The Inescapable Truth of Racial McCarthyite’s

Last night on MSNBC, Lawrence O’Donnell made the outlandish claim that Senator Mitch McConnell assertion that President Obama is working harder on his golf game than on his job was racist.  O’Donnell said, ” Well, we know exactly what he’s trying to do there. He is trying to align to Tiger Woods and surely, the — lifestyle of Tiger Woods with Barack Obama. Obviously, nothing could be further from the truth.”

Of course, McConnell never mentioned the name Tiger Woods and certainly never accused to president of philandering.  That just doesn’t matter. This is the latest, but perhaps stupidest claim, that criticism of the president is racist.  We consistently are told that the GOP speak in “code words.”  Among the words with hidden meaning include: welfare, food stamp president, entitlement society, poor work ethic and amnesty.

These racial McCarthyite’s who see racists under every bed inadvertently reveal more about their view of the country than anything else.  If their “code word” theory was operative, that would mean there are millions of Americans harbor racist hate in their hearts and will respond like Pavlov’s dog when they hear words like “welfare” and “food stamps.”  They must believe large swaths of the country are red neck racist hicks and the GOP appeals to these dumbasses with these accusations.

This is just the latest example of liberals belittling the American people.  Is there any wonder most people reject their liberalism in this form?

Thomas Geoghegan — Keynesian

Churchill said a fanatic is someone who won’t change their mind and won’t change the subject.  Thomas Geoghegan and his Keynesian pals are fanatics.  Despite massive evidence that government spending does not create wealth, they continue to argue for even more spending.

In an article from Bloomberg News entitled “Obama is Lucky Medicare is Out of Control,” Geoghegan argues that out of control Medicare spending is boosting the economy.  “If Medicare was capped and couldn’t shoot up automatically, unemployment would probably be in double digits,” Geoghegan writes.

This line of faulty reasoning is not new and, in fact, permeates the minds of many of our most powerful government officials.  Nancy Pelosi argued that “Let me say that unemployment insurance… is one of the biggest stimuluses (sic) to our economy. Economists will tell you, this money is spent quickly. It injects demand into the economy, and it’s job creating. It creates jobs faster than almost any other initiative you can name.”

Obama’s Secretary of Agriculture Tom Vilsack argued than Food Stamps (SNAP) creates economic growth, as well: ” I should point out, when you talk about the SNAP program or the foot stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.”

Medicare spending is out of control.  More Americans are on Food Stamps than ever before.  And thank to these policies, unemployment, and hence, unemployment insurance spending, are at historic highs.  Shouldn’t we be the wealthiest country on earth?

History proves these individuals wrong.  The richest period in American history was not the New Deal or the Great Society but 1946 when government spending was reduced by nearly two thirds including massive cuts in military spending.

Tom Woods wrote about this: But, fashionable superstitions notwithstanding, government spending — that is, draining resources from the productive sector and devoting them to arbitrary projects — cannot improve the economy. It can only make things worse. So blinded are Keynesian economists, from whom Obama takes his inspiration, by the view that prosperity is attributable to “spending” per se that they predicted a return to depression conditions when World War II spending came to an end. And indeed in 1946, the year after the war ended, the budget was cut by two thirds. But instead of reverting to depression, what occurred instead was the single most robust year the private economy has ever seen.”

Unfortunately, both political parties are dominated by those who seek government as a salvation. For Democrats it’s social sending.  For Republicans (aka “defense socialists”) it’s military spending.   We will recover economically (if its not too late) when government gets under control, spending is reduced and government ceases to crowd out private investment and we begin to rely on the private sector and not the government for jobs.  Medicare, Food Stamps, unemployment insurance and defense spending won’t provide us our economic salvation.

 

Tragedy, Death and Keynesian Economics

On March 11, 2011 tragedy hit Japan.  A massive tsunami hit the island killing nearly 16,000 and leaving nearly 3,300 unaccounted for.  As the world mourned, Keynesian economists saw the events in a positive light.

Larry Summers, the former Harvard University President and former Secretary of the Treasury under Bill Clinton proclaimed that tsunami would bring economic renewal to Japan. “It may lead to some temporary increments ironically to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake Japan actually gained some economic strength,” he said.  Don’t forget, the Kobe earthquake killed 6,000 people and left over a quarter of a million homeless.

This was not the lone raving of a madman.  Paul Krugman after the terrorist attacks on 9-11 wrote that ” like the original day of infamy, which brought an end to the Great Depression — could even do some economic good.”

The common thread of this thinking is the belief that economic destruction, death and despair creates economic wealth by forcing the government to spend money it might not otherwise.  This is also known as the “Broken Window Fallacy.”  The great economic writer Henry Hazlett described the fallacy as:

A young hoodlum, say, heaves a brick through the window of a baker’s shop.  The shopkeeper runs out furious, but the boy is gone.  A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies.  After a while the crowd feels the need for philosophic reflection.  And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side.  It will make business for some glazier.  As they begin to think of this they elaborate upon it.  How much does a new plate glass window cost?  Two hundred and fifty dollars?  That will be quite a sun.  After all, if windows were never broken, what would happen to the glass business?  Then, of course, the thing is endless.  The glazier will have $250 more to spend with other merchants, and these in turn will have $250 more to spend with still other merchants, and so ad infinitum.  The smashed window will go on providing money and employment in ever-widening circles.  The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

Now let us take another look.   The crowd is at least right in its first conclusion.  This little act of vandalism will in the first instance mean more business for some glazier.  The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death.  But the shopkeeper will be out $250 that he was planning to spend for a new suit.  Because he has had to replace the window, he will have to go without the suit (or some equivalent need or luxury).  Instead of having a window and $250 he now has merely a window.  Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit.  If we think of him as part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business.  No new “employment” has been added.  The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier.  They had forgotten the potential third party involved, the tailor.  They forgot him precisely because he will not now enter the scene.  They will see the new window in the next day or two.  They will never see the extra suit, precisely because it will never be made.  They see only what is immediately visible to the eye.

Sadly, the fallacy has become the foundation of every economic theory out there.  If government spends, it creates wealth, the Keynesians argue.  But where is government getting the money?  From taxpayers, of course, who could put the dollars to better, more efficient use.

The union bosses, the politicians (of both parties) and many businessmen looking for a fast buck only see what is immediately visible to the eye — a construction job, a green company and a sign on the highway proclaiming this project was funded by some government stimulus grant.  They fail to see the damage their program does to the economy over the long-term and ignore the debt that is created by their shortsightedness.

This brings us back to Japan.  Since the government was forced to spend billions to clean up after the tsunami, one would think their economy would be booming.  It isn’t.  Some Keynesians still argue that the rebuilding effort will lead to a short-term boost but recent signs suggest the opposite.  As Rueters recently reported, “Japan’s manufacturers’ mood dips, outlook gloomy.”  Seems like death and destruction is not the course for economic recovery.

Treat Business Equally

You won’t find a more anti-tax blog than Outside The 40.  The bottom line is the government is too big and it spends too much.  Politicians don’t need more revenue to spend.

Some conservatives oppose the Marketplace Fairness Act on those very grounds.  The Marketplace Fairness Act allows states to collect existing sales taxes for purchases made on the Internet.

Thanks to a Supreme Court decision, states can’t collect sales taxes unless a company has a “nexus” with the state.  That creates a disparity between small, neighborhood businesses and Internet retailers like Amazon.com and TigerDirect.com.  A small electronic retailer in your neighborhood has to collect and remit sales taxes but Amazon does not.  Many consumers will choose to save to money and shop online.

It’s hard enough to run a profitable small business without government imposing artificial barriers to success.

The issue of federalism is also at stake.  Whether the issue is the sales tax, immigration or medical marijuana, states should have the power to enforce their own laws without the federal government interfering.

The legislation would be better if it applied an origin-based model where sales taxes are imposed at the point of sale.

Either way, the free-rider problem must end.  Treating businesses equally should be the fundamental principle of tax policy.

The GM “Success”

President Obama will highlight his greatest domestic accomplishment at the Democrat National Convention — the bailouts of GM and Chrysler.  If this is Obama’s greatest accomplishment, we are screwed.  Michael Barone looks behind the rhetoric:

Readers with long memories may recall that Charles E. Wilson, president of General Motors and nominee for secretary of defense, got into trouble when he told a Senate committee, “What is good for the country is good for General Motors, and what’s good for General Motors is good for the country.”

That was in 1953, and Wilson was trying to make the point that General Motors was such a big company — it sold about half the cars in the U.S. back then — that its interests were inevitably aligned with those of the country as a whole.

Things are different now. General Motors’ market share in the U.S. is below 20 percent. It has gone through bankruptcy and exists now thanks to a federal bailout. But Barack Obama seems to think that it’s as closely aligned with the national interest as Wilson did.

“When the American auto industry was on the brink of collapse,” Obama told a campaign event audience in Colorado earlier this month, “I said, let’s bet on America’s workers. And we got management and workers to come together, making cars better than ever, and now GM is No. 1 again and the American auto industry has come roaring back.”

His conclusion: “So now I want to say that what we did with the auto industry, we can do in manufacturing across America. Let’s make sure advanced, high-tech manufacturing jobs take root here, not in China. Let’s have them here in Colorado. And that means supporting investment here.”

Was he calling for a federal bailout of other American manufacturing companies? And what does he mean by “supporting investment”? White House reporters have not asked these obvious questions, for the good reason that the president, who has been attending fundraisers on an average of one every 60 hours, has not held a press conference in something like two months.

Obama talks about the auto bailout frequently, since it’s one of the few things in his record that gets positive responses in the polls. But he’s probably wise to avoid probing questions, since the GM bailout is not at all the success he claims.

GM has been selling cars in the U.S. at deep discount and, while it’s making money in China — and is outsourcing operations there and elsewhere — it’s bleeding losses in Europe. It’s spending billions to ditch its Opel brand there in favor of Chevrolet, including $559 million to put the Chevy logo on Manchester United soccer team uniforms — and just fired the marketing exec who cut that deal.

It botched the launch of its new Chevrolet Malibu by starting with the green-friendly Eco version, which pleased its government shareholders, but which got lousy reviews. And it’s selling only about 10,000 electric-powered Chevy Volts a year, a puny contribution toward Obama’s goal of 1 million electric vehicles on the road by 2015.

“GM is going from bad to worse,” reads the headline on Automotive News Editor in Chief Keith Crain’s analysis. That’s certainly true of its stock price.

The government still owns 500 million shares of GM, 26 percent of the total. It needs to sell them for $53 a share to recover its $49.5 billion bailout. But the stock price is around $20 a share, and the Treasury now estimates that the government will lose more than $25 billion if and when it sells.

That’s in addition to the revenue lost when the Obama administration permitted GM to continue to deduct previous losses from current profits, even though such deductions are ordinarily wiped out in bankruptcy proceedings.

It’s hard to avoid the conclusion that GM is bleeding money because of decisions made by a management eager to please its political masters — and by the terms of the bankruptcy arranged by Obama car czars Ron Bloom and Steven Rattner.

Rattner himself admitted late last year, in a speech to the Detroit Economic Club: “We should have asked the UAW (the United Auto Workers union) to do a bit more. We did not ask any UAW member to take a cut in their pay.” Non-union employees of GM spinoff Delphi lost their pensions. UAW members didn’t.

The UAW got their political payoff. And GM, according to Forbes writer Louis Woodhill, is headed to bankruptcy again.

Is this really what Obama wants to do for all manufacturing across America? Let’s hope not.

Environmental Doom — Not

George Will recounts how environmentalists have predicted doom for generations only to see their predictions flop:

Sometimes the news is that something was not newsworthy. The United Nations’ Rio+20 conference — 50,000 participants from 188 nations — occurred in June without consequences. A generation has passed since the 1992 Earth Summit in Rio, which begat other conferences and protocols (e.g., Kyoto). And, by now, apocalypse fatigue — boredom from being repeatedly told the end is nigh.

This began two generations ago, in 1972, when we were warned (by computer models developed at MIT) that we were doomed. We were supposed to be pretty much extinct by now, or at least miserable. We are neither. So, what went wrong?

That year begat “The Limits to Growth,” a book from the Club of Rome, which called itself “a project on the predicament of mankind.” It sold 12 million copies, staggered the New York Times (“one of the most important documents of our age”) and argued that economic growth was doomed by intractable scarcities. Bjorn Lomborg, the Danish academic and “skeptical environmentalist,” writing in Foreign Affairs, says it “helped send the world down a path of worrying obsessively about misguided remedies for minor problems while ignoring much greater concerns,” such as poverty, which only economic growth can ameliorate.

MIT’s models foresaw the collapse of civilization because of “nonrenewable resource depletion” and population growth. “In an age more innocent of and reverential toward computers,” Lomborg writes, “the reams of cool printouts gave the book’s argument an air of scientific authority and inevitability” that “seemed to banish any possibility of disagreement.” Then — as now, regarding climate change — respect for science was said to require reverential suspension of skepticism about scientific hypotheses. Time magazine’s story about “The Limits to Growth” exemplified the media’s frisson of hysteria:

“The furnaces of Pittsburgh are cold; the assembly lines of Detroit are still. In Los Angeles, a few gaunt survivors of a plague desperately till freeway center strips . . .Fantastic? No, only grim inevitability if society continues its present dedication to growth and ‘progress.’”

The modelers examined 19 commodities and said that 12 would be gone long before now — aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten and zinc. Lomborg says:

Technological innovations have replaced mercury in batteries, dental fillings and thermometers; mercury consumption is down 98 percent, and its price was down 90 percent by 2000. Since 1970, when gold reserves were estimated at 10,980 tons, 81,410 tons have been mined, and estimated reserves are 51,000 tons. Since 1970, when known reserves of copper were 280 million tons, about 400 million tons have been produced globally, and reserves are estimated at almost 700 million tons. Aluminum consumption has increased 16-fold since 1950, the world has consumed four times the 1950 known reserves, and known reserves could sustain current consumption for 177 years. Potential U.S. gas resources have doubled in the past six years. And so on.

The modelers missed something — human ingenuity in discovering, extracting and innovating. Which did not just appear after 1972.

Aluminum, Lomborg writes, is one of earth’s most common metals. But until the 1886 invention of the Hall-Heroult process, it was so difficult and expensive to extract that “Napoleon III had bars of aluminum exhibited alongside the French crown jewels, and he gave his honored guests aluminum forks and spoons while lesser visitors had to make do with gold utensils.”

Forty years after “The Limits to Growth” imparted momentum to environmentalism, that impulse now is often reduced to children indoctrinated to “reduce, reuse, and recycle.” Lomborg calls recycling “a feel-good gesture that provides little environmental benefit at a significant cost.” He says that “we pay tribute to the pagan god of token environmentalism by spending countless hours sorting, storing and collecting used paper, which, when combined with government subsidies, yields slightly lower-quality paper in order to secure a resource” — forests — “that was never threatened in the first place.”

In 1980, economist Julian Simon made a wager in the form of a complex futures contract. He bet Paul Ehrlich (whose 1968 book “The Population Bomb” predicted that “hundreds of millions of people” would starve to death in the 1970s as population growth swamped agricultural production) that by 1990 the price of any five commodities Ehrlich and his advisers picked would be lower than in 1980.

Ehrlich’s group picked five metals. All were cheaper in 1990.

The bet cost Ehrlich $576.07. But that year he was awarded a $345,000 MacArthur Foundation “genius” grant and half of the $240,000 Crafoord Prize for ecological virtue. One of Ehrlich’s advisers, John Holdren, is Barack Obama’s science adviser.

 

Tough Questions

The most open and transparent president in American history has stopped taking questions from the Washington press corps — yet we hear hardly a peep of complaint from the compliant lapdogs in the media.  That leave Obama to do interviews from pop music channels in places like New Mexico.  Listen and learn.

 

Why Stop in Ohio

After the slaughter of Democrats who voted to replace the best health care system in the world with a government-run system in 2010, Mitt Romney intends on using ObamaCare as a key wedge issue against Democrats in Ohio, according to Roll Call.  That begs the question:  why stop there?

Trailing President Barack Obama in Ohio throughout the summer, presumptive GOP presidential nominee Mitt Romney is looking to turn the tables by using “Obamacare” as a political weapon to make inroads with traditionally Democratic voters.

Ohio Democrats belittle this strategy. But the Romney campaign sees hidden gold in historically Democratic and swing counties that overwhelmingly voted to approve the Health Care Freedom Amendment, a November 2011 ballot initiative written specifically to rebuke Obama’s Affordable Care Act. Even after the Supreme Court decision ruling the law constitutional, the Romney campaign hopes unhappiness with the health care overhaul could turn enough Ohio Democrats against the president to sink his prospects in this key battleground.

“Ohio independents and moderate Democratic voters now view electing Mitt Romney as the only means by which this national health care tax will be repealed,” said Chris Maloney, a Romney campaign operative based in the Buckeye State.

Democrats concede that Obama is vulnerable in Ohio, despite current polling that gave him a 3-point edge over Romney in the RealClearPolitics.com average, 47 percent to 44 percent, as of Thursday afternoon. But party strategists based in the Midwest swing state argue that Romney is wasting his time if he thinks he can win Democratic and independent votes through promises to repeal the Affordable Care Act – called “Obamacare” by the president as well as the Republicans.

An Ohio Democratic operative referred to the Health Care Freedom Amendment, known as Issue 3, as the “sideshow” in last November’s special election, which was called to determine the fate of Issue 2, a labor reform package pushed by Gov. John Kasich (R). Voters rejected Kasich’s proposal, yet they approved Issue 3 with a strong 65 percent of the vote, giving it 66,066 more “yes” votes than the “no” votes garnered by Issue 2.

These statistics, and how the Issue 2 and Issue 3 votes line up from county to county, undergird the Romney campaign’s confidence that Obamacare could motivate Democratic and independent support for the former Massachusetts governor. But Democratic strategists said support for Issue 3 is not indicative of what is animating voters heading into the fall elections. Republicans, one Ohio Democratic operative said, “are smoking crack” if they think this tactic will work.

That doesn’t mean Democrats aren’t concerned about Obama’s relationship with moderate Democrats and independent voters, particularly among the white, working-class demographic. But, as elsewhere, the president’s underlying weakness in Ohio is a result of anxiety over the economy – and in the eastern part of the state, because of voters’ belief that Obama is hostile to coal.

The Democratic operative said the political atmosphere in Ohio is reminiscent of 2004, and he called the state “very, very hostile territory” for Obama. “One of the biggest problems that the Democrats have is structural,” this individual added. “The Republicans are running the election.”

The Democratic strategist said Republicans are pulling strings at the county level to make voting easier for Republicans and harder for Democrats. The Obama campaign declined to comment.

The Romney campaign this week unveiled a television ad that alleges Obama raided Medicare to pay for the Affordable Care Act. The ad, which the Obama campaign has said mischaracterizes the savings the law wrings from Medicare, was part of a Romney offensive on the senior citizen health care plan that was launched on the heels of the former governor selecting House Budget Chairman Paul Ryan (Wis.) as his vice presidential running mate. Ryan is identified with his proposal to overhaul Medicare.