Tag Archives: political economy

Speaking of Out of Touch

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Senator Bernie Sanders (I, VT) demonstrated the depth of his condition of out of touchness in a Tuesday op-ed in The Wall Street Journal.  Although Sanders’ out of touchness is amply demonstrated by his full-throated defense of the dinosaur that is the United States Postal Service, I want to look at a couple of other things he said in his piece.

First, there’s this:

There are very powerful and wealthy special interests who want to privatize or dismember virtually every function that government now performs, whether it is Social Security, Medicare, public education or the Postal Service.  They see an opportunity for Wall Street and corporate America to make billions in profits out of these services….

He says this in all seriousness, as if shrinking government and returning the bulk of its functions to the private sector where they belong is somehow a bad thing.  And that there would be profit in that private sector (and not only for “Wall Street and corporate America,” but also for medium-sized and small businesses and the Americans these would employ) is something only an avowed Democratic Socialist like Sanders would decry.  Moreover, it’s not only the powerful and special interests who want this shrinking of government and a divestment of its present array of “functions.”  Apparently he’s missed the Tea Party revolution that’s been going on these last five years.

He also had this (with some overlap with the quote above):

They see an opportunity for Wall Street and corporate America to make billions in profits out of these services, and couldn’t care less how privatization or a degradation of services affects ordinary Americans.

This is a false dichotomy.  Privatization doesn’t at all degrade services—it improves those extant and leads to vast expansion of new services, and at lower prices than before.  This is the example of the breakup of Ma Bell, effective at the start of 1984.  Under Ma Bell, we had a very good land line telephone system.  After the breakup, we got an even better land line system of competing companies (until their effective remerger); a cell phone system of competing companies; a cable system of more-or-less competing companies, which also compete for telephone business; and all of them competing for Internet business—including telephony communications.

A further example is the USPS, which prior to the divestment of package delivery and mail service other than first class, did a very good job of delivery.  Now we have competing package and special delivery service companies that are cheaper, faster, and even more reliable, and they have a broader range of special delivery services that the USPS is scrambling to match.  Additionally, all those communications services above are functionally competing for first class mail delivery, too, even though only the USPS can handle formal first class.  That’s what email, texting, Skype, AIM Chat, Twitter, and on and on—even that other dinosaur, faxing—are doing.

Apparently, Rip van Sanders has been sleeping through the end of the 20th century and this beginning of the 21st.

The President’s Defeatist Budget

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It’s illustrated by Table S-12 Economic Assumptions from the White House’s Summary Tables, repeated below.

The table is hard to read; the money line is the third one, labeled “Real GDP, percent change, year/year.”  Beginning in the year 2018—just four years from now—President Barack Obama and his “economic” advisors predict our nation’s economic output—our GDP—growth rate to shrink from 3.1% growth per year to an historic low rate, and abysmal rate, to 2.36% in 2-019, and then to less than 2.5% after that.  And to stay at that abysmal level as far as the prediction can see.

This is the defeatist attitude of the Progressive.  1979 Presidential Candidate Ronald Reagan had a different vision [emphasis added]:

Someone once said that the difference between an American and any other kind of person is that an American lives in anticipation of the future because he knows it will be a great place. Other people fear the future as just a repetition of past failures.  There’s a lot of truth in that.  If there is one thing we are sure of it is that history need not be relived; that nothing is impossible, and that man is capable of improving his circumstances beyond what we are told is fact.

There are those in our land today, however, who would have us believe that the United States, like other great civilizations of the past, has reached the zenith of its power; that we are weak and fearful, reduced to bickering with each other and no longer possessed of the will to cope with our problems.

Much of this talk has come from leaders who claim that our problems are too difficult to handle.  We are supposed to meekly accept their failures as the most which humanly can be done.  They tell us we must learn to live with less, and teach our children that their lives will be less full and prosperous than ours have been; that the America of the coming years will be a place where—because of our past excesses—it will be impossible to dream and make those dreams come true.

I don’t believe that.  And, I don’t believe you do either.  That is why I am seeking the presidency.  I cannot and will not stand by and see this great country destroy itself.  Our leaders attempt to blame their failures on circumstances beyond their control, on false estimates by unknown, unidentifiable experts who rewrite modern history in an attempt to convince us our high standard of living, the result of thrift and hard work, is somehow selfish extravagance which we must renounce as we join in sharing scarcity.  I don’t agree that our nation must resign itself to inevitable decline, yielding its proud position to other hands.  I am totally unwilling to see this country fail in its obligation to itself and to the other free peoples of the world.

The crisis we face is not the result of any failure of the American spirit; it is a failure of our leaders to establish rational goals and give our people something to order their lives by.

We can, indeed, do better than that Progressive budget implies.  We just need to get the Progressives out of the way.  Beginning this year, but necessarily continuing in 2016 and the election cycles beyond.

Gutting our Defense Capacity

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First, President Obama moves to gut our Federal defense establishment, including among other moves reducing the size of our Army to 1940 levels.

Now he wants to gut our state militias, in particular the States’ Army National Guards, also—and reduce thereby their ability to deal with internal matters ranging from disorder to disaster recovery.  And, oh by the way, severely restrict the States’ ability to reinforce that drastically curtailed Federal defense capacity.

Hmm….

Our Economic Recovery

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The Congressional Budget Office had some remarks last Thursday.

More than four and a half years after the end of the recession, employment has risen sluggishly—much more slowly than it grew, on average, during the four previous recoveries that lasted more than one year.  At the same time, the unemployment rate has fallen only partway back to its prerecession level…and a significant part of that improvement is attributable to a decline in labor force participation that has occurred as an unusually large number of people have stopped looking for work….  Moreover, the rate of long-term unemployment—the percentage of the labor force that has been out of work for more than 26 consecutive weeks—remains extraordinarily high.

And

CBO estimates that GDP was 7½% smaller than potential (maximum sustainable) GDP at the end of the recession; by the end of 2013, less than one-half of that gap had been closed.  With output growing so slowly, payrolls have increased slowly as well—and the slack in the labor market that can be seen in the elevated unemployment rate and in part of the reduction in the rate of labor force participation mirrors the gap between actual and potential GDP.

And [emphasis in the original]

Employment at the end of 2013 was about 6 million jobs short of where it would be if the unemployment rate had returned to its prerecession level and if the participation rate had risen to the level it would have attained without the current cyclical weakness. Those factors account roughly equally for the shortfall.

Any questions about the effectiveness of the Obama administration’s economic policies?

Defense Cut “Drivers”

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Here are a couple of types of spending increases that will appear in upcoming Federal budgets:

[A] CBO report finds that mandatory spending, which includes Social Security, Medicare, and Medicaid, is projected to rise $85 billion, or 4%….

And

Interest on the debt is worse.  It is projected to increase 14% per year, almost quadrupling in dollar terms between 2014 and 2024.

DoD Secretary Chuck Hagel’s proposed budget cuts Defense spending by $75 billion over the next two years.

The “mandatory” spending problem could be cured over those same two years, with a proper reform package.

From $416 billion in interest payments in 2013, that 14% increase for 2014 comes to $58 billion; for 2015, the first year of President Barack Obama’s budget proposal (which includes that “mandatory” spending and Hagel’s cuts in the Defense budget), that interest payment increase comes to $65 billion.

Our debt debacle, with its required interest payments, will take considerably longer than two years to redress, and that puts a premium on getting started now on the necessary spending cuts.  This is made even more difficult, though, by the enormous size of our debt coupled with the national survival need to preserve our military capacity.

But the Democrats won’t allow entitlement reform in any direction except expansion—and more spending.  And they refuse to take our debt seriously, demanding ever more (non-defense) spending, and not just for the “mandatory” stuff.  Go figure.