There He Goes Again

Alan Blinder had another one in The Wall Street Journal the other day.  This time he’s bellyachingtalking about the Romney/Ryan ticket and averring that it’s from too deep in right field.  He supports this with three main points grounded in an FDR-ian…consensus:

  • a modest social safety net to protect vulnerable Americans from some of the downsides of unfettered markets,
  • Keynesian-style policies to shorten recessions, and
  • a progressive tax-transfer system to mitigate income inequality

It continues to amaze me that he can say those things with a straight face.  He didn’t make deep right field this time, either.  He fanned.  Struck out in three pitches.

There’s nothing modest about today’s “safety net.”  Far from FDR’s original supplemental income design for social security, with retirees expected to look to their own families for any needed additional support, today’s social security is intended to be replacement income, funded not by themselves and their own families, but solely by direct transfer payments from strangers—at immediate cost to those strangers’ ability to see to their own and their own parents’ financial futures.

Those highly touted, wholly unsuccessful Keynesian policies didn’t shorten the Great Depression, they prolonged it.  By putting floors under food and labor prices, Keynesianism made it far more difficult for companies to resume hiring and for the out-of-work (among too many others) to buy their food (and so were created food stamps).  On top of that, FDR’s Keynesian spending crowded out of the economy that already straitened private sector.  FDR’s own Treasury Secretary confessed the utter failure of these policies.  Henry Morgenthau confided to 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.

Obama’s Keynesian stimulus spending has been a similarly dismal failure.  Unemployment remains above 8% (and underemployment above 14.5%) nearly four years after he began his spending spree.  Fewer people are working today than at the end of the Panic of 2008, even with the 4 million “new” jobs that the economy has created despite his policies.  Obama today has spent “more than we have ever spent before,” it still “does not work,” and he has “never made good on [his] promises.”

To see what does work, review the actions taken by President Ronald Reagan in response to the Carter Recession.  Then go back to the FDR era—just a decade prior to FDR himself—and review the actions taken by President Warren Harding in response to the Depression of 1920-1921, still in progress when he took office (and begun from the policies of another Progressive President).

Mitigate income inequality?  This is the wrong goal, and separately, it’s immoral.  It’s the wrong goal because everyone’s economic prosperity flows from supporting opportunity equality, not income equality, so that every man can show the best that there is in him, so that  every man can seek to the fullest of his ability (in John Adams’ terms) his own happiness.  This also allows—and actively facilitates—every man to maximize his ability to satisfy his duties to himself, his family, and those less well off than he by maximizing his ability to accumulate the resources with which to achieve that satisfaction.  Working toward income equality necessarily caps the ability of a man to maximize the outcomes of his own potential, and it disincentivizes both the man redistributed from and the recipient.  Here, then, is the immorality of forced income equality: it denies every man his opportunity to honor his own obligations.

There are a couple of lesser points in Blinder’s piece.

Any piece of legislation running 2,319 pages will have flaws.

There’s a hint there.  And

For people now under age 55, the Republicans would like to replace Medicare by vouchers that will almost certainly fall short of covering future insurance costs.

There are two small things about this.  First, it’s a carefully static analysis that ignores free market responses to the competition that flows from letting people exercise responsibility for their own medical costs.  But, then, how free would our market be after four more years of Progressive central planning?  The other thing is that this is of a piece with the Progressives’ general refusal to allow any part of today’s Social Security to be privatized.  Americans, you see, are just too grindingly stupid to be able to manage our own fiscal affairs.  We need our Progressive Betters in government to “guide” us.

Factual Errors

Democratic Vice Presidential Candidate Joe Biden had a stirring speech at last Thursday’s Democratic Party convention, touting his running mate’s strong nerves in dealing with our economy.  And it was full of…errors.  Fox News‘ Elizabeth MacDonald has a scorecard; here’s just one item, though.

On the Auto Bailout: “Conviction. Resolve. Barack Obama. That’s what saved the automobile industry.”

Rebuttal: And lots of taxpayer money, $80 billion  to start. GM and its financing arm still owes  US taxpayers $25.1 billion, and taxpayers still own just under a third of GM, or 500 million shares, which remain underwater.  The stock must trade at around $53 a share for taxpayers to breakeven; they currently trade at around $21.  This past August, the Treasury Dept. revised higher the cost of the auto bailout by $3.4 billion, up from the prior estimate of $21.7 billion, an old estimate that had been revised higher over the past year.  GM continues to struggle, as the White House has pressured it to manufacture fuel efficient Chevy Volts, a line of cars GM has pulled the plug on.

Not mentioned in the Vice President’s speech, either, was the Administration’s pressure to pull the plug on car dealerships.  The Obama Administration pressured GM and Chrysler to halt relations with about 2,200 dealers—each one with roughly 50 employees.  That equals to about 110,000 jobs lost.

Notice that careful elision.  That’s 110,000 jobs, wholly unrelated to GM’s bad leadership, that steely-eyed Obama tossed into the can.  Because Big Government knows better than private enterprise—even one like GM—how that private enterprise should run its business.

RTWT.

Some Labor Questions

The Wall Street Journal asked these on Labor Day, and supplied some answers.  Here are some of those questions and answers.

  • Q: How are America’s workers doing? Not good. Over the past decade, over the ups and downs of the economy, taking inflation into account, the compensation of the typical worker — wages and benefits—basically haven’t risen at all. … The Labor Department recently said that 6.1 million workers in 2009-2011 have lost jobs that they’d had for at least three years. Of those, 45% hadn’t found work as of January 2012. … Federal Reserve Chairman Ben Bernanke said Friday that unemployment is still two percentage points higher than normal….
  • Q: Things ARE getting better, though. The U.S. economy is creating jobs, right?  Back in December 2007 when the recession began, there were about two jobless workers for every job opening.  When the economy touched bottom in mid-2009, there were more than six unemployed for every job.  At last count, the BLS says there were 3.4 jobless for every opening.
  • Q: How much of this elevated unemployment is because the unemployed just don’t have the skills that employers are looking for right now?  Some.  …the bulk of the evidence is a lot of the unemployment really is the old-fashioned kind: the kind that would go away if the economy was growing at a stronger pace. Mr. Bernanke said as much at the Jackson Hole conference….

The Democratic Presidential Candidate has taken a bad situation and done little to improve it.  He has, though, actively attacked businesses—the hirers—demonizing them, (over)regulating them, demanding to raise taxes on them.

Tomorrow

I’ll kick the habit tomorrow.  I promise.  I need to get ready, get my mind right, build up to the effort.

That’s what Democratic Presidential Candidate Barack Obama said last Sunday about his spending addiction.  Speaking through his senior campaign advisor, David Axelrod, on “Fox News Sunday,” he said,

You can’t balance the budget in the short term, because to do that would be to ratchet down the economy.

What an awesome display of economic ignorance, even for someone who’s never worked in a real economy in his life.

The economy isn’t already ratcheted down?  With 23 million Americans still out of work or actively underemployed (as in, scratching with part-time jobs, but wanting full-time work)?  With fewer Americans employed today than at the start of his term?  With unemployment above 8% for his entire term?  With a “recovery” since that Panic’s definitional end in early 2009 the worst in American history?  With the Obama tax increases and the rest of his “taxmageddon” set to hammer us in a shade over three months?  With three years of trillion-dollar-plus deficits?  With the nation’s debt $5 trillion larger—one-third larger—than at the start of his term?

Then Obama insisted, again using Axelrod’s mouth, that he’s created 4.3 million jobs since the Panic.  Never mind that while accepting that figure there remain those fewer Americans employed today than then.  Never mind that Obama continues to decline to offer any evidence that he’s responsible for those “added” jobs, that they were not added by what would otherwise be an ordinary business cycle recovery, suppressed by his policies.

Obama insisted, also (through Axelrod, again), that our auto industry was “saved” by his bailout.  Never mind that of the seven major car companies in the American auto industry (GM, Chrysler, Ford, Toyota, Hyundai, Honda, Nissan—all of which import their constituent parts from overseas, and all of which assemble those parts in their plants in the US), only two took his bailout money, and those two are still suffering under significant government ownership.  The other five car companies—albeit generally without significant union employment, and so not in league with Obama—didn’t need “help” at all; the industry was never at risk.  And never mind that had GM and Chrysler been allowed to go through bankruptcy, they would have recovered much faster, without government encumbrances, and without stiffing senior creditors in favor of Obama’s unions.

If the time to balance the budget isn’t now, then when will it be time?  Oh, yeah.  Tomorrow.  I just need another day.

(Over)regulation

Here’s an example, from The Des Moines Register.  Federal banking and mortgage company employment “guidelines,” issued in May 2011 and February 2012, respectively, require these institutions to not employ

executives and mid-level bank employees guilty of transactional crimes, like identity fraud or mortgage fraud.

Fear of Federal litigation, though, has driven these enterprises to apply the regulations across the board to all employees, even the most junior.  Natasha Buchanan, an attorney with Higbee & Associates in Santa Ana, CA notes that

Banks are afraid of the FDIC and the penalties they could face[.]

The results include this one, involving a customer service rep making the princely sum of $30,000 per year.  Richard Eggers is a 68-year-old Vietnam veteran with a conviction, 50 years ago, of using a cardboard dime to try to fool a washing machine in a Laundromat.  He spent two days in jail way back then, and he’s been an upstanding citizen ever since, including that tour in Vietnam.

Now it’s true enough that the FDIC, for instance, has a waiver process that (fired) employees can follow, but it’s a six month-to-a-year effort that might end in denial. Even with gaining a waiver, though, six months is a long time for a low-wage ex-employee to be without a job, especially when it’s caused by Uncle Sugar.  The FDIC also has an “automatic waiver” that supposedly works “faster,” but it’s limited to people sentenced to less than year in jail and who never actually were locked up.  Those two days disqualify Eggers even from this government largess.

This has got to be stopped.