When asked, in Tuesday’s Dartmouth University debate, to be specific about his economic plan, Perry repeatedly said he’d unroll his plan “over the next three days.”  When Romney asked him directly, he responded that Romney had been developing his plan over the last five years, whereas Perry had been developing his only over the last 6 weeks.  This was pretty weak and smacked of excuse-making, especially since Perry has been governor of the second largest state for the last 11 years (and he’s not yet passed up a chance to remind us all of that), and so he has considerable experience at developing economic plans.

Finally, Perry doesn’t communicate well in a fluid environment.  A man who can’t think on his feet isn’t Presidential material.  A Texan who can’t is disappointing.

Romney: Romney’s responses concerning Romneycare and Obamacare in the Dartmouth debate increased my confidence both in his willingness and his ability to repeal Obamacare were he to be elected President, and it showed an ability to respond to Democrats’ attempts at assimilation of Romneycare into Obamacare.

He also has a 160 page Economic Plan, with 59 policy proposals in it.  However, it isn’t that hard to fix our economy and government’s interference with it by limiting spending to less than revenues.  This isn’t rocket science.  This is a Technocrat is overcomplexifying things.

His evasive generalities in response to other economic questions, though (Cain: “can you name some points in your 59-point complex economic plan?”  Romney: <mumble>), indicate to me that he still hasn’t very many specifics fully developed.  And he doesn’t seem willing to get specific; would he take a stand on specifics in dealing with Congress?  Yeah, yeah, I said he’d take a stand here, but his Dartmouth performance makes me wonder about his constancy.  His campaign has been one of avoiding mistakes rather than of advancing concrete ideas.

Finally, at a campaign stop the day before the Dartmouth debate, The Daily Caller asked Romney whether current AG Eric Holder should resign over his performance with DoJ’s Fast and Furious.  Romney’s answer was lengthy and evasive—it took him 35 seconds to say he wasn’t going to say.  When the question was repeated later to Romney’s aide, Eric Ferhnstrom, the aide said Romney “prefers [press] availabilities like this, where his thinking is more organized, as opposed…answering questions on the fly. He doesn’t think that’s conducive to a good conversation.”  See my remarks above about thinking on one’s feet.

Romney is no Eric Cantor, or Paul Ryan.  Or Newt Gingrich.

Cain: Cain’s up from the ranks experience in small businesses and large are a serious plus: in a free market, the entrepreneurs, small businesses, and large businesses are in a positive feedback loop, and that’s a strong economy with a plethora of opportunity.  Cain understands the limits to government effectiveness in that environment, and he understands the necessary fixes, simple fixes.

I like his view of making every section of government justify its budget in detail.  That’s not zero-based budgeting, but it’s close enough, and it’ll work well if not done too often.  He’ll never pull it off, but the threat of it will have its own benefit.

In the Dartmouth debate, he faced serious criticism for the first time: now he’s one of the front-runners, and so a target.  His ability to keep his humor, while providing specifics (he was subject to an “insider” cheap shot when he refused to violate a confidence concerning a couple of possible nominees for his administration) rather than evasion or generalities was refreshing.  And he was able to defend those specifics.  On the other hand, he wasn’t often seriously challenged: “turn 9-9-9 upside down; the Devil is in the details?”  How cute.

His consumption tax is a serious problem, but that can be worked.  Overall, his tax proposal represents a lower set of rates for individuals and businesses, and that’s all to the good: the more of our money left in our hands, under our judgment, the better off our country will be.

In the end, my preference is Herman Cain.  He has the best ideas, and he does, if not the best job, at least a very solid job of presenting and selling them.  And, crassly, it’ll be difficult for the Progressives to keep playing their race card on anyone who disagrees with Obama.  Although we might hear mutterings of Uncle Tom, or Oreo.

Rational Expectations and Jobs and Progressives

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Rational Expectations is the economic theory that people act rationally, by and large and in their aggregate, in their decisions in the market place.  That is, even in the face of incomplete information, people generally form logical predictions about their future, and they act in a logical manner within the framework of their predictions.  Of course, information used in those logical predictions includes government’s actions in the market and people’s own view of what those actions will produce, independently of what government officials might aver.  And of course, in the face of incomplete information, mistakes are inevitable, both individually and across the economy.

The Progressives in government, despite the empirical evidence to the contrary from FDR’s failed Keynesian spending and Obama’s Keynesian Stimulus Act in 2009, instead insist that government spending is stimulative in and of itself, and government taxing is irrelevant to Americans: we will make no predictions from government spending, and we’ll simply accept the taxes as part of our environment; we’ll form no rational expectations of the future from these actions.

Against this backdrop, what are we to make of the Obama Jobs Bill just defeated in the Senate?  Here are the essential components of the Obama proposal:

  • $175 billion in new spending,
  • included in this was $44 billion to cover an extension of unemployment insurance even beyond the present 99 weeks of paying people for not working,
  • a further reduction in the employee’s payroll tax, a parallel reduction in the payroll tax of employers whose payrolls are $5 million per year or less, with this payroll tax reduction set to expire in 15 months, and
  • a permanent surtax of 5.6% on millionaires.

In the Progressive fantasy economics world, employers were to rush right out and hire workers, knowing that just having them on the payroll 15 months from now, their payroll tax cost of these new employees will double.  Never mind that it takes that long in a modern economy for an employer to begin to recoup the hiring and training costs of a new employee and for the employee to become productive.

Also in this world, the new employees in their temporary jobs, and existing employees with their temporary increase in take-home pay, will run right out and spend that money on everything they’ve ever wanted, and the stimulus is carried through.

Finally, in this fantasy world, the millionaires will simply not respond to their new tax: they’ll keep right on doing whatever it is they so nefariously do with their ill-gotten gains.

Here’s what rational expectations says Americans will do, and what we already did, for instance, with Stimulus I in 2009 and with the prior temporary payroll tax reduction (and the one time payments from the Economic Recovery Payment program and the Making Work Pay tax credit).  The fourteen people nationwide who actually got jobs out of Stimulus I did increase their spending, but not by much: they used as much of their windfall as they could to cut into their debts, which had increased sharply as they tried to cover necessary expenses while having no income.  We didn’t spend those payroll tax reductions, knowing they were impermanent—knowing, even, how short-lived they were.  We didn’t spend those one-time payments, either.  Instead, we saved them against future needs, trying to rebuild our savings, or we paid down our debt.  Employers didn’t hire, accurately predicting into the future that those temporary reductions would expire and their costs would expand suddenly and sharply.

The 99 weeks of unemployment payments already have led to a level of extended unemployment duration unmatched in decades: nearly 45% of those currently out of work have been in that state for more than 6 months.  As any freshman Econ student understands, when government subsidizes a thing, government gets more of that thing.  And so it would have been with the proposed extension in unemployment insurance beyond those 99 weeks.

And those millionaires with their shiny, new tax?  They were going to do what any rational human being does: adjust their incomes and investments so as to mitigate the effect of that tax: these job producers, these owners of businesses, were going to reduce their exposures—and not hire more workers in the process.  Those would have been permanent adjustments to their permanent new tax.

These rational responses to temporary government actions were such a complete shock to the Progressives since Stimulus I and those one-time “stimulative” payments that they simply denied the responses occurred.  This is why the Obama jobs bill, thankfully defeated in yesterday’s vote, was proposed in the first place, and why it was structured as nothing more than Stimulus I Reduced.

This Progressive move is part and parcel with their attitude toward the intelligence of the workaday American: we’re just too stupid to think for ourselves.  We’re not capable of behaving rationally.  This is also demonstrated by their mantra that our problem, the reason we don’t just blithely follow them over the cliff, is that we’re too stupid to understand their message.  They must keep adjusting how they communicate with us because we just didn’t get it the first time.  Or the second.  Or the umpteenth.  And so, since we’re too dumb to form rational expectations, their interminable Keynesian spending is perfectly sound economics.

Progressives actually argue, with a straight face, that their programs have saved or created millions of jobs.  Here’s one example of how well that’s actually worked, in the Progressives’ precious “green jobs” milieu, and how honestly their accounting has been done.

Finally, no Progressive (or modern Conservative, come to that) has been able to show that the “recovery” currently in “progress” is due to the “stimulus” bill passed in 2009, or due to the stupendous Federal spending and even more stupendous Federal borrowing, generally, or to some combination of these.  They cannot offer any evidence that whatever anemic recovery might be in progress is due, instead, to an ordinary, normal business cycle recovery.  A recovery that has, in fact, been held back by all of that spending and borrowing, just as the nascent economic recovery in 1937 died shortly after birth from the Federal spending and borrowing and free market interference of FDR.