Tag Archives: ethics

Do Progressives Represent all Americans?

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I don’t often read the jobs welfare program for hack journalists that is The New York Times, but a post by Neptunus Lex drew my attention.

The answer to my question is—apparently not.

As Thomas Edsall writes,

…preparations by Democratic operatives for the 2012 election make it clear for the first time that the party will explicitly abandon the white working class.

…in favor of cementing a center-left coalition made up, on the one hand, of voters who have gotten ahead on the basis of educational attainment — professors, artists, designers, editors, human resources managers, lawyers, librarians, social workers, teachers and therapists — and a second, substantial constituency of lower-income voters who are disproportionately African-American and Hispanic.

As Lex points out, the chosen classes for this Progressive blatantly open class warfare election campaign, does not include educated Americans who do constructive work—doctors, for instance.  Or engineers.  Or scientists.  Or technologists.

Nor need the middle class, of any stripe, apply.  Nor any Americans of Asian heritage, regardless of their “class.”  The Reverend Dr. Martin Luther King longed for the day when men would not be judged by the color of their skin, but by the content of their character.  The Democratic Party itself claims to have fought for the interests of working families and equal opportunities for all Americans for 200 years.  But apparently some groups should have prior claim to these things.  Other groups can come for the ride, maybe, but if they do, they gotta sit in back.

Why is the Party of Obama pushing this divisive class against class, group against group, warfare?  Edsall is clear here, too: so that Obama and his cohorts can get re-elected.

Obama’s alternative path to victory…would be to keep his losses among all white voters at the same level John Kerry did in 2004, when he lost them by 17 points, 58-41….  Obama can afford to drop to Kerry’s white margins because, between 2008 and 2012, the pro-Democratic minority share of the electorate is expected to grow…and the white share to decline….

Their campaign has nothing at all to do with leading our country, or offering solutions to our economic problems.  Just personal political gain.  No matter the divisions he attempts to inflict in the process.

Who’s setting the dogs on whom?

Can We Afford This?

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The International Monetary Fund, reports Belmont Club, is being lined up bail out Italy and Spain to the tune of an $800 billion aid package.  With the US as the IMF’s largest contributor, our “share” of this works out to more than $140 billion.  Can we afford this bailout (I won’t go into “after all the other bailouts” in which our government—we—have participated, both domestically and foreign)?  As an old econ professor of mine used to ask, “Suppose not?”  That is, what are the consequences of our not participating in this new bailout scheme?

Here’s one estimate of those consequences.  The EU’s designated “systemically important” banks hold a lot of European sovereign debt, including, in particular, Greek, Spanish, and Italian (and Portuguese) debt.  So do a lot of the other European banks.  So do a lot of Europe’s national central banks.  On top of this, most of the rest of Europe’s major banks hold the debt (non-sovereign; commercial) debt of those commercial entities that hold all that sovereign debt.

Because of these risks, the EU governing bodies have required those major banks to increase their capital reserves to 9% of their assets in anticipation of a Greek, or other sovereign, default.  But instead of acquiring more capital to reach that 9% threshold, those banks have been busily reducing their asset base to get their existing reserves to 9% of that reduced base—beginning with unloading the sovereign debt they presently hold.  Beyond this, the banks are not buying anymore sovereign debt, in what Spiegel Online International refers to as a “buyers’ strike on euro-zone debt.”  Mutual funds, money market funds, and other financial entities outside the EU have stopped buying European debt, also, even to the point of the US Federal Reserve Bank having to make dollars available to Europe because the commercial entities are even decreasing their willingness to roll over short term debt instruments.  It’s gotten so bad that not even Germany could sell its 10-year bonds in last week’s sale; one-third of their offering was left on the table.

In this environment, suppose Italy defaults (Greece has already defaulted with the agreed 50% write-down of their sovereign debt, but since sufficient government arm-twisting (“Nice banks you got there, Karl, Pierre.  Shame if something happened to them.”) was applied by the other European governments to get private lenders to “volunteer”, a “default” didn’t actually happen).  The banks still holding Italian sovereign debt fail because their assets—those debt instruments—become worthless and are (were) too much of their asset base.  This cascades as banks holding those banks’ own debt fail from the worthlessness of the failed banks’ debt.  And so on.  With the resulting severe economic downturn, the nations of the EU suffer, unemployment rises, output falls; all the things associated with a sharp, steep dislocation occur.  Since Europe is a major trading partner, and so customer, of ours, our economy worsens, our ongoing recession deepens, perhaps sharply, and lengthens.

On the other hand, suppose we go along with this IMF scheme and participate in yet another bailout.  What happens then?  The IMF money, claims La Stampa (via the Belmont Club link above), would give Italy a year to a year-and-a-half to push through reform without actually having to refinance their existing debt.  But, in reality, this just means the string will be pushed down the road.  Politicians, including Italian Prime Minister Mario Monti, won’t use the time to implement real reform, only to pay lip service while continuing to spend.  The rioting in the Italian streets over existing timid spending cuts show this (as they showed in Greece).

Further, with the cost of sovereign—and private—borrowing increasing rapidly as private entities—the only entities, in their aggregate, with the money to continue funding (but even for them, only to a point) national deficit spending, which is sovereign debt, what happens when the money runs out?  Recall that those private entities already are walking away from lending to Europe: they’re not going to lend until they run out of money.

Indeed, Spiegel Online International notes that their sources say that all of the previous bailout attempts have been worthless.  Those sources insist that, as a result, the European Central Bank must finance the debtor nations, even if the EU’s treaties bar it from doing so.  The central bank has enough money, goes the claim, and it can also print money if necessary.  Aside from what blithely ignoring the fundamental law of the land does for binding political entities—and people—together into a coherent polity, such printing of money for the sake of generating dollarseuros is the stuff of very great, if not runaway, inflation, as the Germans know full well.  Sharp inflation represents a devaluation of the currency that is little different from an outright default.

It won’t work, anyway—bailouts cannot work.  The prior bailouts failed, not because there wasn’t enough money transferred, but because the concept of bailouts is a failure: all they do is reward the behaviors that led to the condition by excusing the actors from the consequences of their actions.

In the end, then, Italy (Spain/Portugal) will default anyway.  Only if we’re active participants, we’re out those $140 billion, and a lot more, as all of us, EU and the US, keep trying until the inevitable happens.  Better to cut the cord, stop feeding the habit.  Better if the EU did this, also.  The default will happen sooner, the economic downturn will be extremely sharp, and it will be over.  The defaulting nations will recover, and they’ll be stronger than before for having learned a painful lesson.  For a couple of generations, anyway.  The rest of the nations will be better off, and sooner, for not having ridden this sinking ship down.

Texas Redistricting

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As a result of the 2010 census, Texas picked up four additional Congressional districts, four House of Representatives seats in the Federal Congress.  Pursuant to this, the Texas legislature redrew the existing district map to create those four additional districts.

Of course, someone’s ox is going to be gored by such a remapping, and Texas was sued in Federal court as some groups were unhappy that they hadn’t been favored enough by the new map.

Here’s where it gets interesting.  The primary reason the Federal government has any say at all over how a State sets is Congressional districts is carried in the Voting Rights Act of 1965: this law gives the Federal government, in the form of its Federal courts, the authority to approve or disapprove Congressional district maps of certain enumerated States before those maps can take effect, and Texas is one of those enumerated.  However, and this is key, the purpose of that prior approval requirement is to prevent racial gerrymandering.

The District Court for the District of Columbia rejected the Texas Legislature-drawn district map and sent the case to the District Court for the San Antonio Division of the federal court system for trial.  The San Antonio federal court then proceeded to draw its own district map, which is far out of the jurisdiction of the Federal courts.  This drew, correctly, a sharp reaction from Texas’ Attorney General Greg Abbott as he announced his emergency appeal to the Supreme Court to stay this Federal intrusion into a State’s internal affairs.

A court’s job is to apply the law, not to make policy.  A federal court lacks constitutional authority to interfere with the expressed will of the state Legislature unless it is compelled to remedy a specific, identifiable violation of law.

Beyond this, though, is what the San Antonio District Court did with its map.  The court’s own map would ensure minorities made up the majority in three of the additional four districts.  This is exactly the racial gerrymandering to which the Voting Rights Act authorized the Federal courts to object.

Even larger, though, is this: either we’re all Americans, each of whose vote is as valuable as the others’, or we’re not, and government-favored groups get louder, stronger votes than those disfavored by government.  It’s plain where one Federal judge’s sentiments lie.

Energy Consumption and Quality of Life

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Power Line displays a graph that is one of several from an article by Oil Drum that shows a developing relationship between energy consumption and GDP growth, and it’s reproduced here:

Growth in world energy consumption

Growth in world energy consumption

This graph summarizes a series of national-level graphs and it indicates an increasingly tight coupling between energy growth and GDP growth.  As Power Line and Oil Drum point out, this has implications for any ability to reduce, at least in the near-term, dependency on CO2-based energy in our economies.  Aside from the fact that CO2-based energy has never been shown to be inherently bad—anthropogenic climate change, according to an increasingly deep and broad fossil record, seems a non-event—I want to talk about some other implications of this coupling, and I’ll do that with the explicit assumption that GDP is a good enough stand-in for the quality of life of the world’s inhabitants.

We have reached a point in the improvement of our quality of life where it’s no longer possible, for instance, merely to plant more acres in order to grow more food; it’s no longer possible merely to hire more calculator operators to do more calculations; it’s no longer possible to do more science simply by observing with the naked eye, or with crudely ground glass lenses, the world around us.  It’s no longer possible to increase our comforts in our homes simply by burning more wood in the fireplace.  We need more and better technologies.  It’s technology that produces the medicines that help us defeat yesterday’s killer diseases and will help us against today’s and tomorrow’s, it’s technology that produces and improves the computers underlying and controlling our infrastructure and personal activities, that manages the technologies that let us do the science that make our lives better and that underlie tomorrow’s technological and scientific advances that continue this spiraling cycle of improvement.

But each new advance in technology needs more energy to sustain it and it took more energy to develop it.  The increase in energy use shown in the graph isn’t driven only by population growth yielding more people to consume energy; that growth is driven by the increasing energy demands that an increasing quality of life represents.

We’re faced with a choice, then, as GDP increases and energy consumption increases become tied to each other: do we continue to develop our technologies and the energy to support them so that our GDP, our quality of life, can continue to improve, or do we say enough—this is as good as it gets, stop the improvement train?

I decline the Malthusian solution.  But to do otherwise requires more of that CO2-based energy, more of those fossil fuels.  Whatever we might think of alternative energy sources, they aren’t ready for market.  They can’t produce the energy in the amounts we need to supplement what we have, much less to replace much of it.  Not only are market prices not able to compete—and forcing them would damage our economy even more than it already is—the production efficiencies aren’t there, either.  The energy density of a solar cell doesn’t compare with the energy density of a unit of oil or gas, even if the cell will last longer than the unit of oil or gas.  Subsidizing the alternate energy sources doesn’t answer the problem, either; this merely shifts the price from the utility bill to the tax bill.

A partial answer, then, demands that we increase fossil fuel production, and this demands that the government get out of the way of this increase.  Travesties like the Keystone XL pipeline delay must be undone.  Off shore drilling must be allowed, dry-land drilling must be allowed, fracking must be allowed, and so on.  The government’s regulations that impede these must be withdrawn.  So, too must the regulations that enable frivolous environmental lawsuits and their delays be withdrawn.  For example, despite three years of environmental study for the Keystone XL project, despite the existence of 25,000 miles of oil and gas pipeline already criss-crossing the Oglala Aquifer, additional suits are permitted.  For example, a solar farm in the desert on the other side of the mountains from Los Angeles cannot deliver its green electricity to the city because environmentalists object to every plausible route along which the power lines needed to carry the electricity might run.  For example, a wind farm off the Martha’s Vineyard coast has been blocked by NIMBYers convincing the FAA to rule that the windmills would present a hazard to aviation.  Delays like these simply increase the importance of fossil fuel production.

So, too, must the subsidies, which only inflate the cost of the thing being subsidized, whether oil and gas or “green” energy, be withdrawn.

But the rest of the answer demands that we need energy from all sources.  We need the solar energy, the wind energy, the nuclear energy (and cheap fusion energy is just around the corner.  Still).  But these can’t be forced into the market before their time.  Solar energy remains roughly three times more expensive than fossil-fuel (CO2-based) energy for the consumer.  Permitting requirements can double the cost of building a nuclear power plant, and we still don’t have a place set up in which to store spent fuel—even though a suitable location has been identified.

When any other element of our infrastructure, a road or a bridge or a stretch of railroad line, for instance, has utility, then it can be sold on that basis.  Again, so it is with “green” energy.  When those sources have utility, when they are useful in the market place for the end users, then these can also be sold to us on that basis.  Neither energy source needs to hyped on the basis, for instance, of the jobs that will be created.  Those jobs will appear automatically from the need to produce to satisfy the market’s demand.

Income (In)equality and Freedom

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It is the view of some that the primary task of our government is to engage in wealth redistribution so as to tend to equalize income—to equalize the results of individual effort, regardless of the level or quality of that effort.  There are problems with this asserted purpose, though, historical, practical, and moral.

During the extended discussion of our nation’s blueprint, James Madison wrote in The Federalist No. 10, for instance [emphasis mine],

The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government.

But these differences must, inevitably, result in different degrees of wealth, and of different degrees of income on the path to the accumulation of that wealth.  This diversity, though, is not a failing, but one of the strengths of our nation, one of the things that makes us exceptional, as we’ll see shortly.

Madison added, perhaps in anticipation of today’s debates, this:

The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice.

This is especially a propos in light of the present effort to use taxes explicitly to achieve that wealth redistribution, rather than let men effect their own redistribution through a free market, wherein they freely exchange their wealth among each other as they exchange their goods and services—and money—at freely agreed prices.  The inevitable outcome of these exchanges is that all participants are richer after them than they were before, since all participants, after the exchanges, have gained something of value to them that they had not had before.

This takes me to the practical aspects of the failure of government-driven wealth redistribution.  Our nation’s principles statement acknowledges that all men are created equal.  The only way a government can redistribute wealth is to take from the wealthier and give to the less wealthy—i.e., to tax some more heavily than others, and then to give the proceeds of those taxes to the those less taxed—or today, to those not taxed at all.  But consider what happens when this is done.  Those from whom the fruits of their labor are taken—of necessity, arbitrarily—will have less incentive to continue their labors, and to the extent they do continue, it will not be with their original zeal.  What would be the point?  Their compensation for their labor will only be arbitrarily reduced.  Similarly, those who receive the fruits of others’ labor without having labored to the same extent or quality (those differing faculties) will have a reduced incentive to continue trying with their original zeal: they’re going to receive from government those others’ wealth, in any event.

Yet if each is left to his original equality of opportunity, to use to the fullest his own skill, work ethic, innate ability—his own faculties—he will be free to achieve his fullest potential—and yes, that will be differing levels of income and of wealth.  But that freedom to satisfy one’s own full potential, without government interference, is a part of that exceptionality of the United States.

It’s easy to see how this has played out over the last few decades of ever more active government-driven wealth redistribution.  Taxes on the middle class have been steadily reduced, the yet lower income classes have had their taxes reduced to near nothingness (and often receive tax credits—the wealth that others have earned).  This has been balanced by ever-increasing taxes on the upper classes—the so-called rich, the “millionaires and billionaires.”  Over the years until the 2010 mid-term elections, for instance, the top 10% of income earners have seen their share of the nation’s total income tax rise from 66% to 70%, while the bottom 50% of income earners have seen their share of the nation’s total income tax fall from 4% to 3%.  Yet the recipients of this wealth redistribution are even worse off—as Progressives insist with their plaints about today’s “increasing” income and wealth disparities.  Wealth redistribution, income leveling, doesn’t work by their own offered evidence.

This brings me to my third point, the morality of income redistribution.

Again from our principles statement, we understand that among our natural, inalienable rights is each man’s right to pursue his own happiness.

Here, John Adams is instructive.

All men are born free and independent, and have certain natural, essential, and unalienable rights, among which may be reckoned the right of enjoying and defending their lives and liberties; that of acquiring, possessing, and protecting property; in fine, that of seeking and obtaining their safety and happiness.

Taking from some and giving to others denies to each their moral obligation.  One of the obligations resulting from all men being equal and all men having (an equal) right to pursue their own happiness is the obligation of each man to not be, routinely, a burden on other men either directly, or by imposing on each man’s obligation to help his fellows in their hour of need.  That hour cannot be allowed to last indefinitely.

Government-forced taking and giving denies the one the opportunity to satisfy his moral duty to see to his own happiness, and it denies the other the moral outcome of having seen to his happiness. Further, by routinely imposing on the obligation of the better off, the one imposing (or the government imposing in the one’s name) is, in effect, asserting a dominion over the one who is better off: he owes me because I exist, and he’s richer.  (And never mind that diversity of faculties that are spread across us all.)

In the end, equality of wealth, or of the income that contributed over time to the wealth, is not guarantor of individual freedom.  Indeed, this is quite the opposite: it is the destruction of freedom, since government, in ensuring greater “equality” must also ensure lesser freedoms through the necessary mandates and takings inherent in the redistribution.